Rapid Fur Dressing, Inc., Debtor-In-Possession

RAPID FUR DRESSING Rapid Fur Dressing, Inc. and Rapid Fur Dressing, Inc., Debtor-In-Possession' and Fur Chauf- feurs' & Helpers' Union, Local 122, affiliated with United Food and Commercial Workers International Union, AFL-CIO. Case 2-CA- 20410 7 March 1986 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND BABSON On a charge filed by the Union 22 May 1984, the General Counsel of the National Labor Relations Board issued a complaint 29 June 1984 against the Company, the Respondent, which, as amended 5 December 1984, alleges that the Respondent has violated Section 8(a)(5) and (1) of the National Labor Relations Act. The complaint, as amended, alleges, and the Re- spondent, in its answer and amended answers, admits that at all times material from about 1973 until about January 1983 , the Respondent was an employer-member of the Fur Dressers Bureau of America, Inc. (the Association), which was an or- ganization composed of employers engaged in the fur business and which existed for the purpose, inter alia, of representing its employer-members in negotiating and administering collective -bargaining agreements with the Union; that since at least 1973 the Union has been the designated exclusive collec- tive-bargaining representative of employees in an appropriate bargaining unit comprised of all the Respondent's chauffeurs, helpers , and maintenance workers, and that at all times since then the Union, by virtue of Section 9(a) of the Act, has been and is the exclusive collective-bargaining representative of the employees in the unit described above; that since at least 1973, the Respondent has recognized the Union as the exclusive collective-bargaining representative of the unit employees, and has em- bodied such recognition in successive collective- bargaining agreements, the last of which expired by its written terms on 1 January 1983 ; that since about January 1983, the Respondent has negotiated with the Union on an individual employer basis with regard to the unit employees , and that about June 1983, the Union and the Respondent agreed to continue in effect for an indefinite period the On 13 June 1984 the Respondent Rapid Fur Dressing , Inc. (Rapid) ,led a petition pursuant to Chapter 11 of the Bankruptcy Code, with the clerk for the Southern District of New York . Pursuant to the Certificate of Filing of that petition, Rapid was continued in possession of its proper- ty and management of its business, and no trustee-in-bankruptcy was ap- pointed. In its answer and amended answers to the complaint, Rapid as- serts that it is now known as Rapid Fur Dressing, Inc., Debtor -In-Posses- sion. 278 NLRB No. 126 905 written agreement which expired by its terms on 1 January 1983. The complaint, as amended, also alleges, and the Respondent admits, that on 13 June 1984, the Re- spondent filed a petition pursuant to Chapter 11 of the Bankruptcy Code; that the most recent collec- tive-bargaining agreement between the parties pro- vides, inter alia, that the Respondent will make monetary contributions to a vacation fund and pen- sion plan on behalf of all employees in the unit; that without prior notice to or consent of the Union, from about 25 November 1983 until 13 June 1984, the date of the Respondent's filing of its peti- tion in bankruptcy, the Respondent has failed and refused to make the contractually required pay- ments to the vacation fund, and that from about 1 February until 13 June 1984, without prior notice to or consent of the Union, the Respondent has failed and refused to make the contractually re- quired payments to the pension plan. Notwithstanding its admission of all the above allegations, the Respondent denies that it has com- mitted the unfair . labor practices alleged in the complaint, i.e., that by failing and refusing to make the contractually required payments to the vaca- tion fund and pension plan it has violated Section 8(a)(5) and (1) of the Act. On 8 February 1985 the General Counsel filed with the Board a Motion for Summary Judgment, with exhibits attached, asserting that the Respond- ent's answers to the complaint, as amended, raise' no genuine issues of fact which require an eviden- tiary hearing, and urging that the Board issue a Decision and Order against the Respondent con- taining findings of fact and conclusions of law in accordance with the allegations in the complaint. Thereafter, on 14 February 1985 the Board issued an order transferring proceeding to the Board and Notice to Show Cause why the General Counsel's Motion for Summary Judgment should not be granted. The Respondent did not file a response to the Notice to Show Cause. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. On the entire record in this proceeding, the Board makes the following Ruling on the Motion for Summary Judgment The Respondent's admissions to all the factual al- legations in the complaint establish that (1) the Union was the recognized and exclusive collective- bargaining representative of the Respondent's em- ployees in the above-described unit; (2) the Re- spondent was obligated under the terms of its col- lective-bargaining agreement with the Union to 906 DECISIONS OF NATIONAL LABOR RELATIONS BOARD make monetary contributions to an employee vaca- tion fund and pension plan; and (3) the Respondent stopped making those contractually required con- tributions without prior notice to or consent of the Union. It is well established that Sections 8(a)(5) and (1) and 8(d) of the Act prohibit an employer who is a party to an existing collective-bargaining agree- ment from modifying the terms and conditions of employment established by that agreement without obtaining the consent of the union.2 Nor is there any doubt that pension plans and vacation benefits are well within the scope of this prohibition against unilateral midterm modifications of a collective- bargaining agreement.3 Here, the Respondent has admitted that without notice to or consent of the Union, it unilaterally discontinued its contractually required payments to the pension plan and vacation fund. Accordingly, the Respondent has admitted all the facts material to a resolution of the unfair labor practice issues raised by the complaint. There being no material facts in dispute, and in the absence of any cause to the contrary having been shown by the Respondent, we grant the General Counsel's Motion for Summary Judgment.4 On the entire record, the Board makes the fol- lowing FINDINGS OF FACT 1. JURISDICTION At all times material the Respondent, a domestic corporation, with an office and place of business in New York, New York, has been engaged in the preparation, processing, and nonretail sale and dis- tribution of fur and related products. Annually, in 8 E g , Nestle Co., 251 NLRB 1023 (1980); Fourco Glass Co., 250 NLRB 953, 955 (1980); Pere Marquette Park Lodge, 237 NLRB 855, 861 (1978). a E.g., Nestle Co., id. (pension plan); Pere Marquette, id. (vacation bene- fit). 4 The Chairman's dissent states well the Board's longstanding rule, based on unambiguous legislative history, that not every contract viola- tion will constitute an unfair labor practice. We differ only in the applica- tion of the rule to the instant case . In Capitol City Lumber Co. v. NLRB, 721 F.2d 546 (6th Cir. 1983), cert. denied 104 S Ct. 1291 (1984), the court upheld the Board's finding that the employer violated Sec. 8(a)(5) and (1) of the Act by failing to make pension and welfare payments required under its collective-bargammg agreement with the union. In doing so, the court rejected the employer's argument; identical to the position taken here, that "the Board's interpretation of the case law would convert any violation of the collective bargaining agreement into an unfair labor prac- tice ...: . Id. at 549. The court stated Most disputes over interpretation of collective bargaining agree- ments, such as the termination of an employee in alleged violation of a "just cause" discharge requirement, simply do not rise to the level of an unfair labor practice. Moreover, even those violations of an agreement which could be characterized as unfair labor practices are usually resolved in the arbitration/grievance procedure established by that agreement. The Board has a long history of deferring to the arbitration process both before and after an arbitration award has been made. See Speilberg [sic] Mfg. Co., 112, N.L.R.B. 1080 (1955), Collyer Insulated Wire, 192 N.L.R B. 837 (1971) [Id.] the course and conduct of its business operations, the Respondent purchases and receives at its New York facility products, goods, and materials valued in excess of $50,000 directly from points outside the State of New York. We find that the Respond- ent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act and that the Union is a labor organization within the meaning of Section 2(5) of the Act. II. THE UNFAIR LABOR PRACTICES A. The Unit The following employees of the Respondent con- stitute a unit appropriate for collective-bargaining purposes within the meaning of Section 9(b) of the Act: All chauffeurs, helpers, and maintenance workers employed by the Respondent at its New York, New York facility. B. The Collective-Bargaining Agreement Since about 1973, the Union has been the desig- nated exclusive collective-bargaining representative of the Respondent's employees in the unit de- scribed above, and has been recognized as such by the Respondent. Such recognition has been em- bodied in successive collective-bargaining agree- ments between the Association and the Union, to which the Respondent was bound, the most recent of which expired by its terms on 1 January 1983. In June 1983 the Respondent and the Union agreed to continue in effect for an indefinite period the most recent collective-bargaining agreement. C. The 8(a)(5) and (1) Violations Since about 25 November 1983 until 13 June 1984, the date of the Respondent's filing of its peti- tion in bankruptcy, the Respondent has failed and refused to pay vacation moneys to the appropriate fund as required by the collective-bargaining agree- ment in effect between the parties. Also, since about 1 February 1984 until 13 June 1984, the Re- spondent has failed and refused to pay pension moneys to the appropriate fund as required by that agreement. Accordingly, we find that the Respond- ent has failed and refused to bargain collectively and in good faith with the Union as the representa- tive of its employees, and that the Respondent thereby has engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. On the basis of the foregoing facts and the entire record, we make the following RAPID FUR DRESSING CONCLUSIONS OF LAW 1. The 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 meaning of Section 2(5) of the Act. 3. The following employees constitute a unit ap- propriate for purposes of collective bargaining within the meaning of Section 9(b) of the Act: All of the Respondent's chauffeurs, helpers, and main- tenance workers at its New York, New York facili- ty. 4. At all times material herein the Union has been the exclusive representative ,of the employees in the above-described unit for the purpose of col- lective bargaining within the meaning of Section 9(a) of the Act. 5. By failing and refusing from 25 November 1983 until 13 June 1984 to make contractually re- quired payments to the vacation fund, and by fail- ing and refusing from 1 February 1984 until 13 June 1984 to make similar such payments to the pension plan, in both cases without prior notice to or consent of the Union, the Respondent has failed and refused to bargain collectively with the Union as the exclusive representative of the Respondent's employees in the above-described unit, and thereby has engaged in unfair labor practices in violation of Section 8(a)(5) and (1) of the Act. 6. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2(6) and (7) of the Act. REMEDY Having found that the Respondent has engaged in unfair labor practices within the meaning of Sec- tion 8(a)(5) and (1) of the Act, we shall order that it cease and desist therefrom, and that it take cer- tain affirmative action to effectuate the policies of the Act. Accordingly, we shall order the Respond- ent to make all contractually required payments to the vacation fund for the period from 25 Novem- ber 1983 until 13 June 1984, and to make all con- tractually required payments to the pension plan for the period from 1 February 1984 until 13 June 1984. Any interest applicable to such delinquent payments shall be paid in accordance with the cri- teria set forth in Merryweather Optical Co., 240 NLRB 1213, 1216 (1979). Our Order is expressly directed to "the Respondent, its agents, successors, and assigns" and, as such, is effective against Rapid Fur Dressing, Inc., Debtor-In-Possession.5 5 See Edward Cooper Painting, 273 NLRB 1870, 1871 (1985). 907 ORDER The National Labor Relations Board orders that the Respondent, Rapid Fur Dressing, Inc., New York, New York, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain collectively with the Union by failing and refusing, without prior notice to or consent of the Union, to make contractually required payments to an employee vacation fund from 25 November 1983 until 13 June 1984, and to an employee pension plan from 1 February 1984 until 13 June 1984. (b) 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 neces- sary to effectuate the policies of the Act. (a) Pay all delinquent contributions to the vaca- tion fund from 25 November 1983 until 13 June 1984, and pay all delinquent contributions to the pension plan from 1 February 1984 until 13 June 1984. (b) 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 amount of backpay due under the terms of this Order. (c) Post at its facility in New York, New York, copies of the attached notice marked "Appendix."e Copies of the notice, on forms provided by the Re- gional Director for Region 2, 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. (d) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. CHAIRMAN DOTSON, dissenting. The General Counsel has moved the Board for summary judgment. The complaint alleges that the Respondent, in violation of Section 8(a)(5) and (1) s 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 Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board." 