C-E Natco/C-E Invalco

502 DECISIONS OF NATIONAL LABOR RELATIONS BOARD C-E Natco/C-E Invalco and United Steelworkers of America, AFL-CIO-CLC. Case 16-CA-10037 28 September 1984 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS HUNTER AND DENNIS On 16 August 1983 Administrative Law Judge Nancy M Sherman issued the attached decision The Respondent filed exceptions and a supporting brief,' the Charging Party Union filed exceptions and a brief in support of those exceptions, in sup- port of the judge's decision, and in opposition to the Respondent's exceptions and brief, and the General Counsel filed an answering 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 briefs and has decided to affirm the judge's rulings, findings, 2 and conclusions only to the extent consistent with this Decision and Order I The Union was certified in 1968 as the represent- ative of approximately 1100 predominantly produc- tion and maintenance employees at the Respond- ent's Tulsa, Oklahoma location 3 This case con- cerns events which took place in 1981 during the parties' negotiations leading up to the most recent collective-bargaining agreement effective 1981- 1984 The contract between the parties effective 20 September 1978 was due to expire at 12 01 a m, 31 August 1981 4 Negotiations for a successor agree- ment began on 28 July The Union's principal ne- gotiator was Carl Oldham, subdistrict director for Oklahoma The Respondent's chief negotiator was Lewis S Goff, vice president of personnel and Natco industrial relations 1 The Respondent filed a request for oral argument and the Union filed a statement in opposition to that request The Respondent's request is denied as the record, exceptions, and briefs adequately present the issues and positions of the parties 2 The Respondent has excepted to some of the judge s credibility find ings The Board's established policy is not to overrule an administrative 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 reversing the findings 3 C E Natco and C E Invalco are divisions of Combustion Engineer mg Inc and are a single Integrated business enterprise and a single em ployer within the meaning of the Act Except where noted they are re ferred to here as Respondent 4 All dates are in 1981 unless otherwise indicated The early negotiating sessions concerned non- economic matters On 27 August, the Union put forth its monetary proposal At the 29 August ses- sion, the Respondent presented its contract propos- al, including its economic offer The Union did not accept the Respondent's offer The Union made a new offer, which included some increased econom- ic demands, and which the Respondent rejected During this session, the parties further discussed what might occur if a new agreement was not reached and the current contract expired Oldham indicated that the Union planned to work under ex- tension of the contract Goff stated that the Re- spondent would not extend the contract Goff men- tioned that the Respondent "had fire bombings, bomb threats, and malicious mischief" Oldham re- plied that he had told Goff that "my people are mad and I can't control them But we are going to show up [on Monday, 31 August] so that we can continue some relationship" When asked if this would happen even without a contract, Oldham said, "Yes, but we may walk out the next day When they are out they are my headache This time I'm going to keep them in and we can share the headaches" Goff finally stated that the Respondent had put forth a "final offer," and the Union and the Respondent then caucused 5 After the caucus, the parties again discussed what would happen upon expiration of the con- tract Oldham repeated that employees would report to work, and that "the law" would decide what, if any, benefits could be suspended by the Respondent Goff then talked about a contract ex- tension, and indicated that the Respondent was concerned an extension would result in "violence, fire bombings, and sabotage" During this session, Goff also expressed his opinion that an impasse had been reached A Federal mediator who had been attending the negotiating sessions expressed the same view, although Oldham indicated he was "not at an impasse" Goff then distributed a document, entitled "Memorandum of Understanding," to union representatives This memorandum had been drafted during the caucus discussed above The rel- evant portion of the memorandum read as fol- lows 6 5 The facts are set forth in more detail in sec II of the judge s deci mon 6 The relevant portion of the first part of the memorandum reads as follows MEMORANDUM OF UNDERSTANDING C E Natco and C E Invalco, Divisions of Combustion Engineer mg Inc , hereinafter called the Companies, and Local 7568 of the United Steelworkers of Amenca, AFL-CIO-CLC, hereby agree as follows Continued 272 NLRB No 81 C-E NATCO/C-E INVALCO 503 II The Union, its officers, agents and representa- tives of both the International and the Local (re- ferred to collectively as the Unions) understand and agree that the Unions and their officers, agents and representatives shall be jointly and sev- erally liable for all acts of sabotage, vandalism, or any other harm to the-Companies which arise in any manner during the term of this memorandum, irrespective of any proof of the cause of the acts and/or harm complained of To secure these obli- gations, the Union shall put up a performance bond in the principal amount of $500,000 00 writ- ten by an insurance company or companies ac- ceptable to the Companies, payable upon demand without need for proof of cause whatsoever by either or both of the Companies On receiving the Respondent's proposal, the Union requested it be provided with specific in- stances of sabotage, vandalism, or slowdown No such instances were provided Oldham stated that the Union was not going to sign the agreement Goff said if the Union did not sign the agreement, the Respondent would assume the Union was on strike Thereafter, the Respondent's representatives left the room Oldham asked the Federal mediator to inform the Respondent's representatives that the union negotiators were still at the table willing to bargain, as there were still 1-1/2 days before the contract expired The mediator checked with the Respondent's representatives, and he informed the Union that they indicated the Union had the Re- spondent's proposals, and "that was it" On 30 August, over 1100 employees attended a meeting conducted by the Union They voted unanimously to reject the Respondent's final con- tract proposal The Respondent's proposed "Memorandum of Understanding" was then read to the membership The Union indicated it was not going to sign it The Union told its members that it felt the Respondent wanted a strike, but that the Union recommended its members not engage in a strike The Union recommended that employees report to work on 31 August, but give the Union's bargaining committee authority to call a strike in the future if necessary Employees unanimously agreed with these recommendations I If the parties are unable to reach agreement on a new collective bargaining agreement from and after 12 01 A M , August 31, the Companies agree that employees may work their regularly sched uled shifts without any collective bargaining agreement until said new agreement is negotiated and settled It is agreed that each shift must, in the judgment of the Compa nies, be sufficiently manned to maintain normal production If in the sole judgment of management, insufficient employees report to work or if production is impeded in any manner whatso ever, the effect of which is to decrease production to a rate which is in the sole judgment of the Company commercially insufficient, the parties then understand that a strike shall then be in effect On 31 August, beginning at 12 01 a m, the Re- spondent did not permit employees to work at its plants, although a numerically normal complement of employees arrived at the plants to work 7 When employees were denied entry to the plant, they re- ceived a handout from the Respondent which read C-E NATCO/C-E INVALCO INFORMATION MEMORANDUM SUBJECT TEMPORARY SHUTDOWN OF PLANTS THE COMPANIES ARE WILLING THAT BARGAINING UNIT MEMBERS CON- TINUE WORKING WITHOUT A CON- TRACT WE OFFERED MR CARL OLDHAM, BARGAINING COMMITTEE SPOKESMAN, A WAY TO DO THIS WHILE GIVING THE COMPANY PRO- TECTION AGAINST SLOWDOWNS, VIO- LENCE, ACTS OF SABOTAGE, VAN- DALISM AND BODILY HARM, ALL OF WHICH HAVE BEEN THREATENED WE ALSO WANT TO PROTECT YOUR RIGHT TO WORK UNDER REASONA- BLE CONDITIONS MR OLDHAM RE- FUSED THIS, AND IN SO DOING HAS EFFECTIVELY CALLED A STRIKE WE STILL WANT TO DEVELOP A METHOD WHICH WILL PROTECT YOUR JOB AND ALLOW OUR PLANTS TO OPERATE HOWEVER, WE CANNOT TAKE PREMATURE ACTION WHICH COULD HAVE SERIOUS LONG-TERM NEGATIVE IMPACT ON YOUR FUTURE AS WELL AS THE COMPANIES' WE ARE WORKING ON A METHOD TO ALLOW YOU TO RETURN TO WORK WHILE PROTECTING PEOPLE AND PROPERTY AND YOU WILL HEAR FROM US AS SOON AS WE WORK OUT AN ACCEPTABLE METHOD Later in the morning of 31 August, Oldham sent a telegram to Goff informing the Respondent that the Union was not on strike and that it was making a continuing daily offer for employees to return to work unconditionally Goff replied by telegram re- ceived by the Union on 1 September, inquiring whether the Union's offer to work meant the Re- spondent Islhould now assume that the Union has changed its position and will now accept [the bond] proposal": On that same day, Oldham re- 7 Five night shift employees who reported to work at 10 pm on 30 August were not permitted to work after midnight and were escorted from the plant at 12 01 am on 31 August 504 DECISIONS OF NATIONAL LABOR RELATIONS BOARD sponded that the Union "will not sign the ridicu- lous conditions of employment proposed by the Company on August 29, 1981 In addition to the "Information Memorandum" distributed when employees arrived to work, em- ployees also received a "Letter of Understanding" mailed to their homes 8 A memorandum was at- tached to the letter explaining that the Respondent was making an offer of employment 9 The Union advised employees not to sign the letter Negotiations between the parties resumed on 4 September On 10 September, Goff advised Oldham by letter that the Respondent would extend its 2 September offer to employees On 11 September the Respondent mailed employees a second copy of the prior memorandum and "Letter of Understanding" The Respondent also included a cover memorandum explaining that the offer of employment had been extended, and clarifying some questions concerning the earlier offer 10 8 These letters were dated 2 September, although some employees re ceived letters on 1 September 9 The relevant portions of the memorandum were as follows We have been informed by Union leadership that our employees who are members of Local 7568 of the United Steelworkers of America are willing to work without a Collective Bargaining Agree ment until we reach a negotiated settlement On two occasions the Union has refused to agree to a collective bargaining method to pro tect our people and property We still wish to accept your an- nounced desire to return to work This letter and the attached Letter of Understanding constitute this offer of employment by [Respondent] to you during the time you would be working without a Collective Bargaining Agreement The attached letter sets out the basic terms of your employment during this period Should you sign this Agreement you would be working at your hourly rate and under the Rules of Conduct in effect immediately prior to the expiration of the Collective Bargain- ing Agreement The relevant portions of the Letter of Understanding attached to the memorandum read as follows LETTER OF UNDERSTANDING In consideration of my employment by (The Company), I hereby agree to comply with the following conditions of employ- ment at the Company during the absence of a Collective Bargaining Agreement I) If in the judgment of management of the Company, insufficient employees report to work or if production is impeded in any manner whatsoever, the effect of which is to decrease production to a rate which is, in the judgment of the Company insufficient the Company will conclude that a strike by the Union is in effect 2) I understand that I shall be held responsible to all extents of the law, for any damage or losses to the Company caused by me 3) Further, I understand that my interim employment shall not be under the terms and conditions of the Collective Bargaining Agree ment between the Company and Local 7568 of the United Steel workers of America, AFL-CIO-CLC, which expired at 12 01 a m, August 31, 1981 '° The memorandum stated in relevant part You may not have had ample time to consider our original Offer of Employment" within the time limit because it was sent you just prior to the Labor Day weekend So the Company has extended the Offer of Employment" to September 18 1981 Certain questions have been asked which indicate some misunder standing of the offer terms In an effort to clarify these, the follow mg apply By telegram of 11 September, the Union notified the Respondent that it considered the new offer of employment to be different than prior offers since it included benefits requested but not offered the Union during discussion on 29 August The Union indicated its willingness to accept the offer if it meant the Respondent was withdrawing the demand that the Union agree to the 29 August Memorandum of Understanding On 14 September Goff stated by telegram that the Respondent was considering the Union's recent telegram, the Re- spondent never thereafter replied to the telegram On 18 September, Goff sent the Union a new "Memorandum of Understanding" to be effective 21 September until 9 October The terms of that memorandum included a no-strike provision, but did not include a bond proposal The Union did not accept this offer Subsequently, there were several negotiating ses- sions On 14 October, the parties reached agree- ment permitting employees to return to work Es- sentially, the parties agreed to reinstatement of the recently expired contract until a new one was ne- gotiated On 6 December, the parties entered into a new collective-bargaining agreement effective from 21 August until 1 September 1984 II The General Counsel and the Union argued, and the judge agreed, that the Respondent's 29 August "Memorandum of Understanding" which proposed that the Union agree to post a performance bond constituted a nonmandatory subject of bargaining The judge, citing a long line of Board and court cases,'' held that performance bonds or indemnity agreements are nonmandatory subjects of collective bargaining since they are not within the scope of wages, hours, and terms and conditions of employ- ment, they impede or otherwise render nugatory the bargaining process, and they have the effect of giving only financially able parties the right to engage in bargaining The judge rejected the Re- spondent's argument that the bond proposal was a mandatory subject of bargaining because it con- cerned employee safety The judge found this de- (1) The Offer of Employment" includes essentially the same ben efit coverage as was in effect immediately prior to the expiration of the Collective Bargaining Agreement The Company twice offered the Union leadership a reasonable means for returning to work These offers were rejected We contin- ue to want you to return to work This letter clanfies our offer to you as an individual employee of the Company and member of the Union ii These cases included, inter alia, Betra Mfg Co, 233 NLRB 1126 (1977), Beryl Chevrolet, 221 NLRB 710 (1975), Covington Furniture Mfg Corp, 212 NLRB 214 (1974), enfd 514 F 2d 995 (6th Cif 1975) C-E NATCO/C-E INVALCO 505 fense insufficient as a matter of law," and further found that the Respondent's professed concern for employee safety, preventing production interrup- tion, and preventing further sabotage was not, in fact, the motivation for the bond proposal In this regard, the judge noted that the Union asked for, but the Respondent did not provide, specific in- stances of sabotage, vandalism, or slowdown 13 The judge next found that the Respondent vio- lated Section 8(a)(1) and (3) of the Act by locking out employees in connection with its bond propos- al She found that the lockout was motivated by its desire to compel acceptance of the 29 August "Memorandum of Understanding" Hence, the lockout was in support of a nonmandatory subject of bargaining, and thereby in violation of the Act The judge again rejected the Respondent's defense that the lockout was designed to protect employees and equipment against sabotage and violence, and to provide a "breathing period" to consider its op- tions Finally, the judge concluded that the Respond- ent's 1 and 2 September and 10 September mailings constituted individual offers of employment to em- ployees which differed from the proposal tendered to the Union on certain matters The judge found that by soliciting employees to sign these "Letters of Understanding," the Respondent violated Sec- tion 8(a)(1) and (5) of the Act Additionally, the judge found that by conditioning employment on signing these letters, the Respondent unlawfully in- vaded the employees' right to union representation in violation of Section 8(a)(3) of the Act For the reasons that follow, we agree with the judge that the Respondent's bond proposal was a nonmandatory subject of bargaining However, we conclude that the Respondent did not bargain to impasse or lock out its employees over that issue 14 We do agree, however, that the Respondent un- lawfully attempted to bypass the Union and to deal directly with employees III The law is well settled that a performance bond or indemnity proposal is a permissive, nonmanda- tory subject of bargaining 13 We thus agree with 12 The judge relied on Covington, supra, 212 NLRB at 218, and Car- penters (Excello Dry Wall), 145 NLRB 663, 664-667 (1963) " The judge also found the bond infirm on several other grounds See judge's decision at sec K(1) In light of our disposition of the case, we need not treat these various other grounds 14 As Chairman Dotson agrees that the Respondent did not bargain to Impasse or lock out its employees over the bond proposal, he finds It un- necessary to decide whether the proposal was a mandatory or nonmanda tory subject