Harter Equipment, Inc.

HARTER EQUIPMENT 597 Harter Equipment, Inc. and Local 825, International Union of Operating Engineers, AFL-CIO. Case 22-CA-11527 24 June 1986 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS, JOHANSEN, AND BABSON On 22 April 1983 Administrative Law Judge Steven Davis issued the attached decision. The General Counsel filed exceptions and a supporting brief, and the Respondent filed an answering brief. On 13 August 1985 the Board scheduled oral ar- gument because this case presented important issues in the administration of the National Labor Rela- tions Act. On 19 September 1985 the Respondent, the General Counsel, the Charging Party, the American Federation of Labor and Congress of In- dustrial Organizations, the International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, the Chamber of Commerce of the United States of America, and the Council on Labor Law Equality 1 presented oral argument before the Board. The Board has considered the decision and the record in light of the exceptions, briefs, and oral arguments and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order for reasons set forth in this decision. The issue presented here is whether the Re- spondent violated Section 8(a)(3) and (1) of the Act by hiring temporary replacements after lawfully locking out permanent employees for the sole pur- pose of bringing economic pressure to bear in sup- port of a legitimate bargaining position. The judge found no violation. We agree. In accord with the rationale expressed in the opinion of former Mem- bers Kennedy and Penello in Ottawa Silica Co., 197 NLRB 449 (1972), we hold that, absent specific proof of antiunion motivation, an employer does not violate Section 8(a)(3) and (1) by hiring tempo- rary replacements in order to engage in business operations during an otherwise lawful lockout. The Respondent and the Union have been parties to a series of collective-bargaining agreements since 1973. In October 1981,2 the Respondent and the Union commenced negotiations for a new contract to succeed the one scheduled to expire on 1 De- cember. The Respondent informed the Union that it was experiencing grave financial difficulties and ' The AFL-CIO, the Teamsters , and the Chamber of Commerce ap- peared as amici curiae The Counsel on Labor Law Equality appeared both as amicus curiae and on behalf of the Respondent 2 All dates refer to 1981 unless otherwise indicated consequently sought reductions in wages and changes in the union-security clause. The Union opposed the Respondent's proposals and offered to extend the expiring contract for 6 months so that negotiations could continue. The Respondent re- plied that it would not allow employees to work without a contract and would not grant any exten- sions of the contract. Negotiations continued and on 1 December the Respondent submitted a "final" proposal to the Union. The Union was granted a 1-day extension of the contract to consider the proposal, which it rejected. On 3 December the Respondent locked out its employees in order to put pressure on the Union to agree to terms favorable to the Respond- ent. In mid-January 1982, the Respondent com- menced hiring temporary employees so that it could resume operations and meet fixed expenses. Negotiations continued through March, but at the time of the hearing the lockout continued and the temporary replacements were still employed. There is no evidence that the Respondent was motivated by specific union animus. On the con- trary, the bargaining history between the Respond- ent and the Union shows that their relations have been amicable. Further, there is no evidence that the Respondent engaged in bad-faith bargaining before or after the lockout. Two decisions issued on the same day by the Su- preme Court provide the basis for evaluating the legality of the Respondent's lockout and use of temporary replacements: American Ship Building Co. v. NLRB, 380 U.S. 300 (1965); and NLRB v. Brown Food Store, 380 U.S. 278 (1965). In American Ship Building, the Court held that an employer vio- lated neither Section 8(a)(3) nor Section 8(a)(1) when, after a bargaining impasse had been reached, it temporarily locked out employees for the sole purpose of bringing economic pressure to bear in support of a legitimate bargaining position. In Brown Food Store, the Court held that employers did not violate Section 8(a)(3) or Section 8(a)(1) by continuing operations with temporary replacements after lawfully locking out regular employees in re- sponse to a whipsaw strike against one member of a multiemployer association. The legal analyses in American Ship Building and Brown Food Store were complementary. The Court found sufficient business justification for both em- ployer weapons in the course of economic con- flicts. The Court also assessed the impact of the use of these legitimate employer weapons on three em- ployee rights protected by the Act: the right to bargain collectively, the right to strike, and the right to engage in union activities. In each instance, 280 NLRB No. 71 598 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the Court found that the impact of the employer conduct on employee rights was comparatively slight, rather than inherently destructive . Having so found, the Court concluded that the conduct was prima facie lawful. In American Ship Building, the Court made clear that the employer's lockout reasonably served the legitimate business end of pressing good -faith bar- gaining demands. Turning to the effect of such conduct on employee rights, the Court observed that the lockout was not in any way inconsistent with the employees' right to bargain collectively. "The lockout may well dissuade employees from adhering to the position which they initially adopt- ed in the bargaining, but the right to bargain col- lectively does not entail any `right' to insist on one's position free from economic disadvantage." 380 U.S. at 309. Similarly, a lockout in support of an employer's legitimate bargaining position was not inconsistent with the employees' right to strike because "there is nothing in the statute which would imply that the right to strike `carries with it' the right exclusively to determine the timing and duration of all work stoppages." Id. at 310. Finally, the Court rejected the notion that the lockout had any natural tendency severely to discourage union membership. The lockout did not target only union members. Although employees might suffer eco- nomic disadvantage because of their union's bar- gaining position, "this is also true of many steps which an employer may take during a bargaining conflict, and the existence of an arguable possibility that someone may feel himself discouraged in his union membership or discriminated against by reason of that membership cannot suffice to label them violations of § 8(a)(3) absent some unlawful intention." Id. at 312-313. In Brown Food Store, the Court reiterated its view that an employer lockout was a legitimate economic weapon in a variety of circumstances. For example, the Court had previously found that the use of a lockout by members of a multiemploy- er bargaining unit in response to a whipsaw strike did not violate either Section 8(a)(1) or Section 8(a)(3). NLRB v. Teamsters Local 449 (Buffalo Linen), 353 U.S. 87 (1957). Turning to the unfair labor practice question raised by the hiring of tem- porary employees after a lawful Buffalo Linen lock- out, the Court found the same legitimate business purpose of preserving the multiemployer unit served and stated: "In the circumstances of this case, we do not see how the continued operations of respondents and their use of temporary replace- ments imply hostile motivation any more than the lockout itself; nor do we see how they are inher- ently more destructive of employee rights." 