Swift & Company

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Swift & Company and United Food and Commercial Workers International Union Local No. 71, AFL-CIO. Case 18-CA-6775 September 28, 1982 DECISION AND ORDER BY MEMBERS JENKINS, ZIMMERMAN, AND HUNTER On September 29, 1981, Administrative Law Judge Russell M. King, Jr., issued the attached De- cision in this proceeding. Thereafter, the Charging Party filed exceptions and a supporting brief, and the Respondent filed an answering brief to the Charging Party's exceptions. 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 briefs and has decided to affirm the rulings, find- ings, and conclusions' of the Administrative Law Judge and to adopt his recommended Order. 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 complaint be, and it hereby is, dismissed in its entirety. X In adopting the Administrative Law Judge's dismissal of the com- plaint, we note that the record indicates Respondent entirely shut down its Sioux City facility, thereby effectively closing its entire operation there. Accordingly, we find it unnecessary to reach, nor do we pass on, the Administrative Law Judge's comments concerning the scope of an employer's freedom to act regardless of the circumstances in other situa- tions involving purely economic closures or changes in operations. In this regard, Member Jenkins and Member Zimmerman note that the circum- stances underlying the Respondent's partial closure herein are not akin to an employer's contracting out of work to another employer, inasmuch as there is no evidence that the Respondent had any intention of utilizing the services of another business entity to perform the work of the em- ployees displaced herein. Cf. Fibreboard Paper Products Corp. v. N. LR.B., 379 U.S. 203 (1964) DECISION RUSSELL M. KING, JR., Administrative Law Judge: This case was heard by me in Sioux City, Iowa, on May 29, 1981. The charge was filed by United Food and Commercial Workers International Union, Local No. 71, AFL-CIO (the Union or Local 71), on July 10, 1980,' and a complaint was issued on September 18 by the Re- gional Director of Region 18 of the National Labor Re- lations Board (the Board), on behalf of the Board's Gen- eral Counsel. The Union represented the production and I All dates hereafter are in 1980, unless otherwise stated. 264 NLRB No. 36 maintenance employees at the Respondent's turkey proc- essing plant in Sioux City. On May 22, without prior notice to the Union but during contract negotiations, the Respondent, Swift & Company 2 (the Company), an- nounced the closing of the plant, effective June 22. The plant was in fact closed and the complaint alleges that the plant closing, without prior notice to the Union, was in violation of Section 8(a)(1) and (5) of the Act.3 The Company denies any violation of the Act, contends the closure was for economic reasons only, and argues that it thus had no duty to notify or bargain with the Union over the closure. There is no dispute in this case that the Company did (and does) have an obligation to bargain with the Union over the "effects" of the plant closure, and this matter is not in issue. The complaint (issued September 18, 1980) set the case for hearing May 29, 1981. On January 12, 1981, the U.S. Supreme Court granted certiorari in First National Main- tenance Corp. v. N.L.R.B. (decided June 22, 1981, 452 U.S. 666. The issue involved was whether the employer's unilateral decision to terminate a portion of its business operations solely for legitimate economic reasons was a breach of its duty to bargain under Section 8(a)(5) of the Act. On May 11, 1981, the Company filed a motion to continue the case (set for hearing May 29, 1981) on the ground that the Supreme Court's (then) pending decision in First National Maintenance Corp. could well dispose of the issues in this case. That motion was denied on May 14, 1981, by the Regional Director for Region 18 of the Board. The case then went on to hearing before me on May 29, 1981, 4 and prior to closing the record in the case the date of July 31, 1981, was set for the filing of briefs by counsel. The First National Maintenance Corp. decision was issued on June 22, 1981, and on June 26. 1981, the General Counsel requested "extension of time in which briefs are to be filed" to August 3, 1981. 5 The extension was granted and on August 3, 1981, the Gener- al Counsel filed a motion to dismiss the complaint on the grounds that there was no evidence in the record to sup- port any violation of Section 8(a)(1) of the Act, and that the decision in First National Maintenance Corp. was dis- positive of the alleged violation of Section 8(a)(5) of the Act (duty to bargain). 6 By a time schedule agreed upon 2 The name of the Respondent was amended during the hearing of the case from "Swift & Company Dairy & Poultry Plant. a Division of Swift & Co." to simply "Swift & Company." 3 The pertinent parts of the Act provide as follows: Sec. 8. (a) It shall be an unfair labor practice for an employer- (I) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7 .(5) to refuse to bargain collec- tively with the representatives of his employees . Sec. 7. Employees shall have the right to sclf-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection ... 4 The motion for a continuance was not rencAcd before me at the hearing. I This request was made "in view" of the Court's holding in i-rst Va- rional Maintenance Corp. 6 The motion to dismiss cited, among oilher things. exhibits and testl- mony in the record. 