Waldon, Inc.

WALDON, INC. Waldon, Incorporated and International Association of Machinists and Aerospace Workers, AFL- CIO., Case 16-CA-12372 30 December 1986 DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND STEPHENS On 14 May 1986 Administrative Law Judge Lawrence W. Cullen issued the attached decision. The Respondent and the General Counsel filed ex- ceptions, supporting briefs, and answering briefs. ' The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record' in light ` of the exceptions and briefs and has decided to affirm the judge's rulings, fmdings,2 and conclusions only to the extent consistent with this Decision and Order. We agree with the judge that the Respondent did not violate Section 8(a)(5) of the Act by repu- diating the labor agreement the parties executed because there was no meeting of the minds con- cerning the contract's wage scale. Therefore, there was no valid contract and the Respondent was not obligated to arbitrate the wage dispute. We dis- agree,, however, with the judge's finding that the 'Respondent violated Section 8(a)(5) by unilaterally implementing a new wage scale before reaching an impasse in negotiations. We need not reach the merits of the violation the judge found. We find that the complaint does not allege a preimpasse unilateral change violation, 3 and the impasse issue was never raised at the hear- ing. Because the Respondent was denied an oppor- tunity fully to litigate' an issue the judge raised sua sponte in his decision, we reverse the judge's ford- ing and dismiss the complaint. ORDER The complaint is dismissed. i We deny the Respondent's motion to reopen the record for receipt of additional evidence. 2 The General Counsel has excepted to some of the judge's credibility findings. The Board's established policy is not to overrule an administra- tive law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect. Standard Dry Wall .Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully examined the record and find no basis for re- versing the findings. a The complaint alleges that the Respondent abrogated the collective- bargaining agreement, reduced wage rates, and refused to recognize the contract's grievance-and-arbitration procedure. It is clear from the com- plaint and from the General Counsel's subsequent litigation strategy that the wage reduction and refusal to arbitrate allegations flow solely from the General Counsel's theory that the Respondent refused to honor the contract. 583 J_-CJ. meson, Esq., for the General Counsel. Gary L. Lieber, Esq. (Rose, Schmidt, Chapman, Duff & Hasley), of Washington, D.C., for the Respondent. DECISION STATEMENT OF THE CASE LAWRENCE W. CuLLEN, Administrative Law Judge. This case was heard before me on 6 and 7 February 1986 at Fairview, Oklahoma. The hearing was held pursuant to a complaint issued by the Regional Director for Region 16 of the National Labor Relations Board (the Board) on 26 November 1985. The complaint, as amend- ed at the hearing, is based on a charge filed by Interna- tional Association of Machinists and Aerospace Workers, AFL-CIO (the Charging Party or the Union) on 28 Oc- tober 1985 and alleges that Waldon, Incorporated (the Respondent or the Employer) violated Section 8(a)(5) and (1) of the National Labor Relations Act (the Act) by since about 9 September 1985 'failing and refusing to abide by a written labor agreement executed by the Charging Party and the Respondent,' by reducing the wage rates of its employees and by refusing to recognize the existence of a grievance-arbitration process, which was one of the terms of employment agreed to by the parties and embodied in the aforesaid executed written agreement. The Respondent, by, its answer filed on 12 December 1985, denied the commission of the alleged violations of the Act. On the entire record in this proceeding, including my observations of the witnesses and after due consideration of the positions of the parties and briefs filed 'by the par- ties, I make the following FINDINGS OF FACT AND ANALYSIS' L JURISDICTION The complaint alleges, the Respondent admits, and I find that the Employer is an Oklahoma corporation with an office and place of business located in Fairview, Okla- homa, where it is engaged in the manufacture and sale of material handling equipment, and that during the 12- month period, a representative period, prior to the filing of the complaint, the Employer, in the course and con- duct'of its business operations, purchased and received at its Fairview, Oklahoma facility, products, goods, and materials valued in excess of $50,000 directly from points located outside the State of Oklahoma, and that the Em- ployer is, and has been at all times material an employer within the meaning of Section 2(2), (6), and (7) of the Act. II. THE LABOR ORGANIZATION The complaint alleges, the answer admits, and I find that the Union is, and has been at all times material, a labor organization within the meaning of Section 2(5) of the Act. I The Respondent's posthearing Exh. 19(a) is admitted and its unop- posed motion to correct the transcript is granted. 