380 U.S. at 284. Emphasizing the close relationship in purpose and effects between a lockout and hiring temporaries, the Court found the latter action to be consistent with and having no greater impact on employee rights than numerous other lawful eco- nomic weapons of employers. The use of temporar- ies was not inherently destructive of the right to strike even if it doomed the whipsaw strike to fail- ure. In addition, the tendency to discourage union membership beyond the dissatisfaction lawfully stirred by the lockout was comparatively insubstan- tial. Upon resolution of the bargaining dispute, even if on less favorable terms proposed by the em- ployers, union members could return to their jobs and the temporary replacements would depart. In NLRB v. Great Dane Trailers, 388 U.S. 26 (1967), the Court reviewed and reaffirmed the prin- ciples of American Ship Building and Brown Food Store. From these and other cases,$ the Court dis- tilled and summarized its guidelines for assessing employer motivation in the context of asserted 8(a)(3) violations (388 U.S. at 34): First, if it can reasonably be concluded that the employer's discriminatory conduct was "inherently destructive" of important employ- ee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on em- ployee rights is "comparatively slight," an an- tiunion motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct. Thus, in either situation, once it has been proved that the employer engaged in discriminatory con- duct which could have adversely affected em- ployee rights to some extent, the burden is upon the employer to establish that he was motivated by legitimate objectives since proof of motivation is most accessible to him. In Inland Trucking Co., 179 NLRB 350 (1969), the Board had an opportunity to interpret American Ship Building and Brown Food Store in determining whether employers violated Section 8(a)(3) and (1) by hiring and using temporary employees after a lockout in support of the employers ' bargaining de- mands. The Board adopted without comment the trial examiner's finding of violations. The trial ex- 9 E g, NLRB v Erie Resistor Corp, 373 U S 221 (1963), in which the Court held that an award of supersemonty to employees who worked during a strike was discriminatory, inherently destructive conduct bear- ing its own indicia of improper intent HARTER EQUIPMENT aminer reasoned that the employers' action had at least some adverse impact on employee rights. He then found that the employers had failed to meet a burden of proving that the lockout and use of tem- poraries served a sufficient legitimate objective. The Court of Appeals for the Seventh Circuit en- forced the Board's Order in Inland Trucking Co. v. NLRB, 440 F.2d 562 (7th Cir. 1971), cert. denied 404 U.S. 858 (1971), fording alternatively that the lockout, coupled with the use of temporary em- ployees, was (1) inherently destructive of employee rights and unlawful even if the employers had proved motivation by business considerations or (2) unlawful because the employers failed to prove a legitimate and substantial business justification. In Ottawa Silica Co., 197 NLRB 449 (1972), the Board considered the same issue presented in Inland Trucking but reached a different result. A majority of the Board agreed that the employer's use of temporary replacements to continue its busi- ness operations during a lawful lockout in support of the employer's bargaining position did not vio- late Section 8(a)(3) and (1). The plurality opinion of former Members Kennedy and Penello rejected the Inland Trucking analysis.4 Their opinion re- viewed the principles of American Ship Building and Brown Food Store, and found that locking out employees and continuing to operate with tempo- rary replacements were reasonably adapted to the effectuation of a legitimate business end, then turned to a consideration of the impact on employ- ee rights. The plurality noted that, as in Brown Food Store, the replacements were expressly used only for the duration of the labor dispute, the Union at most could be forced to capitulate and return its members to work on less favorable terms than sought, and the membership could end the dispute at any time by agreeing to the employer's terms and returning to work. Under these circum- stances, the Board plurality found that the employ- er's actions did not have any great tendency to dis- courage union membership, nor were they incon- sistent with the right to bargain or with the right to strike. Finding no violation, the plurality con- cluded with this observation (197 NLRB at 451): Our evaluation of the principles governing employer lockouts coupled with continued op- eration with temporary replacements con- vinces us that the result reached in Inland Trucking does not give proper recognition to legitimate employer interests, devoid of any 4 Former Chairman Miller concurred in the result based on his evalua- tion of the facts of the case in balancing employer interests against em- ployee rights Former Members Fanning and Jenkins, dissenting, would have found the lockout and use of temporary replacements to be inher- ently destructive of employee rights. 599 motive to discourage the exercise of protected employee rights, which was the underlying factor in the Supreme Court's reasoning in American Ship Building. If we are to follow the logic of American Ship Building and Brown Food Stores, we are precluded from inferring antiunion motivation solely from the applica- tion of economic pressure during the bargain- ing dispute. Having reviewed the foregoing precedent and the evidence in this case, we are convinced of the correctness of the plurality opinion of former Members Kennedy and Penello in Ottawa Silica. Initially, we find that the use of temporary employ- ees reasonably serves precisely the same purpose served by the lockout, i.e., bringing economic pres- sure to bear in support of a legitimate bargaining position. After American Ship Building, the validity of such a business purpose is unassailable. We do not perceive any persuasive reason why coupling this purpose with a desire to remain in operation with temporary employees would impermissibly color an employer's otherwise legitimate interests. There can be no more fundamental employer inter- est than the continuation of business operations. Exercising the right to lockout in a bargaining dis- pute does not necessitate for going the option to secure business earnings any more than exercising the right to strike requires employees to for go at- tempts to secure income by temporary alternative employment, strike benefits, or unemployment compensation (where permitted by state law). In sum, the use of temporary employees to remain in operation after a lawful lockout is "a measure rea- sonably adapted to the achievement of a legitimate end. 1,5 We further find that the use of temporary em- ployees here had only a comparatively slight effect on employee rights. As in Brown Food Store, we do not see how the employer's operation with tempo- rary replacements implies hostile motivation any more than the lawful lockout itself; nor do we see how any effort to remain in operation after a lawful lockout could be "inherently destructive" of em- ployee rights and per se violative of the Act with- out inquiry into the employer's motivation.6 The 5 Brown Food Store, supra at 289 The Board has held that the absence of impasse does not of itself make a lockout in support of bargaining demands unlawful , Darling & Co., 171 NLRB 801 (1968), enfd sub nom Lane v. NLRB, 418 F.2d 1208 (D C Or 1969), neither does the absence of any reasonable fear of strike We likewise find that these factors are not dispositive with respect to the postlockout use of temporary employees. They may, however, be relevant in a case in which the employer's professed business motivation is challenged as pretextual 600 DECISIONS OF NATIONAL LABOR RELATIONS BOARD fact that the Respondent here was the protagonist in locking out employees does not warrant infer- ring any greater impact on employee rights from the subsequent use of temporary employees. In light of American Ship Building, there no longer exists any meaningful distinction concerning effects between lawful "offensive" and lawful "defensive" economic weaponry. It is the lawful lockout here which had the impact on employees by removing them from the ranks of wage earners. Replacing them with tem- porary employees has no greater adverse effect on the right to bargain collectively, which "does not entail any `right' to insist on one's position free from economic disadvantage."7 The bargaining re- lationship continues and the parties may negotiate their good-faith demands even while resorting to legitimate economic pressure in support of them. The use of temporary employees also has no great- er adverse effect on the employees' right to strike. If, as stated in American Ship Building, the right to strike does not include "the right exclusively to de- termine the timing and duration of all work stop- pages" (380 U.S. at 310), then the preemptive con- trol over the work stoppage exerted by both lock- out and use of temporary employees cannot be viewed as an intrusion upon the protected right to strike. Finally, any adverse effect of the use of tem- porary employees on the right to belong to a union membership represents, as in Brown Food Store, at most only a slight addition to the impact of the lockout itself. In every instance, the use of "tempo- rary" employees means no threat to the permanent employee