Hawthorn Mellody, Inc.

HAWTHORN MELLODY, INC Hawthorn Mellody, Inc. and Milk, Ice Cream Driv- ers and Dairy Employees, Local Union No., 336, a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of 'America and Automobile Transporters, New Trailer and Armored Car Drivers, Mechanics and Garagemen Union, Local No. 964, a/w International Brotherhood of Teamsters , Chauf- feurs, Warehousemen and Helpers of America. Cases 8-CA-16639-2 and 8-CA-16850 30 April 1985 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS HUNTER AND DENNIS On 18 May 1984 Administrative Law Judge Richard H. Beddow Jr. issued the attached deci- sion. The Respondent filed exceptions and a sup porting brief. - The Board has considered the decision and- the record in light of the exceptions and brief and has, decided to affirm the judge's 'rulings, findings, I and conclusions only to the extent consistent with this Decision and Order.2 The Respondent is engaged in the-processing and distribution of dairy products.' The consolidated 8(a)(5) and (1) charges in this proceeding' were filed by Milk, Ice Cream Drivers and Dairy Em- ployees, Local Union No. 336, which represents the Respondent's drivers and certain other employ- ees at the Respondent's Cleveland, Ohio facility, and by Automobile Transporters, New Trailer and Armored Car Drivers, Mechanics and- Garagemen Union, Local No. 964, which represents the Re- spondent's mechanics at that facility. The judge found that the Respondent violated the Act as charged -by each of the following acts: (1) failing to bargain with Local 336 over its deci- sion to close its Cleveland-based delivery operation and transfer it to Sharpsville, Pennsylvania; (2) fail- ing to bargain with Local 336 over the effects of that decision; (3) bypassing Local 336 and dealing directly with drivers concerning their continued and future employment;, (4) refusing to 'process grievances filed by Locals 336 and 964; and (5) uni- i The Respondent has excepted to some of the judge's credibility find- ings The Board's established policy is not to overrule an administrative law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for reversing the findings We have further considered the Respondent' s contention that the judge has evidenced bias in this proceeding We have carefully considered the decision and record and find these charges unsupported and without ment 2 The Respondent has filed a motion to reopen the record to accept additional testimony The General Counsel opposed, the Respondent's motion The motion is denied 339 laterally changing drivers' wages and other terms --and conditions of employment . As set forth below, ,.while we adopt the judge's finding that the Re- spondent unlawfully changed drivers' wages and other terms and conditions of employment, we do not adopt his other findings.3 Prior to 1983 the,Respondent operated a produc- tion and distribution facility in Cleveland , Ohio. In early October 1982 the Respondent 's major cus- tomer in the area, accounting for 50 to 70 percent -of the Cleveland facility's business , notified the Re- spondent that it was canceling its account . The Re- spondent's initial response, after consulting with Locals 336 and 964, was to lay off several produc- tion employees as well as several drivers. Thereaf- ter, between the end of October 1982 and early January 1983 , the Respondent decided to discontin- ue altogether the production side of its Cleveland operation and transfer it to another facility located approximately 90 miles away in Sharpsville, Penn- sylvania.4 No decision was made at this time whether to discontinue the delivery operation at the Cleveland facility. - On 17 January 1983, the Respondent's general manager Robert Riley' notified Local 336 by letter that the Respondent did not wish to continue its current labor agreement with Local 336 beyond' its 31 March 1983 expiration date . The letter further stated that if in the future it desired to negotiate an agreement with Local 336 it would be on an indi- vidual rather than the present multiemployer basis. In a letter to Riley dated 20 January , Local 336's president Francis Murtaugh responded that Local 336 was still the bargaining agent for the drivers and would continue to be the bargaining agent for any drivers employed after the contract's expira- tion . If Riley had any questions, Murtaugh stated, he could contact him. Riley contacted Murtaugh on 22 January and ar- ranged to meet with him that day . At the meeting Riley -indicated to Murtaugh that the Respondent was concerned about a recent situation where, by invoking a contractual no clause, Local 336 had successfully kept another company from continuing to deliver products into the Cleve- land area after it had closed its base delivery oper- ations there. Riley asked Murtaugh what Local 336's position would be if the Respondent decided to close its, Cleveland-based delivery operation. 3 The consolidated complaint also alleges that the Respondent unlaw- fully failed to bargain with Local 964 over its decision to close its Cleve- land-based delivery operation and the effects of that decision The judge neglected to address this allegation and neither the General Counsel nor Local 964 filed exceptions However, for the reasons set forth infra, we find this allegation without ment 4 No allegation is made that the Respondent unlawfully failed to bar- gain over this decision or its effects , - 275 NLRB No. 55 340 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Murtaugh replied that while. he could not stop them -from doing so, because their contract did not have a no-subcontracting clause, if they were going out of business in the, Cleveland area they had better go out of it completely. On 24 January Murtaugh sent the Respondent the required notice of Local 336's intent to seek a new contract on the contract's expiration. In ac- cordance with its earlier decision, the same day the Respondent _ ceased its production operation in Cleveland, transferring it-to the' Sharpsville, Penn- sylvania facility. - Approximately 1 week later, on ' 2 February, the Respondent called-, a meeting with its remaining drivers at-the Cleveland facility. At the meeting the drivers. were introduced for the .first time to the Respondent's vice president Thomas Bohlender .who had recently assumed General Manager' Riley's responsibilities at the Cleveland facility. Bohlender explained to the drivers how bad the economic conditions were as a result-of their lost business. He told them it was necessary that they help the Company turn-the operation around. He then asked the drivers how things 'were going. They replied that things were not going very good. One of the drivers specifically complained that the drivers had to work too much overtime. Bohlender responded that he agreed that overtime would have to stop because • it was too costly. s Finally, one of the -drivers asked Bohlender whether the rumor was true that- the Cleveland facility- was -going to-be closed at the end of March., Bohlender denied the rumor; stating that he wanted'to stay in the Cleveland area, but that he would let them know one way or another after an'upcoming meet- ing of the Company's principal stockholders. Thereafter, . the Respondent decided that it would close its base delivery operation in Cleve- land at the end of March. Pursuant to that deci- sion, on 18 February it entered into an agency agreement for the sale of all its Cleveland property, including the plant and the garage. In early March it began, laying off the remaining drivers. During this period Murtaugh -attempted several times without success to ' get a ' commitment from the Respondent to begin. negotiations for 'a new contract. On 7 March Murtaugh called the. Re- spondent's sales manager Roger Rickon to repeat this request. Rickon refused, ,telling Murtaugh -that the plant operations had ceased and that any future 5 The uncontroverted testimony of driver Castenzio Distefano, one of 'the General Counsel's own witnesses , establishes that the matter of excess overtime was raised by one of the drivers and not by Bohlender deliveries into the-Cleveland area would be made from outside Local 336's jurisdiction.6 Three days later, on 10 March, the Respondent posted a notice at the plant advising all drivers that if'they were interested in a position at the Sharps- ville facility they should contact Bob Chovan, the general distribution manager in Sharpsville. Several drivers subsequently applied and six were eventual- ly hired. Shortly thereafter, near the end of March and the expiration of the contract, the Respondent began a "slip-seating" operation into the Cleveland area using the six newly rehired drivers. Under this operation =Sharpsville drivers would drive fully loaded trucks from the Sharpsville facility and drop them at a truckstop located Just outside of Cleveland in Richfield, Ohio-a point within Local 336's geographical jurisdiction. From there the six rehired drivers would pick up their fully loaded trucks, make their deliveries, returning their trucks to the truckstop when completed. On 28 March, on learning that drivers were still originating their deliveries from within its jurisdic- tion, Local 336 again notified the Respondent by letter that it continued to represent those drivers and desired to negotiate a new contract on their behalf. The Respondent did not reply. During this time, between 23 March - and 8 April, both Local 336 and Local 964 also filed a total of three griev- ances against the Respondent. The grievances al- leged various violations of the seniority and other provisions of the contract resulting from the March layoffs. The Respondent did not respond to any of the grievances and neither