282 NLRB No. 82 584 Ill. THE APPROPRIATE UNIT On 6 February 1985, the Union was certified as the ex- clusive collective bargaining representative of the em- ployees in the following appropriate unit for purposes of collective bargaining: All production and maintenance employees, includ- ing over-the-road truck drivers, shop floor control- lers, material handlers, quality control inspectors and tool and die makers employed by the Respond- ent at its Fairview, Oklahoma facility, excluding office clerical employees, buyers, scheduler-plan- ners, keypunch operators, purchasing clericals, pro- fessional employees, guards, and supervisors as de- fined in the Act. DECISIONS OF NATIONAL LABOR RELATIONS BOARD IV. THE ALLEGED UNFAIR LABOR PRACTICES2 In March 1985,2 the parties commenced bargaining for an initial labor agreement following the Union 's certifica- tion as the collective-bargaining agent of the employees. By agreement of the parties, economic issues were de- ferred during negotiations until 27 June. The principal negotiator for the Respondent was Kent McCulloch, an attorney who serves as the director of industrial relations of its parent company. The Union's negotiating team was comprised of several bargaining unit members and was headed by Charles Holler, the business manager of Local Lodge 898. Both McCulloch and Holler were experi- enced in labor negotiations. Prior to commencement of negotiations, the Respond- ent had six wage classifications of its employees in place as follows: Grade Job Classification Salary Range IA I II III IV V Maintenance .................................................. Machine-Technical-Tape Machines Painter A ....................................................... Welder A Machine A Ass'y A Machine B ..................................................... Welder B Ass'y B Maint. B Shipping/R.A. Machine C ..................................................... Welder C Ass'y C Maint. C Shipping/R.B. Welder D ....................................................... Machine D Ass'y D Maint. D Painter/Helper .............................................. Shipping/Rec. Janitor $7.75-9.50 7.00-8.75 6.50-8.25 6.00-7.50 5.50-6.75 5.50-6.25 z The following includes a composite of the testimony of the witnesses. s All dates are in 1985 unless otherwise specified Prior to the commencement of negotiations , the Union had requested and received from the Respondent certain information for bargaining purposes. However, the above existing wage grade schedule was not included in the packet of materials furnished the Union . Although the parties had agreed to defer economic matters until other issues were resolved, McCulloch had told the Union's representatives that the Respondent had lost $800,000 al- ready that year and expected this loss to amount to about a million by midyear. Approximately five or six meetings were held between March and June and an agreement was reached on con- tract language by 26 June . McCulloch testified at the hearing that the Respondent was seeking a 5-percent wage reduction and benefit concessions. On 27 June, the Union proposed a 10-percent wage increase and benefit improvements. On 15 July, McCulloch proposed that wages be reduced to the minimum rate of the wage grades of the existing job classification system, thus eliminating the wage range. According to McCulloch's testimony, he went through and identified each of the ex- isting six wage grades including grade I-A and grade I. On the same date the Union countered with a 5-percent wage increase demand with new hires to be hired at the minimum rate of the job classification system with pro- gression to the top of the scale over a period of time. The parties met again on 25 July and at that time, ac- cording to McCulloch, he read from a written proposal on behalf of the Respondent that the wage rates for the jobs would be: I-A, $7.75; I, $7; 2, $6.50; 3, $6; 4, $5.50; and 5, $5.50, and that the starting wage would be $4.50 for new employees who would progress to the minimum rate of their job within 6 months. Current employees would receive either a 10-percent wage decrease or the new rate for their grade, whichever was greater. On 26 July, the Union renewed its proposal for a 5-percent wage increase for current employees with new hires to start at the minimum rate for the job classification. The Respondent reasserted its proposal of a 10-percent reduc- tion, but not below the minimum rate for the job classifi- cation. The Union then proposed a 4-percent increase for current employees. The Respondent then proposed an 8- percent wage reduction, but not below the minimum rate for the job classification. The Union then made another proposal with concession, in a benefit, but with no change in its previous demand for a 4-percent increase for current employees. The Respondent then proposed a 5-percent reduction for current employees, but not below the minimum rate for the job classification. The Union's representatives told the Respondent's representatives they would submit this proposal for a vote by the mem- bership but would not recommend it. McCulloch testi- fied that when he went through the Respondent's pro- posal on 15 and 26 July, he spelled out the specific rate for each wage grade as "I-A was $7.75; I was $7.00; 2 was $6.50; 3 was $6.00 and so forth." All the wage pro- posals were made verbally. Business Manager Holler testified that McCulloch did not list the grade IA classification when making the wage grade proposals but, rather, listed a grade I with a minimum hourly rate of $7.75, a grade II with a mini- WALDON, INC. mum