status of locked out employees. The Union or its individual members have the ability to relieve their adversity by accepting the employer's less favorable bargaining terms and returning to work. In sum, we find that using temporary employees after a lawful lockout in order to bring economic pressure to bear in support of legitimate bargaining demands (1) is a measure reasonably adapted to the achievement of a legitimate employer interest and (2) has only a comparatively slight adverse effect on protected employee rights. We reject the argu- ment that the Board should require more proof of an employer's legitimate purpose in such a case or should engage in balancing employer interests against employee rights to determine whether the Act has been violated, even in the absence of inde- pendent proof of unlawful employer motivation. In our view, the Supreme Court's weighing of all rel- evant rights and interests in American Ship Building and Brown Food Store has already effectively de- r NLRB v American Ship Building, supra at 309 fined the employer's conduct as less than inherent- ly destructive, has recognized the legitimacy of the business justifications involved , and has thereby struck a fixed balance in favor of permitting the use of temporary employees after an otherwise lawful lockout. Because the Court has clearly limit- ed the Board's use of a qualitative balancing test to exceptional cases such as Erie Resistor, supra, when the employer's conduct is inherently destructive of employee rights, no further balancing is appropri- ate here. Apart from this category of exceptional cases, the general rule is that the Board lacks the authority to function as an "arbiter of the sort of economic weapons the parties can use in seeking to gain acceptance of their bargaining demands." NLRB v. Insurance Agents, 361 U.S. 477, 497 (1960). The Court expressly relied on this rule in admonishing the Board to refrain from using a bal- ancing test in American Ship Building and Brown Food Store. In particular, the Court stated that "Sections 8(a)(1) and (3) do not give the Board a general authority to assess the relative economic power of the adversaries in the bargaining process and to deny weapons to one party or the other be- cause of its assessment of that party's bargaining power."e Where, as here, we have found that the employ- er's conduct falls into the category of cases de- scribed in Great Dane Trailers, supra, as those in which the adverse effect on employee rights is "comparatively slight" and the employer has come forward with evidence of "legitimate and substan- tial business justification," the Board must regard the conduct as prima facie lawful." Applying this rule to the issue presented here, we conclude that the Respondent has not violated the Act. Further- more, we hold as a general rule, in accord with Su- preme Court precedent and the plurality opinion in Ottawa Silica, that an employer does not violate Section 8(a)(3) and (1), absent specific proof of an- tiunion motivation, by using temporary employees to engage in business operations during an other- wise lawful lockout, including a lockout initiated for the sole purpose of bringing economic pressure to bear in support of a legitimate bargaining posi- tion.10 8 NLRB v. American Ship Building, supra at 317 9 We do not regard the Court's reference to "substantial" justification in Great Dane Trailers as meaning anything more than nonfrivolous. This was the standard of proof in American Ship Building and Brown Food Store, which was expressly reaffirmed in Great Dane Trailers 10 We overrule Inland Trucking to the extent it is inconsistent with this decision HARTER EQUIPMENT 601 ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed. MEMBER DENNIS, dissenting. Today the Board answers an important, recur- ring, and troubling Federal labor law question: whether any employer who lawfully locks out his employees to support a bargaining position may go further and hire temporary replacements to contin- ue normal operations. It is a question on which the Supreme Court has expressly declined to pass,' though it had the opportunity to do so,2 and over which previous Boards,3 courts of appeals,4 and academic commentators5 have sharply divided. And it is a question, difficult and controversial though it is, to which I believe my colleagues have given the wrong reply. I therefore dissent, persuad- ed as I am that using such replacements after a le- gitimate bargaining lockout-except in narrowly circumscribed and carefully defined "defensive" situations-is inherently destructive of protected employee rights and violates Section 8(a)(1) and (3) of the Act. I begin where the majority does-with an analy- sis of the Supreme Court's simultaneous watershed decisions in American Ship Building Co. v. NLRB, above, and NLRB v. Brown, above. In American Ship Building, the Court held an employer may, after a valid bargaining impasse, lock out employ- ees to exert economic pressure in support of a le- gitimate bargaining position, without violating Sec- tion 8(a)(1) or (3) of the Act.6 In Brown, the Court i American Ship Building Co. v NLRB, 380 U S 300, 308 fn 8 (1965). 2 NLRB v. Brown, 380 U S 278 (1965) S See, e g, Inland Trucking Co, 179 NLRB 350 (1969), enfd 440 F 2d 562 (7th Cir 1971), cert denied 404 U S 858 (1971) (finding temporary replacement unlawful), Ottawa Silica Co, 197 NLRB 449 (1972) (Mem- bers Kennedy and Penello finding temporary replacement lawful , Chair- man Miller concurring , Members Fanning and Jenkins dissenting ), Inter Collegiate Press, 199 NLRB 177 (1972), affd 486 F 2d 837 (8th Cir 1973), cert denied sub nom Bookbinders Local 60 v. NLRB, 416 U S. 938 (1974) (same result and division among Members as in Ottawa Silica) 4 Contrast Inland Trucking Co. v. NLRB, 440 F.2d 562 (7th Cir 1971), cert denied 404 U S 858 (1971) (upholding Board finding of violation for employing temporary replacements), with Inter-Collegiate Press v. NLRB, 486 F 2d 837 (8th Cir. 1973), cent denied sub nom Bookbinders Local 60 v NLRB, 416 U S 938 ( 1974) (upholding Board finding of no violation for employing temporary replacements) s Contrast, e g, Note, Employers' Lockout with Temporary Replacements is an Unfair Labor Practice, 85 Harv L Rev 680 (1972) (arguing use of temporary replacements in conjunction with a legitimate lockout is not unlawful), with Oberer, Lockouts and the Law- The Impact of American Ship Building and Brown Food, 51 Cornell L Q 193, 220-223 (1966) (sug- gesting such replacement is illegal) 6 The Board has subsequently held that a preimpasse lockout to but- tress a proper bargaining position is not unlawful under American Ship Building See Darling & Co, 171 NLRB 801, 802-803 (1968), affd sub nom Lane v NLRB, 418 F 2d 1208 (D C Cir 1969) held that nonstruck employers in a multiemployer bargaining association may use temporary replace- ments in conjunction with a lawful lockout under- taken after the union has commenced a whipsaw strike against one association member. The American Ship Building Court found that the bargaining lockout did not violate Section 8(a)(1) because it did not infringe upon the employees' right to bargain collectively or their right to strike. Nor did the lockout violate Section 8(a)(3) because it did not "carry with it any necessary implication that the employer acted to discourage union mem- bership or otherwise discriminate against union members as such,"7 and there was no independent evidence of unlawful motive.8 The Court explicitly limited its holding to ap- proving an economically motivated lockout unac- companied by the use of replacements, saying, "This is the only issue before us, and all that we decide."9 In a footnote accompanying that state- ment, the Court denied Justice White's accusation that under the majority's rationale "an employer may not only lock out . . . but replace his locked- out employees with temporary help."' ° The Court stated: "Contrary to the views expressed in a con- curring opinion filed in this case, we intimate no view whatever concerning the consequences which would follow had the employer replaced its em- Id at 312 e In American Ship Building, the employer, a ship repair firm operating four Great Lakes shipyards, entered into negotiations with eight unions representing its employees about 7 weeks before the union contract was to expire on 1 August 1961 Despite numerous meetings, the parties failed to reach agreement on significant economic issues The employer and the unions rejected proposals made by one another on 31 July, and the unions rejected another employer offer made 9 August On 11 August the employer distributed notices laying off employees