New Mexico Symphony Orchestra

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 896 New Mexico Symphony Orchestra, Inc. and Musi- cians Association of Albuquerque, Local 618, American Federation of Musicians, AFL–CIO. Case 28–CA–13596 August 27, 2001 DECISION AND ORDER BY CHAIRMAN HURTGEN AND MEMBERS LIEBMAN AND TRUESDALE The issue presented in this case is whether the Re- spondent, New Mexico Symphony Orchestra, Inc., vio- lated Section 8(a)(1) and (5) of the National Labor Rela- tions Act by unilaterally changing the terms and condi- tions of unit employees by failing and refusing to make timely and full payroll payments. Based on the parties’ stipulation of facts, we find that the Respondent violated the Act as alleged. Procedural History The Union filed an unfair labor practice charge on March 11, 1996. By letter dated April 30, 1996, the Re- gional Director for Region 28 deferred the dispute to the parties’ grievance and arbitration procedures under Dubo Mfg. Corp., 142 NLRB 431 (1963). By letter dated Feb- ruary 27, 1997, the Regional Director revoked the defer- ral of the charge and reopened the investigation. There- after, on March 31, 1997, the Regional Director issued a complaint and notice of hearing. The Respondent filed a timely answer, admitting in part and denying in part the allegations in the complaint. In particular, the Respon- dent denied that it had engaged in unfair labor practices. On January 22, 1998, the General Counsel, the Re- spondent, and the Charging Party filed a stipulation of facts and a joint motion to transfer proceedings directly to the Board. The parties agreed that the charge, the letter from the Regional Director approving the partial with- drawal of the charge, the answer, and the stipulation of facts with attachments would constitute the entire record before the Board. The parties waived a hearing, the mak- ing of findings of fact and conclusions of law by an ad- ministrative law judge, and agreed to submit this case directly to the Board for findings of fact, conclusions of law, and a Decision and Order. On March 19, 1998, the Executive Secretary, by direc- tion of the Board, issued an order granting the motion, approving the stipulation, and transferring the proceeding to the Board. Thereafter, the Respondent filed a motion to dismiss the complaint and a supporting brief and the General Counsel filed a brief. The Charging Party filed an answering brief to the Respondent’s motion. The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. On the entire record and the briefs, the Board makes the following FINDINGS OF FACT I. JURISDICTION The Respondent, a New Mexico corporation, incorpo- rated as a domestic, nonprofit corporation, maintains a principal place of business in Albuquerque, New Mex- ico. At all material times, the Respondent has engaged in business as a symphony orchestra. During the 12-month period preceding the execution of the stipulation, the Respondent derived gross revenues in excess of $1 mil- lion exclusive of contributions that, because of limita- tions by grantors, are not available for use for operating expenses. During the same period, the Respondent pur- chased goods valued in excess of $50,000 from suppliers located within the State of New Mexico which purchased and received such goods and materials directly from points outside the State of New Mexico. We find that the Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. We further find that the Union is a labor organization within the meaning of Section 2(5) of the Act. II. ALLEGED UNFAIR LABOR PRACTICES A. Stipulated Facts Since 1993, the Respondent and the Union have been parties to a series of collective-bargaining agreements covering a unit of the Respondent’s employees consist- ing of all the musicians in the orchestra. Under Article 13 of the contract,1 unit members are paid the total of their personal service agreement in 20 equal payments, made twice monthly, over a 10-month period. Unit members also have the option of electing to be paid in 24 equal payments, made twice monthly, over a 12-month period. In either case, the contract requires that the Re- spondent make wage payments twice monthly on the 15th and 30th/31st day of each month. During the 6 months preceding the filing of the charge, from Septem- ber 11, 1995 to March 11, 1996, the Respondent, with few exceptions, failed to make payroll or was late or be- hind in making part or all of its payroll obligations to unit employees. During this period, the Respondent was, at times, up to two payments behind in making the con- tractually required wage payments. Continuing through March 31, 1997, the date on which the complaint issued, the Respondent was chronically late in making full con- 1 The most recent contract was effective by its terms from September 1, 1995 to August 31, 1996. On March 31, 1997, the date on which the charge was filed, the parties were operating under a 1-year extension of the contract, which was effective by its terms through August 31, 1997. 