hourly rate of $7, a grade HE with a minimum hourly rate of $6.50, a grade IV with a minimum hourly rate of $6, and a grade V with a minimum hourly rate of $5.50. Holler contends that he is certain of this and that he reduced the verbal proposal to writing from memory on 16 July and had it typed and submitted it to the Union's members who ratified it with the five grades rather than the six grades. Holler acknowledged having seen a copy of the six grade wage schedule during the course of the organizing campaign and having acknowl- edged that he was aware of it in response to a question by McCulloch at the time McCulloch originally referred to the wage grades. However, Holler contends he did not use the existing wage grades as a point of reference in considering McCulloch's offer. He also testified that the existing wage schedule did not make sense as there were no employees in grade IA classification and many of the actual wages of the employees were above the top of the range for their classification. After Holler obtained the ratification of the proposal as he had presented it to the Union's members, he ad- vised McCulloch who agreed that Holler would prepare a draft of the agreement for execution by the Respondent and the Union. Holler sent a draft of the agreement to McCulloch who recommended changes in language, in- cluding the section involving pay rates . Ultimately, the changes were made and the parties signed the agreement. McCulloch testified that the Respondent's controller, William McDowell, noted that there was an error in the wage grades in the contract as grade IA had been elimi- nated and each of the grades had been bumped to the bottom of the salary range of the next higher grade with the exception of grade V, which remained the same as it had originally had the same minimum rate as grade IV. He believed it to be an error and sent a letter dated 5 September to Holler advising him thereof and had the parent company's president sign the agreement and en- closed it also, and left on vacation . When he returned in September, he was advised that Holler was contending there was no error and that the new grades and rates were correct. The parties met and attempted to resolve the matter in September and October, but were unsuc- cessful in doing so. The Union filed the underlying charge in this case and a grievance and sought arbitra- tion thereof. McCulloch told the Union to either resub- mit to its members what he believed his offer to have been or there would be no agreement as there had not been a meeting of the minds. The Union refused to take this offer back to its members and the Respondent re- fused to honor the contract and reduced the employees wages in accordance with McCulloch's version as to what his offer had been and refused to arbitrate the issue. The Union contends that Holler's version of the offer was correct and that the Respondent had a number of opportunities to review the rates following submission of the drafts to the Respondent, but did not contend there was an error until after the agreement was signed. The the Respondent contends alternatively that the agree- ment as viewed by the Respondent should be binding on the Union or that there was no meeting of the minds and there was no contract and points to the clear reference in McCulloch's negotiating notes of the six grades and dis- 585 putes the accuracy of Holler's negotiating notes, which were purportedly recorded on 16 July from Holler's memory of what had occurred at the 15 July meeting. The combined effect of the 5 percent wage reduction and the bumping up one level of each grade minimum under the Union's version may result in a raise for the current employees or result in an uneven decrease. The Respondent also contends it will form an improper base for further negotiations of subsequent contracts and would incorrectly affect the wage grades of newly hired employees who would rise to a higher minimum than their current grade. Analysis Based on my observation of the witnesses as they testi- fied at the hearing and the plausibility of the views of Holler and McCulloch as they expressed them at the hearing and my review of the negotiations notes of Holler and McCulloch as to what wage grade offer had been proposed and ratified by the Union's members, I find that McCulloch's version as to what he told Holler with respect to the six wage grades as supported by his negotiation notes should be credited . In making this de- termina Lion, I rely on several factors. Initially, my obser- vation of both McCulloch and Holler on the stand and their responses to questioning and the sequence of events as related and viewed by both convinced me that both men were telling the truth as they sincerely believed it to be. I am convinced, however, that McCulloch's version of what he offered to the Union is the accurate one rather than Holler's understanding of the offer. It is un- disputed that the Respondent had in place a six-grade wage classification system although Holler disclaims an understanding of the system . It is also undisputed that Holler was at least familiar with the existence of this system . McCulloch offered a copy of the wage grade system in effect at the time of the negotiation meeting or at least asked Holler whether he was familiar with it to which Holler replied in the affirmative. The