Friendly Ford

National Labor Relations Board - Board Decisions

Jun 21, 1974

211 N.L.R.B. 834 (N.L.R.B. 1974)

834 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Valley Ford Sales, Inc., d/b/a Friendly Ford and
International Association of Machinists and Aero-
space Workers , AFL-CIO, District Lodge No. 87,
Local Lodge No . 1309. Case 20-CA-7485
June 21, 1974
DECISION , ORDER, AND NOTICE TO
SHOW CAUSE
On May 11, 1972, International Association of
Machinists and Aerospace Workers, AFL-CIO,
District Lodge No. 87, Local Lodge No. 1309, herein
called the Union, filed the charge in this case and
duly served it on Valley Ford Sales, Inc., d/b/a
Friendly Ford, herein called the Respondent. About
the same time, the Union filed a grievance concern-
ing the same subject matter and, on May 30, 1972,
the General Counsel deferred further proceedings
pending the outcome of an agreed -upon arbitration.
The arbitrator issued his opinion and award on
January 11, 1973. Thereafter, the General Counsel of
the National Labor Relations Board, by the Regional
Director for Region 20, issued a complaint on May
22, 1973, against Respondent , and an amendment
thereto on August 30, 1973, alleging that Respondent
had engaged in and was engaging in unfair labor
practices affecting commerce within the meaning of
Section 8(a)(5) and (1) and Section 2(6) and (7) of the
National Labor Relations Act, as amended. Copies
of the charge , complaint, and notice of hearing
before an Administrative Law Judge were duly
served on the parties to this proceeding . With respect
to the unfair labor practices , the complaint alleges in
substance that on May 1, 1972, Respondent made a
unilateral change in a wage incentive plan without
giving the Union notice thereof or an opportunity to
bargain collectively concerning the change. On May
30, 1973 , Respondent filed its answer to the com-
plaint admitting in part, and denying in part, the
allegations in the complaint , and raising affirmative
defenses.
On September 17, 1973, counsel for the General
Counsel filed directly with the Board a Motion for
Summary Judgment. Subsequently, on September 24,
1973, the Board issued an order transferring the
proceeding to the Board and a NoticeTo Show Cause
why the General Counsel's Motion for Summary
Judgment should not be granted . Respondent there-
after filed a response to Notice To Show Cause,
entitled "Memorandum in Opposition to General
Counsel's Motion for Summary Judgment."
Upon the entire record in this proceeding, the
Board makes the following:
I Spielberg Manufacturing Company, 112 NLRB 1080 (1955).
211 NLRB No. 129
Ruling on the Motion for Summary Judgment
As noted above , the complaint alleges that Respon-
dent violated Section 8 (ax5) and (1) of the Act by
unilaterally rescinding its wage incentive plan. In its
answer and affirmative defenses, Respondent con-
tends, first , that such action was permissible under
the management rights provision of its collective-
bargaining agreement with the Union , and second,
that in any event the Board, under its Speilberg'
precedent, ought to defer to the award of the
arbitrator who found that Respondent had a right to
rescind the plan. In rejoinder, the General Counsel
contends that the management rights clause of the
contract does not constitute a waiver of the Union's
right to require bargaining concerning the recission
of the wage incentive plan, and that the arbitrator's
decision and award is a substantial departure from
precedent, is internally inconsistent , and, according-
ly, is repugnant to the purposes and policies of the
Act and ought therefore to be disregarded. We agree
with Respondent.
The underlying facts are not in dispute. For 30
more years , the Union has represented Respondent's
shop employees in a multiemployer association unit.
Successive contracts have established the minimum
wages of the represented employees, but been silent
concerning wages in excess of those minimums.
About 1954, Respondent unilaterally instituted a
wage incentive plan. About 1956, Respondent
unilaterally abolished it for 1 or 2 months and about
1960, Respondent unilaterally modified the plan to
provide for monthly rather than semimonthly com-
putations. The plan continued in existence until May
1, 1972, when Respondent unilaterally abolished it.
At no time did the Union ever seek to bargain about
the plan, or modifications thereof . Respondent and
other employer-members of the association have
instituted and rescinded other incentive plans,
without comment from the Union.
At the time the plan was ended, in May 1972, there
was in effect a master contract which provided, inter
alia:
SECTION IV. MANAGEMENT RIGHTS
All matters except those pertaining to rates of
pay, hours and conditions of employment as
provided in this Agreement shall be considered
the prerogative of the Employer . Management of
the plant and the direction of the working forces,
including, but not limited to the right to direct,
plan, control plant operations and to set pro-
duction schedules, to accept, reject and perform