335 NLRB No. 72 NEW MEXICO SYMPHONY ORCHESTRA 897 tractual wage payments. On each occasion that the Re- spondent failed to make the contractually required pay- roll payments, the failure was due to a lack of sufficient funds to cover operating expenses. The contract contains a grievance and arbitration clause providing for binding arbitration.2 Each time the Respondent failed to timely make the payroll payment, the Union filed a grievance. In response to each griev- ance, the Respondent admitted that it had failed to com- ply with the terms of the contract by either failing to make the contractually required wage payment or making the payment late as alleged in the grievance. In some of its responses, the Respondent would indicate either the date on which the delinquent payroll was paid and de- clare that the grievance was satisfied3 or predict the date on which the payment would be made.4 In other re- sponses, the Respondent would warn of another impend- ing failure to make payroll or indicate its “hope” that employees would be paid “as soon as possible.”5 By letter dated November 1, 1995, the Union’s presi- dent informed the Respondent that “it is the Union’s po- sition that no musician is obliged to work when payrolls are not being met in full and in a timely manner” and that no musician “may be properly disciplined or discharged for making the decision that he or she will not work” as long as the payroll was not being met. By letter dated November 8, 1995, the Respondent’s Executive Director Paul Bunker admitted its failure to make timely payment on “a number of payrolls,” but noted that the contractual grievance and arbitration procedure is the exclusive mechanism for resolving disputes under the contract. Bunker also noted that the no-strike clause prevents the Union and unit employees from striking to protest the late payments. The Union did not elect to take any of the grievances to arbitration. As of the date of the stipulation, the Re- spondent had paid unit employees all the back wages due them and its payroll was current. B. The Parties' Contentions The General Counsel contends that the Respondent's repeated and habitual failure to pay employees in accor- dance with the terms of the contract is a unilateral change in the existing wage structure and violates Section 2 Art. 22.2 requires that disputes or disagreements “arising out of or in any way involving the interpretation or application of [the contract]” be submitted to the arbitration procedures. Art. 22.8 provides that the arbitrator “shall limit his or her decision strictly to an interpretation of the language of [the contract].” 3 Letters dated November 28, December 10, 1995, and January 17, 1996. 4 Letters dated November 13, 1995, February 22, and March 5, 1996. 5 Letters dated November 13, 1995, January 18, and February 22, 1996. 8(a)(1) and (5) of the Act. The General Counsel further contends that deferral to arbitration is inappropriate, not- ing that the Union’s resort to the contractual grievance and arbitration procedure is and has been futile, and that a determination by the Board of the merits of the alleged unfair labor practice is critical to the assessment of the unit employees’ right to engage in a work stoppage or other actions protected by Section 7. The Respondent argues that the Regional Director erred in revoking the deferral of this case and that the Board should dismiss the complaint. The Respondent further argues that the parties’ contract places the burden of initiating arbitration on the aggrieved party and that the Union has consistently failed to submit its grievances to arbitration. Finally, the Respondent admits that it failed to make the required payroll payments but con- tends that it lacked sufficient funds to cover operating expenses and its inability to make all of its payrolls in a timely manner is an unintended and unavoidable breach of the contract. The Charging Party argues that deferral is inappropri- ate because the Respondent has admitted that it did not comply with the contract and therefore interpretation or application of the contract is not in dispute. C. Discussion It is well established that the failure to make timely con- tractually required payments without consent of the Union constitutes a unilateral modification of the terms of the collective-bargaining agreement in violation of Section 8(a)(1) and (5) of the Act. See, R.T. Jones Lumber Co., 313 NLRB 726 (1994), and cases cited therein. In the instant case, Article 13.13 of the parties’ contract requires the Respondent to make wage payments on the 15th and 30th/31st day of each month and the Respondent has ad- mitted that it has not complied with the contract. We find no merit in the Respondent’s assertion that de- ferral to arbitration is appropriate.6 In the instant case, the admitted breach of the contract does not involve a question of contract interpretation or require the special competence of an arbitrator. R.T. Jones Lumber Co., supra at 727. Article 13.13 of the parties’ contract is clear and unambiguous on its face and the Respondent admits that it failed to make the contractually required wage payments. The Respondent does not assert that the contract gives it the right unilaterally to alter the timing and amount of wage payments. No construction of the contract is relevant for evaluating the only reason as- serted by the Respondent for failing to make its payroll, 6 Accordingly, we dismiss the Respondent’s motion to dismiss. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 898 namely the lack of sufficient funds to cover operating expenses.7 We also reject the Respondent’s assertion that this case involves only “an unintended and unavoidable breach” of the contract. It is well settled that the Respondent’s as- sertion that it lacked sufficient funds to cover its operat- ing expenses is not an adequate defense to an allegation that it has unlawfully failed to abide by the provisions of its collective-bargaining agreement. Stevens & Associ- ates Construction Co., 307 NLRB 1403 (1992). Further, the Board has recognized that wage provisions are “per- haps the most important element of the many in the em- ployment relationship which Congress remitted to the mandatory process of collective bargaining under the Act.” Oak Cliff-Golman Baking Co., 207 NLRB 1063, 1064 (1973), enfd. 505 F.2d 1302 (5th Cir. 1974), cert. denied 423 U.S. 826 (1975). Thus, the Board’s jurisdic- tion under the Act clearly encompasses not only the au- thority but the obligation to protect the statutory process of collective bargaining against conduct so disruptive to one of its principal functions—the establishment and maintenance of a viable agreement on wages.8 Here the Respondent admits that it has consistently failed to make timely and full wage payments. For ex- ample, as noted above, during the 6 months preceding the filing of the charge, the Respondent, with few excep- tions, failed to make or was late in making part or all of its bimonthly payroll obligations. The parties also stipu- 7 Although stating that he does not reach the deferral issue, our dis- senting colleague suggests that the contractual grievance and arbitration procedure may adequately redress the Respondent's failure to make timely and full wage payments. However, the Union filed a grievance each time the Respondent failed to make timely payroll and, in many instances, the Respondent negated the grievance by making a late pay- ment. Despite these grievances, the Respondent continued to be chronically late in making full contractual wage payments. Only after repeated failure to gain redress through the grievance and arbitration mechanism did the Union come to the Board. To be sure, the Union's grievances were successful in securing payment of the delinquent pay- roll. The grievances did not, however, end the Respondent's chronic lateness in making contractually required payroll payments. 8 Id. The possibility that other remedies exist as suggested by our dissenting colleague does not displace the Board’s authority to adjudi- cate and remedy an unfair labor practice. Sec. 10(a) of the Act pro- vides that the Board’s authority to prevent unfair labor practices is “not affected by any other means of adjustment or prevention that has been or may be established by agreement, law or otherwise. . . .” The Board is not trespassing on forbidden territory when it inquires whether nego- tiations have produced a bargain which an employer refuses to honor. The proper business of the Board is to remedy conduct, such as that in the instant case, that amounts to the repudiation of an obligation under the collective-bargaining relationship. Our dissenting colleague also suggests that the Respondent might not make a timely wage payment pursuant to our Order. We are unwilling to assume that the Respondent will fail to comply with the Board's Order once it is enforced. Further, we are confident that if the Respondent does not comply, the courts will take appropriate action. lated that, throughout the term of the collective- bargaining agreement and continuing through March 31, 1997, the date the complaint issued, the Respondent was chronically late in making full contractual wage pay- ments. In these circumstances, the Respondent's conduct is more than a de minimis failure to abide by the contrac- tually mandated terms and conditions of employment. Zimmerman Painting & Decorating, 302 NLRB 856 (1991).9 Accordingly, in view of the Respondent's admitted failure to make timely and full payroll payments, we find that the Respondent has violated Section 8(a)(1) and (5) of the Act. CONCLUSION OF LAW By failing and refusing to make timely and full payroll payments, the Respondent has committed unfair labor practices affecting commerce within the meaning of Sec- tion 2(6) and (7) of the Act. THE REMEDY Having found that the Respondent has engaged in cer- tain unfair labor practices, we shall order it to cease and desist and to take certain affirmative action designed to effectuate the policies of the Act. We shall order the Respondent to make the unit employees whole for any losses they may have suffered as a result of the Respon- dent’s unlawful failure to make timely and full payroll payments, with such amounts to be computed in the manner set forth in Ogle Protection Service, 183 NLRB 682 (1970), with interest as computed in New Horizons for the Retarded, 283 NLRB 1173 (1987).10 ORDER The National Labor Relations Board orders that the Respondent, New Mexico Symphony Orchestra, Inc., Albuquerque, New Mexico, its officers, agents, succes- sors, assigns shall 1. Cease and desist from (a) Failing and refusing to bargain with the Union, by failing and refusing to make timely and full payroll pay- ments to unit employees. 