Respond- ent's proposal for wage changes involved a 5-percent wage reduction with no employee to go below the mini- mum of then existing wage grade . Holler acknowledged that he did not reduce McCulloch 's offer to writing until the day after the negotiation meeting and relied on his memory to do so. He then presented the offer of a five- grade wage schedule to the employees for ratification rather than the six-grade wage schedule, which McCul- loch contends he proposed and which had been in exist- ence. After the employees ratified the five-grade wage proposal as presented to them by Holler, Holler notified McCulloch that the membership had ratified the agree- ment. Pursuant to agreement of McCulloch and Holler, Holler prepared the initial draft of the contract and pre- sented it to McCulloch who made grammatical changes in the section concerning wages and caused it to be exe- cuted on behalf of the Respondent. II credit McCulloch's testimony that he did not discover the error of the omis- sion of wage grade IA until it was later called to his at- tention by controller William McDowell and that he then sent a letter to Holler informing him of what he be- lieved to be a clerical error and at the same time ob- 586 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tamed and sent to Holler the signature of the president of the parent company to the contract, which signature had not previously been obtained. McCulloch's testimony concerning the discovery of the error was corroborated by McDowell whom I credit in this regard . Although I also credit McDowell that Holler had contended that the rates had merged or words tothat effect when he dis- cussed the error with Holler, I do not find this determi- native of the issues in this case. I find the entire scenario as outlined by McCulloch to be plausible and believable. Conversely, I find the deletion of grade IA would result in the bumping up of certain employees into a higher grade and perhaps even give them a minimal increase as well as effect the minimum starting rate for new employ- ees. In the face of the Respondent's undisputed dire eco- nomic position in 1985 and the entire tenor of the con- cession bargaining engaged in by McCulloch on the Re- spondent's behalf, I find such a result implausible. I thus conclude that the membership through Holler's error ratified a different wage proposal from that offered by McCulloch, resulting in a mistake over an essential element of "the contract. There was, thus, no meeting of the minds over this essential element of wages and there was, thus, no valid contract. Apache Powder Co., 223 NLRB ' 191 (1976). I conclude that Holler was mistaken in his understanding of McCulloch's offer and in what he took back to the membership for ratification . I credit McCulloch's testimony that he did not discover the error until it was called to' his attention by controller McDowell. I do find, however, that the Respondent has not dem- onstrated that there ,was an impasse on this issue such as to entitle it to unilaterally reduce the employees' wages in accordance with its proposal on 9 September 1985 as it did. The complaint alleges that about 1 September 1985 the Respondent reduced the wage rates of its em- ployees in the , unit. The Respondent denied this allega- tion in its answer but the Respondent's attorney stipulat- ed at the hearing that there was a 5 percent wage reduc- tion. Further, Business Representative Holler testified that he learned of the reduction in wage rates of the em- ployees from the stewards . It is thus undisputed and I find that the Respondent did unilaterally reduce the wage rates of the employees in the bargaining unit as al- leged in the complaint and as specifically set out in Gen- eral Counsel's Exhibit 19. I, accordingly, find that the Respondent violated Section 8(a)(5) and (1) of the Act by its unilateral reduction of its employees' wages on 9 September 1985. NLRB v. Katz, 369 U.S. 736 (1962). V. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Respondent as set forth in section N above occurring in connection with its operations as set out in section I above have a close, intimate, and sub- stantial relationship to trade, traffic, and commerce among the several States and tend to lead to labor dis- putes burdening and obstructing commerce and the free flow of commerce. CONCLUSIONS OF LAW 1. The Respondent, Waldon, Incorporated, is an em- ployer engaged in commerce within the meaning of Sec- tion 2(6) and (7) of the Act. 2. The Union, International Association of Machinists and Aerospace Workers, AFL-CIO, is a labor organiza- tion within the meaning of Section 2(5) of the Act. 3. The Respondent did not violate Section 8(a)(5) and (1) of the Act by refusing ,to adopt and pay the wage scale set out in the labor agreement executed by the par- ties as there was no meeting of the minds between the parties concerning the wages to be paid under the terms of the agreement and, thus, there was no valid labor agreement. The Respondent's subsequent refusal to submit the wage dispute to arbitration under this provi- sion of the agreement and its repudiation of the entire contract as invalid also did not violate Section 8(aX5) and (1) of the Act. 4. The Respondent violated Section 8(aX5) and (1) of the Act by its unilateral implementation of its proposal concerning wage reductions on 9 September 1985 with- out negotiating an agreement to the reduction with the Union and in the absence of a valid impasse concerning this issue between the parties. 