Martin Marietta Energy Systems

MARTIN MARIETTA ENERGY Martin Marietta Energy Systems and Oil, Chemical and Atomic Workers International Union, Local 3-288. Case 10-CA-21503 4 March 1987 DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND STEPHENS On 29 September 1986 Administrative Law Judge Howard I. Grossman issued the attached de- cision. The Respondent filed exceptions and a sup- porting brief. 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 brief and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the -Respondent, Martin Marietta Energy Systems, Oak Ridge, Tennessee, its officers, agents, successors, and assigns, shall take the action set forth in the Order. Howard Trimble, Esq., for the General Counsel. W Bruce Swain, Esq., of Bethesda, Maryland, for the Re- spondent. John Williams, District Director, of Knoxville, Tennes- see, for the Charging Party. DECISION STATEMENT OF THE CASE Howard L Grossman, Administrative Law Judge. The charge was filed on 21 January 19861 by Oil, Chemical and Atomic Workers International Union, Local 3-288 (Local 3-288), and complaint issued on 13 May. It al- leges in essence that, Martin Marietta Energy Systems (the Company, or the Respondent) unilaterally and with- out bargaining with Local 3-288 implemented a health benefit plan for its employees in violation of Section 8(a)(5) and (1) of the National Labor Relations Act (the Act). A hearing was held before me on this matter on 24 June 1986 in Oak Ridge, Tennessee. Thereafter, the Gen- eral Counsel and the Respondent filed briefs. On the entire record, and on my observation of the demeanor of the witnesses, I make the following I All dates are in 1986 unless otherwise indicated. FINDINGS OF FACT 1. JURISDICTION 173 The Company is a Maryland corporation with an office and place of business in Oak Ridge, Tennessee, where it is engaged in the operation of laboratories and nuclear facilities for the Department of Energy. During the past calender year, a representative period, the Com- pany sold and shipped from its Oak Ridge, Tennessee, fa- cility finished products valued in excess of $50,000 di- rectly to customers located outside the State of Tennes- see. The Company is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The pleadings establish and I find that the Union is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. Background and Issues Local 3-288 has been certified since 1946 as the repre- sentative of hourly employees in the Department of En- ergy's gaseous diffusion plant at Oak Ridge, Tennessee. The contractor operating those facilities at that time was Union Carbide Corporation, and Local 3-288 entered into a series of collective-bargaining agreements with that contractor, the last one terminating in October 1984. In that year, the Respondent was awarded a contract to perform these functions, and, in October 1984, entered into a current collective-bargaining agreement with the "International Union . . . and its Local 3-288."2 Two memoranda of agreement made a part of the con- tract specify that the Company agrees to provide for its employees as Special Medical Expense Plan and a Hospi- talization and Surgical' Plan, both administered by Con- necticut General Life Insurance Company. The cost of the first plan is divided equally between the Company and participating employees, and the cost of the second plan is borne wholly by the Company. Employee partici- pation in both plans is voluntary.3 Article XV Section 1 of the collective-bargaining agreement reads as follows: Sectionl. It is hereby agreed that this contract con- tains the complete agreement between the parties or their successors, and no additions, waivers, dele- tions, changes or amendments shall be made during the life of this contract except by mutual consent, in writing, of the parties.4 Although the complaint, as noted, alleges the unfair labor practices to be the Company's unilateral implemen- tation of a health benefit plan, at the hearing the General Counsel asserted that a "broader issue" was involved, to wit, a midterm change in the collective-bargaining agree- ment in violation of the proviso to Section 8(d) of the '2 0 C. Exh. 3 3 G.C. Exhs 2 and 3 (pp 87-88) 4 G.C. Exh 3, p 63. 283 NLRB No. 31 174 DECISIONS OF THE NATIONAL LABOR- RELATIONS BOARD Act. Company counsel agreed that this was an issue, that it had been advanced in the past by the General Counsel, and the Company's position was that no "midterm change, (was) involved." B. December 1985 Meeting of the Parties Concerning a New Health Benefit Plan 1. Company notice of the meeting Local 3-288 protests lack of notice to its International of meeting held on 19 December 1985 concerning a new health' benefit plan offered by the Company. Company Superintendent of Personnel Relations Donald H. Blan- ton testified without contradiction that he called Local 3-288 President John Herron on 18 December 1985, and told him that the Company and the Local needed to get together so that ,the Company could communicate infor- mation on health care. Herron made no response. Company Personnel Director Harry G. Conner af- firmed that company practice in the past had been to inform the local president of such meetings. International representatives appeared in such meetings from time to time; however, the Company did not notify them sepa- rately. Although International Representative John Wil- liams stated that International representatives were present at meetings, he agreed that the procedure on oc- casion had been for the Company to notify the local president, who then informed the International. Williams asserted that he first learned of the health benefit meet- ing on the day after it was held, i.e., 20 December 1985. 