of bargaining 15 Jasper Blackburn 21 NLRB 1240 (1940) Conway's Express, 82 NLRB 972 (1949) enfd 195 F 2d 906 (2d Cir 1952), NLRB v Arlington Asphalt, 318 F 2d 550 (4th Or 1963), enfg 136 NLRB 742 (1962), see cases cited at fns II and 12, above the judge's articulate discussion finding the Re- spondent's proposal here to be a nonmandatory subject of bargaining However, our inquiry does not end with this finding It still must be established that the Re- spondent's lockout of its employees was in support of the bond proposal If it were, then we would agree with the judge that the Respondent would stand in violation of the Act However, a close reading of the facts reveals that the lockout was not for the unlawful purpose assigned to it by the judge The parties engaged in several bargaining ses- sions prior to the expiration of the existing collec- tive-bargaining agreement and the Respondent's declaration, echoed by the Federal mediator, that impasse had been reached During these sessions the parties were unable to agree on items, including layoff procedures and economic terms When the parties realized that the existing contract was near- ing expiration and that they had yet to reach agree- ment on economic proposals, they shifted negotia- tions to a discussion of the possibility of extending the existing contract until a new agreement could be reached Still the parties could not agree Then the Respondent declared there was an impasse At this time, less than 2 days before the existing contract was due to expire, the Respondent had no guarantee the employees would not strike On 29 August, Oldham had reminded Goff that the em- ployees could show up to work on 31 August, but they "may walk out the next day" And before ne- gotiations began, the Union had told the Respond- ent its membership had unanimously authorized the negotiating committee to call a strike whenever it wanted Thus, despite the statement that the Union did not plan to strike, the Respondent had no as- surances on that matter 16 Further, during negotiations, and particularly in the week preceding contract expiration, the Re- spondent endured acts of damage to equipment which the Respondent believed were the Union's responsibility Indeed, the judge concluded that some of the incidents relied on by the Respond- ent" were "almost certainly" caused by sabotage, and "created the potential for very serious injury to persons and property" However, the judge did 16 We recognize that the judge discredited Goff's testimony that he told the drafters of the bond proposal that the Respondent could not get a contract extension with a no-stnke provision, and that she found that the Respondent did not specifically ask the Union to extend the no-strike clause These facts do not negate the possibility of a strike " These incidents included cut welding hoses and air lines, cut electn cal cords, improperly grounded welding machines, a fire in a plant stor age area, a trash barrel fire, damaged couplings, holes drilled in a pipe of a product manufactured by the Respondent, glue placed in various locks, and a fire outside a gate bordering the Respondent's property 506 DECISIONS OF NATIONAL LABOR RELATIONS BOARD not believe that the Respondent's concern for em- ployee and property safety motivated its actions in proposing the bond We disagree The judge chided the Respondent for not taking alternative steps, such as seeking injunctions, filing breach of contract suits, or disciplining offenders The judge's comments in this regard constitute sub- stituting her judgment for the Respondent's busi- ness judgment, and are also idle speculation con- cerning these alternatives, they have little to do with aiding analysis of the case Furthermore, we do not agree with the judge that the failure of the three Respondent individuals who drafted the bond proposal to testify negates the objective evidence tending to support the Respondent's concern for its plant's welfare In short, we find that the Respond- ent's concern for safety and sabotage at its plant was legitimate and substantial It was in these circumstances—lack of a no-strike guarantee and safety considerations stemming from sabotage—that the Respondent presented its bond proposal This idea was rejected by the Union, and the Respondent then locked out its employees On these facts, it is clear that the bond proposal was a device to bridge the gap during the hiatus between contracts It was not the item on which bargaining stalemated, nor was it the catalyst for the lockout The bond proposal was an attempt to avert the lockout We agree with the Respondent's conten- tion that the matter of the bond proposal and the lockout can be separated, or bifurcated It was only after the Union refused the bond proposal offer that the Respondent commenced the lockout Its subsequent letters to employees indicated the Union's rejection of the proposal, and then indicat- ed it was attempting to devise another method to enable employees to return to work The "Letters of Understanding" to employees did not renew the bond proposal Indeed, only on 1 September did the Union receive from the Respondent corre- spondence relating to the bond proposal—and that sought clarification of the Union's earlier offer to return to work In sum, we perceive no basis for finding that the lockout was used to require the Union to submit to the bond proposal Rather, that proposal was an alternative method of resolving a dispute, and when it failed the Respondent pro- ceeded along a different line—the lockout—to achieve its aims Accordingly, we reverse the judge's finding that the Respondent violated the Act by locking out its employees However, we agree with the judge's conclusion that the Respondent unlawfully bargained individ- ually with employees As explained above and in greater detail by the judge, the Respondent's early September mailings to employees differed from the proposal tendered to the Union on certain signifi- cant matters Further, the Respondent conditioned employment on the employees' willingness to sign the "Letter of Understanding," a clear interference with statutory rights AMENDED CONCLUSIONS OF LAW Substitute the following for paragraph 5 of the judge's conclusions of law "5 The Respondent has violated Section 8(a)(1), (3), and (5) of the Act by mailing individual offers of reemployment to unit employees" AMENDED REMEDY Having found that the Respondent unlawfully sought to bargain directly with employees as to terms and conditions under which they would be permitted to work and to condition an employee's employment on a willingness to accept such terms and conditions in violation of its duty to bargain with the Union, we shall order the Respondent to cease and desist therefrom, and from in any like or related manner interfering with, restraining, or co- ercing employees in the exercise of their rights under Section 7 of the Act ORDER The National Labor Relations Board orders that the Respondent, C-E Natco/C-E Invalco, Tulsa, Oklahoma, its officers, agents, successors, and as- signs, shall 1 Cease and desist from (a) Refusing to bargain collectively with the Union as the exclusive bargaining representative of employees in the appropriate unit by seeking to bargain directly with employees as to the terms and conditions under which they will be permitted to work (b) Discouraging membership in the Union by conditioning a unit employee's active employment on the willingness to accept as a working condition a proposal whose tender constitutes a violation of the Respondent's duty to bargain with the Union (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) Post at its Tulsa, Oklahoma facilities copies of the attached notice marked "Appendix " 18 Copies 1 8 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 Na ttonal Labor Relations Board' shall read 'Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the Nation- al Labor Relations Board" C-E NATCO/C-E INVALCO 507 of the notice, on forms provided by the Regional Director for Region 16, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon re- ceipt and maintained for 60 consecutive days in conspicuous places including all places where no- tices to employees are customarily posted Reason- able steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material (b) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply MEMBER DENNIS, dissenting Contrary to my colleagues, I would adopt the judge's decision The bond proposal, a nonmanda- tory subject, clearly impeded negotiations for both a new contract and an interim agreement The Re- spondent's own written statements of position, in- cluding the handout it circulated to employees at the inception of the lockout, unmistakably link the lockout with the bond proposal I respectfully dis- sent from my colleagues' efforts to pry the two apart 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 WE WILL NOT refuse to bargain collectively with the United Steelworkers of America, AFL-CIO- CLC, as the exclusive bargaining representative of the employees in the appropriate unit by seeking to bargain directly with such employees as to the terms and conditions under which they will be per- mitted to work The appropriate unit is All production and maintenance employees, warehousemen, shop janitors, first aid attend- ants, field service men and the local truckdriv- ers employed by us at our Tulsa, Oklahoma, plant, but excluding all office clerical employ- ees, over-the-road truckdrtvers, gatemen, watchmen, timekeepers, and supervisors as de- fined in the National Labor Relations Act WE WILL NOT discourage membership in the Union by conditioning a unit employee's active em- ployment on his willingness to accept as to his working conditions a proposal whose tender consti- tutes a violation of our duty to bargain with the Union 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 C-E NATco/C-E INVALCO DECISION STATEMENT OF THE CASE NANCY M SHERMAN, Administrative Law Judge This case was heard before me on November 29-December 1, 1982, pursuant to a charge filed on September 2, 1981, and amended on September 11, 1981, and a complaint issued on April 9, 1982 The complaint alleges that Re- spondent C-E Natco/C-E Invalco violated Section 8(a)(1), (3), and (5) of the National Labor Relations Act (the Act), by demanding an agreement by the United Steelworkers of America, AFL-CIO-CLC (the Union) to a provision which is a nonmandatory subject of col- lective bargaining, by locking out unit employees in sup- port of that demand, and by mailing individual offers of reemployment to such employees Posthearing briefs were filed by counsel for the Gener- al Counsel, Respondent, and the Union On the basis of the entire record,' including the demeanor of the wit- nesses, and after due consideration of the briefs, I make the following FINDINGS OF FACT I JURISDICTION C-E Natco and C-E Invalco are divisions of Combus- tion Engineering, Inc , a Delaware corporation C-E Natco and C-E Invalco are both physically located at Tulsa, Oklahoma, where they are engaged in the manu- facture of drilling and operation equipment utilized in oil and gas fields, specifically the production of pressure vessels at the C-E Natco (Natco) facility and of valves and instruments at the C-E Invalco (Invalco) facility C- E Natco and C-E Invalco, as divisions of the same parent corporation, constitute a single integrated business enterprise and a single employer within the meaning of the Act During the year preceding the issuance of the complaint, a representative period, Respondent, in the course and conduct of its business at its Tulsa, Oklahoma facilities, sold and shipped products valued in excess of $50,000 directly to customers located outside Oklahoma I find that, as Respondent admits, Respondent is engaged in commerce within the meaning of the Act, and that as- sertion of jurisdiction over its operations will effectuate the policies of the Act The Union is a labor organization within the meaning of the Act 1 The record is clanfied to show that R Exh 7 was received without objection 508 DECISIONS OF NATIONAL LABOR RELATIONS BOARD II THE ALLEGED UNFAIR LABOR PRACTICES A Background In November 1968 the Union was certified by the Board as the exclusive representative of an admittedly appropriate unit, specifically described infra in Conclu- sion of Law 3, which consisted essentially of Respond- ent's production and maintenance employees at the Natco and Invalco plants Respondent's amended answer admits that at all times thereafter, the Union, by virtue of Section 9(a) of the Act, has been and is the exclusive representative of the unit employees for collective-bar- gaining purposes, and that Respondent has recognized it as such Except for short periods between contracts, Re- spondent and the Union have been parties since May 1969 to a series of collective-bargaining agreements, the most recent of which was executed on December 6, 1981, was effective as of August 31, 1981, and by its terms is to continue in effect until September 1, 1984, at the earliest 2 The events here at issue occurred in con- nection with the negotiations which led up to the 1981- 1984 agreement These negotiations began on July 28, 1981, and were directed at a new contract to succeed a 1978 agreement which was to expire by its terms at 12 01 am on Monday, August 31, 1981 3 B Alleged Absenteeism, Alleged Slowdowns, Alleged Sabotage, and Fires before August 29, 1981 1 Alleged absenteeism and alleged slowdowns Lewis S Goff, who is Natco's vice president of per- sonnel and industrial relations, testified on direct exami- nation that "as we got into negotiations, we encountered several instances of slowdowns, absenteeism more than doubled" Goff did not further explain his "slowdown" references On cross-examination, he initially testified that in June, July, and August, absenteeism "went up at some shifts in excess of 20, 22 percent", then, that the "20 percent absenteeism" figure was only for Natco (with about 900 of the 1100 unit employees) and only on specific shifts, and then, that "Absenteeism averaged prior to its going into negotiations at about 8 to 10 It went up to an average of 15," but that during certain 8- hour shifts, absenteeism was in excess of 20 percent He testified that the current (November 1982) absenteeism rate was about 3-1/2 percent There is no evidence as to Respondent's absenteeism rate for June-August of any year other than 1981, or for November of any year other than 1982 Respondent did not produce any business records regarding its absenteeism rate During June-August 1981, Respondent disciplined for absenteeism without a legitimate excuse about the same number of employees (5 in a unit of about 1100) who had been disciplined therefor during similar preceding peri- ods The contemporaneous bargaining notes taken by Natco's manager of field industrial relations and recruit- 2 The cover pages of the pnnted booklets which set forth this agree merit and its predecessor state that the parties thereto are Respondent and a local affiliate (Local 7568) of the Union However, the recognition and signature clauses name the Union alone 3 All dates hereafter are 1981 unless otherwise stated ing, David L Hall, show that during the July-December 1981 negotiations, the parties repeatedly discussed absen- teeism issues However, there is no evidence that Re- spondent ever alleged to the Union that absenteeism during June-August 1981 had anything to do with the fact that contract negotiations were anticipated or in progress Although Goff testified that he believed the June-August 1981 increase in absenteeism to be inten- tional and a violation of Article 16 of the bargaining agreement which expired on August 31, 1981, 4 Respond- ent never went to court to get an injunction to prohibit intentional increase in absenteeism 2 Cut hoses and wires in the Natco plant Natco plant superintendent Wilmoth Sanford Respess Jr, testified that between August 26 and 28, he saw "nu- merous" cut gas acetylene welding hoses and air lines He testified that he believed these cuts to be deliberate because the slices were "clean " He further testified that such hoses run across the floors and "occasionally" get cut by equipment which is rolled over the hoses or, per- haps, in other ways 5 According to Respess, the cuts thus "occasionally" effected "can be clean" but "usually" show evidence of pinching, scuffing, or tearing Respess testified that, during the last week of August, he observed that an unspecified number of electrical cords had been cut Respondent offered into evidence photographs, which could have been taken after Septem- ber 2, of two partly severed electrical cords designed to carry a regular, 110-volt household current Respess tes- tified that he had observed one of these on August 27 or 28, that he believed it had been cut but it could have torn loose in another manner, and that he did not know when it was damaged or repaired Respess testified that the other had been drawn to his attention on August 27 by Supervisor Ellis Broughton, that Respess did not know when it had been damaged or repaired, and that, because the line was unplugged and the damage was near the plug, it would have been difficult for anyone to plug in the line without noticing the damage Respess further testified in November 1982 that, so far as he knew, no electrical plugs had been damaged since August 1981, but that repairs would normally be handled by "mainte- nance" 4 Art 16 read as follows The Union agrees that neither it nor any of the employees in the bargaining unit covered by this Agreement will collectively, concer- tedly, or individually engage in or participate, directly or indirectly, in any strike, slowdown stoppage, or other interference of produc lion or work during the term of this agreement, and the Company agrees that during the term of this Agreement, it will not lock out any of the employees covered by this Agreement The Company re tains the nght to discipline or discharge any employee who violates this provision The Union shall not be liable under this Article for acts of individual employees which the Union did not authonze, ratify, approve, or condone 5 Union subdistnct director Carl Oldham testified that gas lines get cut all over—all the time That's a heavy vessel shop, and they lay down skids on them and