5. The aforesaid unfair labor practice affects commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that the Respondent has engaged in a certain unfair labor practice in violation of Section 8(a)(5) and (1) of the Act, I shall recommend that it be ordered to cease and desist therefrom and to take certain affirmative actions designed to effectuate the policies of the Act. I recommend that the Respondent reinstate the wage scale in effect prior to its unilateral implementation of its wage proposal on 9 September 1985 until such time as it has bargained a change in said wage scale with the Union or after bargaining that issue with the Union has reached a valid impasse concerning this issue. I further recommend that the Respondent make the employees whole for any loss they may have suffered as a result of the Respondent's unilateral implementation of its wage proposal on 9 September 1985 . All,' loss of earn- ings and benefits shall be computed with interest in the manner prescribed in F. W. Woolworth Co., 90 NLRB 289 (1980), and Florida Steel Corp., 231 NLRB 651 (1977).4 I do not recommend, under the circumstances of this case, a visitatorial provision in the order as requested by the General Counsel. See O. L. Willis, Inc., 278 NLRB 203 fn. 1 (1986). On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed5 • See generally Isis Plumbing Co., 138 NLRB 716 (1962). s 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. WALDON, INC. 587 ORDER The Respondent, Waldon, Incorporated, Fairview, Oklahoma, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Unilaterally implementing reductions in the wage scale of its employees without bargaining those changes with the Union or bargaining to impasse concerning the issue. (b) In any like or related manner interfering with, re- straining, or coercing its employees in the exercise of their rights guaranteed them under Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Reinstate its wage scale and benefits to that which existed prior to 9 September 1985 when it unilaterally implemented its bargaining proposal until such time as it has bargained a change in the wage scale and benefits with the Union or has reached a valid impasse concern- ing these terms and conditions of employment . The ap- propriate unit is: All production and maintenance employees, includ- ing over-the-road truck drivers, shop floor control- lers, material handlers, quality control inspectors and tool and die makers employed by the Respond- ent at its Fairview, Oklahoma facility, ' excluding office clerical employees, buyers, scheduler-plan- ners, keypunch operators, purchasing clericals, pro- fessional employees, guards, and supervisors as de- fined in the Act. (b) Make whole, with full backpay and benefits with interest in accordance with the recommended "Remedy," all employees in the bargaining unit who sus- tained a loss of earnings or benefits as a result of the Re- spondent's unilateral reduction of their wages on 9 Sep- tember 1985. (c) Preserve and, on request, make available to the Board or its agents for examination and copying, all pay- roll records, social security payment records, timecards, personnel records and reports, and all other records nec- essary to analyze the amount of backpay and benefits due under the terms of this Order. (d) Post at its Fairview, Oklahoma facility copies of the attached notice marked "Appendix."6 Copies of the 6 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." notice, on forms provided by the Regional Director for Region 16, after being signed by the Respondent's au- thorized representative, shall be posted by the Respond- ent immediately upon receipt and maintained for 60 con- secutive days in conspicuous places including all places where notices to employees are customarily posted. Rea- sonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material. (e) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. 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 or- dered us to post and abide by this notice. WE WILL NOT unilaterally reduce the wage scales of our employees without first bargaining a change in the wage scales with the International Association of Ma- chinists and Aerospace Workers, AFL-CIO, or having reached a valid impasse with the Union concerning these terms and conditions of employment. The appropriate unit is: All production and maintenance employees, includ- ing over-the-road truck drivers, shop floor control- lers, material handlers, quality control inspectors and tool and die makers employed by the Respond- ent at its Fairview, Oklahoma facility, excluding office clerical employees, buyers, scheduler-plan- ners, keypunch operators, purchasing clericals, pro- fessional employees, guards, and supervisors as de- fined in the Act. WE WILL reinstate the wage scale existing for our em- ployees prior to our unilateral reduction of them on 9 September 1985 and WE WILL make our employees whole for any loss sustained by them by reason of the reduction, with interest. Our employees have the right to join and support International Association of Machinists and Aerospace Workers, AFL-CIO `or to refrain from doing so. WALDON, INCORPORATED