2. The December meeting Representative of the Company, Local 3-288, and an- other labor organization were present during the meeting on company premises.. Company Director of Personnel Administration Robert E. Burnett told the union repre- sentatives that the Company intended to make a health maintenance organization plan (HMO) available to em- ployees beginning in January 1986. Although Burnett did not discuss any specific HMO plan, he compared HMO's generally with the existing indemnity health benefit plan being administered by Connecticut General, and utilized slides -in his presentation. Only those employees living in counties serviced by the HMO would be eligible. How- ever, there would be no change in the existing indemnity benefit plan, and an employee could elect to continue with that plan. Like the old -plan, the HMO program was optional. However, an employee could not elect to be covered by' both plans-if the employee opted to remain under the indemnity benefit plan, he could not enroll in an HMO program even if he paid for it himself. Various union representatives asked questions of Bur- nett and received answers. The principal factual issue is whether the Company stated that its intention to intro- duce HMO's was not negotiable, or whether it told the unions that the provisions of, an HMO plan were not ne- gotiable. Minutes of the meeting ! kept by Company Labor Relations Specialist D. E. Anderton, affirmed by him to be accurate, show that Burnett was asked wheth- er HMO plans were negotiable. Burnett's reply: "They are not negotiable. HMO's themselves decide what they offer."5 Anderton's testimony elaborated on Burnett's reply-"[t]he HMO's themselves decide what they put into the package that they offered employees. We were not a part of that. We were not in the decision making in that aspect of the benefit plans package itself." An offi- cer of Local 3-288, Mike Church, testified that he also kept minutes of the meeting, and that Burnett's reply to the question was that "benefits are strictly determined by the HMO and are not negotiable." On the basis of this consistent evidence, I find that the Company did not tell the union representatives that its decision to offer HMO's was not negotiable. Rather, it informed them that details of an HMO plan were formu- lated by the HMO's, and were not negotiable. The evidence also shows that Local 3-288 did not agree or disagree with Burnett's statements, and that Burnett did not ask whether Local 3-288 had any objec- tions. In response to a question on whether there would be further meetings on this issue, Burnett replied that there would be further information in the mail, and that the HMO's themselves would schedule meetings to ex- plain the HMO programs.6 C. Dissemination of Further HMO Information A company newspaper dated 26 December 1985 stated that the Company had been evaluating HMO's and planned to offer one to "employees in the near future as an alternative to the present group medical plan."7 On 6 January 1986, the Company sent letters to employees ad- vising them that two HMO plans (Blue Cross and Whit- taker Health Services) would be made available with the enrollment period from 15 January to 15 February 1986, and that coverage would be effective 1 March 1986. The letter stated that employees could remain with the cur- rent plan if they chose to do so.8 A notice further ex- plaining the plans was placed on company bulletin boards on 15 January 1986,9 and a local newspaper car- ried a story giving similar information. t 0 D. Other Company Programs Company counsel stated at the hearing that the HMO plan was a"classic case of a new program offered to the collective-bargaining agent for his acceptence or com- ment." The Company elicited evidence of other such programs. Thus, Personnel Relations Superintendent Blanton testified to the implementation of a special acci- dent insurance plan, a service award program, and -a scholarship program.1 I Blanton averred that - Local , 3- 288 was made aware of these programs about the time of their implementation, but never requested bargaining about them. 5 it Exh. 1. 6 On the question of whether Burnett was asked about further meet- ings, I credit Anderton's minutes-which state that Mike Walls, a member of the other labor organization, asked this question-rather than Anderton's dental during his testimony R. Exh. 1, p. 3. 7 R Exh. 1, p. 2. R Exh. 2 R. Exh. 3. 10 R Exh. 4. 11 R. Exhs. 5, 6, 7, and 8 MARTIN MARIETTA ENERGY The Company document describing the special acci- dent insurance plan states that it constitutes "supplemen- tal coverage" in cases of death, dismemberment, or total disability. The eligibility requirements do not exclude employees who are already covered by the existing hos- pital and surgical plan.12 Although the collective-bar- gaining agreement also provides for dental, group insur- ance, and pension plans, there is no special accident in- surance plan other than treatment for injury caused by accidents in the basic hospital and surgical plan.13 Blan- ton testified that the service award program did not re- place any benefit in the existing contract, and examina- tion of that document shows that it does not contain a service award program or a scholarship plan.'4 E. Legal Analysis and Conclusions As set forth above, although the complaint alleges only the Company's unilateral implementation of a new health benefit 'program, counsel for the General Counsel stated at the hearing and the Respondent's counsel agreed that the issue is whether the Respondent engaged in a midterm modification of the collective-bargaining agreement violative of the proviso to Sec. 8(d).1 s The Board has recently explained the different princi- ples involved in allegations of this nature: Sections 8(a)(5) and 8(d) establish an employer's obligation to bargain in good faith with respect to "wages, hours, and other terms and conditions of employment." Generally, an employer may not uni- laterally institute changes regarding these mandato- ry subjects before reaching a good-faith impasse in bargaining. Section 8(d) imposes an additional re- quirement when a collective-bargaining agreement is in effect and an employer seeks to "modif[y] . . . the terms and conditions contained in" the contract: the employer must obtain the union's consent before implementing the change. If the employment condi- tions the employer seeks to change are not "con- 12 R. Exhs. 5 and 7. 18 G.C Exh. 3. 14 Ibid is The proviso to the first paragraph of Sec. 8(d) reads as follows Provided, That where there is in effect a collective-bargaining con- tract covering employees in any industry affecting commerce, the duty to bargain collectively shall also mean that no party to such contract shall terminate or modify such contract, unless the party de- siring such termination or modification- (1) serves a written notice on the other party to the contract of the proposed termination or, modification sixty days prior to the ex- piration date thereof, or in the event such contract contains no expi- ration date, sixty days prior to the time it is proposed to make such termination or modification, (2) offers to meet and confer with the other party for the purpose of negotiating, a new contract or a contract containing the proposed modifications; (3) notifies the Federal Mediation and Conciliation Service within thirty days after such notice of the existence of a dispute, and simul- taneously therewith notifies any State or Territorial agency estab- lished to mediate and conciliate disputes within the State or Terri- tory where the dispute occurred, provided no agreement has been reached by that time; and (4) continues in full force and effect, without resorting to strike or lockout, all the terms and conditions of the existing contract for a period of sixty days after such notice is given or until the expiration date of such contract, whichever occurs later. 175 tained in" the contract, however, the employer's obligation remains the general one of bargaining in good faith to impasse over the subject before insti- tuting the proposed change. [Illinois Coil Spring Co., 268 NLRB 601, 602 (1984), enfd. sub noun. Auto Workers Local 547 v. NLRB, 765 F.2d 175 (D.C. Cir. 1985).] The Respondent-argues there was no midterm modifi- cation of the contract. "No change, occurred in the nego- tiated medical insurance plan contained in the collective- bargaining agreement." Accordingly, no provision "con- tained in" the contract was modified.16 After receiving notice of the Company's intention to offer a new health benefit plan, "[t]he Union consciously chose to sit back not protest and file charges with the NLRB after enroll- ment in the HMO's had commenced."" -Local 3-288 thus waived its rights to bargain on the issue of the HMO's. The Company cites authorities in support of its position, and the General Counsel cites similar authori- ties, but seeks to distinguish them on the ground that Local 3-288 was given inadequate notice of the time and subject matter of the December meeting. 16 The basic premises on which the Company's waiver argument depends is its position that there was no mid- term change in the contract. The record shows that there was no change in "the negotiated medical insur- ance plan"-the employees were free to continue with the plan if they chose to do so. However, it does not follow from this fact that there was no change in the col- lective-bargaining agreement. The Respondent's substitu- tion of an HMO plan for the existing indemnity benefit plan constituted a unilateral change in the contract. Further, as set forth above, the contract provides that there shall be no "additions, waivers, deletions, changes or amendments' (to the contract) . . . except by mutual consent in writing." The Company's unilateral implemen- tation of the HMO program, without Local 3-288's writ- ten'or other consent, modified this provision of the con- tract. The other programs made available to employees without Local 3-288's consent did not necessarily consti- tute midterm modifications, because their subject matters were not covered by the contract, and the employees could receive the new benefits without sacrificing any contractual right. Nor did Local 3-288's silence when they were implemented constitute acquiescence in any future modifications of the contract. In this case, an em- ployee could sign up for an HMO plan only as an alter- native to the contractual indemnity benefit program, which would then be denied to him. It is clear that the HMO plan was, thus an "addition" to, a "change" in, or an "amendment" to the existing contract.19 Its imple- 18 R. beef, p 9. 17 Id. at 12. 18 G.C. brief, p 11 19, The Respondent's action would have been unlawful even if the em- ployees had not been compelled to sacrifice the existing benefit plan. By making a new plan available, the Respondent was adding an additional and possibly advantageous feature to a benefit already covered by the contract. It, is unlawful for an employer unilaterally to pay employees Continued 176 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD mentation without Local 3-288 's written consent consti- tuted an abrogation of the contractual provision requir- ing such consent, and thus further modified the collec- tive-bargaining agreement. None of the many waiver cases cited by the Respond- ent20 or distinguished by the General Counsel21 in- volved the midterm modification of a collective-bargain- ing agreement. The issue is not whether Local 3-288 waived a bargaining right, but, rather , whether it aban- doned a contractual right for which it had already bar- gained and had obtained in a written agreement . In such cases, the requirements of the proviso to Section 8(d) are explicit, as set forth above. The Respondent did not serve the required written notices, offer to, meet with the other party, notify the Federal Mediation and Concilia- tion Service, or continue in full force the existing agree- ment.22 The following language of an administrative law judge has been accepted by the Board with judicial ap- proval: It is undisputed that Respondent implemented changes in an existing collective-bargaining agree- ment without the Union's consent. Such conduct is violative of Section 8(a)(5) and (1) of the Act be- cause Section 8(d), which defines the duty to bar- gain, prohibits such changes ... In this case, the Union did not agree to Respondent's proposed modifications. In these circumstances, the Board and the Courts have clearly and consistently found an employer's mid-term modification of a fixed term contract to be unlawful. See Oak Cliff-Golman Baking Co., 207 NLRB 1063, 1064 (1973), enfd. 505 F.2d 1302 (5th Cir. 1974), cert. denied 423 U.S. 826 (1975); C & S Industries, Inc., 158 NLRB 454, 457- 458 (1966); We-Care Trading Co., Ltd., 265 NLRB No. 56, slip op. at 7 (1982). La Porte Transport Co., JD-152-84, quoted in Herman Brothers, Inc., 273 NLRB 124, 125 (1984), enfd. mem. 780 F.2d 1015 (3d Cir. 1985).23 more wages than the amount specified in the collective-bargammg agree- ment. European Parts Exchange, 270 NLRB 1244 (1984). Making addition- al benefits of the same nature available to employees without the Union's consent stands on the same footing 20 NLRB v. Columbian Enameling & Stamping Co., 306 U.S. 292 (1939); NLRB v. Island Typographers, 705 F.2d 44 (2d Cir. 1983); NLRB v. Spun-Jee Corp, 385 F.2d 379 (2d Cir. 1967); NLRB v. Alva Allen Indus- tries, 369 F.2d 310 (2d Cir. 1967) Charlie's Oil Co, 267 NLRB 764 (1963); Talbert Mfg., 264 NLRB 1051 (1982), Towne' Plaza Hotel, 258 NLRB 69 (1981); K & S Circuits, 255 NLRB 1270 (1981); W G. Best Homes Corp., 253 NLRB 912 (1980), Citizens Natl Bank of Willmar, 245 NLRB 389 (1979) Citizens Hospital of East Liverpool, 234 NLRB 58 (1978); Clarkwood Corp, 233 NLRB 1172 (1977); Globe-Union, Inc., 222 NLRB 1081 (1976); Medicenter, Mid-South Hospital, 221 NLRB 670 (1975); U.S Lingerie Corp., 170 NLRB 750 (1968); American Bushnes, 164 NLRB 1055 (1967) 21 Cherokee Culvert Co., 266 NLRB 290 (1983), Hartmann Luggage Co., 173 NLRB 1254 (1968) 22 Although this inaction was not specifically alleged in the complaint, the latter "clearly encompassed Respondent's failure to comply with Sec- tion 8(d) by its unilateral change and Respondent was not misled into fail- mg to litigate this issue " Herman Brothers, 273 NLRB 124, 126 (1984), enfd mem. 780 F.2d 1015 (3d Cir 1985) 23 See also Burger Pits, 273 NLRB 1001 (1984), enfd 121 LRRM 3305 (9th Cir 1986), Croft Metals, 272 NLRB 208 (1985) (note reference to change in a health insurance plan at 213), enfd. 771 F 2d 849 (5th Cir 1985), Campo Slacks, 266 NLRB 492 (1983). In accordance with my findings above, I make the fol- lowing CONCLUSIONS OF LAW 1. Martin Marietta Energy System is an employer en- gaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. Oil, Chemical and Atomic Workers International Union, Local 3-288 is a labor organization within the meaning of Section 2(5) of the Act. 3. At all relevant times the foregoing labor organiza- tion has been and continues to be the exclusive represent- ative of Respondent's employees in the following unit found appropriate for the purposes of collective-bargain- ing within the meaning of Section 9(b) of the Act: All hourly employees, excluding guards and salaried employees (monthly or weekly) employed by the Respondent at its Oak Ridge Gaseous Diffusion Plant, Oak Ridge, Tennessee. 