roll tanks over them, and it's a normal occurrence out there daily Oldham had serviced Respondent s plant for the preceding 5 years C-E NATCO/C-E INVALCO 509 3 Action with respect to welding.machines in the Natco plant Respondent has several hundred welding machines which are operated by unit employees and some of which are on occasion unneeded Over the course of August 27-28, Respess discovered four welding ma- chines which had been connected directly to ground and an undisclosed number of which had been turned on Such grounding could have damaged a machine and caused the welder to receive a burn or an electrical shock Respess reported the grounded machines to his "boss," E T Bohbrink, the Natco vice president of man: ufacturmg Nobody was disciplined for this conduct The record fails to show when it occurred On August 27, 28, and 29, various welders in the bar- gaining unit made reports regarding about six welding machines which would not operate because, on an un- known date or dates, the fuses had been removed or the welding cables or leads had been cut The record fails to show whether the machines whose fuses had been re- moved were operable with fuses The removal of the fuses could not have caused any damage to employees or (inferentially) to the machines, and merely constituted a "nuisance" The cutting of the cables could have caused an arc at the cut when the machine was turned on, with the possible consequence that the machine could go to ground or someone could be burned or "startled" The record fails to show whether Respondent had dis- covered similarly damaged or incapacitated welding ma- chines when negotiations were not under way At the time when Respess observed such deficiencies in the welding machines, about 50 bargaining-unit employees, several members of management, and a "very few" out- siders (such as visiting inspectors) could have access to these machines 4 Fire in a Natco plant storage area The Natco plant contains, at various locations, paint, lubricating and hydraulic oils, and lines which contain welding gas, oxygen, and natural gas On August 27, As- sistant Natco superintendent Carl Douglas or a Natco shift superintendent drew Respess' attention to a storage area where a fire had burned and had been extinguished, apparently during the night shift The storage area was about 25 feet by 100 feet, and contained wooden pallets on which were stored 300 to 500 paper and plastic bags filled with refractory material, a noncombustible material similar to cement Approximately 18 to 24 inches from these bags were hoses which contained pure oxygen and combustible natural gas and were equipped with shutoff valves Respess credibly testified to the belief that the fire in the storage area could have spread to the gas lines, and, if this had occurred, Respondent could have had a very serious fire At the time of the fire, at least 8 people were working in the area and 10 or more could have had access to it Certain operations performed in the area were associated with sparks Respess testified that he believed that such sparks could not have caused this particular fire because (in his opinion) it had several origins rather than one Respess, who became Natco plant superintendent about August 1981, testified that he had never seen material of this nature catch fire by spontaneous combustion before or since this occurrence He further testified that he had never observed in the Natco plant any fire of a similar origin As of the November 1982 hearing before me, stor- age pallets were no longer kept in this location 5 Trash barrel fire in the Natco plant On or shortly before August 28, a fire took place in a Natco shop trash barrel which contained mostly paper and scrap wood, and which was in the general area of combustibles such as wooden pallets with pasteboard boxes on them This is not a no-smoking area The barrel, which was metal, was photographed during the day on August 28 The record fails to show whose idea it was to take the photograph Respess testified that he had never seen any other fire of a similar origin in the Natco plant He did not recall who told him about this fire 6 Damage to couplings in the Natco plant Much of the Natco plant production consists of oil- field tanks which are manufactured to codes prescribed by the American Society of Mechanical Engineers Con- formity with such codes requires hydrostatic testing of pressure vessels Such tests are performed by filling the pressure vessels and component parts with water and ex- erting one and a half times their designed pressure, the pressure so exerted runs from 15 pounds to 15,000 pounds per square inch In order to contain the water in the vessel or part being tested, Respondent uses a thread- ed device, called a "hex-head" or "bull" plug, which is screwed into a female plug, also called a "coupling" or a "nozzle" During the second shift on August 24, a visual inspector, who is a member of the bargaining unit, drew the attention of Richard Harry Tanner, Natco's manager of quality control, to the fact that metal had been depos- ited on the threads of 13 couplings (10 in one vessel and 3 in another) by means of a welding device which had been inserted into the coupling Such welding action is not normally performed during the course of production, and Tanner credibly testified to the belief that such an action would have to be intentional If such damage had been missed in visual inspection, a "bull" plug screwed into a damaged coupling could have released (when sub- jected to the normal test pressure of 2160 pounds per square inch) and been projected into the walls or ceiling of the building, into plant equipment, or into the 13 to 17 persons then working in the area 6 Because the vessel under test was intended to hold gas, similar damage to a coupling subsequent to hydraulic testing might have caused release of the gas and a fire on the customer's platform, where 45 to 70 persons are generally em- ployed On August 25, the day after the damage to the cou- plings had been found, Tanner reported it to E T Boh- brink, Natco's vice president of manufacturing, and told 6 Tanner had seen a plug projected through the roof of the shop when it blew, during testing, from a vessel under pressure of 200 pounds per square inch 510 DECISIONS OF NATIONAL LABOR RELATIONS BOARD him that Tanner believed the damage was intentional Tanner also reported it to the foreman, but not to anyone else On August 26 or 27, Company Vice Presi- dent Goff learned about the incident from an unspecified source Tanner testified that the damage must have been done on August 24, and that he could have found out from the foreman which employees were assigned to work on the vessel, but that neither he nor (so far as he knew) any other member of supervision inquired about who they were On an undisclosed date or dates during the week beginning August 31, a visual inspector report- ed to Tanner similar damage effected to two more cou- plings Tanner, who has been in Respondent's employ for 23 years and has been Natco's manager of quality control for 13 years, testified that he had never previously en- countered what appeared to have been intentional damage to couplings or any other company products 7 Holes drilled in pipe of product in the Natco plant On an undisclosed date no later than August 27, un- identified personnel, who may or may not have been unit members, drew to the attention of visual inspection per- sonnel, who are in the unit, that at least 10 holes had been drilled in a gas pipe to a Thermo-Drive unit, a product manufactured by Respondent and used for sec- ondary recovery of oil These holes are not usually drilled in the normal course of production Tanner credi- bly testified to the belief that these holes had been inten- tionally drilled A photograph of the pipe shows that it was in an exposed location about a foot above the floor, and that the holes were about a half-hand apart I infer that whoever drilled the holes anticipated that they would be discovered before the unit was shipped to the customer, and that Respondent drew a similar inference The damage was repaired by replacing the pipe, after which the unit was sent to the customer or the jobsite If the holes had not been discovered before the unit was placed into service, gas would have been released into the atmosphere, possibly causing a fire and inflicting burns on the 5 to 12 people who are usually in the vicini- ty of such a unit when it is in operation Tanner testified that before negotiations were in progress, he had never encountered what appeared to be intentional damage to company products The record fails to show whether Tanner brought the damaged pipe to the attention of other members of management at any material time About 47 employees could have had access to the pipe on the day the damage was discovered 8 Glue in the locks On August 28, glue was put in the locks of quality control manager Tanner's office, of the industrial office, of the radiographic department, and of the offices of an undisclosed number of foremen In order to open Tan- ner's office, someone had to break through the ceiling On an undisclosed date or dates prior to August 29, an undisclosed number of padlocks to Natco toolrooms or tool cribs were jammed with glue 9 Goff s testimony about "our" concern arising from some of the foregoing incidents Goff testified that when he learned on August 26 or 27 about the damaged couplings in two pressure vessels, "we" became concerned that if the damage had not been discovered during visual inspection, injury might have been caused to Respondent's employees during hydro- static testing, or serious injury or death (resulting in Natco liability for millions of dollars) might have been caused to customers' employees on the jobsite He fur- ther testified that "we" became concerned that such inju- ries or deaths might be caused by sabotage of such ves- sels at a time when such sabotage was unlikely to be dis- covered In addition, he testified that "we" feared from the fire reports that the plant would be seriously dam- aged or employees would be injured or killed if there were more fires, or because of gasline explosions result- ing from a fire, or because the fire had caused the elec- tric lights to go out while employees were attempting to escape from the 12-acre building during the night shift Also, he testified that "we" were concerned about em- ployees' receiving electric shocks from cut electric wiring or grounded welding machines Laying to one side the evidence summarized infra part II,E, Goff was not asked to name the members of management who shared any of the foregoing apprehensions with him C Negotiations Prior to August 28 Between July 28 and August 27, inclusive, the parties conducted seven negotiating sessions The Union's prin- cipal spokesman was subdirector Carl Oldham, Respond- ent's principal spokesman was its vice president of per- sonnel and industrial relations, Goff During the six ses- sions which preceded August 27, the parties limited their discussion primarily to noneconomic matters The con- tents of the parties' proposals and discussions and the extent of any agreements reached were not fully litigat- ed, and most of the record evidence on this matter con- sists of the previously mentioned contemporaneous notes taken by David L Hall, Natco's manager of field indus- trial relations and recruiting, who was one of Respond- ent's representatives at the bargaining table 7 On August 7 Goff testified that on a date which he did not specify, I had one confrontation concerning slowdowns One of the union members [whom Goff did not name] wanted to take me out and fight One of the guys [whom Goff did not name] said, Well, you and your family have to get up every morning " Hall's notes state that during a July 29 discussion of a company proposal for "language to indicate the Union's commitment to productivity," Oldham said, We have the nght to give you 1000 head aches without a contract," whereupon union bargaining committee member J D Cole stated, You ye got to get up every day just like anyone else' Still according to Hall's notes, later that same morning Oldham said, We can't agree with your references to productivity and fair wages," Goff said, You guys aren t getting the job done, Cole said, 'You want to walk outside9", Goff asked whether Cole was threatening him, and Cole said no Hall's notes contain nothing else even vaguely re sembling the incident as descnbed by Goff, whose testimony I regard as less reliable than the notes Goff further testified that on a unspecified date someone, whom he did not name, told him and Steve Wilson that Goff and Wilson wouldn t be at the table at the end of negotiations' Goff by implication, identified Wilson as a member of management, Hall testified, in effect, that Wilson never participated in bargaining negotiations I regard Goff's testimony about this incident as too ambiguous to be accorded significance C-E NATCO/C-E INVALCO 511 27, Respondent received the Union's monetary proposal Hall's notes as to that meeting attribute to union negotia- tor Pryor the statement, "We have our proposal for pen- sion and group insurance which we feel will help bring you [Company] into the 20th century" After reviewing the Union's monetary proposal in a caucus and then with the Union, Respondent's negotiators said that they would get back to the Union on the following day with Re- spondent's "best shot," and began to leave Oldham called Goff back into the room and said that the Union was not going to submit a proposal to the membership unless it was a complete proposal "cover to cover," in- cluding pensions and insurance Goff replied that in that event, no proposal would be submitted to the member- ship 8 Before the start of negotiations, the Union had told Respondent that the membership had unanimously au- thorized the committee to call a strike whenever they wanted it 9 As to the Union's statements during the July 28-August 27 negotiations, Hall's notes state "Strike is management's idea—are you going to strike us9" (July 28), "We are going to get what we want without a stnke l° If we delete no strike, no lock out, we can strike over problems rather than leave it to grievances Striking is our answer to unacceptable grievance proce- dure" (July 29), "I doubt there will be a work stoppage" (August 17), and that the Union would agree to a pro- posal by Respondent as to absenteeism "if you give us the right to strike over any dispute concerning the policy" (August 26) During this same period, manage- ment remarked as to strikes, "Past practices is a strike issue with us" (July 28 and 29), and "If there is a strike and it goes 90 days, we may not open up again due to unemployment situation in Tulsa" (August 18) D The August 28 Negotiating Session During a negotiating session on Friday, August 28, the parties discussed a number of substantive contract issues Goff testified that during this session, Oldham asked Goff what Respondent was going to do if the employees showed up Monday (the first day after the expiration of the bargaining agreement), Goff said that Respondent might not let them work, and Oldham said, "We can come in We may work We may not work We may work a day We may not work a day We will work un- conditionally We can work any time" Hall's contempo- raneous notes do not refer to these alleged remarks Ac- 8 My findings as to this conversation are based on Hall s contempora neous notes, which in this matter are consistent with Oldham's testimony In view of these notes, and for demeanor reasons, I do not accept Golf's testimony that Oldham said no agreement would be reached unless a complete agreement were reached as to the pension and group insurance plans for both 1978-1981 (the period covered by the expiring contract) and the period to be covered by the contract under negotiation 9 This finding is based on Golf's uncontradicted testimony He also tes tilled without direct contradiction that on an unspecified date or dates, the Union stated that the rank and file had approved two other strike votes 15 This statement by Oldham (the Union s pnncipal spokesman) was preceded by a remark from union bargaining committee member Cole de- scribing as a strike issue with us" a union proposal to omit in the new contract a provision in the old contract permitting nonurut employees to perform unit work under certain circumstances The new contract re tamed that provision cordingly, and for demeanor reasons, I credit Oldham's denial E The August 28 Management Meeting On the evening of August 28, a management meeting was attended by Goff, Bohbrink, Respess, Douglas, Arthur P Rogers (Respondent's vice president and coun- sel, labor relations), Ken Griffith (Natco's senior vice president in charge of manufacturing at Natco), and Judson Lowd, Natco's then president Goff was the only witness who testified about this meeting He testified that during the meeting, those present discussed the "fires" and "The sabotage that we did discover on the pressure vessels, the cut lines [and] the grounded welding ma- chines" He did not testify that the discussion included the removal of fuses from several welding machines (tes- tified to by Respess, who attended the August 28 confer- ence), the holes drilled in the pipe on the Thermo-Drive unit, the glue in the locks, or absenteeism " Goff s testi- mony suggests that slowdowns were mentioned, but he did not testify about what was said The discussion could not have included the two damaged couplings reported to Tanner during the following week or a fire discovered later that evening at one of Respondent's gates (see infra part II,G) Goff went on to testify that "the discussion essentially evolved around our concern for what would happen if We knew we had fires We knew that there seemed to be a concerted activity to give us [these fires and suspected sabotage] we were concerned about how we could run our plant safely [We discussed the fact that we] at Natco, have suffered a few deaths because of the type of shop we run Our concern there was again for the safety of our people It's a high-hazard shop, and this was discussed And we felt that [the fires and suspected sabotage were] escalating" The participants in this meeting did not discuss pro- posing that the Union post a bond with respect to any