908 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of the Act, unilaterally ceased making on behalf of its employees contractually required monetary pay- ments to a vacation fund and a pension plan. The Respondent's answer admits the factual allegations of the complaint but denies that it has violated the Act. It has.long been observed that a breach of con- tract is not necessarily an unfair labor practice." Concomitantly, the Board is not precluded from enforcing statutory rights and finding an unfair labor practice solely because the matter in dispute is arguably a breach of contract.2 Regrettably, the Board has failed to strike a proper balance-indeed any balance-between those circumstances in which the Board deems a dispute to be one of con- tract breach and leaves the parties to their judicial remedies and those in which the Board acts to remedy a fundamental abrogation of a bargaining obligation and finds an unfair labor practice. Rather, the Board in virtually every situation inter- venes to interpret and enforce a contract by finding that a breach of contract constitutes a unilateral change in violation of Section 8(a)(5) and (1) of the Act. In NLRB v. Strong, supra, the Supreme Court agreed with the Board that an employer violated Section 8(a)(5) by refusing to execute a contract negotiated on its behalf by a multiemployer asso- ciation and agreed that the Board, as part of the remedy, properly ordered payment by the employ- er of the fringe benefits required by the contract. However, the Court also noted as follows: Admittedly, the Board has no plenary author- ity to administer and enforce collective bar- gaining contracts. Those agreements are nor- mally enforced as agreed upon by the parties, usually through grievance and arbitration pro- cedures. The Court further noted at footnote 5 of its deci- sion as follows: ... Congress established the judicial remedy of §301 of the Labor Management Relations Act, 61 Stat. 156; 29 USC §185, in lieu of a proposal to make breach of collective bargain- ing agreements itself an unfair labor practice. H. R. Conf. Rep. No. 510, 80th Cong., 1st Sess., 41-42. The House Conference Report asserts that "[o]nce parties have made a collec- tive bargaining contract the enforcement of that contract should be left to the usual proc- 1 See, e.g., Mine Workers v. NLRB, 257 F.2d 211, 214-215 (D.C. Cir. esses of the law and not to the National Labor Relations Board," id. at 42. From time to time, individual Board Members, in varying contexts, have expressed disagreement with the Board's inclination to view any breach of contract as an unfair labor practice. Recently, in Capitol City Lumber,3 the Board found that an employer violated Section 8(a)(5) and (1) of the Act by refusing to make welfare and pension plan contributions as required by its collec- tive-bargaining agreement with the union. Then Chairman Van de Water concurred, "albeit reluc- tantly," and noted as follows (263 NLRB at 787): I am increasingly concerned that the Board's already overtaxed processes are being utilized to interpret and enforce contracts when other forums are available to the parties. Both state and Federal courts are available to interpret and enforce existing contracts. In Detroit Cabinet & Door Co.,4 a Board majority found an employer violated Section 8 (a)(5) and (1) by, over a period of time, making delinquent pay- ments into fringe benefit funds established by the parties' collective-bargaining agreement. In. dissent, Member Penello found that the conduct com- plained of could not be viewed as anything other than a contract violation . He observed, in part, as follows (247 NLRB at 1419): ... by finding Respondent's conduct to be an unlawful refusal to bargain, my colleagues im- properly involve this Board in the governmen- tal regulation of the terms of collective bar- gaining agreements. They would not only pro- vide the means for parties to reach agreement at .the bargaining table, but would follow the parties from the table into the workplace to dictate the implementation of the agreement. I cannot approve this form of governmental in- trusion. In Nedco Construction Corp., 5 the Board found that an employer violated Section 8(a)(5) by failing to make certain contractually required retroactive wage payments. In dissent, Member Kennedy stated (206 NLRB at 151): Respondent's failure to make the retroactive wage payments constituted at most a breach of contract which Congress has said should be remedied by other processes and ultimately by the courts. 1958); American Vitrified Products Co., 127 NLRB 701 (1960); United Telephone Co., 112 NLRB 779, 781 (1955). 8 263 NLRB 784 (1982). 2 See NLRB Y. Strong Roofing & Insulating Co., 393 U.S. 357 (1969); 4 247 NLRB 1415 (1980). NLRB v. C & C Plywood Corp., 385 U.S. 421 (1967). 5 206 NLRB 150 (1973). RAPID FUR DRESSING 909 Member Kennedy further observed (206 NLRB at 152): It seems inappropriate to me for this over- burdened Board not to refer the parties to their judicial remedies. As I read the Legisla- tive History, Congress did not intend that we function as a court to order specific perform- ance of a contract and to assess damages against [r]espondent[s]. In my judgment, the Board has acted contrary to Congressional intent and in furtherance of an ill-ad- vised policy by fording, in effect, almost any breach of contract to be an unfair labor practice. Certainly, Congressional intent as expressed in the legislative history, including particularly Congress' rejection of a proposal to make a breach of con- tract an unfair labor practice, indicates ' that an or- dinary breach of contract does not violate the Act. Additionally, it is an unwise policy for the Board, with its heavy workload, to serve as a monitor for contract compliance when other Congressionally mandated forums are available to the parties to remedy their contractual disputes . 