Local sought arbitra- tion. Applying the Board's decision in Otis Elevator Co.,7 . the judge found that the Respondent had a duty to bargain with Local 336 over its decision to close its Cleveland-based delivery operation. For the reasons set forth below we reverse. In Otis Elevator the Board held that management decisions which affect the basic direction or nature of the business are excluded from the • mandatory bargaining obligation.of Section 8(d). The Board stated that the critical factor was "the -essence of the decision itself, i.e., whether it turns upon a change in the nature or direction of the business, or turns upon • labor costs; not its effect on employees or' a' union's-ability to offer alternatives."8 6 Although Murtaugh originally testified that Rickon said that deliv- eries would no longer "be taking place in" -the Cleveland area, Mur- taugh's subsequent testimony indicates that the' overall substance of Rick- on's remarks as understood by Murtaugh was that any future deliveries into the Cleveland area would be made from outside Local 336's geo- graphical jurisdiction ° 269 NLRB 891 (1984) 8 Id at 892 HAWTHORN MELLODY, INC. :In the instant case the judge found that the Re- spondent did not intend at the time of its decision to close its delivery, operation to transfer it to Sharpsville. Rather, the judge found- that it was the Respondent's intention from the outset to "slip- seat" future deliveries out of the nearby Richfield truckstop with only the possibility of an ultimate transfer to Sharpsville. Thus, the judge found, no fundamental change in the Respondent's operation was ever intended or occurred. Furthermore, citing Bohlender's comment about overtime at the 2 Feb- ruary meeting, the judge found that labor, costs were "a motivating factor" in the Respondent's de- cision. Accordingly, the judge concluded that under Otis Elevator the Respondent had a duty to bargain with Local 336 over'that decision. We disagree. We find, based' on the record evi- dence, that the Respondent did intend from the outset to permanently, transfer the delivery oper- ation to Sharpsville. First, the Respondent's 10 March notice advertised in effect that any future jobs would be at the Sharpsville facility. Second, it is uncontroverted, and supported by the testimony of the General Counsel's own witnesses, that the Respondent told all of. the drivers who applied for those jobs that they would have to relocate to Sharpsville. Third, the-six drivers who were even- tually rehired for those jobs were immediately placed under the terms and conditions of employ- ment prevailing under the Sharpsville. collective- bargaining agreement.9 Finally,_ shortly thereafter all six of the rehired drivers applied,' to transfer their membership - to the Teamsters Local in Sharpsville.10 Although the Respondent in late March admit- tedly began "slip-seating" deliveries from the nearby Richfield trucksstop rather than making the deliveries from Sharpsville, the Respondent .pre- sented uncontroverted testimony that it did so only as a temporary measure to accommodate the 're- hired drivers until they were financially able 'to re- locate. By the date of the hearing two of the six drivers had in fact relocated to Sharpsville and the General Counsel presented no evidence to suggest that the other four would not follow them.1' 9 The employees at the Respondent's Sharpsville facility are represent- ed by Teamsters Local •261 As found by the j udge, Local 261's collec- tive-bargaining agreement contained different terms and conditions of employment from Local 336's collective -bargaining agreement with the Respondent 10 Local 336 subsequently denied their applications pending the out- come of this unfair labor :practice proceeding . , 11 While driver Morzenski (who was not rehired) testified that Rickon told him that the Richfield location would be only temporary because the Respondent would soon be-running the trucks back out of double 5 [the Cleveland facility]," he also testified that when he called the Sharpsville facility about a job he was told he would have to relocate to Sharpsville In any event, the Respondent had by then placed the entire "double 5" property up for sale 341 Having determined precisely, what the Respond- ent's decision was, the question is whether that de- cision "turn[ed] upon a change in the•nature'or di- rection- of the business, or turn[ed] upon -labor costs."12 We find that it turned upon the former: It is undisputed that the Respondent had recently lost 50 to 70 percent of its business .and that this was the-principal reason it decided to transfer its pro- duction, operation to Sharpsville. Again, the Gener- al Counsel failed to present any evidence that this was not also the principal' reason the Respondent decided to likewise transfer its delivery operation. Although the judge found that labor costs were "a motivating, factor" in that decision, unlike the judge we do not find this dispositive-of the Re- spondent's duty to bargain with -the Union. The Board held in Otis Elevator that the decision must "turn 'upon"- labor costs-that it must be more than merely "one of the, circumstances which stimulated the evaluation process"-for a - bargaining obliga- tion to attach.13 Accordingly, contrary to the judge,' we conclude that the Respondent had no duty to bargain with Local 336 over its decision to close its Cleveland-based delivery operation and transfer it to Sharpsville. 14 -The judge also found that the Respondent un- lawfullyfailed to bargain with Local 336 over the effects of that decision. The judge rejected the Re- spondent's contention That whatever right Local 336 had to bargain over effects was waived by its failure to request bargaining, finding that Local 336 never received adequate notice of the Respondent's intentions. We disagree. While the Respondent may not have given formal notice- to Local 336, it is clear ' from the record that Local 336 had substantial information from which it must inevitably have been aware of the Respondent's intentions. Thus, Murtaugh testi- fied that Local 336 knew of the Respondent's loss of the majority of its business in late 1982, the inl- tial layoffs in the production and delivery- oper- ations, and the eventual decision to close the pro- duction operation altogether.. On 17 January- 1983 Murtaugh was notified by letter that the Respond- ent did not wish to continue its present labor agreement with Local 336-beyond its 31 March ex- 12 Otis ' Elevator,' supra ' We 'note that the General Counsel does not allege any union animus on the part of the Respondent The judge, in fact, found 'that the Respondent and Local 336 "had enjoyed a long histo- ry of harmonious labor relations " 13 269 NLRB 891, 892 (1984) See also Columbia City Freight Lines, 271 NLRB 12 (1984), 14 For the same reasons, we also find that the Respondent had no duty to bargain with Local 964 over its decision to close its . Cleveland-based delivery operation and transfer it to Sharpsville 342 DECISIONS OF NATIONAL LABOR RELATIONS BOARD piration date.15 Two 'days later Murtaugh was asked -what Local 336's position would be should the Respondent decide to close its Cleveland-based delivery operation. On 7 'March, Murtaugh was told by General Manager Riley that the Respond- ent would not. be making any future deliveries from within Local -336's jurisdiction.'6 Finally, Mur- taugh admitted that he also knew of the Respond- ent's subsequent 10 March notice to the remaining drivers informing them of their right to apply for a job at the Sharpsville facility. Clearly, under these circumstances Local - 336 cannot . claim that it lacked knowledge of the Respondent's intentions.'' Accordingly, it being, undisputed that Local 336 never requested bargaining' over effects, contrary to the judge we find that the Respondent did not unlawfully- refuse to do so.' 8 The judge also found that the Respondent en- -gaged in unlawful direct dealings. with the drivers when it met and discussed overtime .with them on 2 February and when it rehired the six drivers in late March, without in either case notifying Local 336. We also reverse this finding. As described by drivers Distefano and Mancini, both of whom were the General Counsel's wit- nesses, the. 2 February meeting was nothing more than a "get together" for the purpose of getting ac- quainted with Bohlender, the Respondent's new general manager; and to find out "what was going on" as a result of the Respondent's loss of business. To the extent overtime was discussed at this meet- ing; it was only after an employee complained 15 While the judge interpreted the Respondent's 17 January letter as merely indicating that all future bargaining would be on an individual rather than the usual multiemployer basis, Local 336 obviously did not share the judge's interpretation when it received the letter President Muitaugh's response to the Respondent's-letter clearly indicates that he interpreted it as meaning that no further bargaining would take place with Local 336 after the existing contract's expiration is While this turned out to be technically mcorrect'msofar as the Re- spondent's temporary, Richfield-based slip-seating operation was within Local 336's geographical jurisdiction, this does not detract from the fact that Local 336 was told of the Respondent's intention not to do so,'yet never thereafter requested bargaining ' ' .. 