matter F Safety Inspector's August 28 "Vandalism Activities" Memorandum After the August 28 management meeting a safety in- spector's memorandum was received by Safety Head Delbert Stoner, Plant Superintendents Harvey Todd and Douglas, and Vice President Bohbrink The record fails to show whether any other members of management read this memorandum at any material time This memo- randum was offered and received in evidence solely to show that a report was received by management, and not to show the truth of the report or that the incidents de- scribed therein in fact occurred The memorandum de- scnbed the trashcan-fire and the glued-locks incidents de- scribed supra Further, the memorandum described the storage-area fire described supra, and alleged that this fire had been started in five different locations Also, the " Tanner, who testified for Respondent about the holes and the glue, did not testify that he drew them to management's attention at any mate nal time There is no evidence that glue was put into the locks of anyone who attended the August 28 management meeting 512 DECISIONS OF NATIONAL LABOR RELATIONS BOARD memorandum described certain incidents (involving broken windshields and slashed tires on company trucks) about which the instant record contains no probative evi- dence G The August 29 Fire Very early in the morning on August 29 Respondent discovered a fire on the outside of a metal gate in a chain link metal fence bordering Respondent's property Employees do not ordinarily enter or leave through this gate The area where the fire occurred is in an open area where there is nothing but weeds to catch fire It is behind a convenience store on the side of a public road, and is accessible to the public generally As to the origin of the fire, Respess, who himself saw the fire, testified that "It appeared that a gasoline or some type of liquid had been ignited which made a very large, brilliant fire for a few minutes" Respondent called the city fire department which put out the fire Respess testified that nobody had any idea who set the fire Between this fire on August 29, 1981, and Respess' testimony on Novem- ber 30, 1982, no other fires took place at the plant H The August 29 Negotiating Session, the Proposed "Memorandum of Understanding" with Respect to the Contractual Hiatus The parties conducted their ninth bargaining session on August 29, 1981, beginning at 905 am Union repre- sentative Cole commented that Respondent had had a "hot night" Goff inferred that he was referring to the fire at the gate, and agreed with him Respondent then gave the Union a "language proposal," which included a proposal (discussed in greater detail infra part II,K,3) re- garding the order of layoff during reductions in force (Goff testified that when using the term "language changes" during the hearing before me, he meant to refer to proposed contract changes which did not relate directly to money items, I infer that both parties so used the term during negotiations ) Goff said that the proposal represented the items which would have to be agreed to in order to get a contract, that the proposal was "the bottom line," and that Respondent was willing to take a strike over it The parties then broke for about 1 hour and 20 min- utes 12 After they returned to the table, there was a pause, after which Goff said, "Looks like we've got an impasse on language" Oldham said, "You've got an im- passe" Goff said, "It looks like the only way we will get anything is through a work stoppage" Oldham said, "We aren't going to strike you" Goff said, "We feel the relationship between the Union and the Company has de- teriorated to the point that the Company will have to assert itself We will have to assert ourselves We cannot and will not address your economic proposal Rather, you have forced us into a situation in which all we can do is give our best shot The Company's offer is based on the Union's agreeing to proposed language changes 12 This finding is based on Hall's notes I do not accept Goff's some what unlikely testimony that at this point the Union did not caucus and ratification by the union membership prior to expira- tion of the current contract" Goff then related to the Union Respondent's initial economic proposal While he was describing Respond- ent's wage proposal, union representative Cole made an earthy comment of disgust Oldham told him to "cool it," and asked Goff to clarify the wage proposal After Goff had finished relating Respondent's economic pro- posal, Union Representative Bates Powell said, "We will have to look at this" Goff said, "I would have hoped that we would have been able to work it out without a work stoppage" Oldham said, "What are you going to do when we show up for work on Monday9"13 Goff asked how the Union planned to continue to work Oldham said, "We plan to work by extending the contract," without specifically referring to article 16 (the no-strike/no-lockout clause) (supra fn 4) Goff said, "We will not extend the contract" Oldham said, "We will leave them in there Are you willing to discuss extending the contract?" Goff said no 14 Oldham said, "We expect to show up Monday, then you will have to lay us off" Goff said, "Well, since we're talking about it, we need to explain the conditions under which you can work We will not extend the contract We have had fire bombings, bomb threats," and malicious mischief "16 Oldham said, "I told you a month ago, my people are mad and I can't control them 17 But we are going to show up so that we can continue some relationship" Goff said, "Without a contract?" Oldham said, "Yes, but we may walk out the next day When they are out they are my headache- 1100 headaches [inferentially referring to 1100 unit em- ployees] This time I am going to keep them in and we can share the headaches" Powell said to Goff, "[Y]ou're not approaching this right We want an agreement and I'll give you some friendly advice to think about an agreement" Goff said, "We've had a lot of time to think 13 The negotiating session was being held on Saturday, August 29 The contract was to expire at 12 01 am on Monday August 31 My findings in this paragraph up to this point are based on Hall s contemporaneous notes, Goff's testimony that Oldham did not mention a limitation on article 16 and that Respondent did not indicate to the Union that Respondent wanted to extend that provision, and Oldham's testimo ny that Respondent never requested such an extension Goff initially tes tilled that the Union never said It would be willing to extend the con tract, and then testified that Oldham asked whether Respondent would be willing to extend the contract with the understanding that the Union "could walk at any time,' to which Respondent replied that it was un- willing to discuss extending the contract under those terms In view of Hall's notes and the testimony of Oldham mentioned in this footnote, and for demeanor reasons, I do not credit the testimony of Goff described after the first sentence of this footnote 15 There is no evidence that there had been any bomb threats, or that any member of management had received any reports of such bomb threats The record suggests that Goff and Respess believed the August 29 gate fire to have been caused by a fire bomb This incident aside, there is no evidence that there had been any fire bombings or that any member of management had received any reports of such Incidents 16 My finding in this sentence is based on Hall's contemporaneous notes In view of these notes, and after considering the witnesses' de- meanor, I accept Goff's testimony that he alleged the existence of fires and fire bombs, and discredit Oldham's denial of such remarks and of a reference to bomb threats For similar reasons, I discredit Oldham s denial that Goff used the words "malicious mischief," but accept Old ham's denial that Goff referred in terms to cut electncal wires " This remark aside, there is no evidence regarding what was said dunng this earlier conversation C-E NATCO/C-E INVALCO 513 about an agreement, but I've seen no movement Now we are up to the wire and you want to extend the con- , tract Well, you ain't going to get it" Oldham said, "I know how these things work—I've been through a lot of these You've got to extend wages and benefits" Goff said, "Gentlemen, we have given you a proposal that is our final offer" At this point, the Union caucused for about 26 minutes While the Union was thus caucusing, Goff met with Natco President Lowd and attorneys Pat Cremmins and Pat Bond Of this group, only Goff had attended any of the negotiations He testified that he told the others that Respondent could not get an extension with a "no strike" clause in it (cf supra fn 14, infra part II,K,1) There is no other evidence as to what was said by anyone during this conference Nor is there any evidence as to what else, if anything, Lowd, Cremmins, and Bond had been told about what was happening at the bargain- ing table During this management conference, Respond- ent prepared a proposed "Memorandum of Understand- ing" set forth in full infra Goff testified that although he participated in coming up with the language of this pro- posal, he was not its "architect", that the "architects" were "the managers and the top management of the company and the attorneys that were at a management meeting at that caucus," and that none of them had been present during the negotiations and at the bargaining table As previously noted, Lowd had attended the August 28 management meeting (supra part II,E) The record otherwise fails to show what, if anything, the "ar- chitects" of this proposal had been told about the events summarized supra part II B and G None of these "archi- tects" testified at the hearing Goff testified that it was during this conference that company representatives first raised the idea of asking the Union to agree to a bond requirement After the break, the Union stated that it wanted the "language" proposal as initially drafted by it As to eco- nomic matters, the Union made a proposal which as to vacations and holidays, at least, called for higher benefits than the Union's earlier proposal Also, the Union for the first time proposed a "ratification bonus" of $300 per em- ployee The Union stated, "The proposal will keep going up until someone gets in here to straighten out this lan- guage" Goff said, "The longer you're out, the higher the demand?" Oldham said yes Oldham said that the Union was not planning a strike, and offered to extend the current agreement during negotiations or to have the employees work without a contract Goff said that if Re- spondent let the workers go ahead without a contract, Respondent would suspend all fringe benefit payments Then, Goff asked Oldham what would happen on Monday Oldham said that the employees were going to report to work as usual Monday morning, and "we'll have to let the law decide what can be suspended and what can't be We'll worry about that when it hap- pens" Goff said, "You wanted to address an extension Well, we want to talk about it Our concern is that if we extended we'll have violence, fire, bombings, and sabotage " 18 Oldham said, "I'll tell our people not to do it I've told them not to do it" 19 Goff said, "Yeah, then we get fire bombs and bomb threats [see supra fns 15- 16] That situation is not tolerable" After a pause, Goff said, "We seem to be at an impasse on language" Similar views were expressed by the Fed- eral mediator, who had been sitting in on the negotia- tions since August 17 Oldham said, "I'm not at an im- passe on language" Goff said, "I am Our attorneys have drawn up a contract for the purpose of continuing to work after the contract expires " At this point, Goff dis- tributed to each union representative, and read aloud the proposed Memorandum of Understanding drafted by Re- spondent while the Union was caucusing about Respond- ent's initial economic proposal This document reads as follows MEMORANDUM OF UNDERSTANDING C-E Natco and C-E Invalco, Divisions of Com- bustion Engineering, Inc, hereinafter called the Companies, and Local 7568 of the United Steel- workers of America, AFL-CIO-CLC, hereby agree as follows I If the parties are unable to reach agreement on a new collective bargaining agreement from and after 12 01 A M, August 31, the Companies agree that employees may work their regularly scheduled shifts without any collective bargaining agreement until said new agreement is negotiated and settled It is agreed that each shift must, in the judgment of the Companies, be sufficiently manned to main- tain normal production If in the sole judgment of management, insuffi- cient employees report to work or if production is impeded in any manner whatsoever, the effect of which is to decrease production to a rate which is in the sole judgment of the Company commercially insufficient, the parties then understand that a strike shall then be in effect II The Union, its officers, agents and representa- tives of both the International and the Local (re- ferred to collectively as the Unions) understand and agree that the Unions and their officers, agents and representatives shall be jointly and severally liable for all acts of sabotage, vandalism, or any other harm to the Companies which arise in any manner during the term of this memorandum, irrespective of any proof of the cause of the acts and/or harm complained of To secure these obligations, the Unions shall put up a performance bond in the prin- cipal amount of $500,000 00 written by an insurance company or companies acceptable to the Compa- nies, payable upon demand without need for proof 18 My finding that Goff made this statement is based on Hall's contem poraneous notes and Goff's testimony In view of these notes, I discredit Oldham's denial that Goff used the words fire bombings" and sabo- tage" 19 This finding is based on Hall's contemporaneous notes and Goff s testimony I do not accept Oldham's denial that he said, 'I'll tell them to cool it" 514 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of cause whatsoever by either or both of the Com- panies After receiving this proposal, the Union asked Re- spondent to give the Union specific incidents of sabo- tage, vandalism, or acts of slowdown Respondent did not give the Union any such incidents Oldham said, "We're not signing it—no way We don't have to sign it I've been through too many of these" Goff said, "If you don't sign it, then we will have to assume you're on strike" Oldham said, "We aren't signing it" Goff said "You have our proposal" Oldham said, "You can't set any conditions on us We will work unconditionally" At this point, at 11 34 a m, Respondent's representatives got up and left the room As Goff walked out, Oldham said, "That SOB —What does he think—I was born yester- day9 They'll need more than that bond" After the departure of Respondent's representatives, the Union told the Federal mediator that "we're still sit- ting in here, willing to bargain over this thing, we've got a day and a half before this thing runs out We'd like to see if we can reach an agreement" Oldham asked the mediator to check with Respondent's representatives and to see whether they had left the premises or if they were going to come back and bargain The mediator left the room, came back, and said that Respondent had told him that the Union had Respondent's proposals, and "that was it "2° I Events from August 30 to September 18 1 The unit employees' August 30 rejection of Respondent's August 29 economic proposal with respect to a new bargaining agreement, and of Respondent's August 29 proposal with respect to a contractual hiatus period On Sunday, August 30, the Union conducted a meet- ing attended by over 1000 employees The Union submit- ted to the employees Respondent's August 29 economic proposal with respect to a new collective-bargaining agreement The employees unanimously rejected it Then, Oldham or someone else on the bargaining com- mittee, read to the membership Respondent's proposed "Memorandum of Understanding" with respect to the anticipated contractual hiatus period Oldham said that the Union was not going to sign it Oldham or someone else on the bargaining committee said that the Union felt that Respondent was wanting a strike The speaker went on to say that the committee was recommending to the membership not to strike, to agree to go to work on the morning of Monday, August 31, and to give the bargain- ing committee the authority to call a strike at some point in the future if one were necessary The employees unanimously voted to follow this recommended action and to go to work 20 My finding in this last sentence is based on Oldham's uncontradicted testimony, received in evidence without objection or limitation See American Rubber Products Corp p NLRB, 214 F 2d 47, 52 (7th Cir 1954) 2 The August 31 beginning of the lockout 2 ' Five night-shift employees who reported for work at Natco at 10 p m on August 30 were not permitted to work after midnight and were escorted from the plant at 12 01 am on August 31 On each shift at each plant on August 31, a numerically normal complement of employ- ees arrived at the plants in an attempt to go to work Commencing on August 31, Respondent's employees in the bargaining unit who attempted to report for work were not permitted by Respondent to enter the plants or go to work At the time they attempted to go to work on August 31, such employees were given the following document AUGUST 31, 1981 C-E NATCO/C-E INVALCO INFORMATION MEMORANDUM SUBJECT TEMPORARY SHUTDOWN OF PLANTS THE COMPANIES ARE WILLING THAT BARGAINING UNIT MEMBERS CONTINUE WORKING WITHOUT A CONTRACT WE OFFERED MR CARL OLDHAM, BARGAIN- ING COMMITTEE SPOKESMAN, A WAY TO DO THIS WHILE GIVING THE COMPANY PROTECTION AGAINST SLOWDOWNS, VIO- LENCE, ACTS OF SABOTAGE, VANDALISM AND BODILY HARM, ALL OF WHICH HAVE BEEN THREATENED 22 WE ALSO WANT TO PROTECT YOUR RIGHT TO WORK UNDER REASONABLE CONDITIONS MR OLDHAM REFUSED THIS, AND IN SO DOING HAS EFFECTIVELY CALLED A STRIKE WE STILL WANT TO DEVELOP A METHOD WHICH WILL PROTECT YOUR JOB AND ALLOW OUR PLANTS TO OPERATE HOW- EVER, WE CANNOT TAKE PREMATURE ACTION WHICH COULD HAVE SERIOUS LONG-TERM NEGATIVE IMPACT ON YOUR FUTURE AS WELL AS THE COMPANIES' WE ARE WORKING ON A METHOD TO Si Apparently for reasons of advocacy, Respondent objected at the hearing to the use of the term "lockout" to describe its conduct on and after August 31 As discussed infra, it is undisputed that on and after August 31, Respondent either refused to permit unit employees to work at all, or refused to permit them to work unless they or the Union agreed to certain company proposals Respondent has failed to suggest a term which it believes should be used My use of the term "lockout" is for convenience only, and does not imply any presuppositions as to the pur- pose or legal implication of Respondent's action 22 Goff testified that this offer was the memorandum of understanding proposed by Respondent on August 29 He further testified that "I think it was also in addition to the things we were hearing from the shop about the Union planning a strike force of a hundred or so people to come in and do it We had seen what the Union had done with Star and Crane Carrier and we had every indica- tion it would happen here too There is no other evidence regard ing the matters referred to in this paragraph, and Respondent's brief does not refer to this testimony by Goff C-E NATCO/C-E INVALCO 515 ALLOW YOU TO RETURN TO WORK WHILE PROTECTING PEOPLE AND PROP- ERTY AND YOU WILL HEAR FROM US AS SOON AS WE WORK OUT AN ACCEPTABLE METHOD. 