the Chicago yard was shut down entirely; all but two employees were laid off at Toledo, a large number of employees was retained at Lorain to finish a major project; and employees in the Buffalo yard were laid off in stages as they completed various remaining tasks. The judge found no violation of Sec 8(a)(1), (3), or (5) in the employ- er's conduct, concluding it was defensive in nature, i e, to avoid the pos- sibility of a strike occurring during the shipping season when a ship was in the yard or when the yard was full The Board, however, reversed, and found the lockout unlawful, determining its purpose was solely to apply economic pressure on the union to achieve a prompt and favorable settlement. The Court in American Ship Building stated, "Both the Board and the [judge] assumed, within the established pattern of Board analysis, that if the employer had shut down its yard and laid off its workers solely for the purpose of bringing to bear economic pressure to break an impasse and secure more favorable contract terms, an unfair labor practice would be made out." 380 U S at 306 The Court recognized that the Board had permitted lockouts only in special "defensive" situations (summarized, id at 307) Its decision in American Ship Building, however, obliterated that distinction and sanc- tioned postimpasse lockout use as a legitimate weapon absent unlawful motivation See Evening News Assn, 166 NLRB 219, 221 (1967), petition for review denied sub nom Teamsters Local 372 v NLRB, 404 F 2d 1159 (6th Cir 1968), cert denied 395 U S 923 (1969) 9 Id at 308 10 Id at 324 602 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ployees with permanent replacements or even tem- porary help."11 The majority errs in reading American Ship Building broadly without due regard to the Su- preme Court's denial that it was upholding the use of temporary replacements. Indeed, a close inspec- tion of American Ship Building reveals that its ra- tionale for concluding a simple bargaining lockout does not impair the Section 7 and Section 13 pro- tected right to strike not only is inapplicable to a lockout accompanied by the use of temporary re- placements, but impliedly calls for a different result. My colleagues correctly recite the Court's state- ment that the right to strike does not encompass "the right exclusively to determine the timing and duration of all work stoppages." 12 But from that statement the majority erroneously leaps to the conclusion that "the preemptive control over the work stoppage exerted by both lockout and use of temporary employees cannot be viewed as an intru- sion upon the protected right to strike." The Court made its comment in the context of rejecting the Board's argument that a lockout pre- empts "the possibility of a strike and thus leave[s] the union with `nothing to strike against."' 13 The Court stated, "Insofar as this means that once em- ployees are locked out, they are deprived of their right to call a strike against the employer because he is already shut down, the argument is wholly specious, for the work stoppage which would have been the object of the strike has in fact oc- curred." 14 In this context, the Court's immediately subsequent remarks about a union not having the right to control the "timing and duration" of work stoppages logically follows. But, by the same token, when an employer not only locks out his employees, but remains in business using replace- ment personnel, the right to strike has been nulli- fied under the Court's reasoning because no work stoppage has occurred. The majority's reliance on this portion of the Court's opinion is thus not only misplaced, but also self-defeating. The Court also observed that a prohibition against lockouts was removed from the original legislative draft of Section 8(a)(1), giving rise to an inference the deletion was designed "to mollify those who saw in the bill an inequitable denial of resort to the lockout, and to remove any language which might give rise to fears that the lockout was being proscribed per se." 15 The Court also pointed ' 1 Ed at 308 In. 8 ' 2 1d at 310 out other provisions of the Act, including Section 8(d)(4) restricting a party to a labor contract from engaging in a strike or lockout without giving req- uisite notice, contain references that "can be inter- preted as a recognition of the legitimacy of the [lockout] device as a means of applying economic pressure in support of bargaining positions." 16 The Court thus discerned a specific statutory basis for validating a bargaining lockout. In sum, I am not convinced that American Ship Building furnishes authority for justifying the use of temporary replacements in tandem with a lawful lockout without more. The Court found sanction for upholding a bargaining lockout, inter alia, in the statute itself and its legislative history, and ex- pressly divorced the temporary replacement from the lockout issue. To the extent any implications may be drawn from the opinion, the Court's ration- ale for finding a bargaining lockout does not abridge the right to strike suggests temporary re- placement use would indeed contravene that right. When the Court, on the same day, addressed the temporary replacement issue in NLRB v. Brown, above, 380 U.S. 278, it did so within the confines of a narrowly delineated set of circumstances and eschewed any general rule approving temporary replacement use. There, negotiations between the union and a five-member multiemployer group op- erating six stores failed to produce an agreement on wages. When the union struck one store (Food Jet), four employers operating the remaining five stores immediately locked out their union-repre- sented employees and replaced them with manage- ment personnel, relatives of management, and tem- poraries for the strike's duration. Food Jet also hired temporary help. When the strike ended a little more than a month later, the Food Jet strikers and the locked-out employees were reinstated and the temporaries dismissed. The Court found the employers' use of tempo- rary replacements in connection with the lawful lockout violated neither Section 8(a)(1) nor Section 8(a)(3). The Court, however, restricted its holding to "the circumstances of this case," 17 its rationale centering around the defensive character of the lockout. The Court found no implicit hostile moti- vation nor inherently destructive impact in the em- ployers' conduct, viewing it as "all part and parcel of respondents' defensive measure to preserve the multiemployer group in the face of the whipsaw strike.""' Significantly, the Court observed that de- 1s Id 1s Id. 14 Id '7380US at 284 15 Ed. at 315. 18 Id HARTER EQUIPMENT vying the nonstruck employers of the multiemploy- er group the right to replace their employees with temporaries would negate the right to lock out be- cause it would permit the struck employer to gain the economic upper hand by remaining in business through utilization of replacements, 19 and thereby potentially threaten the integrity of the multiem- ployer association.20 In examining specifically the alleged 8(aXl) vio- lation, the Court agreed with the Board that per- mitting the nonstruck stores to stay in operation in- creased the pressure on the employees, but found "these pressures are no more than the result of the Local's inability to make effective use of the whip- saw tactic."21 The Court concluded therefore that the use of temporary replacements in such circum- stances constituted a legitimate economic weapon not inherently destructive of employee rights. The Court also found no evidence of independent hos- tile motive. Regarding the 8(a)(3) allegation, the Court like- wise found the employers' conduct did not have an inherently destructive impact on union membership activities, and that there was no evidence of subjec- tive unlawful intent. The Court emphasized, how- ever, that "the respondents' attempt to remain open for business with the help of temporary replace- ments was a measure reasonably adapted to the achievement of a legitimate end-preserving the in- tegrity of the multiemployer bargaining unit."22 The majority overlooks the key to the Court's decision in Brown, which is its emphasis upon the defensive nature of engaging temporary help in connection with a lockout where a union has al- ready struck a member of a multiemployer group. To deny the remaining employers the right to re- place in addition to the right to lockout would place the nonstruck employers at a disadvantage vis-a-vis the struck employer having a recognized right to replace. In other words, the Brown Court found the multiemployers' right to lock out hollow absent a special, limited right temporarily to re- place. Had the Supreme Court in Brown desired to place its imprimatur upon the use of temporary re- placements in other contexts, it would have used instead the wider American Ship Building rationale justifying bargaining lockouts generally to sanction temporary replacement to the same extent. 