240 * . . e SWIFT & COMPANY by all counsel, replies to the General Counsel's motion were subsequently and timely filed. These replies by counsel for the Union and the Company were extensive, the Union against dismissal and the Company in favor of dismissal of the complaint. The Union urges that this case is clearly distinguishable from First National Mainte- nance Corp. I now, and for the first time, address the General Counsel's motion to dismiss the complaint, and I hereby deny the same. I do so at this time not on the basis of merit, but in my opinion the case is ripe for decision, having been carried through the Board's formal hearing process notwithstanding the pendency of First National Maintenance Corp. Should this case be destined for Board review in one form or another, the initial decisional process will be behind it.7 Upon the entire record, including my observation of the demeanor of the witnesses,8 and after due considera- tion of the pleadings, motions, and replies filed herein, I make the following: FINDINGS OF FACT I. JURISDICTION The pleadings, evidence, and admissions herein estab- lish the following jurisdictional facts. At all times materi- al herein, the Company has been a Delaware corpora- tion, and has maintained a place of business or plant in Sioux City, Iowa, where it has been engaged in the proc- essing and nonretail sale and distribution of poultry or turkeys. During the calendar year ending December 31, 1979, the Company, in the course and conduct of its op- erations described above, sold and shipped from said plant products and goods valued in excess of $50,000 di- rectly to points outside the State of Iowa. Thus, and as admitted, I find and conclude that the Company is now, and has been at all times material herein, an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. As also admitted, I find and conclude that the Union is, and has been at all times material herein, a labor orga- nization within the meaning of Section 2(5) of the Act. I I realize that "briefs," in their formal sense, were not filed in this case. The extension granted to the General Counsel to August 3, 1981, was for this purpose. No such "briefs" were actually filed and no further extensions were requested. Additionally, and in my opinion, little or nothing more could be said or argued about the case other than that which appears in the General Counsel's motion to dismiss and the re- sponses to the same. a The facts found herein are based on the record as a whole and upon my observation of the witnesses. The credibility resolutions herein have been derived from a review of the entire testimonial record and exhibits with due regard for the logic of probability, the demeanor of the wit- nesses, and the teaching of N.L.R.B. v. Walton Manufacturing Company. et a., 369 U.S. 404, 408 (1962). As to those testifying in contradiction of findings herein, their testimony has been discredited either as having been in conflict with the testimony of credible witnesses or because it was in and of itself incredible and unworthy of belief All testimony and evi- dence, regardless of whether or not mentioned or alluded to herein, has been reviewed and weighed in light of the entire record. II. ALLEGED UNFAIR L ABOR PRACTICES A. Summary of the Testimony and Evidence9 Union President Wayne Huntsman had worked for the Company for some 18 years and his present job was that of grading pork bellies at another company plant also lo- cated in Sioux City. That plant is also under contract with the Union, and Huntsman was commencing his third year as president of the Union. Regarding the turkey plant, Huntsman testified that the operation at this plant was seasonal, starting up in late May and ending in late December. Approximately 175 employees worked at the turkey plant. Huntsman testified that the 3-year col- lective-bargaining agreement or union contract with the turkey plant expired April I and that negotiations for a new contract had commenced in January. These negotia- tions ended May 20 and consisted of approximately 9 to 10 sessions. Huntsman was on the union bargaining com- mittee with six or seven other employees, and the Com- pany's bargaining committee included Plant Manager John Juel, who was the principal spokesman for the Company. Huntsman testified that a bargaining session was held on May 9 at which time the Company tendered its "final offer" and asked that it be put to a ratification vote by the Union. May 19 was the date previously set for the regular union meeting, but Huntsman indicated that no ratification vote was conducted at this meeting because the Union had recently learned of a May 20 bar- gaining session set before a Federal mediator. According to Huntsman, the Union did not request this session with the Federal mediator, and at the May 19 union meeting a further meeting for possible ratification was scheduled for May 22. At the May 20 bargaining session before the Federal mediator, Huntsman related that the proposals on each side were exchanged through the mediator and that at one point the Company's representatives excused themselves to return to the plant to call the Company's main office in Chicago. Huntsman related that upon their return they indicated that there would be "no further movement on any items at this time." Huntsman testified that during the early morning hours of May 22 the Union's bargaining committee met and decided to recom- mend to the membership ratification of the proposals that had been submitted