3. The parties' August 31-September 1 correspondence regarding the lockout and the proposed "Memorandum of Understanding" A telegram to Goff from Oldham, received by Re- spondent at 8:17 a.m. local time on August 31, states: This is to advise you and C-E Natco/C-E In- valco that the members of Local 7568 voted over- whelmingly not to call a strike upon the expiration of our current contract but instead voted to contin- ue to work unconditionally until a new contract is agreed upon. The action taken by the Company at 12:01 a.m. August 31, not to allow the bargaining unit employees reporting to work at their regular schedule time to work is regrettable. This notice is to also advise you that the Union is hereby making a continuing daily offer for each and every bargain- ing unit employees [sic] to be allowed to return to work unconditionally. That same day, Oldham signed the original charge herein, which alleged, inter alia, that Respondent had violated the Act "by insisting upon non-mandatory and unlawful bargaining demands; [by locking] out its em- ployees as a direct result of the Union's not agreeing with said demand; and [by discriminating] against bar- gaining unit employees in terms and conditions of em- ployment." 2 3 A telegram to Oldham from Goff, received by the Union at 9:56 a.m. local time on September 1, reads: We acknowledge your 31 August telegram that offered to have our employees "unconditionally" return to work without a contract. You have previ- ously rejected, on behalf of the Union, our pro- posed agreement to protect our people and property while working without a contract. Should we now assume that the Union has changed its position and will now accept that previous proposal? If this is true, are you prepared to execute our previous proposal by 3 p.m. 1 September, so that our employees, your members, may get back to work at the earliest possible time? Please advise. By telegram sent to Goff at 11:02 a.m. on September 1, Oldham stated: This is to advise you that the Union has not and will not sign the ridiculous conditions of employ- ment proposed by the Company on August 29, 23 However, this charge was not filed until September 2, and was not received by Respondent until several days thereafter 1981. You have the Union's offer to work all em- ployees unconditionally. This offer has not changed. 4. Respondent's tender to each employee of a "Letter of Understanding" regarding employment conditions during the contractual hiatus At an undisclosed hour before noon on September 1 (see infra fn. 25), Natco employee Kenneth Clark re- ceived in the mail at his home a copy of the memoran- dum and "Letter of Understanding" set forth below, and dated September 2. The mailing envelope contained a postage meter stamp dated September 1. Carrying with him the envelope and its contents, Clark drove down to the union hall and, about noon on September 1, asked Oldham whether "they" were going to let the employees come back to work. Oldham said that he did not know. Clark showed him the documents. Oldham said that he had never seen them, and asked if he could keep them and the envelope. Clark said yes. That afternoon, Oldham received calls from various other Natco employees that Respondent was sending out letters trying to get everybody to come back to work. Some of them read part of these documents to Oldham over the telephone. At Oldham's request, a couple of them brought down to his office copies of these docu- ments with the envelope in which they had been re- ceived through the mail." On the following day, September 2, Respondent hand- delivered to Oldham's office the following letter from Goff dated September 1: We have received your Telex of September 1, 1981, rejecting, for a second time, our proposed agree- ment to allow for the return to work of our em- ployees who are members of Local 7568 while pro- viding a vehicle to protect the safety of our people and facilities. In response to your refusals, we have devised an in- dividual offer of employment and Letter of Under- standing, which we will mail on Wednesday, Sep- tember 2, 1981, to all our employees who are mem- bers of Local 7568. This is being done to accommo- date your members announced willingness to return to work without a Union Contract and to get our plants back in operation. Attached to this letter was a memorandum to Natco em- ployees signed by Goff with a "Letter of Understanding" attached, and also (perhaps) a memorandum to Invalco employees signed by Invalco supervisor Stephen Russo with a "Letter of Understanding" attached. The memo- randa to the Natco employees and to the Invalco em- ployees were almost identical, as were the attached "Let- ters of Understanding." The memorandum to the em- ployees read as follows: 24 My findings in this paragraph are based on Oldham's uncontradicted testimony, received without objection or limitation See American Rubber, supra, 214 F 2d at 52. 516 DECISIONS OF NATIONAL LABOR RELATIONS BOARD September 2, 1981 TO ALL HOURLY EMPLOYEES Re Offer of Employment We have been informed by Union leadership that our employees who are members of Local 7568 of the United Steelworkers of America are willing to work without a Collective Bargaining Agreement until we reach a negotiated settlement On two oc- casions the Union has refused to agree to a collec- tive bargaining method to protect our people and property We still wish to accept your announced desire to return to work This letter and the attached Letter of Understand- ing constitute this offer of employment by [Re- spondent] to you during the time you would be working without a Collective Bargaining Agree- ment The attached letter sets out the basic terms of your employment during this period Should you sign this Agreement you would be working at your hourly rate and under the Rules of Conduct in effect immediately prior to the expiration of the Collective Bargaining Agreement Read it carefully and if you can agree with its terms, please date, sign and return it as follows At this point, the memorandum specifies a mailing ad- dress, and a plant gate where the "Letter of Understand- ing" could be returned in person to Respondent The memorandum goes on to state To allow us to schedule the work and make plans for start-up, this must be received by the Company no later than September 8, 1981 If in the opinion of the Company, sufficient employ- ees indicate their desire to return to work, you will be advised of your starting date The letter of understanding attached to the memoran- dum reads as follows LETTER OF UNDERSTANDING In consideration of my employment by [the Company], I hereby agree to comply with the fol- lowing conditions of employment at the Company during the absence of a Collective Bargaining Agreement 1) If in the judgment of management of the Compa- ny, insufficient employees report to work or if pro- duction is impeded in any manner whatsoever, the effect of which is to decrease production to a rate which is, in the judgment of the Company, insuffi- cient, the Company will conclude that a strike by the Union is in effect 2) I understand that I shall be held reponsible to all extents of the law, for any damage or losses to the Company caused by me 3) Further, I understand that my interim employ- ment shall not be under the terms and conditions of the Collective Bargaining Agreement between the Company and Local 7568 of the United Steelwork- ers of America, AFL-CIO-CLC, which expired at 12 01 am, August 31, 1981 4) During my interim employment hereunder I agree to report as direted by authorized Company representatives during the following respective shift hours At this point, both letters specify a first shift to work from 7 a m to 330 pm, and also a second and a third shift The Invalco letter and the Natco letter specify dif- ferent hours for the second and third shifts Both letters go on to state I will work my regularly scheduled shift in accord- ance with the above schedule without the coverage of the terms of a Collective Bargaining Agreement I have read the above and understand that I am bound by the conditions contained in this commit- ment At the end of this document is a space for the individ- ual employee's signature The document does not call for a signature by the Union Laying to one side the Natco employees whose copies of the memorandum and the letter of understanding were mailed on or before September 1, these documents were mailed to all the unit employees on September 2 25 The Union advised the employees not to sign the let- ters of understanding The Union told the employees that they should not sign because they would be working without any union representation or a collective bargain- ing agreement, because they could be held liable for any kind of accidents and "all kinds of stuff that could be mismanaged," and because "any time the Company de- termined it wanted to, they could say the Union was on strike, whether we wanted to or not" On September 4, the parties had their first negotiating session since the expiration of the 1978-1981 bargaining agreement Union Representative Harvey Hamilton said that the night-shift employees who showed up to work on the night of August 30 should receive 4 hours' pay Goff said that Respondent would pay the Natco employ- ees (who had reported at 10 p m) for 2 hours and 1 minute, and the Invalco employees (who had reported at midnight) for 1 minute 26 The parties then discussed job- bidding issues 25 This finding is based on the testimony of Jim Spoon, Natco's super visor of reproduction, and his affidavit, received in evidence without ob jection As previously noted, the letter sent to Natco employee Clark had a franking date of September 1 impressed by means of a postage meter After Clark was excused, Goff credibly testified that the frank was Im- pressed by means of a postage meter at Natco He testified that he did not know whether Clark s letter had been franked the day before It was mailed Spoon's testimony which was given before Clark's testimony, does not specifically state whether the letters were franked and mailed on the same date, nor was Spoon recalled to clanfy this matter Under these circumstances, and in view of the evidence that other Natco employees received their letters on September 1, I credit Oldham's testimony that Clark brought him the letter and envelope on September 1 Clark did not recall the date on which he received the letter, but credibly testified that he showed it to Oldham later the same day 26 Both the 1978-1981 agreement and the 1981-1984 agreement pro- vided for at least 4 hours' pay to any employee reporting to work at his Continued C-E NATCO/C-E INVALCO 517 By letter dated September 10, 1981, Goff advised Oldham of an "extension of the individual offer of em- ployment mailed September 2, 1981, to our employees • . • . This is being done to accommodate your members and your announced continued willingness to have them return to work without a Union Contract." On Septem- ber 11, Respondent mailed to each employee in the bar- gaining unit a second copy of the memorandum bearing the September 2 date, and also the attached letter of un- derstanding. Also attached was the following cover memorandum, inferentially attached to Goff s September 10 letter to Oldham:27 September 10, 1981 TO ALL HOURLY EMPLOYEES Re: Offer of Employment You may not have had ample time to consider our original "Offer of Employment" within the time limit because it was sent you just prior to the Labor Day weekend. So the Company has extended the "Offer of Employment" to September 18, 1981. Certain questions have been asked which indicate some misunderstanding of the offer terms. In an effort to clarify these, the following apply: (1) The "Offer of Employment" includes essentially the same benefit coverage as was in effect imme- diately prior to the expiration of the Collective Bargaining Agreement (2) If an insufficient number of employees accept the "Offer" it may be necessary to supplement that number with salaried employees in order to com- plete work in progress and satisfy customer orders. (3) Under the "Offer of Employment," the plant will initially operate on an 8:00 a.m. to 4:30 p.m. shift. The Company twice offered the Union leadership a reasonable means for returning to work. These offers were rejected. We continue to want you to return to work. This letter clarifies our offer to you as an individual employee of the Company and member of the Union. 5. The Union's unsuccessful attempt to obtain, with respect to the contractual hiatus, a "benefit coverage" offer like that made to the individual employees On September 11, the Union sent Respondent the fol- lowing telegram: This is to confirm receipt of your correspondence dated 9-10-81. There is a significant difference in this offer to the bargaining unit employees in that you have made an offer to continue' the "same bene- regular scheduled starting time except for, Inter aim, "cases of labor dis- putes . or other conditions beyond the control of the Company" The parties had agreed on August 26 to continue this provision in effect Cf infra fn 48 27 Apart from the printed letterheads, the September 10 memoranda are identical except that the Natco memoranda are signed by Goff and the Invalco memoranda are signed by Russo fit coverage as was in effect immediately prior to the expiration of the collective bargaining agree- ment." This is exactly what the Union requested on August 29, 1981, in negotiations, but you turned the union offer down. If the Company is willing to now withdraw its demand that the "Union sign the memorandum of understanding given to us on August 29, 1981, as a condition of employment" and give all bargaining unit employees the same benefit coverage they had prior to the expiration of the contract the Union and its members are willing to report for work as quickly as possible. We consider the following to be benefits enjoyed by the bargain- ing unit employees prior to the Company's illegal lockout on August 31, 19[8]1 The telegram then listed the numbers and titles of most of the articles in the 1978-1981 agreement. The only arti- cles not listed were the "no-strike/no-lockout" clause (supra fn. 4), an article permitting Respondent to use nonunit "sales and technical trainees" to perform unit work under certain circumstances, the clause specifying the effective period of the 1978-1981 contract, and a wage progression schedule for a period ending in 1979.28 Oldham credibly testified that he omitted the no- strike/no-lockout clause because he did not think that it constituted "benefit coverage" language. By telegram dated September 14, Goff stated that Re- spondent was "under detailed consideration of' the Union's September 11 telegram "and will respond at the earliest possible time." This September 14 telegram, sent with the instructions to the telegraph company "Deliver don't phone," was the only reply that the Union ever re- ceived to its September 11 telegram. 