17 See International Offset Corp, 210 NLRB 854 (1974) Unlike in NLRB Y Royal Plating & Polishing Co., 350 F 2d 191 (3d Cir 1965), cited by our dissenting colleague, there is no evidence here that the Respond- ent:deliberately withheld knowledge of its decision to close the Cleve- land facility to deter Local 336 from bargaining over effects Although the judge specifically found otherwise, this finding was based on his earli- er erroneous finding that the Respondent never planned to transfer the delivery operation to Sharpsville Further, the Respondent does not rely merely on "plant gossip, conjecture and rumors" to establish Local 336's knowledge As outlined above, the Respondent had several direct discus- sions with Local 336's president in which it first suggested and later un- equivocally stated that it would no longer be making deliveries from within Local 336's jurisdiction is We also find that the Respondent, did not unlawfully refuse to bar- gain with Local 964 over the effects of its decision - The General Counsel did not present any evidence or elicit any testimony concerning this alle- gation No officer or member of Local 964 testified Furthermore, as noted, no exceptions were filed to the judge's failure to ' address this alle- gation - about it. 19 Further, contrary to the judge's finding there is no evidence that by -voicing his agreement with the employee Bohlender thereby "foreclosed the' Union from bargaining concerning this issue.' As for the rehiring of the six drivers, nothing in the record indicates that the Respondent's 10 March notice was in any way inconsistent with the contract. Indeed, such notice would seem to be re- quired insofar as article III of the contract gives the drivers the right (subject to seniority preference) to transfer to any location outside of Local 336's juris- diction into which their work might be trans- ferred.20 Nor is there any evidence that the Re- spondent's actual hiring of the six drivers violated the contract.' Although, as found by the judge, the rehired drivers had not been the six most senior drivers at the 'Cleveland facility, the General Coun- sel failed to show that any more-senior drivers de- sired the Sharpsville jobs.21 The judge also found that the Respondent un- lawfully refused to process grievances filed by Locals 336 and 964 over conduct which occurred before the contract's 31 March expiration date. The judge. based his ` finding on the fact that the, Re- spondent ' never answered the grievances, rejecting the Respondent's contention that the Locals forfeit- ed their unfair labor practice charge by failing 'to exhaust the negotiated grievance procedure. The judge found that exhaustion would have been "a probable futile act" because the 'Respondent had "repudiated the entire collective bargaining proc- ess" by refusing to bargain over its decision to transfer the delivery operation and its effects. We reverse. - -There is no evidence in the record that the Re- spondent's failure to answer the grievances was either contrary to the contractual grievance proce- dure or. otherwise unusual. Indeed, the evidence in- dicates just the' opposite. Thus, Local 964's letter accompanying its 'grievance states that: "In the event we do not hear from you, we will process 's There is no allegation that the Respondent unlawfully solicited the employee's complaint 20 While, as found by the judge , this notice would not have been read- ily accessible to those drivers already on layoff, the General Counsel pre- sented no evidence that the Respondent did not notify them in some other manner of their right to transfer to Sharpsville On the contrary, Marzenski, the only such driver called by the General Counsel, testified that Rickon phoned him to notify him about the availability of jobs in Sharpsville - ' 21 Although Bohlender testified on cross-examination that he did not specifically consider seniority when selecting the six drivers for rehire at the Sharpsville facility, this is not by itself sufficient to affirmatively es- tablish that the contract's seniority provisions were violated Thus, even if true that the Respondent "unilaterally" decided who would transfer, as our dissenting colleague characterizes it,'insofar as the General Counsel failed to show that the Respondent's decision was contiary to the previ- ously bargained-for provisions in art III of the contract governing such decisions, we find that the Respondent did not thereby violate Sec 8(a)(5) of the Act HAWTHORN MELLODY, INC. this grievance -, through the Ohio Joint Council Grievance Committee.." The cover letter to one-of Local 336's two grievances similarly states that: "If a satisfactory agreement between the Union and the Company cannot be reached let this letter serve as notice to proceed to the Joint Market Grievance Committee to settle the problem." Neither Union ever did so. Moreover, we have found that the Re- spondent was not obligated to bargain over its de- cision to transfer the delivery operation or its ef- fects. The Respondent's failure to do so, therefore, cannot be characterized as a.repudiation of the col- lective-bargaining process.22 We, however, adopt the judge's remaining find- ing that the Respondent violated Section 8(a)(5) and (1) of the Act when it changed the six rehired drivers' terms and conditions of employment,, to those prevailing at the Sharpsville facility without first bargaining with Local 336. It is well estab- lished that an incumbent union enjoys a presump- tion of continued majority status obligating an em- ployer to bargain with it' 23 In order to rebut this presumption the employer must show either: (1) lack of majority status, or (2) a good-faith doubt of majority status.24 The Respondent has shown nei- ther. As discussed above, although the Respondent in- tended to transfer its delivery operation to Sharps- ville, due to difficulties in relocating it did not' im- mediately do so. Instead, it began "slip-seating" the deliveries from the Richfield truckstop. From-the time Local 336 requested bargaining, for -a new contract in late March to the date of the hearing, the only move the Respondent actually consum- mated was. from the closed Cleveland facility to the Richfield location. The six rehired drivers 'con- tinued from that location to perform essentially the- identical work that they had done from the. Cleve- land facility, i.e., delivering milk products into the Cleveland area. Further, the Respondent did. not allege or offer any evidence that any of these driv- ers no longer desired to be represented by Local 336.25 Under these circumstances, we find that 'the Respondent had a continuing duty to-bargain .with Local 336 as long as these, drivers remained in Richfield, and therefore unlawfully changed their 22 Nor do we find that the Respondent's failure to'bargain with Local 336 over the six rehired drivers' terms 'and conditions of employment upon the expiration of the old contract , discussed infra, constituted such a repudiation At most it indicated that the Respondent would not meet to negotiate a new contract, not that it was unwilling to fulfill its obliga- ' . tions under the old 'contract 23 Ramada Inns, 171, NLRB 1060 (1968) ' 24 Terrell Machine Co, 173 NLRB 1480, (1969), enfd 427 F.2d 1088 (4th Cir. 1970) 25 While all six drivers applied to transfer to the Sharpsville Teamsters local, they- apparently did so only on the assumption that they would soon be relocating to the Sharpsville facility 343 terms and conditions of employment without doing so.26 AMENDED CONCLUSIONS OF LAW Delete Conclusions of Law ' 3, 4, and 5 and re- number the subsequent paragraph. ORDER The National Labor Relations -Board orders that the Respondent, Hawthorn Mellody, Inc., Cleve- land, Ohio, its 'officers, agents, successors, and as- signs, shall - - 1. Cease and desist from (a) Refusing to bargain with Milk, Ice Cream Drivers and Dairy Employees; Local Union No. 336, a/w International Brotherhood- of Teamsters, Chauffeurs, Warehousemen and Helpers of Amer- ica as the exclusive representative of the employees in the following appropriate unit: 'All drivers employed by Respondent at its Richfield, Ohio location, excluding all' other employees and all supervisors as defined by the Act. - - (b) Unilaterally changing terms and conditions of employment of employees in the above-described unit without-notice to or consultation with Local 336. (c) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action designed to effectuate the policies of the Act. (a) On request, bargain with Local'336 as the ex- clusive representative of the employees in ' the above-described unit and, if an understanding is reached, embody-the understanding in a signed agreement.