as "final" proposals by the Company on May 9. However, they also decided to contact Plant Manager Juel before the meeting to try to "clarify" some of the language prior to the meeting that evening. Hunts- man indicated that there were still some "open issues." Juel was reached by telephone at approximately 9 a.m., and Huntsman testified that he reminded Juel of the rati- fication meeting that evening and indicated to Juel that he wanted to try and get some clarification on certain points prior to the meeting. According to Huntsman, at that point Juel read from a letter, indicating that the 9 The following includes a summary of the testimony of the witnesses appearing in the case. The testimony will appear normally in narrative form, although on occasion some testimony will appear as actual quotes from the transcript. The narrative only and merely represents a summary of what the witnesses themselves stated or related. without credibility de- terminations unless indicated, and does not reflect my ultimate findings and conclusions in this case. 241 DECISIONS OF NATIONAL LABOR RELATIONS BOARD plant would be closed June 22 and that the Company thus was withdrawing all previous offers. A letter an- nouncing the plant closing for "economic consider- ations" was distributed to all employees later that day. Huntsman testified that at this point in time the plant had not been reopened for production for the season, and that later in the day he asked Plant Manager Juel if the recent negotiations had any effect in the plant closure decision, to which Juel replied, "No, it was a decision that was made in Chicago." Juel also indicated to Hunts- man at this time that he had only learned of the decision to close the plant the prior day (May 21). Gilbert Smith testified as the present director of busi- ness operations for the poultry division of the Company. In May 1980 he was group manager for poultry oper- ations and his home office was in the Company's home office in Chicago. Smith testified that the various poultry plant managers reported directly to him. Smith related that in January 1978 there was a change in the top man- agement of the Company, with a marketing program thrust to make turkey an item consumed year-round. Smith related that marketing projections by the Compa- ny for the years 1978, 1979, and 1980 reflected that the then current plant capacity of the Company was not suf- ficient. A study of the Company's 12 then existing turkey plants was commenced and this study was completed in July 1979. In this study, the 12 turkey plants were objec- tively rated as to their potential for improved productiv- ity, and the Sioux City turkey plant came in last (12th). According to Smith, the Sioux City turkey facility was a 4-story building built in 1930 as a "creamery," and was not designed to be a "turkey eviscerating plant on its own." The facility was owned by the Company and Smith indicated that the plant itself was put on the market in June 1980. Smith testified that 6 factors were used in the study of the 12 turkey plants, which were as follows: (I) procurement cost; (2) grades of turkeys available; (3) yield (from live weight to dress weight); (4) wage rates; (5) productivity (man-hours and labor cost versus pounds produced for man-hours); and (6) out- bound freight costs (from Sioux City to various markets). Smith testified that sometime after the results of the study the Company determined that the new marketing program had been too ambitious, and that production had increased in some turkey plants because of industrial engineering changes. Thus, Smith indicated that the Company came to be in an "over-capacity situation," and studies reflected that by closing the Sioux City turkey plant, some $2 million a year could be saved commenc- ing in 1980 and thereafter, which resulted in the decision to close the plant. Smith testified that he learned of this decision on May 21 and on that date he and Labor Rela- tions Manager Charles Frederick called Plant Manager Juel in Sioux City. Smith indicated that the Company's policy in plants with seasonal operations was not to "re- commence" operations unless and until there was a col- lective-bargaining agreement in effect. Smith added that two other turkey plants were also closed after the Sioux City plant, and that in 1979 the Company's turkey plants produced 360 million pounds as opposed to 368 million pounds in 1980, without the production of the Sioux City plants. According to Smith, the "operational earnings" in 1977 of the Company's turkey plants was $7 million but that in 1980 the Company lost $30 million in its turkey plant operations. Smith attributed this loss, in great part, to excessive inventories during periods of reduced demand, resulting in low sale prices. John Juel testified as the Company's Sioux City turkey plant manager in 1980. Juel took part in the negotiations with the Union commencing in January, and related that at a bargaining session which took place on April 22 union representative Stamoulis, on behalf of the Union, asked for a "substantial" wage increase of $1 per hour. 0° According to Juel, the April 22 demand was the first and only demand made by the Union, although the Company made several counteroffers, ending with their "final pro- posal" of May 9.'" Juel testified that there were three bargaining sessions with the Federal mediator and that the last such session was conducted May 20, at which time the mediator represented to him that the Company's "final proposal" was unacceptable to the Union. Charles D. Frederick testified as a labor consultant for the Company. In 1980 he was the Company's manager of labor relations. Frederick related that subsequent to plant closure the Company received a "letter" from the Board indicating that the Company would be liable for back wages until such time as they sat down and negotiated with the Union over the decision to close the plant. After discussing the matter with a company attorney, on October 20 Frederick wrote to Union President Hunts- man offering to meet with the Union and "bargain col- lectively regarding the Company's decision to discontin- ue its Sioux City, Iowa Turkey Plant." 