9 In finding no violation, our dissenting colleague cites his own prior dissenting opinion in another case, as well as the dissenting opinions of other Board Members in Zimmerman and other cases, thereby effec- tively conceding that his position is contrary to Board precedent. Our dissenting colleague further suggests that the collective-bargaining process can provide adequate redress for the Respondent’s misconduct. However, a similar contention was also rejected in Zimmerman, 302 NLRB at 857, and we likewise reject our colleague’s suggestion here. 10 The parties have stipulated that, as of the date of the stipulation, the Respondent had paid unit employees all back wages due them and that its payroll is current. To the extent the Respondent has made the contractually required wage payments, those amounts shall be deducted from any backpay that may be due. NEW MEXICO SYMPHONY ORCHESTRA 899 (b) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Make timely and full payroll payments as required by the collective-bargaining agreement and make whole unit employees for any losses they may have suffered as a result of the Respondent’s unlawful failure to make timely and full payroll payments, in the manner set forth in the remedy section of this decision. (b) Preserve and, within 14 days of a request, or such additional time as the Regional Director may allow for good cause shown, provide at a reasonable place desig- nated by the Board or its agents, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of payment due under the terms of this Order. (c) Within 14 days after service by the Region, post at its facility in Albuquerque, New Mexico, copies of the attached notice marked “Appendix.”11 Copies of the notice, on forms provided by the Regional Director for Region 28, after being signed by the Respondent's au- thorized representative shall be posted by the Respondent and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent to ensure that the notices are not al- tered, defaced, or covered by any other material. In the event that, during the pendency of these proceedings, the Respondent has gone out of business or closed the facil- ity involved in these proceedings, the Respondent shall duplicate and mail, at its own expense, a copy of the no- tice to all current employees and former employees em- ployed by the Respondent at any time since September 11, 1995. (d) Within 21 days after service by the Region, file with the Regional Director a sworn certification of a responsi- ble official on a form provided by the Region attesting to the steps that the Respondent has taken to comply. MEMBER HURTGEN, dissenting. My colleagues find that the Respondent violated Sec- tion 8(a)(5) and (1) by failing to pay its unit employees in a timely fashion, as required under its collective- 11 If 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 Na- tional Labor Relations Board" shall read "Posted Pursuant to a Judg- ment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board." bargaining agreement with the Union.1 In so doing, they reject the Respondent’s arguments that its failure, on various occasions, to pay its employees on time was an unintended contract breach caused by insufficient funds, and was not a violation of the Act. Alternatively, they reject the Respondent’s argument that such a contract breach should be deferred to the parties’ grievance- arbitration procedure. I disagree with my colleagues. I find that the tardiness of Respondent’s payments was not unlawful under Sec- tion 8(a)(5). The parties stipulated that the tardiness was “occasioned by a lack of sufficient funds to cover operat- ing expenses and for no other reason.” The issue is whether the Respondent has terminated or modified the contract in violation of Section 8(a)(5) and 8(d), as dis- tinguished from committing a contract breach. Clearly, Respondent has not engaged in the former conduct. It has not repudiated the contract or sought to avoid its terms. It simply has been financially unable to pay at various times. At most, this is a breach of contract, not a violation of Sections 8(a)(5) and 8(d) of the Act.2 I disagree with my colleagues’ conclusion that the con- tractual grievance and arbitration procedure has been inadequate to deal with contract breaches. My col- leagues say that Respondent’s subsequent wage pay- ments have “negated” the grievances. In fact, those grievances prompted Respondent to tender the payments or provide written explanations as to when payments would be made. The Union had the option of accepting this as a settlement or pursuing the grievance further. Those grievances—if pursued—would provide the Union with the opportunity to recoup from the Respondent any additional moneys or other applicable remedies or penal- ties provided for under the contract and much more ex- peditiously than any relief the Board will provide. The Union, as the aggrieved party, had the right to pursue these grievances to arbitration. It chose not to do so. In sum, the fact that there is no 8(a)(5) violation here does not mean that there are no ways to redress the prob- lem. There is a grievance-arbitration mechanism; there is Section 301 of the Act to enforce arbitral awards; and there can be collective bargaining to find ways to redress the problem. With particular respect to collective bar- gaining, for example, the Union and the Respondent could agree to a bond that would be the source of prompt payment of wages if the Respondent did not pay in a timely fashion. 1 Although several paychecks were not provided to employees on time, all pay owing to the employees had been tendered at the time that the parties presented this case to the Board on a stipulated record. 2 See my dissenting position in Endicott Forging & Mfg., 328 NLRB 69, 71 (1999). DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 900 The majority implies that I have found the Respon- dent’s failure to make timely wage payments to be “de minimus.” They misconstrue my position. I do not minimize the importance to employees of receiving timely pay. Nor do I seek to diminish the Respondent’s contractual obligation to make those payments. How- ever, the late payments here were unintended and were driven solely by lack of funding. The Respondent has demonstrated its ongoing willingness to work with the Union to redress the problem of late payments. The Re- spondent is willing to apply the contractual grievance- arbitration mechanisms to its breach. In these circum- stances, I find that the dispute is best resolved in that manner rather than through Section 8(a)(5). My colleagues misconstrue my position in another re- spect as well. I am not saying that the Board lacks the power to redress unfair labor practices. Clearly, under Section 10(a) the Board has the power do so. However, as discussed infra, I do not believe that there has been Section 8(d) and 8(a)(5) contract modification. Further, even if there were, the Board has discretion to allow other tribunals to resolve the dispute (e.g., Collyer defer- ral). Finally, I stress that there is no need to turn this dis- pute into a full-blown NLRB case. The Board is a busy agency, with many cases on its plate. I see no need to spend time and money (taxpayer and party money) on a case such as this one. Even if successful, 8(a)(5) litiga- tion will not solve the problem. After extended litigation (ALJD, Board decision, court decree), this case will re- sult only in an order that Respondent make timely pay- ments. Let us assume arguendo that the conduct is re- peated, i.e., Respondent, for financial reasons, is unable to make a timely payment. I suggest that a court would not find it “clear and convincing” that Respondent should be held in contempt. The practice of punishing debtors ended in this country in the 19th Century. Thus, one wonders why all the time and money has been spent on the litigation of the instant case.3 I therefore would dis- miss the complaint.4 3 Contrary to my colleague's assertion, I am not suggesting that the Respondent would disobey a Board order. I simply suggest that even if Respondent is financially unable to comply, contempt sanctions would be unlikely. 4 In an otherwise meritorious case, the Board may defer under Col- lyer. In a case without merit, the Board dismisses. APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we vio- lated the National Labor Relations Act and has ordered us to post and abide by this notice. Section 7 of the Act gives employees these rights. To organize To form, join, or assist any union To bargain collectively through representatives of their own choice To act together for other mutual aid or protection To choose not to engage in any of these protected concerted activities. WE WILL NOT refuse to bargain with Musicians As- sociation of Albuquerque, Local 648, American Federa- tion of Musicians, AFL-CIO, the exclusive collective- bargaining representative of our employees in an appro- priate unit, by failing and refusing to make timely and full payroll payments. The appropriate unit is: All employees employed by the New Mexico Sym- phony Orchestra, Inc. performing work covered by the classifications set forth in Article 2 of the collective- bargaining agreement, but excluding guards and super- visors as defined by the Act. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exercise of the rights guaranteed you by Section 7 of the Act. WE WILL make timely and full payroll payments as required by the collective-bargaining agreement and WE WILL make whole unit employees for any losses they may have suffered as a result of the our failure to make timely and full payroll payments, with interest. NEW MEXICO SYMPHONY ORCHESTRA, INC.