1' See NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333 (1938). 20 380 U S at 284-285 The Court quoted approvingly from the court of appeals analysis of the circumstances, as follows (id. at 285): If the struck employer does choose to operate with replace- ments and the other employers cannot replace after lockout, the eco- nomic advantage passes to the struck member, the non-struck mem- bers are deterred in exercising the defensive lockout, and the whip- saw strike enjoys an almost inescapable prospect of success. 21 Id at 286 22 Id at 289 603 The factual setting for the Respondent's employ- ment of temporary personnel in this case is far dif- ferent from that in Brown and similar to that in American Ship Building. The parties' collective-bar- gaining agreement ran from 1 December 1978 to 1 December 1981. The Respondent and the Union met numerous times, bargaining in good faith, but failed to reach agreement before the contract's ter- mination. Negotiations stalled principally over the Respondent's desire to reduce its wage and fringe benefit payments . The Respondent rejected the Union's offer to extend the labor agreement for 6 months, as it desired immediate cost relief. The Re- spondent made a "final" offer to the Union on I December, agreed to a 1-day contract extension to permit employee consideration, but locked out the unit the next day after its proposal was rejected. The Respondent's president, Seth Harter, testified he locked out the employees because he feared a strike at any time in the absence of a contract and because he desired to place negotiating pressure on the Union. In January, Harter began hiring tempo- rary replacements, as he testified, to defray fixed expenses and continue operations. Although there were some subsequent negotiations in March 1982, no agreement had been reached by the time of the hearing on 20 and 21 January 1983. There is no in- dependent evidence of bad faith or union animus on the Respondent's part. The use of replacements under the instant facts is, in my view, inherently destructive of employee rights and violates Section 8(a)(1) and (3) of the Act, notwithstanding the absence of improper motive and the presence of what might be viewed as legitimate and substantial business reasons for the conduct.23 Unlike Brown, all the Respondent's employees desired to continue working. In such a case, as one respected academic, Professor Oberer, has stated, "To deny them work which is then of- fered to nonunion replacements, solely because of their collective bargaining efforts, would seem clearly discriminatory and in the nature of reprisal for section 7 activities."24 Further, as discussed above, although the right to strike is not impaired when the union is denied the freedom to dictate 2a See generally NLRB v Erie Resistor Corp., 373 U S 221 (1963); NLRB v. Great Dane Trailers, 388 U S 26 (1967), NLRB v Fleetwood Trailers Co., 389 U.S 375 (1967) The Court in Erie Resistor (373 U S at 228) explained that where "in- herently discriminatory or destructive " conduct is involved. The employer must be held to intend the very consequences which foreseeably and inescapably flow from his actions [be- cause] his conduct does speak for itself-it is discriminatory and it does discourage union membership and whatever the claimed over- riding justification may be, it carries with it unavoidable conse- quences which the employer not only foresaw but which he must have intended 24 Oberer, Lockouts and the Law, 51 Cornell L Q 193, 221-222. 604 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the "timing and duration"25 of a work stoppage (lockout only), that right is nullified when the union is denied the possibility of effecting or pro- voking a shutdown (lockout plus temporary re- placement). Professor Oberer has concluded, rightly in my estimation, as follows:26 It may therefore be argued that Brown Food is irrelevant, and that the single employer who chooses to lock out for bargaining purposes should resign himself to paying the price of a temporary cessation of business. Because he is himself responsible for his dilemma with re- spect to continued operations, he might fairly be required to take the bitter with the sweet. Put otherwise, his total conduct-the bargain- ing lockout plus the hiring of temporary non- union replacements-might be said to "carry its own indicia of unlawful intent." Any other conclusion would entail subordinating express- ly protected employee rights in favor of non- expressly protected employer interests to a degree not involved in the validation of the bargaining lockout itself. The Seventh Circuit in Inland Trucking Co. v. NLRB, above, 440 F.2d 562 (1971), reasoned along similar lines to conclude that Brown was properly limited to its special facts involving a multiemploy- er group's defensive reaction to a whipsaw strike, and that a lockout accompanied by temporary re- placements is inherently destructive of employee rights and in contravention of Section 8(a)(1) and (3) of the statute. The court commented that such a lockout "forecloses the employees' opportunity to earn without surrendering the corresponding right of the employer,"27 and held that "[p]ermitting an employer to impose this additional price on the protected right to collective bargaining would .. . conflict with the intended scope and content of that right."2 s I think my colleagues err in stating broadly that, after American Ship Building, "there no longer exists any meaningful distinction as to effects be- tween lawful `offensive' and lawful `defensive' eco- nomic weaponry." While American Ship Building effaced that distinction regarding the legitimacy of lockouts, the Court, in deciding that case and Brown, rejected the squarely presented opportunity to go one step beyond and hold temporary replace- ment use lawful on the same basis as the lockout itself. Instead, the Court delimited its holding in 26 American Ship Building, above at 310 26 Oberer, above, 51 Cornell L Q at 222 27 440 F 2d at 564 28 Id Brown to circumstances in which the union had ini- tiated economic action and nonstruck employers' utilization of temporary replacements was vital to make meaningful their unquestioned lockout right. In so doing, the Court, I believe, implicitly recog- nized that allowing an employer to take the offen- sive and temporarily replace locked-out employees renders nugatory the employees' right to strike, and places an unacceptable burden on employees' rights to engage in collective-bargaining and union activities. I therefore find the Respondent's tempo- rary replacement of its employees in these condi- tions unlawful under Section 8(a)(1) and (3) of the Act as inherently destructive of rights guaranteed in Sections 7 and 13 of the Act. Marguerite R. Greenfield, Esq., for the General Counsel. Kent A. F. Weisert and Joseph Campisano, Esqs. (Schwartz, Tobia and Stanziale), of East Orange, New Jersey, for the Respondent. DECISION STATEMENT OF THE CASE STEVEN DAVIS Administrative Law Judge. On April 1, 1982, Local 825, International Union of Operating En- gineers, AFL-CIO (the Union), filed a charge against Harter Equipment, Inc. (Respondent), and on July 30, 1982, the Regional Director of Region 22 issued a com- plaint against Respondent that alleges that it violated Section 8(a)(1) and (3) of the Act by locking out six named employees and hiring temporary replacements for those employees. The case was heard before me in Newark, New Jersey, January 20 and 21, 1983. On the entire record, including my observation of the demeanor of the sole witness, Seth Harter,' and after due consideration of the briefs filed by the General Counsel and Respondent, I make the following FINDINGS OF FACT 1. JURISDICTION Respondent, a New Jersey corporation, having its principal office and place of business at Route 33, Eng- lishtown, New Jersey, is engaged in the sale, distribution, and service of construction and lawn maintenance equip- ment and related products. It annually purchases and re- ceives construction equipment and other goods and ma- terials valued in excess of $50,000 directly from suppliers located outside New Jersey. Respondent admits and I find that it is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. i There were no credibility issues raised at the hearing Harter's undis- puted testimony is credited As discussed , infra, I do not