- (b) , Make whole employees in the- above-de- scribed unit for any, loss of benefits which would have accrued to them but for the' unilateral changes made in their terms and conditions of employment, in the manner provided in the section of the admin- istrative law judge's decision entitled "Remedy.". (c) Preserve, and, on 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 26 See 'Repubhc Engraving & Design Co, 236 NLRB 1150 (1978). We therefore find the instant case distinguishable from NLRB Y Massachu- setts Machine & Stamping, 578 F.2d 15 (4th Cir 1978), denied enf 231 NLRB 801 (1977), in which the interstate relocation of operations was consummated ' 344 DECISIONS OF NATIONAL LABOR RELATIONS BOARD amount of backpay due under the terms of this Order. (d) Mail to all employees who are or have been in the above-described unit' since March 1983, and post at its Sharpsville, Pennsylvania facility copies of the attached notice' marked "Appendix."27 Copies of the notice, on forms provided by the Re- gional Director for Region' 8, after being signed by the Respondent's authorized representative, shall be posted by the Respondent, immediately upon re- ceipt and maintained for 60 consecutive days in conspicuous places including all places where no- tices to employees are customarily posted. Reason- able steps shall be taken by the Respondent _to ensure that the notices are not altered, defaced, or covered by any other material.. (e) Notify- the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. - IT IS FURTHER ORDERED that the complaint alle- gations not specifically found are dismissed. MEMBER DENNIS, concurring in part and dissent- ing in part. I concur with my colleagues' findings that the Respondent had no obligation to bargain about the decision to transfer the Cleveland-based delivery operation to Sharpsville, l did not fail to process grievances, and unlawfully changed terms and con- ditions of employment without bargaining. Con- trary to my colleagues, however, I would find that the Respondent failed to bargain about the effects of the transfer decision. As late as February 1983 the Respondent told employees it -hoped not to have to transfer the de- livery operation. After 18 February, when it made the decision-to transfer in March, the Respondent did not inform the Union of the decision. In March the Respondent began laying off employees, posted a notice advising employees whom to contact if they desired to transfer to Sharpsville, personally contacted some laid-off employees and rehired them: Local 3362 repeatedly requested- bargaining 27 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 Judgment of the United States Court of Appeals Enforcing an Order of the Nation- al Labor Relations Board " i See my separate opinion in Otis Elevator Co, 269 NLRB 891 (1984). The underlying reason prompting the-decision to transfer the delivery operation-the loss of a customer who provided 50 to 70 percent of the Cleveland business-was wholly , outside the Union's control Even as- suming_labor costs were a consideration , that factor was not a significant consideration in the decision Thus, the Union was in no "position to lend assistance or offer concessions that reasonably could affect . the em- ployer's decision " Otis Elevator, supra, 269 NLRB 891, 897 (1984) 2 I make no findings regarding Local 964, as no party filed exceptions involving that Union for a new 'contract. At one point the Respondent advised the Union that all future deliveries would be made from outside its geographical jurisdiction. When it became apparent that this statement was incorrect and the Union again requested- bargain- ing, the Respondent simply refused to reply. An employer has a duty to bargain about the ef- fects of a transfer decision "in a meaningful manner and at a meaningful time." First National Mainte- nance Corp. v.,NLRB, 452 U.S. 666, 682 (1981). An element of "meaningful" bargaining is "timely notice to 'the union of the decision . . . so that good faith bargaining does not become futile or im- possible." Penntech Papers v. NLRB, 706 F.2d 18, 26 (1st Cir. 1983). Here, although the Union may have received hints of a possible transfer, "plant gossip, conjec- ture and rumors cannot take the place of formal notice when notice is required." NLRB v. Royal Plating & Polishing Co., 350 F.2d 191, 195 (3d Cir. 1965). Further, what notice the Union did receive was misleading, incorrect, or lacked detail. I cannot find on this record when the Respondent made the decision 18 February to transfer the de- livery operation in-March, but admittedly never di- rectly notified the Union of the decision, that the conflicting, . vague, and incorrect information the Union received constituted legally sufficient notice.3 Absent timely notice, the Union had no obligation to request effects bargaining. Conse- quently, I would find that the Respondent violated Section 8(a)(5) by failing to notify the Union of the transfer decision in a timely manner and provide it with an, opportunity -to bargain over the effects of the. transfer decision. - - I would also find that the Respondent unlawfully dealt directly with unit employees, thereby bypass- ing the employees' designated collective-bargaining agent. The record shows that after making the transfer decision, the Respondent contacted several laid-off employees and rehired them. Transfer rights are critically important to employees affect- ed by an employer's decision to transfer operations. When an employer unilaterally decides who will transfer, it precludes meaningful bargaining about the treatment of affected employees. See Soule Glass & Glazing Co. v. NLRB, 652 F.2d 1055, 1085 & fn. 19 (1st Cir. 1981). By dealing directly with employees about who would transfer, and thereby bypassing the Union and failing to bargain about 3 I disagree with my colleagues' implied finding that the Respondent provided adequate notice because there is no evidence the Respondent deliberately withheld information about its decision The Union had a right to timely notice, the Respondent's actions, whether deliberately de- ceptive or not, failed to meet minimal notice standards HAWTHORN MELLODY, INC the effects of the decision to transfer operations, the Respondent violated Section 8(a)(5).4 4 The contract provision my colleagues cite is irrelevant The question is not whether the Respondent violated the contract , but whether the Re- spondent failed to bargain about the effects of its decision to relocate and unilaterally selected individuals to transfer Surely my colleagues are not suggesting that the contract provision was intended to sanction 'direct dealing 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 violated the National Labor Relations Act and has ordered us to post, and abide by this notice. WE WILL NOT refuse to bargain with Milk, Ice Cream Drivers and Dairy Employees, Local Union No. 336, a/w International Brotherhood of Team- sters, Chauffeurs, Warehousemen and Helpers of America, as the exclusive representative of the em- ployees in the following appropriate unit: All drivers employed by Hawthorn Mellody, Inc. at its Richfield, Ohio location, excluding all other employees and all supervisors as de- fined by the Act. WE WILL NOT unilaterally change -the terms and conditions of employment of the employees in the above-described unit without notice to or consulta- tion with Local 336: - ' WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7- of the Act." - WE WILL, on request, bargain with Local 336 and' put in writing and' sign any agreement reached - on terms and conditions, 'of employment -for our employees in the above-described unit. WE WILL make whole employees, with interest, in the above-described unit ,for any loss of benefits which would have accrued to them but for the.uni- lateral changes made in their terms and conditions of employment. = HAWTHORN MELLODY, INC. - DECISION STATEMENT OF THE CASE RICHARD H. BEDDOW JR.-, Administrative Law Judge. This matter was heard in Cleveland, Ohio, on November- 14 and 15, 1983. Subsequently, briefs were filed by Re- spondent and the General Counsel. • - - 345 The proceedings are based on charges, subsequently amended, filed. May 13, 1983, -and June 23, 1983, by Milk,' Ice Cream Drivers and Dairy Employees, Local Union No. 336 and Automobile Transporters, New Trail- er and Armored Car Drivers, Mechanics and Garagemen Union, Local No. 964, both affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousmen and Helpers of America. -The Regional Director issued- a consolidated complaint on August 3, 1983, alleging that- Respondent Hawthorn Mellody, Inc., a Delaware corpo-, ration, violated Section 8(a)(1) and (5) of the Act by by- passing the employees' designated collective-bargaining representative and dealing directly with employees re- garding their continued employment and future employ- ment; by closing its Cleveland facility and moving part of its delivery operation to Richfield, Ohio, without note-- fication to the Union and bargaining over the decision and effects; by refusing to process grievances filed by the Unions over matters arising out of the collective-bargain- ing- relationship; and by unilaterally altering the wages, hours, and working conditions of employees working at. its Richfield, Ohio location. , On a review of the entire record in these cases and from my observation of the witnesses and their demean- or, I make- the following FINDINGS OF FACT I. JURISDICTION Respondent-' owned and operated a dairy located on East 55th Street in Cleveland, known as its Cleveland Division, which was engaged until March 1983 in the - processing and distribution of dairy products. It admits that during the critical period it purchased and received products, goods, and materials valued in excess of $50,000 annually from points outside Ohio and, accord- ingly, it is concluded that Respondent is an employer en- gaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. Respondent admits that the Teamsters International Union is a labor organization within the meaning of Section 12(5) of the Act and I fur- ther find- that it is shown that Local 336 and Local 964 are affiliated with that International Union. II. THE ALLEGED UNFAIR LABOR PRACTICES Respondent operates several divisions engaged in proc- essing and distributing dairy products throughout a number of States, including its Brookfield Dairy Division which has a plant in Sharpsville,,Pennsylvania. As noted it also operated a plant in Cleveland until 1983. The latter facility had a long history of generally harmonious labor relations with the Unions and a series of successive collective-bargaining agreements with Local 336, the most recent of which was effective from March 31, 1980, through March 31, 1983. i The employees of Respondent represented by Teamsters Local 336 have historically been divided into three bargaining units: the production employees; the truck drivers; and the -ice cream employ- ees. At times the separate units were covered by one col- i All dates are ,in 1983, unless otherwise indicated 346 DECISIONS OF NATIONAL LABOR RELATIONS BOARD lective-bargaining agreement with separate provisions for each unit; however, sometimes the separate units -bar- gained for individual contracts and these were embodied in separate documents. In any event, there were always separate pay scales, separate seniority, and other different terms and conditions of employment for the separate bar- gaining units. Under the contract for the Cleveland plant which expired on March 31, employees had a right to apply for positions if work was transferred out of the ju- risdiction. Local 964 has historically- represented -Respondent's mechanics, and it and Respondent have been parties to- successive collective-bargaining agreements, the most recent of which was effectively May 14, 1980, through - May 13, 1983. During October 1982, Respondent lost one of its major customers, a supermarket chain in northern Ohio, which accounted for approximately 50 to 70 percent of Re- spondent's business. Due to this unprecedented loss, Re- spondent changed, its method of operations in the north- ern Ohio area. Robert Riley, the plant's general manager, notified the Union of the problem and between October 1982 and January 1983 production employees, as well as seven drivers, were laid off in accordance with seniority provisions as Respondent streamlined its operations. During this period of time a decision was made to move the plant's production to Respondent's Brookfield facilities-in Sharpsville. Also; about January 17, Local 336 received a' letter from Respondent informing Local 336 that Respondent did not wish to continue its labor agreement with the Union After March 31, and that if, in. the -future Respondent desired to bargain with Teamsters Local 336, it would be on an individual, rather' than mul- tiemployer basis. Francis D. Murtaugh, president and business agent of the Union, responded to this letter on January 20,-stating- that Local 336 intended to represent whatever, employees were left in the area after March 31. A meeting was held 2 days later between representatives of Respondent and Local-336, wherein Respondent solic- ited the Union's position on the possible closing down of its Cleveland operation. Murtaugh indicated that he could not stop them from ' going out of the production business, but that if Respondent was going to go out of the delivery business, "they had better-go out of it com- pletely," because there was no subcontracting clause in the contract. Meanwhile, in mid-January; Respondent signed a commitment for the sale of the plant's equip- ment '(it subsequently was auctioned off on March 24). On January, 24, 1983, Murtaugh sent Respondent' the re- quired 60-day notice prior to the expiration of .the collec- tive-bargaining agreement requesting bargaining, for a new contract. Additional oral requests were made by Murtaugh; however, Respondent did • not agree to bar- gain. . During this period, ^ Respondent made - substantial changes in its, method of -operation and, about January 24, it ceased Cleveland production operations,altogether and began trucking milk and other dairy,products to its facility at East 55th Street from Sharpsville. The prod- ucts initially were transferred through the plant to local delivery trucks and delivered by bargaining unit employ- ees to Respondent's customers in the Cleveland area., At this time, General Manager Riley was relieved of his duties and Thomas Bohlender, a corporate vice president located in Sharpsville, assumed responsibilities for the re- maining Cleveland operation. Bohlender was ultimately responsible for any 'employees who were hired and fired; however, Sales Manager Rickon remained in Cleveland and supervised the sales and distribution operations and in this role he possessed the authority to discipline and -lay off remaining employees.' Respondent experienced problems with its revised de- livery and scheduling methods in Cleveland and thereaf- ter called a meeting of employees on February 2, at a restaurant near the East 55th Street facility. Bohlender was introduced to' the seven remaining drivers and Boh- lender and Rickon explained that economic' conditions were very bad and asked the employees' help in order to turn around the operations. Bohlender explained that Re- spondent's problems were due in part to excessive, and costly, driver overtime. At the close of this meeting, Re- spondent assured the employees that it would not lock up the Cleveland operation at' the end of March and that Respondent would notify the employees before any action was taken. Local 336 was not advised of this. meeting and no union official was present. _ On February 18, Respondent entered into an" agency agreement to sell both the plant and garage facilities at 55th Street (the garage subsequently was sold on Octo- ber 1 and thereafter arrangements were made to lease the plant). ' - The Cleveland operations continued to be unprofitable and, , in early March, Respondent decided to close its East 55th Street operation totally and to serve its remain- ing Cleveland area customers by transferring over-the- road loads from Sharpsville to local delivery drivers at a conveniently located truck stop at Richfield, Ohio (at a point physically within the geographical jurisdiction of Local 336). Respondent laid off the remaining bargaining unit drivers throughout the month of March. It also posted a notice to employees informing. them. that any driver wishing to seek employment with its Brookfield Dairy Division could contact General Distribution Man- ager Bob Chovan at Sharpsville for an application. Re- spondent did not discuss this change in operations or the. reemployment 'opportunity with Local 336. About March 3, however, Respondent notified Local 964 that it did 'not desire to renew'its collective-bargaining agree- ment. Local 964 replied with a request for a meeting, however, no response was made by Respondent. During this period Local' 336 Representative Murtaugh received no specific notification' concerning Respondent's plans for the Cleveland area until sometime around March' 7, when Roger Rickon, Respondent's sales manager, ad- wised Murtaugh that the plant operation had ceased, and that deliveries would no longer be' taking place in the Cleveland area. 'During March, Respondent hired six former bargain- ing unit - drivers to deliver routes serving its remaining customers in the Cleveland area.. These' employees (Joseph Kovalsky, Jefferey Barton, Alan Blasczak, Ronald Duvall, William Wheeler,; and David. Bucknot) HAWTHORN MELLODY, INC. were not the six most senior drivers who had worked at Respondent's Cleveland facility. Respondent states that the six employees selected were hired from among a small number of employees who ap- plied pursuant to its notice. Bohlender, who personally interviewed driver Wheeler in early March, testified that he did not take into consideration the contractual provi- sion . regarding a guaranteed opportunity for Local 336 drivers to apply for employment at other Hawthorn Mel- lody divisions. Wheeler was told he would be required to move to the Sharpsville area. Driver Blasczak, whose wife worked in Respondent's Cleveland office, had been laid off on January 15. On March 1, prior to the posting of the notice, he went to Brookfield Dairy on his own, was interviewed, and received an application. He was told by Chovan he would have to relocate (he and driver Bucknot subsequently did so). Initially he re- mained in Cleveland. and started on March 14, by meet- ing a Brookfield driver, first at a'Ohio turnpike location, then at 55th Street, and then at the Richfield truck stop (until he moved to Sharpsville on June 4). ' - Tom Mancini, the Union's most senior driver, testified that, sometime during the week of March 21, he asked Rickon whether Respondent had found another new yard to operate from, as rumors in the garage had indi- cated. Rickon answered "no." He then told Mancini that he was getting too old for the work and that, with the new operation, Rickon would be in charge and anyone not going along with his policies would be dismissed and he would not have to answer to anyone. Mancini was laid off on March 31. Driver Henry Marzenski, who was laid off in October 1982, testified that he was contacted in January or Feb- ruary by Rickon and told that something might be hap- pening at the dairy in March. He was asked if he would be interested in a job and then was instructed by Rickon to call the Brookfield Dairy and discuss the job with a named individual. Marzenski called Brookfield Dairy, had an oral interview, and 'was advised -that Rickon would get back to him. Rickon phoned Marzenski, said something would happen toward the end of March, and told Marzenski, that Brookfield only wanted the people Rickon wanted. Shortly thereafter one of Respondent's sale representatives came to Marzinski 's home and went over plans for-the operation of a particular route. Rickon then called Marzenski and instructed him to meet a Brookfield driver at a location away from the Cleveland dairy and to try the route. After doing so, he was in- structed to come to work on the next day; however, he felt something was not proper about picking up his truck away from the dairy and he told Rickon he was turning the job down. Rickon assured him that the location would only be temporary and that soon the Respondent would be "running the trucks back out of double 5," re- ferring.to the East 55th Street garage and dairy location. Near- the end of March, Respondent began renting space at the Hy-Miler Truck Stop located on State Route 21 in Richfield, where Marzenski had picked up his load, and Respondent began. trucking the milk from the Brookfield Dairy to Richfield using Brookfield driv- ers and having the six above-noted rehired Cleveland area drivers pick up full trucks in Richfield, deliver their 347 routes and return empty vehicles to Richfield, a practice known in the industry as slip-seating. The Union was not told of Respondent's new .system; however, on March 21, several former drivers told Mur- taugh that they had seen less senior drivers working out of, 55th Street. The drivers filed a grievance and Mur- taugh called Respondent. Respondent told Murtaugh that the other drivers would not be working in his jurisdic- tion as they had decided that the employees would come under the jurisdiction of Teamsters Local 261 which rep- resents employees at Sharpsville. ' On March 25, Team- sters Local 964 also filed a grievance with Respondent concerning a supervisor's performance of bargaining unit work (all mechanics had been laid off and a supervisor made minor repairs on one of the vehicles used for local distribution). On March 28 Murtaugh called and wrote to Respond- ent again advising it of the contract ,expiration and that the . Union intended to continue to represent members working in the- Cleveland area.. On April 8, Local 336 filed a grievance concerning the proper amount of vested vacation pay paid to employees. Other than the noted phone conversation regarding the. March 21 grievance, Respondent never answered any of these grievances and, by. way of explanation, states that it felt any bargaining obligation it may have had ceased when the collective- bargaining agreements with the Unions expired (it con- cedes some merit to the vacation pay - grievance and ex- pressed a desire to resolve the matter). Otherwise, Re- spondent did not inform or bargain with. the Charging Party about the changes in its method of serving its re- maining customers in the Cleveland area who formerly were served by the union members under- terms and con- ditions of the noted bargaining agreements. Subsequently, former unit members Jeffrey Barton, Alan Blasczak, David Bucknot, Ronald Duvall, Joseph Kovalsky, and William Wheeler sought to transfer to Union Local 261 representing Respondent's employees in Sharpsville. On July 13, Local.336 notified Local 261 that it had filed, an unfair labor practice charge and held the transfers in abeyance . Respondent asserts that it has made-it•a condition of employment that these employees report to the Brookfield Dairy daily, and that it other- wise - has made a- "temporary", concession to these em- ployees by allowing them to remain in the Cleveland area and engage in slip-seating (using many of the same trucks previously used at the local Cleveland dairy). Re- spondent asserts it still intends to base the Cleveland' routes at the Brookfield Dairy;, however, drivers Buck- not and Blasczak are the only two employees who have moved to Pennsylvania and run -their. routes directly from the Brookfield Dairy. - At the time of the hearing, nearly 8 months- after the Richfield operation began, four employees still: worked their routes partial (Wheeler works out of the truck stop on Monday and Friday- pickups but picks up in Sharps- ville on Wednesdays) 'or totally - out of the -Richfield truck stop in accordance with Respondent's expressed "discretion" not to force the employees to move- to Brookfield at this time. Respondent also states that the garage area property owned by Hawthorn Mellody in 348 DECISIONS OF'NATIONAL LABOR RELATIONS BOARD Cleveland has been sold, that no maintenance, fueling, or any other work was',done at- the former plantsite since March 31, and that all drivers. delivering products in the Cleveland area are under the' direction of Sharpsville Su- pervisor Chovan with'their paychecks issued out of the Brookfield Dairy offices. Respondent pays a $50 monthly fee for use of the truck stop but, except for parking and changing drivers, it neither receives nor performs any other business services there. "III. DISCUSSION The record shows that Respondent lost the major cus- tomer of its Cleveland dairy which led to the closing of its production facilities. It-then changed its method of serving its remaining Cleveland area customers to a system whereby the product was supplied by its Sharps- ville plant, trucked to a leased location near Cleveland, and then distributed by newly hired drivers that formerly had been employees of the Cleveland plant. The change occurred prior to the expiration on March 31 of the cot- lective-bargaining agreement - between Respondent and Teamsters Union Locals 336 and' 964. No -bargaining over the change occurred, all Cleveland union members were laid off by March 31, and those' drivers hired to participate in --the so-called - slip seat distribution' from Sharpsville were not. the most senior drivers and were not transferred from Cleveland under the existing bar- gaining agreement provision regarding - the . transfer of work outside'-the jurisdiction. Subsequently, two of six drivers hired did move to Sharpsville and l5egan distrib- uting directly from Respondent's Brookfield Dairy facili- ty while four drivers -remained in Cleveland and contin- ued to run their, routes in whole .or in, part by "slip-seat- ing" through a leased Cleveland area location. The issues presented -are whether Respondent had a duty to bargain over the changes in its Cleveland oper- ation and whether it did in-fact do-so; whether Respond- ent - dealt directly with employees - and bypassed the Union; whether Respondent refused to bargain over the plant closing and transfer of, operations and refused to process union grievances; and whether Respondent uni- laterally changed terms -and' conditions of, employment by hiring six Cleveland Teamsters Local. 336 , members under the different terms . of its bargaining agreement with' Teamsters-Local 261 in Sharpsville. _. _ . Although the Respondent does not, specifically admit certain basic allegations that were denied in its answer to the - Regional Director's = complaint, t it . did . not pursue these issues on .brief. Inasmuch. as. the record supports the General Counsel's contentions in these respects; I. find that the charges in these proceedings were,-timely filed, that, the Charging Parties, are labor : organizations . repre- senting employees in' appropriate bargaining units, - and that Respondent- Vice -President Thomas Bohlender and Sales Manager Roger Rickon are statutory supervisors under Section 2(11) of the Act;who se words and actions, as pertinent herein, are-attributable_to-Respondent„ A, Duty to'Bargain ' '. A 'fundamental principle of'Board law has been that an employer has-- an obligation to bargain' with ,the- collec- tive-bargaining representative of its employees concern- ing any decision to remove work from the bargaining unit by' relocating it elsewhere, • even- if the employer's sole motivation in relocating the work is economic busi- ness considerations. Otis Elevator, 255 NLRB 235 (1981): Respondent, however, cites a number of court decisions for the proposition that there is no duty to bargain over the partial shutdown of operations because of economic reasons or the removal of facilities to a new location, NLRB v. Drapery Mfg. Co., 425 F.2d 1026 (8th Cir. 1970), and NLRB v. Transmarine Corp., 380 F.2d 933 (9th Cir. 1967), and suggests that the issue be evaluated under a balancing test related to whether notice to the union and negotiation therewith might alleviate econom- ic conditions, a test adopted in Brockway Motor Trucks v. NLRB, 582 F.2d 720 (3d Cir. 1978). Respondent further contends that it notified the Union of economic condi- tions over 2 months prior to its ultimate closedown and of its desire not to negotiate a new contract, that it held a meeting and had other discussions with the union rep- resentative, and that the unions otherwise had actual and implied notice of the fact of ultimate-shutdown. Accord- ingly, it argues that if any duty to bargain existed, it was met. - On brief the General Counsel cites the Supreme Court decision in First National Maintenance Corp., 452 U.S. 666 (1981), which adopts the balancing test for resolving the issue of whether an employer has an obligation to bargain about economically motivated decisions to go partially out of business. In that decision the Court stated that (id. at 679): [I]n view of an employer's need for unencumbered decisionmaking, bargaining over management deci- sions that have a substantial impact on the contin- ued 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.' Subsequent, to the filing of briefs by the parties, the Board, in Otis Elevator II, 269 NLRB 891 (1984), recon- sidered the decision in the prior case (Otis Elevator 1) supra in light of the Court's ruling in First National Maintenance, and, in overruling the charges upheld in the first decision, the Board found that the duty to bar- gain applies only when a management decision-whether it is characterized as subcontracting, reorganization, con- solidation, or relocation-turns on direct modification of labor costs, as, in Milwaukee Spring II, 268 NLRB 601 (198,4),. and does not arise if the decision turns on a change in-the basic direction or nature of the enterprise. Specifically, the decision states that (269 NLRB at 892): Despite the evident effect- on employees, the critical factor to a determination whether the decision is subject to mandatory bargaining is the essence of the decision itself, i e., whether it turns upon a change in the nature or direction of the business , or turns upon labor costs,- not its effect on employees nor a union's ability to offer alternatives . The decision at issue HAWTHORN MELLODY, INC. here clearly turned upon a fundamental