Farm Boy Restaurant; Farm Boy Restaurants Nos. 2 And 3

82 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Merrell M. Williams; Boy's Restaurant, Inc.; Girl's Restaurant; Jumbo's d/b/a Farm Boy Restau- rant; Farm Boy Restaurants Nos. 2 and 3 and Hotel Employees and Restaurant Employees International Union, Local 703, AFL-CIO. Case 31-CA-10172 31 March 1986 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND STEPHENS On 26 November 1982 the National Labor Rela- tions Board issued its Decision and Order' in the above-entitled proceeding in which it affirmed Ad- ministrative Law Judge Frederick C. Herzog's finding that the Respondent violated Section 8(a)(5) and (1) of the National Labor Relations Act, by repudiating its tentative agreements with Hotel Employees and Restaurant Employees Inter- national Union, Local 703, AFL-CIO (the Union) on the subjects of meal credits and cost-of-living increases in wages. On 23 September 1983 the Board notified the parties that it had decided, sua sponte, to reconsider its decision. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. Having again reviewed the record in this pro- ceeding, we have decided to overrule the earlier decision finding the violation. This case presents the question of whether the repudiation of tentative agreements reached in the course of collective bargaining, standing alone, constitutes bad faith in contravention of the Re- spondent's bargaining obligations. We hold that, in the circumstances of this case, it does not. The facts, as more fully set forth by the judge, are as follows. The Respondent and the Union have had a collective-bargaining relationship for number of years, with their most recent contract having been effective from 1 April 1975 to 31 March 1980. The parties met on 28 and 29 Febru- ary 19802 to negotiate a successor collective-bar- gaining agreement. The Respondent was represent- ed in negotiations by its attorneys, Wilson Clark and Albert Tomigal. The Union was represented by its attorney, David Silver, as well as by local and international union officials. Clark advised the Union at the inception of bargaining that although he and Tomigal were generally authorized to nego- tiate and reach agreement, certain items would re- quire more specific authorization of the Respond- 265 NLRB 506 Unless otherwise indicated, all dates are 1980 ent. Clark stated that arrangements had been made between his client and him that he could reach someone by telephone at any reasonable hour to seek additional authority. The parties agreed at the beginning of bargaining that each reserved the right to add to, delete, change, or modify any pro- posal or amendment during negotiations. The Union additionally noted that any agreement reached would be subject to ratification of the membership. On the second day of bargaining, the parties had made sufficient progress that Clark broached the possibility of a specific package agreement. Clark specified that he could not make such an offer without his client's authorization, but solicited the Union's response if the package offer were to be made. The union negotiators indicated that they would be willing to agree to the proposal suggest- ed by Clark, and Clark then left the negotiating table to telephone his client. After obtaining the telephonic authorization of Richard Hall, an official of the Respondent who had been identified by Merrell Williams as the indi- vidual with whom Attorney Clark should have his dealings regarding the negotiations, 3 Clark re- turned to the negotiating table and advised the Union that he had the authority to make the pack- age offer previously discussed by the parties. The Union accepted the offer, which included proposals regarding meal credits and cost-of-living increases, and Union Attorney Silver agreed to prepare a document memorializing the agreement. After the meeting, Clark again called his client and this time spoke with Merrell Williams, owner or part owner of all the restaurants covered by the parties' contracts. Williams informed Clark that Clark did not have the authority to make the pro- posals in the parties' agreement concerning cash payments in lieu of meals and cost-of-living wage increases. Clark told Williams that he had been talking with Hall about these proposals, and that he had mistakenly believed that Hall was getting his directions from Williams. Williams told Clark that he had to see what the cost-of-living increase would do to operations, that several of the coffee shops were losing money, and that he just did not know at that point what he was going to do. Wil- liams agreed to consider the proposals and advise Clark of his decision. On 5 March Williams informed Clark that he would not