believe that Harter's fear of a strike was justified However, that minor issue does not at all affect his credibility HARTER EQUIPMENT 605 II. THE UNION Respondent has denied knowledge or information about the Union's status as a labor organization. The evi- dence established that the Union, whose members in- clude certain employees of Respondent, represents em- ployees in collective-bargaining negotiations with their employers and is a party to various bargaining agree- ments including an agreement with Respondent. I ac- cordingly find and conclude that the Union is a labor or- ganization within the meaning of Section 2(5) of the Act. III. ALLEGED UNFAIR LABOR PRACTICES A. Background Prior to 1978 Respondent was a member of an em- ployer association, in the Associated Equipment Dealers of New Jersey, which was a party to a collective-bar- gaining agreement with the Union. In 1977 Respondent withdrew from the association and separately negotiated and entered into a collective-bargaining agreement with the Union, that ran from December 1, 1978, to Decem- ber 1, 1981. The parties met about 14 times for the purpose of ne- gotiating a renewal contract to replace the agreement that was to expire on December 1, 1981. They met about seven times before the lockout of December 3, 1981. It is not alleged that Respondent engaged in surface bargain- ing or bad-faith bargaining and in fact the General Coun- sel stated at the hearing that charges alleging a refusal to bargain that were filed against both parties were either dismissed or withdrawn. During the course of the negotiations, the proposals and demands of both parties were presented and dis- cussed. The major issues were wages and a union-securi- ty clause. Throughout the negotiations it was the Union's posi- tion that it would extend the expiring agreement for as much as 6 months so that negotiations could continue. It was Respondent's position that it wanted to reach agree- ment and have a contract executed before the December expiration date, and if a renewal agreement was not exe- cuted by that time it would not permit its employees to work. Respondent's reasons for insisting on a contract before December 1 were threefold: (a) President Seth Harter feared that if Respondent's agreement was ex- tended beyond January 15, 1982, the expiration date of the association contract, the Union would demand that Respondent agree to the same terms as the association contract, and (b) Respondent sought to reduce its wages and fringe benefit payments because it was losing money and had to cut costs. Thus, as an extension of the con- tract, with its high wage and benefit provisions would not relieve its financial difficulties, and (c) Respondent wanted the protection of a no-strike clause because it feared that its employees might strike if they worked without a contract being in effect. Respondent initially proposed a union-security clause that provided that union membership would be voluntary after 180 days of employment. The union-security clause in the expiring contract required membership in the Union as a condition of employment, after 90 days of employment for regular employees and 180 days for trainees. The Union was opposed to Respondent's union- security proposal and there was little movement in nego- tiations on that issue until November 27, 1981, when Union Representative Fay proposed, subject to the ap- proval of union officials, that Respondent would not be required to provide benefits for new employees until 36 months after their employment. Respondent immediately accepted this offer, however, later that day Fay advised Respondent that he could not obtain approval of the pro- posal from union officials and the offer was therefore withdrawn. Harter conceded that in the meetings held in Novem- ber, the parties reached agreement on certain items. On December 1, the day the contract expired, Re- spondent submitted a new "final" proposal to the Union that provided, inter alia, that "trainees shall be required to apply for membership in the Union not later than 18 months after their employment and are not eligible for benefits until a union member." Respondent also pro- posed a wage reduction permit for its employees. Fay re- quested that the contract be extended 1 day to permit the employees to consider the proposal. Accordingly, the employees worked on December 2. On December 3, Harter was advised by Shop Steward Jeffrey Hughy that the employees rejected Respondent's proposal but wanted to continue to work until a new contract was agreed on.2 Harter refused, and directed his Service Manager James Gerstenmier to refuse to permit the em- ployees to punch in or work. On December 4, the em- ployees picketed Respondent's premises with signs that stated that they were locked out. Harter testified that he locked out the employees mainly because he did not want to have employees working at the shop without a contract because he feared that the employees might strike at any time, and also to put pressure on the Union to agree to a contract. In early December, Harter, at the recommendation of a mediator, met with Union President Jackie Pierson to attempt to resolve the union-security issue. Pierson rec- ommended and Harter accepted a provision whereby trainees would not become members of the Union and thereby entitled to contributions for pension, welfare, and other benefits until the 13th month of their employ- ment. Thereafter, Harter met with Fay and agreement was reached on other items, but on January 7, 1982,3 Fay withdrew the proposal made by Pierson and accept- ed by Harter in early December relating to trainees. Harter believed that there was no progress in the ne- gotiations and he decided to hire temporary replace- ments because he had service work in the shop that needed to be done in order to defray his expenses in keeping the plant open, and also to continue his oper- ations. Beginning January 15, Harter placed advertise- ments for employees and certain employees were hired in January. On March 10, Respondent presented the Union with revised proposals that were later rejected by the Union. 2 On December 2, the Union confirmed this in a telegram to Respond- ent All dates hereafter are in 1982 606 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Thereafter, the parties reached agreement on March 21 when the wages were agreed on, and a letter of intent was to be signed the next day. Harter then told Fay, however, that inasmuch as he had work only for the me- chanics he would reinstate only the mechanics at that time, and would not take back the parts employee or driver because he had no work for them . Fay replied that he had "legal problems" in Respondent's recalling only the mechanics. The following day, March 22, Fay demanded that Harter reinstate at least one parts employ- ee, one driver, and one painter, and Harter refused. Also on that day, prospective employees applied for work in response to an advertisement placed in the previous day's newspaper. Certain employees were hired . When re- placements were hired, in January and March, Respond- ent accepted orders from its customers and operated its business as in the past. On March 30, Respondent withdrew its last offer due to "anger, frustration and exasperation" essentially be- cause the Union demanded that it reinstate a parts em- ployee, painter, and driver although it had no work for them. The last day of picketing was April 1, on which date the Union filed the instant charge against Respond- ent. At the time of the hearing the labor dispute had appar- ently not yet ended, a renewal contract had not yet been executed,4 the replacement employees were still working for Respondent, and the regular unit employees had still not been returned to work. IV. CONTENTIONS OF THE PARTIES The General Counsel essentially argues that Respond- ent's lockout and hire of temporary replacements during the lockout was inherently destructive of their Section 7 rights and, principally relying on Inland Trucking Co.,5 asserts that nevertheless Respondent has failed to meet its burden of establishing a legitimate and substantial jus- tification for its employment of the replacements. Respondent argues essentially that in the absence of any independent evidence of union hostility, it could lock out its employees and employ others on a tempo- rary basis to do the work of the locked-out employees in aid of its bargaining position, as a matter of legal right, under the decisions of the Supreme Court in American Ship Building Co. v. NLRB6 and NLRB v. Brown Food Stores 7 V. DISCUSSION AND ANALYSIS Respondent's answer denies that it had locked out its employees on December 3, 