change in the nature and direction of the business, and thus was not amenable to bargaining. [Emphasis added.] In the instant case the Union was made aware in Octo- ber 1982 of the fact that over half of Respondent's Cleveland market had been lost. Continual layoff of em- ployees at the facility confirmed the Union's awareness. On January 17 Respondent specifically notified Local 336 that it did not desire to continue the present bargain- ing agreement beyond its expiration date of March 31, and that if in the future it desired to negotiate, it would be on an individual basis and not as part of a multiem- ployer group. In March the Union also became aware that a notice had been posted advising drivers of an op- portunity to seek employment at Respondent's Sharps- ville plant; however, no specific notice was given to the Union, except as noted above, and, correspondingly, the Union did not originate a request to Respondent to bar- gain over averting a-closedown or over the Sharpsville jobs..In connection with the latter point, I find that the Union did not waive its right to bargain by failing to re- quest meetings inasmuch as the employer never clearly notified the Union of its intention to transfer its Cleve- land area distribution to Sharpsville until at least March 7. Moreover, this latter notice inaccurately stated that deliveries would no longer take place in the Cleveland area while, in fact, the "slip seating" distribution plan for deliveries from Sharpsville via an exchange of drivers at a Cleveland area location was in the process of being es- tablished. The plan, as implemented on March 14, prior to the expiration of the bargaining agreement, remained in effect in substantial part at the time of the hearing some 8 months later. Contrary to the implication of Respondent's brief, the Company did not notify the Union in January that it did not wish to negotiate for an agreement for the period after March 31. Rather, the Company said that if it de- sired it would bargain on an individual basis, not part of the multiemployer group. Accordingly, I find the Union clearly could conclude that the possibility for bargaining on a successor agreement was still open. Also, the Com- pany's alleged -notice of March 7 occurred after Vice President Bohlender had told employees at a February 2 meeting that problems were partially due to its distribu- tion method resulting in excessive, costly overtime but that it had no intention of locking up the Cleveland op- eration at the end of March.2 Accordingly, although it was clear that a shutdown of production facilities oc- curred;' the Union had no compelling reason to believe that Respondent planned to transfer its distribution oper- ation as well. Moreover, the purported transfer' of these latter operations did 'not, in fact, take place inasmuch as significant delivery services to its remaining Cleveland 2 While I consider Respondent's claim that the Union, breached a duty by negotiating and failing to disclose concessions given to another member of the multiemployer bargaining group to be irrelevant to the disposition of the issues herein, it is noted that despite Respondent's com- ments to the employees, it already had committed itself to selling both the production plant and the garage location and, otherwise, it did not seek concessions from the Union' despite its expressed concern over dnver cost 349 area customers were accomplished through its slip-seat- ing arrangement at a Cleveland area location by Cleve- land area drivers who did not relocate to Sharpsville. Under the facts present.here, Respondent is not shown to have gone out of business in the Cleveland area with respect to both the sale and distribution aspects of its op- erations. While economic considerations due to a loss of a major customer may have dictated closing of its local production facilities and relocation of its source of supply, the Company did not relocate all significant as- pects of its distribution system. It planned to and did - continue product distribution in the Cleveland area and, thus, bargaining over the utilization of Local 336 drivers (who had enjoyed a long history of harmonious labor re- lations trips with the employer) would not have been burdensome or would it in any way have encumbered the Company in its decisionmaking and the conduct of its business. The changes in the specifics of its distribu- tion system were a minor part of the overall changes in the Employer's operations and the record supports the inference that bargaining could have led to possible alter- natives or concessions that could have avoided or affect- ed the layoff of senior bargaining unit members as well as the planned future move of the operations to Sharps- ville and the rehiring of less senior, laid-off drivers. Accordingly, I agree with the contentions of the Gen- eral Counsel that bargaining with the Union concerning Respondent's decision regarding its Cleveland operations might have been fruitful, and would outweigh any minor burden placed on Respondent. Thus, under the circum- stances presented, Respondent was obligated to bargain with the Union over its decision to close its former dis- tribution facilities and change its'operations to a slip-seat- ing arrangement with possible future transfer of oper- ations to its Sharpsville location. ;In recognition of the Board's decision in • Otis Elevator II I find that Respondent's- decision to change its distri- bution system for Cleveland area customers, while relat- ed, was a completely different and separate decision from the decision whereby it transferred all its produc- tion function from Cleveland to its Brookfield dairy fa- cility in- Sharpsville And, as indicated by Respondent in its February meeting with the drivers, labor costs were a motivating factor. in Respondent's pursuit of further changes in its distribution operation. Union concessions reached through the bargaining process clearly could have affected' Respondent's decision regarding the changes contemplated and 'made. Accordingly, I con- clude that such decision falls within Respondent's bar- gaining obligation as contemplated by the Court in First National Maintenance, supra.' - Moreover, Respondent did not' subcontract, liquidate, or even consummate a transfer of that part 'of its business which handled distribution of its dairy products. It made various changes 'in' routes and in its distributional oper. ation's,'changes directly related to labor costs, but there was no ch'ange in the basic' nature of the functions of its distribution system and of the unit employees. Moreover, the Court in First National Maintenance, supra, also noted a, distinction between the "decision" itself and-the "effect" of the decision and recognized that 350 DECISIONS OF,NATIONAL LABOR RELATIONS BOARD the latter is a-required subject of.bargaining. Thus, even if Respondent could ,be considered to have actually transferred its distribution operation to Sharpsville, and to have no duty to bargain over the "decision" to change its operations, it did not bargain over the effect on the Local 336 drivers. Instead, as discussed below,,.it began -direct dealing with laid-off, less senior drivers concern- ing their employment through its Sharpsville plant to perform distribution services to Cleveland area custom- ers. This direct dealing was done several weeks prior to the expiration of the collective-bargaining agreement and, inasmuch as that agreement had a specific clause dealing with the transfer rights of Local 336 drivers, Re- spondent clearly was required to bargain over the effect of the transfer. - As noted, Respondent alternatively argues that it satis- fied any duty to bargain through actions taken to notify the Union of its loss of customers and resulting financial loss and through its continued discussion of problems up until the time of the complete shutdown and the termina- tion of the contract. The General Counsel , however, contends that Respondent never agreed to meet and bar- gain with the Charging Party Unions either_ fora new contract or over the decision to close or modify the Cleveland operation . Rather, only one brief meeting was held on January 22 at -which time Respondent inquired of Local 336 as to its position regarding a possible closure of the Cleveland facility. The Union specifically told Re- spondent that if it was going out of the delivery business, it should do so completely as the'Unio'n intended to con- tinue to represent whatever employees were left in the area.. ' As indicated above, Respondent went forward with ar- rangements for the sale of its Cleveland properties and the development of its slip-seating distribution system while, at the same time, asking the remaining drivers for help and advising them that it did not intend to lock up the Cleveland operation at the end of March when the contract expired . -Under these circumstances , I'infer that Respondent was dealing with the Union on- the mistaken belief that its bargaining obligation would end with the expiration of the collective-bargaining 'agreements and that, in anticipation thereof, it purposely concealed its planned changes from the Union. While the Union was aware of the Company's' declin- ing business activities , it was not notified directly of an- ticipated changes. Moreover, any indirect information re- ceived was not of such a nature that it could be consid- ered as sufficient to achieve the status of implied notice, especially since the discussions held by Respondent with employees and the Union deceptively avoided specific acknowledgment or disclosure of Respondent's actual plans. This nondisclosure was followed by Respondent's further bypassing of the Union while