6. The "Memorandum of Understanding" proposed by Respondent on September 18 with respect to the contractual hiatus period At 10:43 a.m. on September 18, the Union received by courier a proposed "Memorandum of Understanding" signed by Goff and to be effective from September 21 to October 9. The proposal called for employees to return to work, but included a provision that the Natco plant would have no second or third shift "for the foreseeable future." Further, Natco employees who had been on the second (but not the third) shift could exercise their se- niority to bump only the least senior Natco employee on the day shift in the same classification and pay grades or in the helper classification. Under the 1978-1981 agree- ment, Natco employees on any shift could also escape layoff by bumping junior Natco employees on any shift and with other classifications. As of August 29, 1982, Re- spondent was seeking to include in the new collective- bargaining agreement a clause which (according to Re- spondent) accurately described the existing layoff proce- dure, and which would permit Natco employees on any 28 The Union's telegram did not refer to various letters of understand- ing, included in the printed booklet which sets forth the 1978-1981 agree- ment, regarding welding experience, job posting and outside luring for skilled jobs, and meetings to discuss the possible need for an industrial nurse 518 DECISIONS OF NATIONAL LABOR RELATIONS BOARD shift to escape layoff by bumping junior Natco employ- ees in the same or lower paid classifications, regardless of the displaced employee's shift (see R Exh 14) 29 Before August 31, the Natco plant had operated on three shifts and nobody was in layoff status (infra fn 31) The proposed Memorandum of Understanding further stated that wages would be those called for by the 1978-1981 agreement, that all "employee fringe benefits" in that agreement would be "reinstated effective September 21, 1981, for all employees who are working," and that the no-strike/no-lockout clause in the 1978-1981 agreement (supra, fn 4) "shall be in full force and effect in its en- tirety At a meeting that afternoon, Oldham gave Goff a letter which stated, inter aim, "[T]he Union and its Mem- bers continue in their desire to see an end to your illegal lockout of our Members To this end, we continue our offer to unconditionally return to work However, the Union cannot agree to the terms for an interim agree- ment as expressed in your latest Memorandum of Under- standing The Union stands ready and willing to negoti- ate an interim agreement as well as a new contract" Goff sal(' that the Union had rejected Respondent's pro- posal Oldham said that the employees "will all come back or none of them are coming back" Goff said that if the Union could not agree to Respondent's proposal, there was no need for any further discussions on it The parties agreed to make arrangements for a meeting to discuss the new contract, but not the terms of a new in- terim agreement J Events on and after September 21, the Execution of a New Bargaining Agreement At the parties' next negotiating session, on September 21, Goff remarked that "the longer you are out, the longer it will take to get everyone back" Oldham said that the Union could have the employees back at 5 a m Goff said, "You have our conditions in that memoran- dum" Oldham said that the employees were ready to come back "unconditionally" Goff said, "Yes, and walk out the next day, or have a slowdown" Oldham said, "We can't guarantee that they will all be there every minute of every day" Goff said, "We can't have an agreement with a shop this size without some guarantee you're going to work" Oldham said that the Union had 1100 people ready to go back to work, and that the Union would get them back with full backpay Oldham further stated that although some employees had family in the hospital, the insurance company which had carried their health insurance under the bargaining agreement would accept premiums from Respondent only, and not from the Union Goff said that Respondent did not have 1100 jobs Oldham said, "We are ready to go to work The loss of jobs is your fault If they go in and act like you've said they will, then you have the right to throw them out again We want them back in I've done this many times with people all over the country Just bring them back in to work and your won't have prob- lems We don't plan on striking you" Goff said that Re- 29 As to this matter, the 1981-1984 bargaining agreement was about the same as the 1978-1981 agreement spondent had made an offer with the same wages and benefits Oldham said, " and a no-strike/no-lockout, and a seniority policy that nobody has ever heard of" Goff said, "We have given you a valid offer and you have rejected it We now want to work out an agree- ment" At this point, the parties began to discuss contract pro- posals regarding the performance of unit work by non- unit trainees, subcontractors, and supervisors Goff stated that Respondent had supervisors and "city plaza people" who were outperforming unit employees During a sub- sequent discussion about how to make the shop grow, Goff remarked, "We have major layoff now and it will get worse" Latter, dung a discussion of job-bidding pro- posals, Oldham stated that Goff was not interested in working out the problem Goff replied, "I won't bid against myself—offer a proposal—you say No—offer a lesser proposal You have to give some ground too" Oldham replied, "I got into midde ground—but you didn't respond "39 After the parties had discussed other contract propos- als, Oldham said that the Union wanted to change its in- surance proposal to have Respondent pay the full cost up to 1 year "during a strike or lockout or whatever" Goff said, "Why don't you take over the insurance?" Oldham said, "We'll look at it At least this wouldn't happen" After some discussion of other matters, union representative Cole said, "Why did you terminate the in- surance? Did you think that would bring them back?" Goff replied, "The Company wants to bring all the economic pressure it can on the striking [sic] employ- ees [The] Company has made 4 valid offers" Cole said, "That's what I thought I just wanted to see if you would say it" Oldham stated that the NLRB would open the shop On September 28, the parties conferred for about 5 hours After they had discussed substantive contract terms, Union Representative Cole said that Respondent had an empty shop Goff said, "The longer it's empty, the less work is in it" Oldham said, "You can't find enough people to do that work No other contract nego- tiations ask people to give up their rights But you damn sure do You're supplying work for 15 other shops" The parties then arranged to meet on the following day 31 30 My findings in this paragraph are based on Hall's notes, which do not show similar remarks by Goff on any other occasion Goff testified I arranged compromise after compromise package which the Union rejected almost without exception At one point in—or at sev- eral points in negotiations, I told [Oldham] that I wasn t going to bid against myself And he said, 'What did that mean ?" I said, 'I m not going to bargain with myself When I make a proposal and you reject it, I d like a counter offer ' In most cases, there was no counter offer In view of Goff's failure to give a context for this conversation or con- versation, and for demeanor reasons, as to the Goff Oldham conversation I credit the above-quoted testimony only to the extent that it is corrobo- rated by Hall's notes 21 My findings in this paragraph are based on Hall's notes Goff testi fled that just before the lockout, 'Our plants were fully utilized We were running two full shifts at Natco and couldn t get people He fur ther testified that 250 people were working on the night shift Jt Exh 1 shows that some Natco employees were then working on a shift which started at 10 p m See also the text attached to fn 26, supra C-E NATCO/C-E INVALCO 519 About 10 a m on the following day, September 29, the parties met again They began by discussing subcontract- ing and job-bidding issues However, when Goff re- marked that Respondent wanted to get a contract, Cole remarked that not much work was being done without one Goff said that for every month that the employees were "out," 100 fewer people would be at work Oldham said that he thought the NLRB would open up the plant Goff offered to bet Oldham $100 on that, and said that he did not think anything could be accomplished for the rest of the day Following some further discussion, the meeting broke up, about an hour and a half after it began The next meeting, on October 13, was called by the Federal mediator Both Goff and Oldham said that they wanted to get the employees back to work Oldham said that the employees were ready to go back to work un- conditionally Goff asked what "unconditionally" meant Oldham told him to look in the dictionary Goff said, "In other words, we open the door and you'll show up" Oldham said, "Yes, we will, we're ready to work" Goff said, "You're saying under terms of the old contract?" Oldham said that coverage would have to include "cer- tain obligations," such as processing grievances Goff asked the differences between "unconditional" and Re- spondent's September 18 offer Oldham said, "There were conditions on that offer" Goff asked whether Oldham was willing to extend the no-strike/no-lockout clause along with the rest of the contract Oldham said, "Yes, cover-to-cover if extension is made—Are you making an offer?" Goff said yes, and that getting every- one back might take 60 days The parties then proceeded to discuss arrangements for getting the employees back to work A bargaining session on October 14 between 11 22 a m and 3 15 p m was directed entirely toward reaching a memorandum of agreement under which employees were to return while the parties were negotiating for a new bargaining agreement That day, the parties execut- ed a memorandum of agreement which reinstated the 1978-1981 bargaining agreement "in all its terms and conditions" from October 19 to November 30 Respond- ent agreed that if the parties negotiated a new 3-year contract during the effective period of the interim agree- ment, Respondent would reinstate their insurance bene- fits retroactively to August 31 upon their return to work or contract signing, whichever was later Also, Respond- ent agreed to use its "best efforts" to recall all the em- ployees consistent with Respondent's production require- ments, on the basis of plant seniority within their classifi- cations Further, Respondent undertook not to work unit employees overtime in a classification if there were em- ployees on layoff in that classification The parties met on 11 occasions thereafter The last negotiating session was held on December 3 On Decem- ber 6, 1981, the parties executed a new bargaining agree- ment effective as of August 21, 1981, and to expire on September 1, 1984, at the earliest Goff testified that it took about 12 weeks to bring everybody back I am un- clear whether he was calculating from the October 14 execution of the interim agreement or from the Decem- ber 6 execution of the 1981-1984 bargaining agreement Goff testified that after September 2 and through Sep- tember 18, employees were not permitted to work unless they had signed the "Letter of Understanding" attached to Respondent's individual offers of employment dated September 2 and September 10 Goff further testified that from September 18 to October 19, the only way the employees could return to work was for the Union to execute the "Memorandum of Understanding" which Re- spondent proposed to the Union on September 18 Oldham credibly testified that from August 31 until Oc- tober 19, Respondent never told the Union that the gates would be open, and the employees could return to work, without any need for the Union to sign either Respond- ent's proposed August 29 or its proposed September 18 "Memorandum" He further credibly testified that during the period, the Union took no strike votes and never told Respondent that it would strike K Analysis and Conclusions 1 Whether paragraph II of the "Memorandum of Understanding" proposed on August 29 constituted a mandatory subject of collective bargaining As previously noted, paragraph II of the "Memoran- dum of Understanding" proposed by Respondent on August 29 provided, in substance, that the Union, its af- filiated local, and their respective officers, agents, and representatives, would be jointly and severally liable "for all acts of sabotage, vandalism, or other harm to [Re- spondent] which arise in any manner during the term of this memorandum, irrespective of any proof of the cause of the acts and/or harm complained of To secure these obligations, the Unions shall put up a performance bond in the principal amount of $500,000 00 written by an in- surance company or companies acceptable to [Respond- ent], payable upon demand without need for proof of cause whatsoever by [Respondent] I agree with the General Counsel and the Union that this proposal consti- tuted a nonmandatory subject of collective bargaining With uniform judicial approval, the Board has held to be a nonmandatory subject of collective bargaining a proposal that either party post a performance bond, or agree to an indemnity, to secure performance of the bar- gaining agreement or as a condition of terminating a strike or lockout 32 Such a proposal is not within the area of "wages, hours and terms and conditions of em- ployment", would have the effect (contrary to the statu- tory scheme) of giving only financially responsible par- ties the right to compel bargaining, and tends to delay, impede, or otherwise circumscribe the bargaining proc- ess 33 Moreover, where (as here) the performance-bond 32 Betra Mfg Cc, 223 NLRB 1126, 1131-32, 1135 (1977) Beyer! Chev rolet, 221 NLRB 710, 721-722 (1975) (Member Howard Jenkins Jr, con- curring), NLRB v F M Reeves & Sons, 47 LRRM 2480 (10th Or 1961), cert denied 366 U S 914 (1961) Conway's Express, 87 NLRB 972, 978- 979 (1949), affd 195 F 2d 906 (2d Cir 1952), see also cases cited infra fns 33-34 " NLRB v Laborers Local 1082 (Boggs Plastering Co ), 384 F 2d 55, 57 (9th Cir 1967) cert denied 390 U S 920 (1968), Carpenters (Excello Dry Wall Ca) 145 NLRB 663 (1963), enfd 58 LRRM 2064 (DC Cir 1964) Covington Furniture Mfg Corp, 212 NLRB 214 216-219 (1974), enfd 514 F 2d 995 (6th Cif 1975), see also the cases cited infra fn 34 520 DECISIONS OF NATIONAL LABOR RELATIONS BOARD indenmity proposal extends to protection against injury from third parties, such a proposal is a nonmandatory collective-bargaining subject for the further reason that the public duty to bargain may not be set at naught be- cause of alleged private inconvenience claimed to exist by reason of actions or threatened actions of third per- sons 34 Respondent's proposal was a nonmandatory subject of collective bargaining for the further reason that it called for the imposition of liability on a local affiliated with the Union and on the officers, agents, and representatives of both the local and the Union, although only the Union is the certified representative, is named in the recognition clause of the 1978-1981 and 1981-1984 bargaining agree- ments, and (through its representatives) was a party sig- natory to such agreements NLRB v Borg-Warner Corp, 356 U S 342, 345, 350 (1958), North Carolina Furniture, 121 NLRB 41 (1958) Notwithstanding the foregoing precedents, Respondent contends that paragraph II of its proposed "Memoran- dum of Understanding" was a mandatory subject of col- lective bargaining because that proposal allegedly consti- tuted an effort by Respondent to bargain about employee safety, which is unquestionably a mandatory subject of collective bargaining Existing precedent suggests that Respondent's defense is insufficient as a matter of law 35 At the very least, in order to prevail on such a ground, Respondent would have to make a showing sufficient to outweigh the policy considerations which underlie the heretofore consistent line of cases holding this kind of proposal to be a nonmandatory subject Any such show- ing would have to be particularly strong in the instant case, in view of the specific evidence that the bargaining process as to unquestionably mandatory subjects was im- peded by Respondent's conduct in insisting on its pro- posed "Memorandum of Understanding" and locking out the employees in support of that proposal (see infra part II,K,2) During all of the parties' seven bargaining ses- sions after Respondent first advanced this proposal and until the parties reached an agreement regarding the em- ployees' return to work and their interim working condi- tions, the parties discussed Respondent's proposed "Me- morandm of Agreement" and/or issues related to the lockout, which I find infra to have been effected in sup- port of the "Memorandum" proposal Such issues were the sole subject of discussion during three of these ses- sions (September 18 and October 13 and 14), and the September 29 discussion was shortened by an argument regarding what action the NLRB would take about the 34 NLRB v Davison, 318 F 2d 550, 556 (4th Cir 1963), Covington Fur suture, supra 212 NLRB at 217-218, Laborers Local 1082 (Boggs Plaster- ing Go), 150 NLRB 158, 165, 177-178 (1964), enfd 384 F 2d 55 (9th Cm 1967), cert denied 390 U S 920 (1968) 35 Covington, supra, 212 NLRB at 218 (indemnity proposal nonmanda tory although allegedly advanced to protect nonunion employees from threats, coercion, harassment, or intimidation), Ewell°, supra, 145 NLRB at 664-667 (performance bond proposal nonmandatory although motivat ed by desire to assure payment of contractually prescribed wages and benefits by employer with history of delinquency), but see Boggs, supra, 384 F 2d at 57 Excello rejected in terms Respondent's contention that the performance bond cases turn upon bonds which run to the employer only for its benefit, and do not extend to bonds which bear a direct or reason ably certain relation to the protection of employees lockout 36 I note, moreover, that the Union's August 29 rejection of the proposed "Memorandum of Understand- ing" led Respondent to terminate the day's session at 11 34 a m, notwithstanding the Union's request for fur- ther discussion about mandatory subjects I conclude that Respondent has failed to show that the alleged relation- ship between its proposal and employee safety outweighs the considerations which normally render such proposals nonmandatory subjects, and whose force is affirmatively demonstrated by the effect of Respondent's proposal on the progress of negotiations as to mandatory subjects Thus, in connection with this claim by Respondent as to its motive for advancing this proposal, Respondent called as witnesses none of the three individuals (Lowd, Cremmins, and Bond) whom Goff identified as the "ar- chitects" of the proposal Moreover, neither Goff nor any other witness testified about any remarks these three "architects" made regarding what their motives were Goff testified that the Union's alleged refusal to extend the no-strike provisions (article 16) of the 1978-1981 bar- gaining agreement "essentially said" that such a no-strike undertaking would not be available to protect Respond- ent, its "people," and its customers from the kind of "acts that had been occurring in the last three or four days of the [1978-1981] contract" He went on to testify that the proposed "Memorandum of Agreement" consti- tuted an alternative rek-ciurse to assure such protection, and that "we couldn't afford a strike We couldn't afford a work stoppage" In addition, he testified that he told Lowd, Cremmins, and Bond that Respondent "couldn't get an extension with a 'no-strike' clause in it" However, Goff further testified that, with regard to the Union's offer to continue to work, Respondent never told the Union that Respondent wished to extend the no-strike clauses, and that Oldham did not make any mention of a limitation on Article 16 when he told Respondent on August 29 that the Union planned to work by extending the contract Moreover, the credible evidence (supra part II,D and H) shows that the Union offered to continue to work under an extension of the contract, and that the Union did not imply the possibility of a strike until after Respondent's August 29 refusal to extend the contract Furthermore, although Article 