1981. The evidence clearly establishes that it did. Respondent's position from the outset of the negotiations was that if a contract was not agreed on by its expiration date, it would not permit the employees to work. Indeed, on December 3, 1981, on learning that his new proposal had been rejected by the employees, Harter directed his manager to refuse to permit the unit employees to work. Thereafter, he denied 4 However, negotiation sessions did take place after April 8 Inland Trucking Co., 179 NLRB 350 (1979) 6 380 U.S. 300 (1965) 7 380 U.S. 278 (1965) the request of certain unit employees to return to work. I accordingly find that December 3, 1981, Respondent locked out its unit employees.8 The Supreme Court in American Ship Building held that the employer in that case did not violate the Act by locking out its employees when its only object was to exert pressure in support of its bargaining position," and it therefore followed that the use of the lockout did not carry with it any "necessary implication" that it acted to discourage union members as such. The Court noted that it did not appear that the "natural tendency" of the lock- out was to discourage union membership while serving no significant employer interest and that union animus must be proven . It is clear here that Respondent, as testi- fied by Harter, lawfully locked out sit employees to bring pressure on the Union to modify its demands and to bring about a settlement of the dispute on favorable terms as soon as possible to relieve its financial losses. Indeed, the lockout was nearly successful inasmuch as full agreement on the terms of a new contract was reached on March 21. In Brown Food Stores, which dealt with the issue of temporary replacements, the Supreme Court held that in the absence of a finding of hostile motive, an employer does not violate the Act by continuing operations with the use of temporary replacements during an otherwise lawful lockout. The Court stated that "when the result- ing harm to employee rights is ... comparatively slight, and a substantial and legitimate business end is served, the employers' conduct is prima facie." 110 The complaint alleges, and the General Counsel, citing Inland Trucking argues, that Respondent's conduct in locking out and employing temporary replacements for the locked-out employees amounts to conduct that is "in- herently destructive" of the employees' Section 7 rights. The Supreme Court has stated that "if it can reasonably be concluded that the employer's discriminatory conduct was 'inherently destructive' of important employee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was moti- vated by business consideration."11 The Board, however, has consistently rejected such a per se violation, t 2 and 8 "The conditioning of all work upon acceptance of the contract is the very essence of a lockout " NLRB Y. Golden State Bottling Co., 401 F 2d 454, 457 (9th Cir 1965) 8 Although American Ship Building dealt with a postimpasse lockout, the Board has applied the principle in that case to preimpasse lockouts. Darting & Co, 171 NLRB 801 ( 1968), enfd. sub nom. Lane Y. NLRB, 418 F.2d 1208 (D C. Cir. 1969). It is clear that no impasse had occurred here At the time of the lockout the parties were still negotiating, Respondent had just presented the Union with a new offer and Respondent admitted that much progress had been made, including the granting of concessions at the meetings immediately prior to the lockout 10 Brown Food Stores, supra at 289 11 NLRB v. Great Dane Trailers, 388 U S 26, 34 (1967). tY Some Board members would apply Inland Trucking and find that the use of temporary replacements always create a violation of the Act See the dissenting opinion in Johns-Manville Products Corp, 223 NLRB 1317 (1976); Hess Oil Virgin Islands Corp., 205 NLRB 23 (1973); Ralston Purina Co., 204 NLRB 366 (1973), Inter-Collegiate Press, 199 NLRB 177 (1972), Ottawa Silica Co., 197 NLRB 449 (1972) HARTER EQUIPMENT has expressly refused to follow Inland Trucking.' 3 Rather, it has been the holding of a majority of the Board that in the absence of a finding of antiunion moti- vation, an employer does not violate Section 8(a)(3) or (1) of the Act by hiring temporary replacements to con- tinue operations during an otherwise lawful lockout. i 4 I accordingly find and conclude for the reasons to be dis- cussed infra that Respondent's actions were not inherent- ly destructive of its employees' Section 7 rights. Moreover, the General Counsel further contends that even if Respondent's actions are not deemed to be inher- ently destructive of its employees' rights, nevertheless, it has not presented evidence of "legitimate and substan- tial" business justification for its conduct.15 I am unable to agree with the General Counsel's argument. The Board has not required an employer to show that it had "legitimate and substantial" business justification for its conduct.16 Rather, such a "balancing test," ap- plied by the Board and Seventh Circuit in Inland Truck- ingi7 was endorsed by former Chairman Miller principal- ly in his concurring opinion in Inter-Collegiate Press, but has not been accepted by the Board. Indeed, as noted above, the Board has expressly refused to follow its deci- sion in Inland Trucking. Here, Respondent's actions constituted "a measure rea- sonably adapted to the effectuation of a legitimate busi- ness end."18 As set forth in Brown Food Store, and followed by the Board in Ottawa Silica: [T]he replacements were expressly used for the du- ration of the labor dispute only; thus, the displaced employees could not have looked upon the replace- ments as threatening their jobs. At most, [sic] he Union could be forced to capitulate and return its members to work on terms less desirable than hoped for. The membership, through its control of union policy, could end the dispute and terminate the lockout at any time by agreeing to Respondent's terms and returning to work on a regular basis. It would appear that union members would have nothing to gain and much to lose, by quitting the union. Under all these circumstances, we cannot say that Respondent's conduct had any great tendency to discourage union membership. As stated by the Supreme Court in Brown Food Stores, not only was the prospect of discouragement of membership comparatively remote, but the attempt to remain open for business with the help of temporary re- placements was a measure reasonably adapted to the achievement of a legitimate end. We see nothing in Respondent's conduct which would warrant a conclusion that it was motivated 13 Ralston Purina Co, 204 NLRB 366 fn 1 (1973), Ottawa Silica Co, 197 NLRB 449, 451 (1972) 14 Ralston Purina Co, supra at fn 1, Hess Oil, supra at fn 2, Inter- Collegiate Press, supra, and Ottawa Silica, supra 18 Inland Trucking Co, 440 F 2d 562, 564 (7th Cir 1971), cert denied 404 US 858 (1971) 18 See cases cited in fn 14, supra 17 See fn 15, supra 18 Brown Food Store, supra, 380 U S at 289 607 by any antiunion considerations or that it was in- tended to discourage the exercise of protected em- ployee rights. We view the lockout here as having been used solely in support of Respondent's legiti- mate bargaining position . In such circumstances, it was not inconsistent with the right to bargain col- lectively nor with the right to strike. Having con- cluded that the resulting harm to employee rights by the lockout and continued operation by use of temporary replacements was comparatively slight, and being of the view that there is insufficient evi- dence of improper motivation we hold that Re- spondent did not violate Section 8(a)(1) and (3).119 The same reasoning applies to the facts in this case. It should be noted that although the advertisements for the replacements did not state that the positions would be temporary, it was Harter's intention to return the regular employees to work at the end of the dispute.2 ° Inasmuch as the dispute had not ended at the time of the hearing, the temporary employees were still employed by Re- spondent.21 The General Counsel argues that unlike Brown Food Stores when the Court noted the union could have ended the dispute by returning the members to "work on terms which, while not as desirable as hoped for, were still better than under the old contract" (emphasis added), here the terms offered by Respondent were less favorable than provided for in the prior contract. Although the General Counsel may be correct, the Board, in Ottawa Silica, did not rely on that language in Brown Food Stores, but simply stated, as set forth above, that the Union could "return its members to work on terms less desirable than hoped for." Moreover, there was no