abide by the agreements regarding meal credits or cost-of-living increases. On the same ' According to Clark, Hall is the comptroller for Williams Brothers Markets, Inc , a partner in some of the Farm Boy Restaurant operations involved in the case, and the bookkeeper, in general , for the Respond- ent's restaurant operations 279 NLRB No. 13 MERRELL M. WILLIAMS 83 date, Clark telephoned Union Attorney Silver to advise him of Williams' position. Clark offered to resume negotiations and explained his embarrass- ment in having erroneously assumed that Williams had authorized the offer regarding these items. Clark told Silver that Williams could not agree to the proposals because the Respondent was losing money at several of the restaurants, and indicated a willingness on the part of the Respondent to allow the Union to look at its books. The Union thereaf- ter refused to meet and bargain further with the Respondent and, on 17 March, conducted a ratifi- cation meeting at which the membership approved the package agreement including the two repudiat- ed provisions. On 25 August 1981, over a year later, the Union presented the Respondent with a copy of their "agreement" for execution. The judge found the Respondent's failure to make sure that it had clear channels of communica- tion between itself and its negotiator to be incon- sistent with its duty to bargain in good faith, but concluded that the Respondent's violation did not stem from any defect in its grant of authority to Clark. He found, rather, that the Respondent vio- lated the Act by repudiating its tentative agree- ments on the subjects of meal credits and cost-of- living increases which had been explicitly and ad- mittedly authorized by the Respondent through Hall, an officer of the Respondent cloaked with os- tensible authority to reach agreement. The viola- tion found, therefore, was premised on the Re- spondent's repudiation of these earlier agreements. We disagree, and find that the Respondent's with- drawal of these provisions does not constitute bad faith in the circumstances of this case. Unlike the refusal to execute an agreed-upon contract, which is a per se violation of Section 8(a)(5) and (1) of the Act because it demonstrates a refusal to acknowledge and abide by the fruits of bargaining, the withdrawal of tentative agreements reached prior to the formation of a legally enforce- able contract represents only one factor to be con- sidered in determining good- or bad-faith bargain- ing.4 In ruling on an allegation that a party has failed to bargain in good faith, it is well established that we look to the totality of circumstances re- flecting the party's bargaining frame of mind. Rhodes-Holland Chevrolet, 146 NLRB 1304 (1964). We have previously declined to find employers who withdrew provisions on which tentative agreement had been reached during negotiations to have failed in their bargaining obligations when the employer's explanation for its retraction did not in- dicate a lack of good faith. See Olin Corp., 248 NLRB 1137, 1141 (1980); Loggins Meat Co., 206 NLRB 303, 309 (1973); Food Service Co., 202 NLRB 790, 802-803 (1973). In this case, the Respondent's negotiator made an offer to the Union believing he had the author- ity to do so. When it became clear that the Re- spondent would not approve the proposals, the ne- gotiator immediately withdrew from the agree- ments, offering a reason for so doing, and further offered to immediately resume bargaining. The Union, which had not yet submitted the proposal to membership for ratification or taken any action in reliance on the parties' tentative agreement, re- fused to bargain further. The Respondent's expla- nation for its retraction of its prior agreement re- garding the two provisions constitutes sufficient good cause to rebut any inference of bad faith ar- guably arising from that action. Further, the Re- spondent offered to substantiate its explanation by opening its books to the Union and to resume bar- gaining in an effort to reach agreement. There is no other indication that the Respondent was with- drawing from the agreements in order to frustrate the bargaining process or avoid reaching a con- tract. Accordingly, we overrule the original Deci- sion and Order and shall dismiss the complaint. ORDER The complaint is dismissed. 4 As noted by the judge, the General Counsel refused to issue a com- plaint alleging that the parties had reached a complete agreement Nor does the General Counsel challenge the Respondent' s legal right to with- draw from its tentative agreement on the proposals prior to the union ratification vote What the General Counsel contends is that the act of repudiating these tentative agreements evidences bad faith