2 Frederick testi- fied that on December 29 he received a phone call from Huntsman, who stated that he would "get back to [him] with dates" after he consulted with an attorney in Chica- go. According to Frederick, he never heard from Hunts- man again. B. Evaluation of Evidence and Law and Initial Conclusions Prior to the Supreme Court's decision in First National Maintenance Corp. v. N.L.R.B., 452 U.S. 666 (1981) (hereinafter called National Maintenance), the Board had long held that an employer's decision to close part of its operations affects the "terms and conditions of employ- ment" within the meaning of the Act, and was thus a '° Union President Huntsman conceded in his testimony that the SI- per-hour figure was once mentioned, but only in jest, and never was a serious demand. I On April 25, G. R. Nelson, the Company's "complex manager" wrote a letter to all employees stating that no "start-up date" for the plant had been scheduled "due to the lack of agreement with the Union on a contract." The letter added that the Company felt its proposal had been fair but that the Union had demanded a wage and benefit package "which would likely double our labor cost over a three year period." On May 9, Nelson again wrote to the employees indicating that "additional benefits have been added to the Company's proposal," and expressing hope that "the Company's proposal" will be ratified and the plant re- opened for processing. i2 The record reflects that in introducing the letter as evidence, coun- sel for the Company stated that its purpose was to "tole [sic] any back- pay which might be involved in the event any violation is found [in this case]." Huntsman wrote back to Frederick on October 24 expressing a willingness to meet with the Company "subject [tol contacting our legal counsel before setting a date." 242 SWIFT & COMPANY mandatory subject for collective bargaining. Ozark Trail- ers, Incorporated, 161 NLRB 615 (1966). In National Maintenance the employer provided housekeeping and maintenance services to commercial customers. One such customer was a nursing home, and there came a time when the employer began to lose money over its con- tract with the home. After attempts to remedy the situa- tion failed, the employer ceased servicing the home and 3 days later informed its employees that had been work- ing at the home that they would be discharged. During this period and prior to ceasing operations at the home, the employees at National Maintenance had organized, the Board had certified a union as their collective-bar- gaining representative, and the union had requested bar- gaining but had not received a response to the request. The Board found the employer had violated Section 8(a)(1) and (5) of the Act by failing to satisfy its duty to bargain concerning both the decision to terminate its contract with the nursing home and the efforts of the de- cision upon the employees involved. 242 NLRB 462 (1979).'3 The resulting Order of the Board was enforced by the Second Circuit. 627 F.2d 596 (1980). In reversing the Board and the Second Circuit, the Supreme Court concluded and held as follows: . . . that the harm likely to be done to an employ- er's need to operate freely in deciding whether to shut down part of its business purely for economic reasons outweighs the incremental benefit that might be gained through the union's participation in making the decision, and we hold that the decision itself is not part of... "[the] terms and conditions" . . .over which Congress has mandated bargaining. [452 U.S. at 686.] In reaching the above holding, the Supreme Court deter- mined that the decision (itself) to terminate operations was part of the employer's "retained freedom[s] to manage its affairs unrelated to employment." Id. at 677. Significant remarks in the decisions leading up to its holding are as follows: . . .in establishing what issues must be submitted to the process of bargaining, Congress had no expecta- tion that the elected union representative would become an equal partner in the running of the busi- ness enterprise in which the union's members are employed. [Id. at 676.] The present case concerns a third type of manage- ment decision, one that had a direct impact on em- ployment, since jobs were inexorably eliminated by the termination, but had its focus only on the eco- nomic profitability of the contract . . . a concern under these facts wholly apart from the employ- ment relationship. This decision, involving the scope and direction of the enterprise, is akin to the decision whether to be in business at all .... [Id. at 677.] Management must be free from the constraints of the bargaining process to the extent essential for the t1 As indicated earrher, there is no dispute in this case regarding har- gaining over the "effecls" of Ihe plant's closure running of a profitable