evi- dence that Respondent engaged in bad-faith bargaining22 and, indeed, the fact that the prior contract was so gen- erous to employees, due to Respondent's failure to demand that a cap be placed on cost-of-living adjust- ments to wage raises, causing its wage costs to be higher than certain of its competitors, was the nub of the instant dispute. The General Counsel further asserts that another factor cited in Brown Food Stores as applied by the Board in Ottawa Silica is inapposite. Thus, it was noted in those cases as evidence that the employer's conduct did not have a tendency to discourage membership in the union, that the union members, through their control of union policy "could end the dispute and terminate the lockout at any time by agreeing to the employer's terms and re- turning to work." Although the General Counsel states that Respondent's withdrawal of its last offer on March '9 Ottawa Silica, supra at 451 20 I am aware that there was no evidence that the replacements were in fact told that their positions were temporary and that they would be replaced at the conclusion of the dispute 21 It is of no moment that certain unit employees requested reinstate- ment and were refused, inasmuch as the labor dispute had not ended at the time they asked to return to work Moreover , there was no evidence that the Union sought to end the dispute or sign an agreement with Re- spondent at the time the employees made their request to return 22 Charges alleging that Respondent violated Sec 8(a)(5) of the Act by its conduct during the bargaining were withdrawn or dismissed See Sargent-Welch Scientific Co, 208 NLRB 811 (1974) 608 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 30 caused some confusion about what the union member- ship could agree to then,23 nevertheless, at the time of the lockout December 3, 1981 , Respondent was advised that its new proposal that it submitted to the Union on December 1 had been rejected by the employees. In ad- dition, during the course of the lockout on March 10, Respondent presented a revised proposal to the Union that was later rejected by it, and on March 21 full agree- ment was apparently reached on all terms of a new agreement when a new dispute arose over which em- ployees would be reinstated. Thus, the union members could have during the course of the lockout on several occasions agreed to Respondent's terms and returned to work. Furthermore, it is noted that there is no evidence that Respondent was motivated by antiunion animus. On the contrary, the bargaining history between Respondent and the Union shows that their relations have been amica- ble-first when Respondent was a member of the em- ployer association and then when it reached agreement separately with the Union in its recently expired con- tract. Thus, the Union gave certain concessions to Re- spondent in the 1978 contract that it did not afford to the employer association. Harter, although he bargained hard in the instant negotiations , nevertheless I am convinced that he had a sincere desire to reach agreement with the Union and continue their relationship. Evidence of this is seen in Respondent's [c]ontinuing efforts throughout negotiations to expe- dite bargaining sessions looking toward an early contract agreement, and the fact that it offered pro- posals, discussed union proposals , made concessions, and reached agreement with the Union on certainly most of the provisions of a collective-bargaining agreement prior to [the] lockout.24 In addition, the replacements were not hired until about 6 weeks after the commencement of the lockout because Respondent reasonably believed that the parties would reach agreement before too long. Thus, there was no attempt by Respondent to rush to hire replacements. This clearly shows a lack of intent by it to discourage membership in the Union and Harter's good faith in ulti- mately hiring replacements for the locked-out employees. As set forth above, the General Counsel argues that Respondent can show no "legitimate and substantial" jus- tification for its conduct, and further asserts that Inland Trucking applies herein. In that case, the trial examiner, affirmed by the Board, stated that "Respondents assert no special situation, beyond their normal business oper- ations, in justification of their conduct," did not face "any serious or unusual competitive threat from other firms," and their problems "do not appear to differ mate- rially from those common to . . . other employees." The 23 Negotiation sessions did continue after the filing of the instant unfair labor practice charge by the Union on April 1 There was no evidence that the Union was confused about what it could agree to in order to end the dispute 24 Stokely- Van Camp, Inc, 186 NLRB 440, 451 (1970), which also in- volved a "well-founded fear of a disastrous strike," not present here. The business justifications of Respondent will be discussed, infra trial examiner, therefore, in finding a violation of the Act in the use of temporary replacements during a lockout, required "some more substantial justification for that ad- ditional, significant discrimination against such employ- ees inherent in giving their work to others , after shutting them out from employment."25 The General Counsel correctly asserts that this case does not involve the cir- cumstance present in other cases, such as strike threat,26 the possible deterioration of perishable goods,27 or criti- cal operating problems.28 I am unable to agree with the General Counsel's theory. As noted above, Board cases subsequent to Inland Trucking do not appear to require the employer to establish such justification, and the Board has express- ly declined to follow Inland Trucking. Nevertheless, Harter gave undisputed testimony that Respondent expe- rienced severe financial difficulties-its net profit drop- ping from $36,166 in 1979 to $2247.88 in 1980, and in 1981 it sustained a net loss of $14,516. The Union was informed of the financial status of Respondent at the first negotiating session. During the lockout, Respondent's fixed expenses continued while no work was being per- formed on machinery already in the shop awaiting serv- ice. Accordingly, in order to begin operations and meet its fixed expenses, Respondent hired temporary replace- ments. As noted above, Respondent did not hire replace- ments until about 6 weeks after the commencement of the lockout, during which 6-week period no unit work was performed. Respondent's use of temporary replace- ments therefore was "reasonably adapted to achieve le- gitimate business ends"29-its economic survival and ac- cordingly its use of such replacements "to continue oper- ations during an otherwise lawful lockout"30 did not violate the Act. Conclusions It is concluded that there being no proof of antiunion motivation, Respondent's lockout of employees occurred in order to put pressure on the Union in support of Re- spondent's legitimate bargaining position and that the lockout therefore was neither inherently destructive of employee rights nor inherently prejudicial to union inter- ests nor devoid of significant economic justification. It is further concluded that there being no proof of an- tiunion motivation, Respondent's use of temporary re- placements during the lockout, although the resulting tendency to discourage union membership was compara- 25 Inland Trucking, supra at 359 26 Harter testified that he would not let the unit employees work with- out a contract because, inter alia, he feared that they would strike at any time. I find that there was no basis for such a fear inasmuch as the Union never threatened to strike; several times during the negotiations the Union offered to extend the expiring contract for as much as 6 months while negotiations continued; and when the employees rejected Respond- ent's proposals on December 3, 1981, precipitating the lockout, they of- fered to continue to work until a new contract was agreed on I also note that no strike took place during the negotiation of the expired contract in 1978 21 Ralston Purina Puppy Chow, supra 28 Johns-Manville, supra 29 Brown Food Stores, supra 30 Ralston Purina Co, supra; WGN of Colorado, Inc, 199 NLRB 1053 (1972), Inter-Collegiate Press, supra. HARTER EQUIPMENT 609 tively remote, such use of replacements constituted a On the foregoing findings of fact and conclusion of measure reasonably adapted to the effectuation of a le- law, I issue the following recommended31 gitimate business end and was lawful. CONCLUSION OF LAW Respondent has not violated the Act in any respect. ORDER The complaint is dismissed in its entirety. 31 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses