United Stockyards Corp.

UNITED STOCKYARDS CORP Sioux City Stockyards, Division of United Stock- yards Corporation and United Food and Com- mercial Workers International Union, AFL- CIO, Local No 176 Case 18-CA-10063 February 28, 1989 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT AND HIGGINS On June 28, 1988, Administrative Law Judge William L Schmidt issued the attached decision The General Counsel filed exceptions and a sup- porting brief, and the Respondent filed a brief in answer to the General Counsel's exceptions 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, findings, and conclusions only to the extent consistent with this Decision and Order The judge found that the Respondent did not violate Section 8(a)(5) and ( 1) of the Act by deny- ing the Union's request for certain financial infor- mation, and by thereafter unilaterally changing its employees' terms and conditions of employment after declaring an impasse in its negotiations with the Union The General Counsel has excepted to these findings We find merit in the exceptions 1 The question of whether the Respondent here was obligated to furnish the Union with the re- quested information turns on whether the Respond- ent, either through words or conduct , conveyed to the Union during negotiations that its proposal to eliminate the guaranteed workweek benefit for em- ployees was based on its financial inability to con- tinue providing the benefit If the Respondent's proposal was based on a claimed inability to pay, then the Union was entitled to the information re quested NLRB v Truitt Mfg Co, 351 US 149 (1956), Atlanta Hilton & Tower, 271 NLRB 1600 (1984) The Respondent asserts, and the judge found, that the proposal to eliminate the guaranteed 5 day workweek was based on efficiency considerations and not on a claim of inability to pay , and that it was, therefore, under no obligation to furnish the Union with the information requested The record, however, does not support such a finding Rather, the Respondent's conduct at the bargaining table, when viewed in its entirety , shows that the Re- i In % ew of our decision here we find it unnecessary to pass on the judge s remarks in fn 2 of his decision concerning the possible applica tion of the Equal Access to Justice Act to the facts of this case I spondent sought to justify its contract proposal to eliminate the workweek guarantee by a claim of fi- nancial hardship The record reveals that on December 12, 1986, prior to the expiration of their contract on January 25, 1987,2 the Respondent and the Union began ne- gotiations for a new contract 3 At that first bar- gaining session, the Respondent's attorney and principal negotiator, Soren Jensen,4 informed Union Representative Frank Jackson that the Re- spondent would not sign any more agreements con taming a guaranteed workweek, a benefit available to employees under their still-current agreement 5 According to Jackson, Jensen sought to justify the contract demands by stating that the livestock mar- kets were down and that the Respondent was "losing money not making any money "s Fol- lowing that meeting, Jensen provided Jackson with the Respondent's written contract proposals that incorporated the above-proposed changes At the January 12 bargaining session Jackson in- formed Jensen that the Union needed proof that the Respondent was losing money in light of its demand for the elimination of the guaranteed workweek and the attendant effect it would have on other employee benefits Jackson then handed Jensen a letter requesting specific financial informa- tion from the Respondent 7 Jensen replied that 2 All dates are in 1987 unless otherwise indicated ' The parties held four additional bargaining sessions on January 12 February 7 and 13 and March 2 4 Jensen had been retained by the Respondent s parent corporation United Stockyards Corporation to bargain on the Respondent s behalf during the latter s contract negotiations with the Union as well as on behalf of other stockyard operations whose employees were represented by the Union s sister locals 5 The guaranteed workweek provision of the parties contract provided that an employee scheduled to work at the start of the week was assured of 40 hours of work that week unless voluntarily absent The guaranteed workweek affected other employee benefits such as pensions and vaca tions which were based on the number of hours worked by an employee Jensen further informed Jackson that the Respondent also wanted to remove the extensive restrictions in the contract on subcontracting and the performance of unit work by supervisors 6 According to Jackson Jensen repeated this claim throughout the ne gotiations Jensen denied having made the losing money statements at tnbuted to him by Jackson or having defended the proposals on the ground that the Respondent was in a diminished financial condition pleading poverty losing profits or in danger of going out of business or bankrupt The judge implicitly credited Jackson s testimony that Jensen made the remarks for he found that Jensen s statements that the Sioux City operation was unprofitable or was losing money cannot be read lit erally r The Union requested that the Respondent furnish it with the follow mg information for the previous 3 years Federal income tax returns and audit reports (including balance sheets income statements and changes in financial position) and any other documents books and records that would separately show ( 1) the total bargaining unit labor costs and the cost of nonbargaining unit labor including supervisory and other man agement salary and benefits (2) total income from sales or fees (3) over head and other administrative costs and (4) interest on financial charges 293 NLRB No 1 2 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD while the Respondent was willing to provide the Union with some information, it would not "open its books" to the Union, as Jensen believed would be required by the information request Jensen also stated that the Respondent was not pleading pover ty or going bankrupt, but that because of reduced livestock receipts, its Sioux City Stockyard oper- ation was not profitable He further indicated that the Respondent did not believe it was wise to pro- vide any pay increases Jensen formally replied to the Union's informa tion request by letter dated January 15 In the letter he expressed the Respondent's willingness to provide the Union only with information pertaining to payroll and other costs associated with the bar gaining unit members He declined, however, to provide the Union with the other requested infor- mation because the Respondent did not consider the information to be either appropriate or neces- sary for collective bargaining, and because the Re spondent allegedly had not "pled poverty" or sought any special treatment from the Union con- cerning the stockyard operation The letter repeat- ed Jensen's claim that the Sioux City stockyard op- eration was unprofitable At the February 7 bargaining session the Re- spondent's president, Donald Bales, told the Union that if the status quo were maintained, the Re- spondent would not be able to maintain 28 people on the payroll," pay its taxes, and maintain the upkeep on the stockyards During this session, Jensen advised the Union that the Respondent's po sition on the guarantee would not change even if a strike should occur, and that the Respondent was making money only on real estate investments Jackson remarked that he wished he could believe the Respondent was in "that bad of shape " During the February 13 meeting, Jackson in- formed Jensen that he had read the Respondent's annual report and that the figures indicated the Re spondent could operate with a guarantee Jensen replied that the Respondent would no longer oper- ate in that manner Following discussion over the hours needed by employees to obtain benefits, Jackson remarked that the Respondent's proposal was worse than he thought Jensen replied that the condition of the business was worse than he thought and stated that "we have to go out of busi- ness or change the way we're doing business "9 In support of his finding that the Respondent's proposal to eliminate the guaranteed workweek was not based on a plea of poverty, the judge relied, for the most part, on the fact that the Re- spondent's parent corporation, United Stockyards Corporation, was a profitable operation, which would have rendered an alleged claim of poverty by the Respondent indefensible, that Jackson was fully aware of United's profitability, that it was United that proposed elimination of the guaranteed workweek, and that the Respondent had repeatedly asserted that it was not pleading poverty In this regard, Bales' remarks, which the judge found "troubling," were accorded little weight by the judge because he found they were inconsistent with United's overall financial picture at that time The judge, in our view, erred in his finding con cerning Bales' remarks, and in relying on United's corporate profitability to conclude that no plea of poverty was made by the Respondent As to Bales' remarks, the record and, in particular, the hand- written notes that were received in evidence con- taining statements made during bargaining sessions indicate that Bales was referring to the financial condition of the Respondent, and not its parent corporation, when he made his remarks Further, although Jensen may have been sent by United to negotiate on the Respondent's behalf, it is the Re- spondent, and not United, that has the collective- bargaining relationship with the Union, and who would be bound to any agreement reached with the Union 10 It is the Respondent's financial condi- tion, and not United's that, as found below, was placed in issue by the remarks made by both Jensen and Bales during contract negotiations 11 Under these circumstances, we find, contrary to the judge, that United's corporate profitability is of little or no relevance here, and that Bales' remarks are indeed relevant to the question whether the Re- spondent asserted an inability to pay during con tract negotiations Further, despite the Respondent's contrary asser- tions, it is clear from the above that the Respond ent repeatedly attempted to portray to the Union that its stockyard operation was in a poor financial state The Board has stated that no "magic words" are needed to find that a claim of financial hardship is being invoked by an employer concerning its 8 There were 28 unit employees then employed at the Respondent s stockyards 8 On March 11 Bales informed the Union that the Respondent be heved that an impasse in negotiations existed and that on March 16 it would implement the terms and conditions proposed by the Respondent in the negotiations On March 16 the Respondent implemented its pro posals By letter dated March 20 the Union protested the Respondents declaration of impasse 10 See Teleprompter Corp 227 NLRB 705 (1977) enfd 570 F 2d 4 (1st Cir 1977) " Further the fact that the proposal to eliminate the workweek guar antee may have been initiated by United rather than by the Respondent is in our view of no consequence here It is the Respondent that repeat edly sought to justify its need to eliminate that benefit for its unit em ployees by relying on the allegedly poor financial condition of its stock yard operation UNITED STOCKYARDS CORP bargaining stance 12 It is sufficient if the employ- er's words and conduct specifically link its bargain- ing position to economic hardship Here, the state- ments by Jensen and Bales were made concerning their insistence that the workweek guarantee be eliminated Further, their comments-in particular Jensen's repeated remarks that the Respondent was losing money, not making any money, that the con- dition of the business was worse than anticipated, and that it would go out of business unless changes were made, together with Bales' remark that under the status quo the Respondent would not bo able to maintain the 28 unit employees on the payroll, pay its taxes, and maintain the upkeep on the stock- yards-indicate that it was the allegedly poor fi- nancial condition of its stockyard operation, caused by a purported decline in livestock receipts, rather than a claimed need for a more efficient operation, that formed the basis for the Respondent's demand to do away with the guaranteed workweek 13 Accordingly, we find that the Respondent, by linking its contract proposal to the weakened finan- cial condition of its stockyard operation, was making a claim of inability to pay and was, there- fore, obligated under Truitt to furnish the Union with the requested financial information In failing to do so, the Respondent violated Section 8(a)(5) and (1) of the Act, as alleged Further, the Re- spondent's refusal to bargain in good faith by not providing the Union with the requested informa- tion meant that no genuine impasse was reached in the negotiations between the parties 14 Consequent- ly, the Respondent was not free to unilaterally im- plement the changes it made in its employees' wages and other terms and conditions of employ- ment In doing so the Respondent violated Section 8(a)(5) and (1) of the Act CONCLUSIONS OF LAW 1 By failing and refusing to provide the Union with requested financial information necessary and relevant for collective-bargaining purposes, the Re- 12 Clemson Bros 290 NLRB 943 (1988) Atlanta Hilton & Tower supra at 1602 Although in Atlanta Hilton the Board concluded that the em ployer had not plead poverty it did so because the employers general references to the economy and to its vacancy rate were insufficient to constitute a plea of inability to pay and because a letter by the union to the employer indicated that the latter had claimed that it was unwilling rather than unable to meet the union s demands However the facts in this case as described above clearly indicate that the Respondent here unlike the employer in Atlanta Hilton sought to justify its contract pro posal on its financial inability to continue providing employees with a guaranteed workweek is Thus it is clear that the Respondents financial condition was a con tinuing issue during the negotiations even after the Respondents January 15 response to the Unions request for information The Respondents representatives continued to assert the Respondents financial hardship as justification for its bargaining proposals and the Union s representatives continued to question the veracity of the Respondent s claims 14 Cowin & Co 277 NLRB 802 (1985) 3 spondent has engaged in unfair labor practices af- fecting commerce within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the Act 2 By unilaterally changing the terms and condi- tions of employment of unit employees about March 16, 1987, at a time when no lawful impasse in negotiations existed, the Respondent has en- gaged in unfair labor practices affecting commerce within the meaning of Section 8 (a)(5) and (1) and Section 2(6) and (7) of the Act REMEDY Having found that the Respondent violated Sec- tion 8(a)(5) and (1) of the Act by refusing to fur- nish the Union with certain financial information and by unilaterally instituting changes in its unit employees' wages and other terms and conditions of employment, we shall order it to cease and desist from engaging in such conduct and to take certain affirmative action necessary to effectuate the policies of the Act The Respondent shall, on request , be required to furnish the Union with the financial information re- quested in its letter of January 12, 1987 The Re- spondent shall also be required to make unit em- ployees whole for any loss in wages and benefits they may have sustained , including fringe benefit fund contributions, as a result of the unilateral changes implemented by the Respondent on March 16, 1987 Any backpay due will be determined in accordance with the method described in Ogle Pro- tection Service, 183 NLRB 682 (1970), with interest thereon as set forth in New Horizons for the Retard- ed 15 ORDER The National Labor Relations Board orders that the Respondent, Sioux City Stockyards, Division of United Stockyards Corporation, Sioux City, Iowa, its officers, agents, successors, and assigns, shall 1 Cease and desist from (a) Refusing to bargain collectively with United Food and Commercial Workers International Union, AFL-CIO, Local No 176, by refusing to furnish the Union with necessary and relevant fi- nancial information 1s 283 NLRB 1173 (1987) Interest on and after January 1 1987 shall be computed at the short term Federal rate for the underpayment of taxes as set out in the 1986 amendment to 26 U S C § 6621 Interest on amounts accrued prior to January 1 1987 (the effective date of the 1986 amendment to 26 U S C § 6621) shall be computed in accordance with Florida Steel Corp 231 NLRB 651 (1977) We leave to the compliance stage the question whether the Respondent must pay any additional sums into employee benefit funds to satisfy our make whole remedy Merryweather Optical Co 240 NLRB 1213 (1979) 4 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD (b) Unilaterally implementing changes in the wages and terms and conditions of employment of employees represented by the Union without ex- hausting the collective-bargaining process and having reached a bona fide impasse in negotiations (c) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act 2 Take the following affirmative action neces sary to effectuate the policies of the Act (a) On request, furnish the Union with the finan- cial information requested in its letter of January 12, 1987, to the extent the information has not al ready been provided (b) Bargain in good faith with the Union until a collective-bargaining agreement or a bona fide im- passe in negotiations is reached (c) Make whole all unit employees for any loss in wages and benefits they may have suffered as a result of the Respondent's March 16, 1987 unilater- al changes in their wages and other terms and con- ditions of employment, with interest in the manner described in the remedy section of this decision (d) Preserve and, on request, make available to the Board or its agents for examination and copy- ing, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order (e) Post at its facility at Sioux City, Iowa, copies of the attached notice marked "Appendix "16 Copies of the notice, on forms provided by the Re- gional Director for Region 18, 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 customarily posted Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material (f) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply 16 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 APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice Section 7 of the Act gives employees these rights To organize To form, join, or assist any union To bargain collectively through representa tines of their own choice To act together for other mutual aid or pro tection To choose not to engage in any of these protected concerted activities WE WILL NOT refuse to bargain in good faith with United Food and Commercial Workers Inter- national Union , AFL-CIO, Local No 176, by de- nying its request for financial information needed to perform its collective-bargaining duties WE WILL NOT make unilateral changes in the wages and other terms and conditions of employ ment of employees represented by the Union with out first bargaining with the Union to agreement or to impasse about such changes WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer cise of the rights guaranteed you by Section 7 of the Act WE WILL, on request, furnish the Union with the financial information requested in its letter of Janu- ary 12, 1987, which has not already been provided WE WILL make whole all our employees repre- sented by the Union for any loss of wages and ben- efits they may have suffered as a result of the uni- lateral changes made to their wages and other terms and conditions of employment on March 16, 1987, with interest SIOUX CITY STOCKYARDS, DIVISION OF UNITED STOCKYARDS CORPORA- TION Everett Rosenberry Esq, for the General Counsel Soren S Jensen and Arthur Carter Esqs (Erickson & Se derstrom) for the Respondent Harry H Smith Esq of Sioux City Iowa for the Charging Party UNITED STOCKYARDS CORP 5 DECISION STATEMENT OF THE CASE WILLIAM L SCHMIDT Administrative Law Judge United Food and Commercial Workers International Union AFL-CIO, Local No 176 (Union refers to Local 176 UFCW refers to its parent) filed this charge on May 8, 1987' alleging Sioux City Stockyards Division of United Stockyards Corporation (Respondent or Stock yards refers to the division involved here United refers to the parent) violated Section 8(a)(1) and (5) of the Na tional Labor Relations Act (Act) The Union amended its charge on June 24 and, on June 25, the Regional Di rector for Region 18 of the National Labor Relations Board (NLRB or Board) issued a complaint and notice of hearing before an administrative law judge The Respondent filed a timely answer admitting cer tarn foundational allegations and denying the unfair labor practices alleged The complaint alleges, in essence, that Respondent re fused to bargain in good faith with the Union by (1) re fusing to furnish the Union with necessary and relevant financial data for collective bargaining purposes, and (2) unilaterally imposing new wages and working conditions on its union represented employees The key question presented is whether Respondent refused to bargain in good faith by declining the Union s request for a wide range of financial information on the basis of the princi ple established in NLRB v Truitt Mfg Co, 351 U S 149 (1956) I heard this matter on July 28 at Sioux City, Iowa Having carefully considered the entire record 2 the de ' Unless shown otherwise all dates refer to the 1987 calendar year 2 Included in the record are handwritten notes reflecting a portion of the exchanges between the negotiating teams at the last four of the five bargaining sessions between Respondent and the Union The notes were offered by the General Counsel and were received over Respondents vigorous objection The note taker was Jacqueline Dendinger a legal as sistant from the law firm of Erickson and Sederstrom which represents Respondent who was present at those sessions for the purpose of taking notes Respondents opposition to the receipt of the notes is based on its claim that they are incomplete regarding the exchanges at the bargaining table and inaccurate In its brief Respondent renews its opposition and seeks again to have the notes excluded Respondents attack on the notes-which in fact are unusually extensive-is in general terms No witness called by Respondent addressed the accuracy of any relevant ac count attributed to him in the notes During the General Counsel s roves tigation of the original charge-which alleged that Respondent was en gaged in surface bargaining-the notes were submitted to the Regional Director of as reflective of the course of bargaining or as Respondent describes in its brief a picture of the bargaining process here Having been prepared at Respondents direction obviously reviewed by responsi ble agents submitted in defense of the charge as originally filed and un disputed in pertinent part I find Respondent has adopted the notes and as such they are admissible because they contain admissions related to the issues here and to the context of those admissions Accordingly Re spondent s request that I reverse my ruling admitting the notes is denied Respondent also argues the notes should be rejected for a policy reason The substance of this argument is that the notes were submitted during the General Counsels investigation for one purpose (to refute the surface bargaining charge which they clearly do) but were used at the hearing for another purpose (to support the refusal to furnish information allegation) The short answer to Respondents policy argument is that the General Counsel is entitled under Sec II of the Act to any evidence of any person being investigated and is required under Sec 3 of the Act to prosecute complaints before the Board The General Counsels Sec 3 duty presupposes that she will prosecute complaints by presenting all rel evant evidence lawfully in her possession If that scheme inhibits parties meanor of the witnesses, and the posthearing briefs of the General Counsel and the Respondent, I have con cluded Respondent did not violate the Act as alleged for reasons specified in the following FINDINGS OF FACT I THE ALLEGED UNFAIR LABOR PRACTICES A Background The Respondent, a Delaware corporation, is engaged in the operation of a public stockyard at Sioux City Iowa 3 The Stockyards income is derived from boarding, feeding, and auctioning livestock (cattle, hogs and sheep) brought to market by growers and the rental of office space and other excess facilities As public stock yards it is regulated under the Public Stockyards Act, which requires, among other things, that it be open for business daily regardless of the volume of livestock re ceipts The Stockyards is an old Sioux City institution that celebrated its centennial anniversary at the time of the hearing Until 1963 the Stockyards operated as an inde pendent, essentially local enterprise In that year it became a subsidiary of United Later United and its sub sidiaries became a subsidiary of the Canal Randolph Cor poration (Canal) but United and its subsidiaries resumed their independent status on June 1 1984, on Canal s liqui dation When the spinoff occurred, United s principal-if not sole-business was the operation of at least 10 public stockyards throughout the United States After the spinoff, United vigorously pursued a course of diversification That program drastically changed the character of the enterprise From its headquarters in New York City, United began trading in investment se curities and pursued its real estate development activities with increased vigor Although United continued its stockyard operations, by 1987 they were no longer Unit ed s heart and soul The shifting nature of United s char acter is graphically reflected in the sources of its income In 1984 United s net income from operations was from voluntarily cooperating with the General Counsel then so be it Accordingly the sanction sought by Respondent is inappropriate and denied Having so ruled however I hasten to add a word of caution to the General Counsel The legal theory underlying the original charge and the amended charge are substantially different The complaint is based on the theory of the amended charge Respondents counsel (and chief negotia tor) complains that he was never questioned during the investigation con cerning matters specifically relevant to the theory of the amended charge and the formal papers show that he did not receive the amended charge until the day after the complaint issued Such circumstances if true under the Equal Access to Justice Act could easily lead to an award if Respondent qualified But the mere fact that Respondent does not qualify for relief under EAJA is not reason to deny it an opportunity to fully and fairly address the charges made against it s In the 12 month period preceding December 31 1986 Respondent derived gross revenues in excess of $500 000 from its Sioux City stock yard operation During the same period Respondents direct outflow and direct inflow each exceeded $50 000 in connection with its Sioux City op eration As Respondent meets the Board s retail and nonretail standard for exercising the statutory jurisdiction present here I find that it would effectuate the purposes of the Act for the Board to exercise its junsdic tion to resolve the labor dispute presented here 6 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD $5,446,902, with $5,238 765 coming from its stockyard operations In 1986 United s net income was $12,818,471 with $4,068,737 coming from stockyard operations The declining stockyard activities-which United attributes to a general downturn in the agribusiness economy and direct purchasing of livestock by slaughterhouses-pro duced excess real estate which fueled United s real estate activity 4 The most extreme example occurred at Fort Worth, Texas, where the stockyard was closed alto gether and the land was used to develop a theme park The Union represents Stockyards' production and maintenance employees at Sioux City 5 Similar employ ees at several other United stockyards (except, perhaps, those in Milwaukee) are represented by the Union s sister locals At the time of the hearing there were 28 employees in the Sioux City unit Most were long term employees with 20 to 30 years of service The wages, hours, and working conditions of those employees have historically been governed by the terms of a collective bargaining agreement between Respondent and Union, most recent ly the Sioux City agreement was effective by its terms from January 23, 1984 to January 25, 1987 6 B The 1986-1987 Negotiations Historically bargaining between UFCW locals and United has been conducted on a location by location basis The agreement in Indianapolis, Indiana, expired in mid 1986 and the agreements at six or seven other loca tions were scheduled to expire during United s fiscal year ending October 31, 1987 United began planning for the 1986-1987 labor negoti ations in 1985 At that time it retained Omaha Attorney Soren Jensen to conduct or oversee negotiations at all lo cations and established three bargaining objectives for new agreements at all locations Specifically Jensen was directed by United s leadership to negotiate an end to all workweek guarantees restrictive subcontracting clauses and prohibitions against supervisors performing unit work The individual subsidiary president at each loca tion was given discretion to determine wage and benefit offers and all other elements of the labor agreement The Respondents position on the workweek guarantee and its negotiators statements justifying its elimination while bargaining with the Union provide the heart of this case In a nutshell the workweek guarantee (included in all of United s stockyard agreements) provided that all regular employees scheduled for work at the start of the workweek were guaranteed 40 hours of work that week unless they were voluntarily absent The guarantee had a ripple effect on other contractual benefits such as pen sions and vacations, which are based on the number of hours worked The effect of the guarantee from Re spondent's perspective was that employees were often given make work or nonproductive work during slack periods as Respondent was obliged to pay employees anyway By Respondents estimate 20 to 25 percent of the work performed at Sioux City was not really essen tial, but this estimate was hotly disputed by unit employ ees on the bargaining committee In November 1986, Respondent gave the Union timely notice of its intention to terminate the existing Sioux City agreement when it expired on January 25 That notice further expressed Respondents willingness to begin ne gotiations for a new contract ' and advised that Re spondent wished to propose substantial changes in a new agreement The parties commenced negotiations for a successor Sioux City agreement on December 12, 1986, and held four additional sessions on January 12, February 7 and 13 and March 2 Respondents negotiators were Jensen, Stockyards president, Donald Bales, and two other Stockyards officials, representing the Union were UFCW Representative Frank Jackson Local 176 Presi dent Clyde Bolles and a bargaining committee of select ed unit employees At the December 12 session Jensen informed the Union that Respondent would not sign any further agreements containing a workweek guarantee, extensive restrictions on subcontracting, and the performance of unit work by supervisors According to Jackson Jensen justified these demands by saying that the livestock mar kets were down and that United was losing money not making any money Jackson asserted that Respond ent s negotiators repeated the losing money not making any money theme at all the remaining bargain ing sessions Jensen acknowledged that he spoke at length justifying the three corporate objectives on December 12 Howev er he denied that he ever justified the proposed elimina tion of the workweek guarantee on the ground that Re spondent was in a diminished financial condition, plead ing poverty losing profits, or in danger of going out of business or bankrupt Instead Jensen claimed that the Union was,told repeatedly that in light of the declining livestock receipts the monetary investment that the stockyard operation represented was not regarded as profitable by United In this regard, Jensen asserted that United's investment at Sioux City was approximately $10 to $15 million Based on that assertion, the Sioux City net income in 1986 of $983 748 translates into a return of 6 5 to 9 8 cents per dollar of investment 7 Following the December 12 meeting Jensen prepared a proposal in contract form that incorporated the changes Respondent sought to negotiate and forwarded it to Jackson 8 Jackson was astonished by the magnitude of the language changes he is reported to have later said after reviewing the proposal, that it upset his whole weekend * At the time of the hearing only slightly more than one third of Sioux City s livestock facilities was required for Respondent s activities 8 The Union is a labor organization within the meaning of Sec 2(5) of the Act 8 The parties extended the agreement to February 8 during the negoti ations discussed below ° In 1986 Sioux City produced almost 25 percent of United net income from stockyard operations This fact suggests that if United s investment at the nine other stockyards it operated was similar to Sioux City the return was far far worse 8 Respondents written proposal treated only contractual language changes Its economic proposals were submitted to the Union by letter dated January 20 UNITED STOCKYARDS CORP In response, Jackson prepared and came to the Janu ary 12 bargaining session with a letter requesting the Re spondent furnish certain financial data The meat of the Union s request is contained in the following two para graphs of the letter Under the N L R. A, as you are aware an em ployer has the obligation to furnish the union infor mation relevant to the performance of its represent ative functions The issue of the employers financial inability to meet the union s contract proposals is interjected into the negotiations, information regard ing the employers financial condition becomes rele vant to the union s ability to perform its negotiation function So that the negotiations can progress in the most realistic manner the Union requests the following financial information on Sioux City Stock Yards for each of the last three years copies of federal income tax returns and audit reports, including bal ance sheets, income statements, and changes in fi nancial position, for the past three years, and any other documents, books, and records which will separately show (1) the total bargaining unit labor costs as well as the cost of non bargaining unit labor, including supervisory and other management salary and benefits, (2) total income from sales or fees, (3) overhead and other administrative costs, and (4) interest on financial charges This financial data should be presented in a manner which clearly breaks down the costs and reveals the profits and losses during each of the three years When Jackson tendered the letter to Jensen on Janu ary 12 he told Jensen that the Union needed proof as soon as possible that United was losing money in light of the drastic demand to eliminate weekly guarantee and its attendant effects Purportedly, Jackson argued that the financial information would be real helpful if Respond ent was unable to provide increases or the Union was re quired to take wage cuts Jensen s response at the time was that Respondent would provide some information but would not com pletely open its books as the Union s request would re quire Jensen argued that the Respondent was not plead ing poverty nor was it going bankrupt He asserted that because of the reduced livestock receipts Respondent was not profitable, but it was going to continue to oper ate However Jensen asserted that Respondent did not think it was wise to provide pay increases What Re spondent sought, Jensen stated, was a reasonable agree ment Later, Jensen stated that Respondent was still making money, but a lot of it came from the non oper ational' business at Sioux City such as rental income 9 9 Respondents 1986 income statement suggests that the repeated claim that its non operational income accounted for a major portion of its income is only a partially accurate explanation of the situation at Sioux City Although the revenues from livestock related activities dropped by nearly a million dollars from 1985 to 1986 and revenue from nonlivestock activities rose by only $140 000 Respondents net income actually in creased by approximately $23 000 The principal explanation for Re spondent s ability to maintain its relatively level net income in the face of significant reduction in livestock related revenues lies in the fact that Re 7 Jensen promised to respond to the Union s information request in writing By letter dated January 15, Jensen responded at length to the Union s request In pertinent part Jensen s letter states Your letter of January 12 assumes that at some point in time in the negotiations that the employer indicated that it is in a precarious financial situation and cannot afford to provide pay or benefits at a prescribed level and that because of this situation the union should grant some sort of relief to the company This is true even though at the first meet ing the company made no proposal regarding hourly wages or benefits and in fact, even at the second meeting no proposal regarding economics was discussed At no time has the employer pled poverty nor does it intend to do so in connection with these ne gotiations It is true that the yard operations are not profitable in Sioux City because of the reduced numbers and the impossibility, under the previous labor contract, of reducing overhead and cutting labor costs in proportion to the reduction in the number of cattle and hogs being processed through the market However, the company is not in any way near bankruptcy nor is it necessary to request any special treatment from the union in connection with its operation As I indicated to you, certain fi nancial information is available to the union in bar gaining, particularly if it is requested at an appropri ate time This kind of information has to do with the cost of certain benefits i e, holidays and vaca tions The employer is not required to open its books except in a situation where it requests special treat ment because of an extremely negative and precari ous financial condition The proposals which the company has made and will be making throughout the negotiations, are made to insure a profitable operation and also to assure continued employment at Sioux City It is the company s opinion that a new collective bargaining contract must face a number of realities regarding the changes in operation and the changes in the Sioux City market This is the basis for our proposals and not because of 'poverty Therefore, we are willing to furnish you the fol lowing information 1 Payroll costs for the bargaining unit 2 Other similar information regarding costs associated with the members of the bargaining unit In connection with the other requests made in your January 12 letter, we do not think them either appropriate or necessary for collective bargaining Respondent's wage proposal of January 20 called for a reduction in the number of employee classifications and a spondent reduced its 1986 operating and maintenance expenses by nearly $700000 8 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD reduction in the hourly wage rates for all classifications The Union responded by letter dated January 22 with its own economic proposals No mention was made in the Unions letter to Respondents January 15 letter concern ing the information demand nor did the Union request any information in its January 22 letter Throughout the remainder of the period the parties bargained together, their positions concerning the desire for and the willingness to provide, the financial data dis cussed in the foregoing exchange remained unchanged The proposal to eliminate the guaranteed workweek re mained as the key issue in the subsequent unproductive negotiations 10 The Respondents notes of February 7 attribute re marks to both Bales and Jensen pertaining to the Re spondent s financial position Bales told the Union that if we don t get more receipts we cant even have 28 people on the payroll we can t pay taxes and upkeep on yards with status quo Later Jensen emphasized that Respondents position on the guarantee would not change even in face of a strike and asserted that Stock yards was only making money on real estate Shortly thereafter Jackson stated I wish I could feel you were in that bad of shape During this meeting Jensen assert ed Respondent was endeavoring to reduce its direct labor costs Relatively early in the February 13 meeting Jackson asserted that he had seen reports showing Respondent was making a profit Jensen said that he too, had read the annual report When Jackson asserted that the figures reflected Respondent could operate with a guarantee, Jensen responded that Stockyards won t operate that way anymore But at another point, on February 13, while discussing the number of hours per week an em ployee must work to acquire benefits, Jackson observed that Respondents proposal was worse than he thought Jensen responded that the condition of the business was worse than he thought Later while addressing the guar antee issue, Jensen stated We have to go out of buss ness or change the way we re doing business Yet later Jensen rejected a 4 hour per day guarantee saying that it was nothing the way receipts are going Finally by letter dated March 11 Donald Bales Re spondent s division president, notified Jackson and Local 176 President Clyde Bolles that Respondent believed an impasse in negotiations existed For this reason Respond ent advised the union representatives that it intended to put into effect as of March 16 the basic terms and con ditions proposed by Respondent in the negotiations' By letter dated March 20, Jackson protested to Bales con cerning the declaration of an impasse Notwithstanding, Respondent did implement its proposals on March 16 and kept them in effect thereafter No further bargaining sessions were held or scheduled 10 This is not to say that there was no movement on this issue Re spondent suggested from time to time a willingness to consider a gradual elimination of the guarantee the Union suggested that from time to time it would entertain a downward adjustment in the number of employees benefiting from the provision or the number of hours guaranteed Never theless the fundamental position of Respondent that it would sign no fur ther agreements containing a guarantee and of the Union that it was not in business to give away workweek guarantees remained unaltered C Further Findings and Conclusions In NLRB v Truett Mfg Co above the Supreme Court held that a union is entitled to evidence substantiating an employers bargaining position of economic inability to pay proposed wage increases The Court reasoned that If such an argument is important enough to present in the give and take of bargaining, it is important enough to require some sort of proof of its accuracy Id at 152- 153 The principle articulated in Truitt has been applied with equal force when an employer relies on its past and ongoing financial losses to justify wage and benefit re duction proposals Cowin & Co, 277 NLRB 802 (1985) No magic words are necessary to express a poverty plea, but the words and conduct must be specific enough to convey that meaning Atlanta Hilton & Tower, 271 NLRB 1600 (1984) Truitt is applicable to a wide variety of bar gaining situations in which the good faith obligation re quires that a party to bargaining negotiations be willing to substantiate, on request a position it has taken during negotiations Stanley Building Specialties Co 166 NLRB 984 (1967) As the chronology of events establish the Unions fi nancial information demand was grounded on Respond ent s proposal to eliminate the workweek guarantee rather than its proposal for classification by classification wage reductions The request for information and Re spondent s reply all came before the Respondent s wage proposal was exposed Moreover Respondents wage rate proposal on its face indicated that the rates repre sented a wage floort that could be increased on a merit basis And in subsequent negotiations, Respondent stated its flexibility about the wage proposal As the financial information request was focused on Respondents workweek guarantee proposal, the question becomes whether the General Counsel has established Respondent sought to justify its proposal on the basis of its inability to pay Although some evidence