business. It also must have some degree of certainty beforehand as to when it may proceed to reach decisions without fear of later evaluations labeling its conduct an unfair labor practice. Congress did not explicitly state what issues of mutual concern to union and management it intended to exclude from mandatory bargaining. Nonethelees, in view of an employer's need for un- encumbered decisionmaking, bargaining over man- agement decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management relations and the collective-bargaining process, outweighs the burden placed on the conduct of the business. [Id. at 678-679.] The Union argues in this case that in view of the long bargaining and contractual history between the Union and the Company, and in light of the then current and ongoing contract negotiations, to have notified the Union of the decision and bargained over the decision would have imposed no burden on the Company in the conduct of its business. This may or may not have been true, but we are dealing here with what Congress deemed a man- datory subject of bargaining, the decision to close or ter- minate part of a business. The Court in National Mainte- nance clearly found that such a management decision was not what Congress intended a mandatory subject of bargaining under the Act. In my opinion, the fact that bargaining over such a decision may be expedient or ad- vantageous to one or both parties, or may cause no harm, imposes no legal duty on an employer to so bar- gain, in light of the holding in .National Maintenance. The Union in this case also argues that the Supreme Court's earlier holding in Fibreboard Paper Products v. A.L.R.B., 379 U.S. 203. 57 (1964). is controlling here. In Fibreboard. a duty to bargain xwas imposed on an employ- er that unilaterally subcontracted, for legitimate business reasons, work that formally had been performed by union members. In National Maintenance. the Court dis- tinguished Fibreboard, pointing out that the termination or closure decision had as its focus only economic profit- ability involving the scope and direction of the enter- prise, which was \wholly apart from the employment re- lationship, or an aspect thereof. The Union further notes in its agrumnent in this case that the Company was guilty of bad faith in subverting the bargaining process by forestalling agreement on a new contract prior to the shutdown. I note that the com- plaint in this case does not allege such "surface bargain- ing" nor does the General Counsel argue the same. Fur- ther, I find no union animus in this case, nor is such urged by any party. The Court, in National NMaintenance, placed no restrictions on when and how such a manage- ment decision was to be announced. The unrebutted evidence in this case reflects, and I so find, that the closure decision by the Company was based solely on economic and profitability grounds. I am further convinced that this case falls squarely within the holdings in National ,Maintetnance, and I shall thus recom- mend that the complaint be dismissed. National Mainte- nance was no doubt a blosw to organized labor, but its - 243 DECISIONS OF NATIONAL LABOR RELATIONS BOARD mandate that employers have "unfettered decisionmak- ing" in purely economic closures is clear. There are cer- tain safeguards which are preserved, and which perhaps serve to narrow the decision. But in my opinion it is now absolutely clear that an employer's decision to close his loosing business, or a part thereof, is his alone, if he so chooses. Upon the foregoing findings of fact, and upon the entire record, I hereby make the following: CONCI USIONS OF LAW 1. That the Respondent Employer is an employer en- gaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. That the Charging Union is a labor organization within the meaning of Section 2(5) of the Act. 3. That the following employees of the Respondent constitute a unit appropriate for the purposes of collec- tive bargaining within the meaning of Section 9(b) of the Act:' 4 All production and maintenance employees and truck drivers, excluding office and clerical employ- ees, operating students, manager, assistant manager, solicitors, plant foreman, buttermaking foreman, egg room foreman, poultry grading foreman, poultry and egg receiving foreman, route buyers and super- visors with authority to hire, discharge, promote, I" The unit was stipulated by all parties at the hearing of the case demote, transfer, discipline or recommend such changes. 4. That the Charging Union, at all times material herein, and by virtue of Section 9(a) of the Act, is the exclusive representative of the employees in the unit de- scribed above, for the purpose of collective bargaining with respect to rates of pay, wages, hours of employ- ment, and other terms and conditions of employment."5 5. That the Respondent's unilateral decision in this case to close its poultry or turkey plant in Sioux City, Iowa, did not violate Section 8(a)(l) and (5) of the Act. 6. That the Respondent has not further or otherwise violated the Act. Upon the basis of the foregoing findings of fact, con- clusions of law, and the entire record, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: ORDER ' 6 It is ordered that the complaint herein be, and the same is, hereby dismissed. a1 The complaint in the case so alleges, and the Respondent's answer so admits. I6 In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall, as provided in Sec. 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes. 244