6 Again, the leg- islative history supports the adoption of this sound policy. The Senate Report stated the Board would ... develop . . . a policy of entertaining under these provisions only such cases alleging violation of contract as cannot be settled by resort to the machinery established by the con- tract itself, voluntary arbitration or if neces- sary, by litigation in court. . . . Any other course would engulf the Board with a vast number of petty cases that could best be set- tled by other means. In short , the intention of the committee in this regard is that cases of contract violation be entertained on a highly selective basis, when it is demonstrated to the Board that alternative methods of settling the dispute have been exhausted or are not avail- able. S. Rep. No. 105; 80th Cong., 1st Sess., I Legis- lative History of the Labor Management Rela- tions Act of 1947, p. 429. In a similar regard , the Supreme Court noted in Smith v. Evening News Assn.,7 the Board has de- clined to act "where, in its judgment, federal labor policy would best be served by leaving the parties to other processes of the law." e In United Telephone Co., supra, the Board, in dismissing 8(a)(5) alle- gations, stated that the "Board is not the proper forum for parties' seek- ing to remedy an alleged breach of contract or to obtain specific enforce- ment of its terms." Unfortunately the Board, subsequent to this case, has failed to follow its sound teachings. 7 371 U.S. 195, 198 fn. 6 (1962). Having reviewed, as Chairman, the ever continu- ing and burdening flow of cases before the Board in which. we are asked to interpret and/or enforce collective-bargaining agreements, I believe it is es- sential that the Board reexamine its holdings in this area. I would restore a proper and healthy balance between those matters involving significant statuto- ry issues, and thus properly resolved by the Board and those disputes best resolved by the parties in other forums. If, during the term of a contract, a party engages in conduct reflecting a substantial re- pudiation of its contractual and bargaining obliga- tion, particularly if that conduct occurs in conjunc- tion with other statutory violations by that party, the Board must intervene and decide the significant statutory issues at stake. The Act demands no less. But, when the parties seek to enmesh the Board in disputes arising solely over contract interpretation and/or compliance, the Board must decline to be involved and leave the dispute to the parties them- selves." This case fits into the latter category. Es- sentially, the Charging Party would have the Board act to enforce the contract and serve as its collection agency for the Respondent's financial ar- rearages to the vacation and pension funds: As the Respondent's conduct constitutes nothing more than a contract violation, I would dismiss the com- plaint in its entirety. • s In his dissent in Papercraf Corp., 212 NLRB 240, 242 fn.5 (1974), Chairman Miller expressed his view as follows: I do not take the extreme position that conduct constituting a breach of contract may never constitute a violation of the Act over which we ought to assert jurisdiction. Where the conduct involved has overtones beyond mere contract breach and which go to areas where the policies of this Act are threatened, of course we take ju- risdiction. We may, even then, defer in the first instance to an avail- able arbitral forum if we are satisfied that the parties' own voluntary machinery may resolve the matter in a manner consistent with the policies of this Act. But where, as here, there is really nothing more at issue than a run-of-the-mill dispute over proper contract interpre- tation and application, I am of the view that there is no genuine reason why the enforcement of the contract ought not to be left to the usual processes of the law, in accordance with what I understand to be the intent of Congress. 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 fail or refuse to bargain collec- tively and in good faith with Fur Chauffeurs' & Helpers' Union, Local 122, affiliated with United 910 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Food and Commercial Workers International Union, AFL-CIO, by unilaterally, without prior notice to or consent of that Union, discontinuing our payments to the employee vacation fund and pension plan, as required by our collective-bargain- ing agreement with that Union, which covers all of our chauffeurs, helpers, and maintenance workers employed at our New York,' New York facility. 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 make whole our employees by reim- bursing the vacation fund for all delinquent pay- ments which we failed to make from 25 November 1983 until 13 June 1984, and by reimbursing the pension plan for all delinquent payments , which we failed to make from 1 February 1984 until 13 June 1984. RAPID FUR DRESSING, INC.