supports the General Counsels position I am satisfied that the pre ponderance of the evidence shows Respondents proposal was grounded on efficiency considerations and not on its inability to pay This conclusion is supported by the fol lowing (1) The proposal was generated at the parent corpora tion level and was made applicable to negotiations at all stockyard locations (2) Respondents policy of reducing stockyard ex penses to meet diminished stockyard receipts was public ly emphasized in its 1986 stockholders report (3) By its very nature the proposal provided Respond ent with flexibility in regulating its work force needs, but it did not necessarily guarantee lower payroll costs 11 (4) The proposals related to subcontracting and per formance of unit work by supervisors also generated at the parent level, were similarly designed to provide Re spondent with greater flexibility in utilizing its work force i 1 Thus if managements estimate that 20 to 25 percent of the Sioux City labor costs were for non essential activities is accurate it is likely that some labor savings would result from the elimination of the guaran tee To the extent that estimate was exaggerated elimination of the guar antee would produce proportionately less savings UNITED STOCKYARDS CORP 9 (5) United s net income rapidly rose over the final 2 years of the last collective bargaining agreement so that claims of poverty would obviously have been indefensi ble 12 (6) Even the Sioux City income statement reflects level income even in the face of diminishing livestock re ceipts (7) Jackson was aware of United s increased income (8) With few exceptions, discussed below, Respondent repeatedly asserted it was not pleading poverty (9) At the first two bargaining sessions Jensen ex plained at length Respondents belief that it did not need its entire work force for a full 40 hour week and accord ingly, the 40 hour guarantee was an unnecessary expense (10) Respondent summarily rejected the Union s pro posals for a modified guarantee, but remained open to a phaseout period and stated its flexibility on all other issues The General Counsel argues that Jensen s letter reject ing the Union s financial information on the ground that the Stockyards was not profitable implies that Re spondent s proposals were designed to relieve an unprof itable situation The General Counsel believes that this position, coupled with Bales' statement at the February 7 bargaining session concerning the Stockyards inability to pay its taxes meet maintenance expenses, and maintain current employment levels under existing conditions belie Respondents defense that its proposals were not grounded on a poverty plea Although Bales' remarks are troubling, Jensen s asser tion about profitability does not necessarily carry the black and white implication ascribed by the General Counsel or understood by Jackson Rather as Jensen tes tified, relative to the amount of investment the Stock yards represented, it was not a profitable operation Jeri Ben's statements that the Stockyards was not profitable or was losing money cannot be translated ipso facto into a negative income statement or a poverty plea Such re marks must be read in the context of those who directed Jensen s activities, namely, United s corporate managers in New York From the perspective of managers who had more than doubled United s income in the 2 year period following its spinoff from Canal through bull market securities and real estate activities, the return of less then 10 cents per dollar of investment at Sioux City could easily be viewed as losing money For this reason I find Jensen s statements that the Sioux City operation was unprofitable or was losing money cannot be read lit erally, which is how Jackson and the General Counsel have read it Bales remarks on the other hand are not at all con sistent with the picture of United at that time In my judgment the posture of the record does not permit any inferences concerning Bales remarks as Respondent chose only to oppose the introduction of Dendinger s notes and never sought to have Bales explain the remarks attributed to him in the notes while testifying Hence any attempt to reconcile Bales remarks requires specula tion rather than inference Nonetheless Bales remarks alone are not sufficient to support a finding that Re spondent was pleading poverty The General Counsel argues that this case is indistin guishable from Cowin, above I do not agree In that case the employer was actually losing money and had even sought a midterm modification of the prior agree merit to obtain relief from a scheduled wage increase be cause of its financial predicament The ultimate conclu sion in that case was that the employer had argued that it could not afford the increases sought by the employee representative despite its protestations to the contrary By contrast I am satisfied Respondents proposals here were designed to gain flexibility and efficiency in the use of its work force Although end result of Respondent s proposal might produce some reduction in its labor costs, the record simply fails to establish that Respondent sought this economy because of a precarious financial position For these reasons I find Cowin distinguishable and that Respondent was not obliged to disclose the type of financial information sought by the Union s January 12 letter As the General Counsel claims that no bona fide im passe was reached only because of Respondents refusal to furnish the requested information it follows that that allegation, too, is without merit Accordingly I will recommend that the Board order the complaint dismissed in its entirety CONCLUSIONS OF LAW 1 Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6) and (7) of the Act 2 The Union is a labor organization within the mean ing of Section 2(5) of the Act 3 Respondent did not engage in the unfair labor prac tices alleged in the complaint issued against it on June 25 On these findings of fact and conclusions of law and on the entire record , I issue the following recommend ed13 ORDER It is recommended that the complaint be dismissed 12 Although much of this increase was attributable to its securities and real estate business which had little or nothing to do with its stockyards operation on which the bargaining focused the financial records intro duced indicate that even the stockyards operation produced income as opposed to losses i 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