16 of the 1978-1981 agreement was in effect through August 30, Respondent never filed any lawsuits alleging that this agreement had been breached by any of the conduct whose repetition (according to Goff) Respondent was seeking to prevent by an extension of that clause, and never attempted to identify or discipline the employees who had engaged therein 37 36 Indeed, during the negotiations on October 27, almost 2 weeks after the parties had executed the interim agreement which called for the ern ployees return the parties discussed whether the period of the lockout was to be included in determining whether individual employees records were "cleared out" for attendance purposes 33 Respondent contends that any reliance on its failure to try solving its problems through disciplining individual employees or filing breach of contract lawsuits would impermissibly attempt to control the results of negotiations This might be true if Respondent s performance bond pro posal was on its face a mandatory subject of collective bargaining How ever, some control over negotiation results is imposed by the statutory classification of some subject as nonmandatory Because Respondent s Continued C-E NATCO/C-E INVALCO 521 Moreover, the proposal itself called for union liability for harm done to Respondent, not for harm done to em- ployees Indeed, so far as the record shows, not until after shutting the plants down did Respondent allege to the Union in terms that its proposed "Memorandum of Understanding" was partly directed toward protecting "our people "38 Further, much of the evidence regarding the incidents now cited by Respondent and what it did about them at the time makes highly questionable any contention that Respondent believed that they resulted from intentional misconduct Thus, during the summer of 1981, Respondent admittedly disciplined, for absenteeism without a legitimate excuse, only about the same number who had been disciplined therefor during similar preced- ing periods Furthermore, Goff admittedly exaggerated during his earlier testimony the extent of absenteeism, Respondent presented no records to establish its extent or its variance with respect to comparable earlier peri- ods, and there is no evidence that Goff ever alleged to his superiors or to the Union any belief that the employ- ees were absenting themselves for ulterior reasons Fur- ther, circumstances known to Respondent establish a substantial chance that gas hoses and air lines were acci- dentally cut when a machine rolled over them, that the trashcan fire was caused by a careless smoker, and that the fire at the gate had nothing at all to do with anyone who worked at the plants Indeed, Respondent failed to respond to Oldham's August 29 inquiry, after he had read Respondent's proposed "Memorandum of Under- standing," for specific incidents of sabotage, vandalism, or acts of slowdown It is true that some of the incidents on which Re- spondent relies were almost certainly the result of sabo- tage by unknown persons for problematic reasons, and that such incidents created the potential for very serious injury to persons and property I have no doubt that such incidents caused concern to those members of man- agement who knew about them, as well as to unit em- ployees who reported them or even found out about them However, in view of the evidence summarized above, I do not believe Respondent's contention that Re- spondent's concern for employee safety motivated its action in proposing the "Memorandum of Understand- ing" Further, because Respondent admittedly did not ask the Union to extend the no-strike clause, in view of the credible evidence regarding the parties' discussion of the Union's extension proposal, and for demeanor rea- sons, I do not credit Goff s uncorroborated testimony that he told Lowd, Cremmins, and Bond that Respond- ent could not get an extension with a no-strike clause in proposal appears on its face to be nonmandatory, alternative-remedy con- siderations can properly be taken Into account in evaluating the conten tion that the Union was, nonetheless, required to bargain about the pro posal 38 See Respondent s September 1 telegram to Oldham The letters dis tnbuted by Respondent to the individual employees on August 31 de- scnbed the proposed "Memorandum of Agreement as 'giving the Corn pany protection agaist slowdowns, violence, acts of sabotage, vandalism and bodily harm," and then stated, "We also want to protect your nghts to work under reasonable conditions We are working on a method to allow you to return to work while protecting people and property and you will hear from us as soon as we work our an acceptable method" (Em phams added ) it See NLRB v Walton Mfg Co, 369 U S 404, 408 (1962) 39 Respondent further contends that paragraph II of its proposed "Memorandum of Understanding" was a man- datory subject of collective bargaining because this pro- posal was allegedly intended to prevent future interrup- tion of production Respondent's brief relies on Respess' testimony that the removal of fuses from about six weld- ing machines cost an undisclosed amount of lost produc- tion and time, and on Tenneco Chemicals, 249 NLRB 1176, 1179 (1980), holding that the establishment of measured production standards constitutes a mandatory subject of collective bargaining Here again, the "archi- tects" of this proposal did not testify that the proposal was intended to prevent future interruption of produc- tion (which was unavoidably interrupted by the lockout itself), nor is there any testimony about what they stated their motives to be Indeed, there is no evidence that any of these "architects" knew about the removed fuses Also, here again, there is no evidence that Respondent tried to find out who had removed the fuses, or de- scribed this specific incident to the Union Finally, Respondent contends that paragraph II was a mandatory subject of collective bargaining because, in advancing it, Respondent was "really not motivated by a desire for damages but, rather by a desire to inter- pose a request which would negate the possibility of fur- ther sabotage, and, hence, future danger to the equip- ment" Here again, the "architects" of the proposal did not testify in support of that contention Moreover al- though Goff testified that the proposed $500,000 per- formance bond would have fallen far short of covering the full liability imposed by paragraph II, paragraph II did not limit liability to the amount of the bond, neither Goff nor anyone else testified that Respondent intended to confine any liability claims to the bond alone, and Goff testified that Respondent never advised the Union that the proposal was being advanced as a mere psycho- logical deterrent against damage to the plant To be sure, such an admission to the Union might well have limited the psychological deterrence which Re- spondent allegedly intended to impose However, Re- spondent's reliance on this undisclosed intent as a defense to its action in connection with paragraph II is similar to some previously undiscussed considerations which cause me to reject, as fundamentally unfair, Respondent's reli- ance on the Union's conduct upon receiving Respond- ent's proposal Respondent does not seem to dispute that the Union would have been under no obligation to dis- cuss a nonmandatory bargaining subject and that para- graph II appeared on its face to constitute such a subject Moreover, among the aspects of this proposal which at least appeared to render it nonmandatory was its threat to the solvency of the Union, its local, and their "offi- 39 Goff testified that Oldham s final remark to Goff of August 29, to the effect that the bond would not be enough, meant to Goff that Re spondent "would have a continuation of the chaos that had been building and accelerating in the last week of the contract Having been made after the Union received Respondent's proposed Memorandum,' this remark could not have motivated that proposal Nor is there any testimo ny that this remark motivated any of Respondent's subsequent conduct 522 DECISIONS OF NATIONAL LABOR RELATIONS BOARD cers, agents, and representatives" if anyone in any manner inflicted harm on Respondent Furthermore, ear- lier that same day Oldham had advised Respondent that he had told employees not to engage in misconduct but "his people" were "mad" and he could not control them Also, after receiving Respondent's proposed "Memoran- dum of Understanding," the Union asked Respondent to give the Union specific incidents of sabotage, vandalism, or acts of slowdown, but Respondent did not do so 40 In addition, when Oldham said that he would not sign Re- spondent's proposal, Respondent's representatives left the room and refused to return or to comply with the Union's request for an additional meeting before the cur- rent bargaining agreement expired In short, Respondent forewent an opportunity to explain to the Union the spe- cial circumstances which (Respondent now claims) alleg- edly imposed on the Union an obligation to bargain about a proposal which on its face appeared nonmanda- tory becase of, inter aim, its threat to the Union's solven- cy, even though the Union had told Respondent that the Union was unable to prevent employee conduct for which Respondent's proposal would have rendered the Union liable in damages Accordingly, I reject Respond- ent's apparent suggestion that paragraph II was some- how rendered a mandatory subject of collective bargain- ing by the Union's failure to state in terms that its rejec- tion was based on the proposal's no-fault character or on the cost or underwriting availability of the bond 41 As previously noted, paragraph I of Respondent's pro- posed "Memorandum of Understanding" states, inter aim, "If in the sole judgment of management, insufficient em- ployees report to work or if production is impeded in any manner whatsoever, the effect of which is to de- crease production to a rate which is in the sole judgment of the Company commercially insufficient, the parties then understand that a strike shall be in effect" After re- citing the entire "Memorandum," the complaint alleges that this "provision as described above is a non- mandatory subject of collective bargaining" According- ly, the complaint is at least susceptible to the interpreta- tion that Paragraph I, too, is alleged to involve a non- mandatory subject of collective bargaining and to have been improperly demanded by Respondent However, paragraph 12(b) of the complaint merely alleges that the Union rejected Respondent's demand that the Union post a performance bond, this bond is referred to in only Paragraph II of the "Memorandum" Moreover, the General Counsel's opening statement did not attack Para- graph I of the "Memorandum," and it is not attacked in either his or the Union's brief Accordingly, I will not pass on this issue Cf United States Pipe & Foundry Go, 40 As already noted (supra fn 15), Goff had previously mentioned to the Union, in general terms, alleged incidents as to whose occurrence there is little or no record evidence 4i Respondent's bnef (pp 10-11) also recites certain circumstances which allegedly "justified' Respondent in presuming, subject to rebuttal by the Union, that the Union could and did control the happenings pre- ceding contract expiration" No member of management testified to any such presumption" Moreover, the uncontradicted evidence refutes the factors which allegedly justified this "presumption" More specifically, al though Oldham did tell Respondent that he had tned to control "his people," he went on to say that he could not, and vainly asked Respond ent to specify what incidents It was concerned about 180 NLRB 325, 327-328 (1969), enfd and affd 442 F 2d 742, 748 (D C Cir 1971) (withdrawal of fringe benefits at a time when bargaining lockout would have been lawful held violative of Section 8(a)(3) and (1) because "conduct which has as one of its purposes forcing the employees to strike is far more inimacal to funda- mental employee rights than an outright lockout"), Em- erson Electric Go, 246 NLRB 1143 (1979), enfd and re- manded 650 F 2d 463 (3d Cir 1981), cert denied 455 U S 939 (1982) (employees on sick leave as of the start of a strike had a Section 7 right to refrain, while medi- cally excused, from declaring their position as to wheth- er they would support the strike), Belknap, Inc v Hale, 113 LRRM 3057 (1983) (employer ordinarily has duty to offer reinstatement, upon application, to unreplaced but not to replaced economic strikers), Bio-Science Laborato- ries, 209 NLRB 796 (1974) (whether economic strikers should "bump" their replacements is mandatory subject for collective bargaining), Johns-Manville Products Corp, 223 NLRB 1317 (1976), enf denied on other grounds 557 F 2d 1126 (5th Cir 1977), cert denied 436 U S 956 (1978) (hiring permanent replacements for lawfully locked-out employees without notifying the bargaining representative violated Section 8(a)(3) and (5)), Overland Hauling, 194 NLRB 1146, 1148-49 (1979), American Cy- anamid Co, 235 NLRB 1316, 1324-25 (1978), enfd 592 F 2d 356, 364 (7th Cir 1979)42 2 Whether Respondent's conduct (allegedly including the lockout) in connection with the paragraph II violated Section 8(a)(1), (3), and (5) of the Act An employer violates Section 8(a)(1) and (3) of the Act by locking out his employees in order to compel their union to agree to a proposal which (like Paragraph II of Respondent's proposed "Memorandum of Under- standing") constitutes a nonmandatory subject of collec- tive bargaining Movers & Warehousemen's Assn, 224 NLRB 356, 366-367 (1976), enfd 550 F 2d 962 (2d Cir 1977), cert denied 434 U S 826 (1977), see also American Stores Packing Go, 158 NLRB 620 (1966), NLRB v Bagel Bakers Council, 434 F 2d 884, 889 (2d Cir 1970), cert denied 402 U S 908 (1971) Moreover, although merely advancing such a proposal is not unlawful, an employer violates Section 8(a)(5) and (1) by insisting, as a condition of agreement, on the union's agreeing to a proposal regarding a nonmandatory subject of collective bargaining Such insistence is unlawful whether or not the parties to the negotiations have reached agreement as to mandatory collective-bargaining subjects 43 Further, 42 Cremmins, one of the architects of the proposed "Memorandum of Understanding was the attorney responsible for handling the employees' unemployment compensation claims Goff's testimony suggests that para- graph I was intended at least partly to prevent the employees from claim ing that they were locked out employees entitled by state law to unem ployment compensation, rather than strikers not so entitled I need not and do not determine whether bargaining to achieve such a purpose would be proper under the National Labor Relations Act Cf New York Tel Co v New York State Labor Dept, 440 U S 519 (1979) 43 Cote Bros Bakery, 259 NLRB 776, 782-783 (1981), see also Ship- builders (Bethlehem Steel Corp) v NLRB, 320 F 2d 615, 618 (3d Cu- Continued C-E NATCO/C-E INVALCO 523 an employer's unlawful insistence is established by an employer lockout ("the ultimate weapon in [the employ- er's] labor relations arsenal") in support of the nonman- datory proposal Movers & Warehousemen's Assn v NLRB, 550 F 2d 962, 966 (4th Cir. 1977), cert denied 434 U S 826, enfg 224 NLRB 356, 367 (1976) Respond- ent seems to contend that such a lockout would not suffi- ciently establish "insistence" in a situation where the em- ployer (1) had advanced the proposal after the parties had reached an impasse and (2) would have accepted a contract without the proposal Assuming (without decid- ing) that by August 31 the parties had reached impasse with respect to the terms of a bargaining agreement to replace the 1978-1981 contract, Respondent's argument in this respect might have weight if Respondent had sought to include its proposed "Memorandum of Agree- ment" as part of that contract However, the proposed "Memorandum" was by its own terms to be effective only until the "new agreement is negotiated and settled Moreover, the fact that this nonmandatory bargaining proposal was Respondent's initial proposal with respect to the hiatus period precludes any contention that it was advanced after the parties had reached an impasse as to an interim agreement, nor does Respondent so contend Furthermore, although Respondent's brief contends that Respondent would have withdrawn the August 29 bond proposal if the Union had agreed to extend the no-strike clause, Respondent's bond proposal was advanced imme- diately after the Union vainly offered to extend the con- tract, without any indication that the no-strike clause was excepted Furthermore, not until September 18, more than 2 weeks after the lockout began, did Respond- ent ask the Union to agree to this clause and other new proposals (see supra fn 14) Moreover, I agree with the General Counsel and the Union that Respondent's refusal to permit its employees to work on August 31 was motivated by a desire to compel the Union to accept Respondent's proposed "Memorandum of Understanding" to be effective after the 1978-1981 bargaining agreement expired and before a new bargaining agreement was reached Thus, when the Union refused on Saturday, August 29, to sign the "Memorandum" (which had Just been proposed), Goff remarked that, if the Union did not sign it, Respondent would assume that the Union was on strike When the Union again stated that it would not sign, Respondent's representatives left the room and refused to return On the following Monday, August 31, Respondent refused to permit employees to begin work, on the express ground that the Union had refused to accept Respond- ent's proposed Memorandum of Understanding 44 A 1965), cert denied 375 U S 984 (1964) Similarly, a union s insistence on such a proposal constitutes a violation of Sec 8(b)(3) Operating Engineers Local 12 (Associated General Contractors), 187 NLRB 430, 431-432 (1970) 44 Each employee was given an "information memorandum" which stated, inter alio., that Respondent was "willing that bargaining unit mem hers continue working without a contract We offered [the Union] a way to do this, an offer which Goff testimonially identified as the proposed "Memorandum of Understanding ' The letter went on to state that by rejecting this offer, the Union had effectively called a stnke September 1 telegram to the Union from Respondent asked whether the Union was prepared to execute the Memorandum of Understanding "so that our employees, you members, may get back to work at the earliest possi- ble time9" 45 Furthermore, Respondent never did more than acknowlege the Union's September 11 telegram stating that the employees would return to work if Re- spondent would withdraw its demand that the Union sign the "Memorandum of Understanding" and give all bargaining unit employees the same "benefit coverage" they had had prior to the expiration of the bargaining agreement Moreover, Goff testimonially admitted that after September 2 and through September 18, employees were not permitted to work unless they had signed the "Letter of Understanding" attached to Respondent's in- dividual offers of employment However, Respondent's September 2 letter to the Union attributed Respondent's individual offer of employment and "Letter of Under- standing" to the Union's refusal to sign the proposed "Memorandum of Understanding" Indeed, after assert- ing that any lockout which may have occurred was de- fensive in nature, Respondent's brief goes on to assert that "the demon for indemnification was a corollary of the defensive lockout tactic and in support of, conversely a substitution for, a lockout which had not yet oc- curred" Goff testified that the decision to exclude the employ- ees from the plant on August 31 was not made because the Union refused to sign the proposed August 29 "Memorandum of Understanding," but was made essentially to give us time to catch our breaths We had went through a period of escalat- ing acts that concerned us about the safety of our people Our business was unbelievable that year, and we Just wanted to get our heads on straight before deciding possibly whatever alternatives we could have Respondent contends in its brief (pp 7 and 26) that Re- spondent "if there was a lockout, was engaged in a de- fensive lockout to prevent sabotage, production delays and slowdowns" To the extent that Goff was attributing the lockout to a desire to have an opportunity to decide Respondent's "alternatives," such testimony not only suggests in itself that the lockout was at least partly mo- tivated by the Union's refusal to sign the Memorandum, but also is difficult to reconcile with Respondent's con- tinuation of the lockout for more than 6 weeks 46 Al- 45 On the basis for the telegram as a whole (supra part 11,1,3), I per ceive no basis for Respondent's contention in Its brief that Respondent was asking whether the Union s offer for the employees' return would be under a warrant of safety for them from the Union" That same portion of Respondent's brief can be read as suggesting that the Union's reply to this telegram led Respondent to draft and send out to the employees the individual offers of employment, all of them identical However, Re spondent received the Union's reply at 11 02 am on September 1, and mailed some of its offers to the individual employees on September 1 and in time to be received in the mail by noon on that day 44 The record falls to show what management representatives decided on the lockout, or the basis for Goff's claimed knowledge of their mo lives 524 DECISIONS OF NATIONAL LABOR RELATIONS BOARD though Respondent's brief contends that Respondent locked out its employees to protect itself against sabo- tage, production delays, slowdowns, and danger to em- ployees, no management representative who was identi- fied as a participant in the lockout decision testified that such were his motives (see supra, fn 46) Moreover, Re- spondent's contention in this respect is substantially belied by much of the evidence previously analyzed in connection with Respondent's contention that the bond proposal was a mandatory subject of collective bargain- ing More specifically, as to the events which allegedly motivated this decision, Respondent made no attempt to discipline employees or to seek relief against the Union on the basis of the 1978-1981 agreement, as to a number of such incidents, the evidence indicates that Respondent did not believe them to be due to intentional misconduct, and Respondent failed to respond to Oldham's August 29 inquiry, after he had read Respondent's proposal, for spe- cific incidents of "sabotage, vandalism, or acts of slow- down" Further impeaching this contention are Respond- ent's individual offers of employment to all of the bar- gaining-unit employees upon conditions only one of which was even arguably related to Respondent's pres- ently tendered motives for the lockout—namely, an un- dertaking to "be held responsible to all extents of the law, for any damage or losses to the Company caused by me " However, Respondent's brief states (pp 29-30) that this portion of its proposal is merely "a statement of a condition implicit in all employment relationships," and there is no evidence that the Union ever asked Respond- ent to forego such rights under the law 4 7 Similarly, the management rights clause of both the expired 1978-1981 agreement and the new agreement executed in December 1981 afforded Respondent the right "to establish and re- quire employees to observe reasonable company rules and regulations, and to maintain order and to sus- pend, demote, discipline and discharge employees for just cause" There is no evidence that either party during negotiations requested a change in this language More- over, Respondent admittedly never advised the Union that Respondent wanted the Union to agree to extend the no-strike/no-lockout provision (article 16) of the 1978-1981 agreement because Respondent thought that this article might afford Respondent some protection from "the acts that had been occurring in that last three or four days of the contract" On the contrary, Respond- ent did not until September 18 propose the extension of this provision (which at least arguably would also have forbidden Respondent to engage in the August 31 lock- out), repeatedly rejected the Union's August 29 propos- als (which did not expressly exclude Article 16) to extend the contract, and never asked the Union why its September 11 letter did not include Article 16 among the "benefits" which the employees had enjoyed before the lockout and under whose coverage the Union was will- ing to have the employees return to work In any event, the record shows that in locking out the employees on August 30 and 31, Respondent was mon- 47 Indeed, on September 21, Oldham remarked that if the employees 'go in and act like you've said they will, then you have the right to throw them out again" vated at least in part by a desire to compel the Union to agree to paragraph II of the proposed "Memorandum of Understanding" A lockout with such a motivation is un- lawful, at least unless Respondent can establish, by a pre- ponderance of the evidence, that it would have taken the same action for wholly permissible reasons NLRB v Transportation Management Corp, 462 US 393 (1983), Movers & Warehousemen's Assn, supra, 224 NLRB at 366, 550 F 2d at 966, and cases cited Respondent has plainly failed to meet that burden For the foregoing reasons, I find that Respondent vio- lated Section 8(a)(1), (3), and (5) of the Act by insisting on the Union's agreement to the proposed "Memoran- dum of Understanding" and by locking out its employees in support of that demand 3 Whether Respondent violated Section 8(a)(1), (3), and (5) in connection with its individual offers of employment to the strikers The parties do not appear to dispute, and I find, that the mandatory subjects of collective bargaining include the conditions under which the locked-out unit employ- ees could return to work, and their conditions of em- ployment upon their return and before the execution of a new contract Johns-Manville, supra, 223 NLRB 1317, Bio-Science Laboratories, supra, 209 NLRB 796, Bethle- hem, supra, 320 F 2d at 620 Accordingly, as to such matters, Respondent was under a duty to bargain with the Union as the employees' exclusive representative, and would violate Section 8(a)(1) and (5) by bargaining with the employees individually Medo Photo Supply Corp v NLRB, 321 U S 678, 683-684 (1964), Tulsa Sheet Metal Works, 149 NLRB 1487, 1491-92, 1503 (1964), enfd 367 F 2d 55 (10th Cir 1966), NLRB v Brown-Dunkin Co, 287 F 2d 17, 19-20 (10th Cir 1961), J H Bonck Co, 170 NLRB 1471, 1482 (1968), enfd 424 F 2d 634 (5th Cir 1979), NLRB v General Electric Go, 418 F 2d 736, 755 (2d Cir 1969), cert denied 397 U S 965 (1970), John G Merkel & Sons, 232 NLRB 140, 152-153 (1977) Nonetheless, on September 1 and 2, and again on Sep- tember 10, Respondent mailed to each employee in the bargaining unit, all of whom had been locked out, an in- dividual offer of employment which called for the indi- vidual employee to sign an agreement regarding the con- ditions under which Respondent would permit him to work during the contractual hiatus Further, these indi- vidual offers differed in certain respects from the propos- al which Respondent tendered to the Union with respect to such matters More specifically, the "Letters of Un- derstanding" (as "clarified" by Respondent on September 10) which were tendered to the employees included "es- sentially the same benefit coverage as was in effect im- mediately prior to the expiration of the Collective Bar- gaining Agreement" However, during the bargaining session immediately preceding the lockout, Respondent had expressly advised the Union that if Respondent let the workers go ahead without a contract, Respondent would suspend all fringe benefit payments Moreover, Respondent failed to reply to the Union's September 11 inquiry about whether Respondent's "benefit coverage" offer to the employees included various other contractual C-E NATCO/C-E INVALCO 525 "benefits" which included recognition of the Union and a grievance procedure 48 Furthermore, the "Memoran- dum of Understanding" contained no provision calling for employee liability "to all extents of the law, for any damage or losses to the Company caused by me", while the "Letters of Understanding" permitted the employee to work without the Union's signing the performance- bond or other provisions in the "Memorandum of Under- standing "49 Accordingly, I conclude that by soliciting the employees to sign the "Letters of Understanding," Respondent violated Section 8(a)(1) and (5) of the Act Mount Airy Psychiatric Center, 230 NLRB 668, 676-677, 680 (1977), Naccarato Construction Co, 233 NLRB 1394, 1400-01 (1977), Lehigh Lumber Co, 230 NLRB 1122, 1125 (1977), enfd 577 F 2d 727 (3d Cir 1978), cert denied 439 U S 928 (1978), Gerstenslager Co, 202 NLRB 218, 224-225 (1973), enfd 487 F 2d 1332 (6th Cir 1973), cert denied 416 U S 984 (1974) 50 Moreover, Respondent concedes that after September 2 and through September 18, employees were not per- mitted to work unless they had signed a "Letter of Un- derstanding" In other words, Respondent was condition- ing active employment during the contractual hiatus on the employee's willingness to accept a proposal which differed from Respondent's proposal to the Union with respect to employment terms and conditions during that period and whose tender to each employee by Respond- ent constituted an invasion of that employee's statutory right to union representation 51 Accordingly, Respond- ent's conduct in mailing such letters constituted a viola- tion of Section 8(a)(3) Lion Oil Co v NLRB, 245 F 2d 376, 378-379 (8th Or 1957) CONCLUSIONS OF LAW 1 Respondent is engaged in commerce within the meaning of Section 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 The following employees of Respondent constitute a unit appropriate for the purposes of collective bargaining 48 Respondent would probably have violated the law if during the contractual hiatus, it had withdrawn recognition from the Union, failed to honor the contractually generated grievance procedure, or failed to honor the contractually generated obligation to pay fringe benefits to active employees Bethlehem supra, 320 F 2d at 620, Hen House Market No 3 175 NLRB 596 (1969) enfd 428 F 2d 133 (8th Cir 1970), Hilton Davis Chemical Co, 185 NLRB 241 (1979), see also Nolde Bros v Local 358 Bakery Workers, 430 U S 243 (1977), American Sink Top & Cabinet Go, 242 NLRB 408 (1979), Cardinal Operating Go, 246 NLRB 279, 287- 288 (1979) Oldham credibly testified that during negotiations for a new agreement to succeed the 1978-1981 agreement, Respondent never pro posed to eliminate all fringe benefits 49 I note, moreover, certain differences between the Memorandum and the Letters" regarding when a strike was to be considered in effect Such differences Included omission from the Letters' of the under scored language in the "Memorandum, in the sole judgment of the Company commercially insufficient" The complaint does not allege that the inclusion of this clause in the Letters constituted an unfair labor practice irrespective of Respondent's duty to bargain with the Union Cf discussion under The Remedy" 89 Respondent's brief relies on cases where the employer discussed with individual employees the same proposals which had been, or soon thereafter were, submitted to the union Si See J I Case Co v NLRB, 321 U S 332, 337-339 (1944) Empori- um Capwell Co v Western Addition Community Organization 420 U S 50, 62 (1975) within the meaning of Section 9(b) of the Act All pro- duction and maintenance employees, warehousemen, shop janitors, first aid attendants, field service men, and the local truckdnvers employed by Respondent at its Tulsa, Oklahoma plant, but excluding all office clerical employees, over-the-road truckdnvers, gatemen, watch- men, timekeepers and supervisors as defined in the Act, and as certified in the National Labor Relations Board Certification of Representatives in Case 16-RC-4879 dated November 15, 1968 4 Since about November 15, 1968, and at all times ma- terial herein, the Union, by virtue of Section 9(a) of the Act, has been, and is, the exclusive representative of the employees in the foregoing unit for the purpose of col- lective bargaining with respect to rates of pay, wages, hours of employment, and other terms and conditions of employment 5 Respondent has violated Section 8(a)(1), (3), and (5) of the Act by insisting that the Union agree to a proposal which constitutes a nonmandatory subject of collective bargaining, by locking out Respondent's unit employees in support of the proposal, and by mailing individual offers of reemployment to said unit employees 6 The unfair labor practices set forth in the foregoing paragraph affect commerce within the meaning of Sec- tion 2(6) and (7) of the Act THE REMEDY Having found that Respondent has violated the Act in certain respects, I shall recommend that Respondent be required to cease and desist therefrom The Union's re- quest for a broad cease-and-desist order is warranted by Movers & Warehousemen's Assn, supra, 224 NLRB at 358-359 Affirmatively, Respondent will be required to make a lawful and unconditional offer, to each locked-out em- ployee who has not already received such an offer, of re- instatement to the job of which he was unlawfully de- prived, or if such job no longer exists, to a substantially equivalent job, without prejudice to his seniority and other rights previously enjoyed In addition, Respondent will be required to make each such employee whole for any loss of pay he may have suffered by reason of Re- spondent's conduct in locking out its employees, from August 30, 1981, until such employee received or re- ceives such a lawful and unconditional offer of reinstate- ment, to be computed in the manner set forth in F W Woolworth Co, 90 NLRB 289 (1950), with interest as prescribed in Florida Steel Corp, 231 NLRB 651 (1977) 52 I find unmeritorious Respondent's contention that any backpay ceased to run upon Respondent's tender of the "Letters of Understanding" As previously found, the tender of such "Letters" constituted in itself an unfair labor practice (see part II,K,3) Moreover, such "Let- ters" were ineffective to toll backpay for the further rea- sons that the employees' return was conditioned on their signing such a "Letter," such "Letters" purported to grant Respondent the option of unilaterally declaring the " See generally Isis Plumbing Go, 138 NLRB 716 (1962) 526 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Union on strike whenever Respondent determined pro- duction to be "insufficient," although such action would invade the employees' hiatus statutory right to determine whether and when to engage in a union-authorized strike, the "Letters" did not otherwise clearly call for the employees' return to work under the same conditions of employment which they had enjoyed before the lock- out, and Respondent never replied to the Union's inquiry about whether Respondent's offer to individual employ- ees included union recognition and the grievance proce- dure, although the Union had advised the employees to reject the offer on the ground that, inter aim, they would be working without any union representation Shelly & Anderson Furniture Mfg Go, 199 NLRB 250, 264-265 (1972), enfd 497 F 2d 1200 (9th Cir 1974), United States Pipe, supra, 180 NLRB at 327-328, enfg 442 F 2d at 748, Overland Hauling, supra, 194 NLRB at 1148-49, Emerson Electric Co, supra, 246 NLRB 1143 As called for by Movers & Warehousemen's Assn , supra, 224 NLRB 356, backpay shall continue to run until the employee in ques- tion receives a lawful and unconditional offer of rein- statement 5 3 Because Respondent has executed a 3-year contract with the Union and neither the General Counsel nor the Union has requested an affirmative bargaining order, no such order will issue See Movers & Warehouse- men's Assn, supra, 224 NLRB at 358-360, 368-369 In addition, Respondent will be required to post appropriate notices [Recommended Order omitted from publication ] 53 No contention is made that the backpay penod should be affected by Respondent's September 18 proposed Memorandum of Understand mg " In this connection, I note that this proposal called for a no stnke commitment which had not existed since the August 31 expiration of the contract for only one shift at the Natco plant (where three shifts worked before the lockout) and for manning of that shift in a manner inconsist- ent with the system in effect Just before the lockout