ignoring bargaining agreement- provisions regarding transfer rights through its -actions in,handpicking laid-off and less senior drivers for its, new system for Cleveland area - distribution. Lastly, Respondent continued to disregard the Union through its failure to acknowledge grievances ' filed during the last week of -the contract . Under these- cir- cumstances, I conclude that Respondent is shown to have violated Section 8 (a)(5) and ( 1) of the Act as al- / leged in its failure and refusal to bargain with the Union over its decision to close its Cleveland facility and close, change, or transfer its distribution operations and over the effects on unit employees of the result of that deci- sion. B.,Direct Dealings with Employees The record shows that Respondent contacted laid-off driver Marzinski and solicited his application - for employ- ment by Brookfield - Dairy and that six other laid-off drivers were interviewed and hired directly by Vice President Bohlender or Distribution` Manager Chovan. Although a notice to drivers also was posted, the notice would not have been' readily accessible to laid -off driv- ers; however, the record otherwise shows that Cleveland Sales Manager Rickon played' a part in the selection of laid-off drivers who were to be informed of job opportu- nities at Brookfield Dairy . It is likewise clear that the Union received no notification of Respondent's hiring plans and that this was done intentionally inasmuch as Bohlender specifically testified he -did not take the con- tractual provision regarding guaranteed transfer opportu- nities into consideration when selecting the drivers. Respondent 'also met with -employees on February 2, without notice to the Union and without representation by the Union at the meeting. It discussed the subject of costly overtime causing losses in its distribution oper- ation with the employees but, by not informing the em- ployees' bargaining agents of the meeting , foreclosed the Union from bargaining concerning this issue I find that the timing of Respondent 's direct dealings in the light of its concurrent avoidance of bargaining with' the Union on the decision and the effects' of the changed distribution operation also indicate that Re- spondent intended to make changes regardless of any bargaining obligations with the Union . It is well estab- lished that a company's direct dealings with employees tend to undermine a union 's status as exclusive represent- ative and to inhibit parties from reaching agreement on bargaining issues. See Tralas Meat Co., 239 NLRB 1400 (1979). Here, it appears that Respondent anticipated. that it could successfully bypass the Union, obtain the serv- ices of hand-picked drivers independent o;. their seniority status, -and operate in the Cleveland area 'under the less costly terms and conditions of employment prevailing at its Brookfield Dairy facility. Respondent bypassed the Union and dealt directly with employees concerning terms and conditions of employment at a time it was avoiding any bargaining with the Union and , according- ly, I conclude that Respondent-is shown to have violated Section 8(a)(1) and (5) of the Act as alleged. C.-Refusal to Process Grievances Locals 336 and 964 filed three grievances which al- leged that senior drivers were laid off while drivers with less seniority were working ; that - a supervisor did bar- gaining unit work and that Respondent did not pay the proper amount of vacation pay due employees . Respond- ent refused to answer and process these grievances, based on its belief that it had no obligation to respond to these grievances in view of the expiration of the con- HAWTHORN MELLODY, INC. tract. Here, the subject. matter of the grievances is argu- ably encompassed by the terms of the collective-bargain- ing agreement and, under such circumstances;, an em- ployer must continue to bargain with a union over terms and conditions of employment and it is bound to adhere to the contractual grievance procedure following the ex- piration of the contract, see Digmor Equipment •& Engi- neering, 261 NLRB 1175 (1982). Respondent argues that the Union did not pursue the grievances by a request for mediation or arbitration and should not be allowed to circumvent the exhaustion of the grievance procedure by an unfair labor charge. As pointed out by the General Counsel, however,' the charge was filed in concert with charges of related con- duct involving Respondent's total failure to bargain with the Union in respect to its change in operations and the expiration of the collective-bargaining agreement and, under circumstances where the employer has repudiated the entire collective-bargaining process, the Union should not be required to engage in a probable futile act. Accordingly, I conclude that Respondent's failure to process grievances violated Section 8(a)(5) and (1) of the Act, as alleged. D. Unilateral Change in Terms and Conditions As noted above, Respondent hired former bargaining unit employees to deliver to customers out of the East 55th Street terminal in the middle of March, while the collective-bargaining agreement with Cleveland Local 336 was still in effect. On the expiration of the contract or shortly before, Respondent established its truck stop "slip seating" operation. The rehired employees were compensated according to the collective-bargaining agreement which covered Brookfield Dairy employees which, among other differences, contained a wage scale different from the Teamsters Local 336 contract. And, inasmuch as .Respondent did not bargain or bargain to impasse with the Union regarding these changes, it was not free to set terms and conditions of employment sepa- rate and distinct from those contained in the current col- lective-bargaining agreement, regardless of the fact that it was pursuant to the,: terms of another Local Union's collective-bargaining agreement. Accordingly, I con- clude that Respondent is shown to have unilaterally changed terms and conditions of employment in viola- tion of Section 8(a)(1) and (5) of the Act as alleged. CONCLUSIONS"OF LAW 1. Respondent 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. Specifically, Teamsters Local 336 and Local 964 have been and are the exclusive representatives of employees in their respective units for the purposes of collective bargaining within the meaning of Section 9(a) of-the Act. 3. By failing or refusing to bargain with Local Union No. 336 over both the decision and effects of its purport- ed closure of its Cleveland facilities, changes in its Cleveland area distribution operation, or transfer of em- 351 ployees,, Respondent violated Section 8(a)(1) and (5) of the Act. - 4: By bargaining directly with laid-off employees of Local No. 336 regarding employment through its Brook- field Dairy facility Respondent violated Section 8(a)(1) and (5) of the Act. 5. By unilaterally refusing to process grievances of both Local No. 336 and Local No. 964 encompassed under the terms of the applicable collective- bargaining agreement Respondent violated Section 8(a)(1) and (5) of the Act. 6. By unilaterally changing terms and conditions of employment from those of Teamsters Local 336 to those of Local 261 Respondent violated Section 8(a)(1) and (5) of the Act. REMEDY Having found that Respondent has engaged in certain unfair labor practices, I find it necessary to order Re- spondent to cease and desist therefrom and to take cer- tain affirmative action designed to effectuate the policies of the Act. Respondent having refused to bargain in good faith concerning its decision to change its Cleveland distribu- tion operation and to transfer Local 336 Cleveland area drivers to employment through its Sharpsville (Brook- field Dairy) facilities and the effects of such decision, I shall recommend that Respondent offer to bargain in good faith with the Union on both the decision to trans- fer and about the effects of such decision on unit em- ployees. I shall also recommend that Respondent process the outstanding grievance of both Local 336 and Local 964, and that it cease and desist from bypassing the Union in derogation of its exclusive bargaining status by dealing directly with employees concerning the transfer of unit jobs. The General Counsel submits that in order to provide an adequate remedy Respondent also should be required to make whole all employees who were laid off as a result of Respondent's unlawful refusal to bargain. The record shows that the drivers currently working for Re- spondent through its Richfield, Ohio location, or who otherwise transferred to Sharpsville, are not the most senior employees as set forth in Respondent's Cleveland area seniority list. It can be determined through compli- ance proceedings which employees would be entitled to be made whole for their losses and, therefore, it shall be recommended- that Respondent be required to pay back- pay to the affected employees until Respondent bargains in good faith with the above -mentioned Unions in the in- stant matters. Where backpay is required, it will be paid with interest on the' amounts owing and computed in the manner prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), plus interest as computed in Florida Steel Corp., 231 NLRB 651 (1977). In a similar vein, if the Union so requests, Respondent shall offer any such dis- cnminatee immediate and full transfer rights and place any discriminatee for whom no job is immediately avail- able on a preferential hiring list in accordance with se- nionty and inform its discriminatees in writing, of such 352 DECISIONS OF NATIONAL LABOR RELATIONS BOARD listing. Otherwise, I find it unnecessary to recommend is- [Recommended Order omitted from' publication.] suance of a broad order.