4. At all relevant times the Respondent and the fore- going labor organization have been parties to a collec- tive-bargaining agreement concerning employees in the unit described above which, inter alia, provides for a Special Medical Expense Plan and a Hospitalization and Surgical Plan, and, further, provides that no additions, waivers, deletions, changes or amendments in said agree- ment will be made except by mutual consent, in writing, of the parties to the contract. 5. By offering to the employees in the unit described above and by implementing without the written consent of said labor organization, a new Health Maintenance Organization plan as an alternative to the foregoing con- tractual rights, which would be sacrificed upon employ- ees acceptance of the new plan, the Respondent thereby unilaterally added to, deleted from, changed, or amended said collective-bargaining agreement, and modified by abrogation that section of the contract requiring that any such modification be by mutual consent and_in writing. 6. The Respondent's action described above constitutes a refusal to bargain within the meaning of Section 8(d) of the Act, and thus constitutes, a violation of Section 8(a)(5) and (1) of the Act. 7. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that the Respondent has engaged in cer- tain unfair labor practices, I shall recommend that it cease and desist therefrom and take certain affirmative action designed to effectuate the purposes of the Act, in- cluding the posting of the attached notice. I shall recom- mend that the Respondent be ordered to rescind its un- lawful modification of the collective-bargaining agree- ment by withdrawing its offer of Health Maintenance Organization benefits as an alternative to the existing medical benefits under the contract. It is the Board's established policy not to require re- scission of an unlawful wage increase previously granted, because of the injury thereby sustained by employees. MARTIN MARIETTA ENERGY ' 177 European Parts Exchange, supra, 270 NLRB at 1245. In- asmuch as some of the Respondent's employees may have accepted the new medical plan being administered by third-party health maintenance organizations, and abrupt termination of said plans might similarly be injuri- ous to said employees, I shall recommend that nothing in the Order be construed to require the Respondent to ter- minate any such existing individual plan. However, the evidence shows that such plans have coverage for a spe- cific period of time, with employee option thereafter to change to another plan. The rescission order recom- mended shall apply to any subsequent renewal of the new plan, absent the Respondent's compliance with its contractual obligation to obtain the written consent of the aforesaid labor organization. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed24 dix."2$ Copies of the notice, on forms provided by the Regional Director for Region 10, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are cus- tomarily posted. Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, de- faced, or covered by any other material. (c) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. 25 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." ORDER The Respondents, Martin Marietta Energy Systems, Oak Ridge, Tennessee, its officers; agents, successors, and assigns, shall 1. Cease and desist from (a) Offering or implementing new health benefit pro- grams which offer benefits otherwise covered by its ex- isting collective-bargaining agreement with Oil, Chemi- cal and Atomic Workers International Union, Local 3- 288, without the written consent of said labor organiza- tion. (b) In any like or related manner interfering with, re- straining, or coercing its employees in the rights guaran- teed then by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the, Act. (a) Rescind its offer of a' Health Maintenance Organi- zation plan made available to employees in the unit de- scribed above, absent the written consent thereto by the above-name labor organization, provided that nothing shall be construed so as to require the Respondent to re- scind an already existing individual plan prior the end of the period when it expires according to its terms. (b) Post at its Oak Ridge, Tennessee, Gaseous Diffu- sion plant, copies of the attached notice marked "Appen- 24 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 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 offer or implement any new health ben- efit plan which offers 'benefits otherwise covered by our existing collective-bargaining agreement with Oil, Chem- ical and Atomic Workers International Union, Local 3- 288, without the written consent of said labor organiza- tion. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the rights guaranteed them by Section 7 of the Act. WE WILL rescind our prior offer and implementation of a new health benefit plan and will not renew it with- out the written consent of the aforesaid Union, except that we will not interfere with any existing individual plans for the period of their existing coverage as speci- fied in the said plans. MARTIN MARIETTA ENERGY SYSTEMS