any and all types of work, to terminate or
FRIENDLY FORD 835
discharge employees for justifiable causes and to
relieve employees from duty because of lack of
work or for other legitimate reasons, and the right
to introduce new and improved methods and
facilities, and the management of the properties,
is exclusively vested in the Employer, provided,
however, that any action taken under this section
shall not conflict with the express terms of this
Agreement.
SECTION X. WAGE SCHEDULE
Paragraph 2. The wage rates specified herein are
minimum and no employee shall have his pay
reduced as the result of the signing of this
Agreement. Nothing herein shall prohibit the
paying of higher rate of pay at the discretion of
the Employer.
(Section XIV contains a three-step grievance
procedure providing for arbitration as the last step.)
On the date of the rescission of the wage incentive
plan, the Union and the Association presumably
were bargaining for a new contract; however, at the
arbitration hearing, the Union and the Respondent
stipulated that "nothing they did or didn't do for
negotiating that [new] contract would have any
[e]ffect upon the merits or rights in this particular
arbitration case."
As noted above, the arbitrator's decision and
award held that Respondent had a right unilaterally
to terminate the incentive plan. The arbitrator found
that the Union had waived its right to object to the
termination of the incentive plan based on (a) section
IV of the contract, the management rights clauses;
(b) the Union's failure to challenge the discontin-
uance of the plan in 1956 and the change made in
1960; (c) the Union's failure to negotiate concerning
the plan at contract openings ; and (d) the Respon-
dent's implementation from time to time of other
incentive plans without objections from or negotia-
tions with the Union.
In so deciding, the arbitrator first interpreted
section IV, the management rights provision of the
contract, which, in its first sentence , excepts "rate[s]
of pay . . . as provided in this Agreement" from the
prerogatives of management . The arbitrator conclud-
ed that the incentive plan was not a rate of pay
provided for in the contract and, accordingly, that it
fell within the scope of management prerogative. In
support of his conclusion, he found that the
contract's wage provisions, including section X, the
maintenance of standards clause, covered neither the
broader category of wages above the minimums
prescribed, nor incentive earnings in particular. In
his consideration of the waiver issue, the arbitrator
discussed Board and court precedents, some of which
he found applicable2 and others, distinguishable.3
After cautioning that his authority was limited to the
particular question before him, that of the unilateral
termination of the incentive plan, he stated that the
subject of other incentive plans might not have been
waived by the Union and that Respondent's obliga-
tion to bargain in the future on the general subject of
incentive plans might still exist.
In the recent Radioear4 case , which raised the
question of whether certain clauses in a collective-
bargaining agreement permitted an employer to
discontinue the payment of "turkey money" to its
employees, the Board decided to defer its decision to
the parties' agreed-upon arbitral process. We there
suggested some of the factors that an arbitrator
might consider in determining whether the contract
permitted such action. We said:
The Trial Examiner . . . [relied] . . . on the
principle that there must be a "clear and
unequivocal" waiver of the right involved. We do
not agree. Where the parties, as here, have
engaged in the collective-bargaining process, as
contemplated by the statute, and have executed a
collective-bargaining agreement, setting forth the
terms of their bargain, we are unwilling to ignore
what has taken place at the bargaining table and
decide the parties' dispute on the basis of a
simplistic formula arrived at by this Board.
While in some situations the rule of "clear and
unequivocal" waiver may be a realistic appraisal
of the bargain reached, in other situations it may
not be. The answer does not, in our view, call for
a rigid rule, formulated without regard for the
bargaining postures, proposals, and agreements of
the parties, but rather, more appropriately, should
take into consideration such varied factors as (a)
the precise wording of, and emphasis placed
upon, any zipper clause agreed upon; (b) other
proposals advanced and accepted or rejected
during bargaining; (c) the completeness of the
bargaining agreement as an "integration"-hence
the applicability or inapplicability of the parol
evidence rule; and (d) practices by the same
parties, or other parties, under other collective-
bargaining agreements. These are but a few of the
many factors that could and would be considered
by an arbitrator.
2 International Shoe Company, 151 NLRB 693 (1965); Speidel Corpora- 3 Tide Water Associated Oil Company, 85 NLRB 1096 (1949); N.L.R.B. v.
tion, 120 NLRB 733 (1958 ); N.L.R.B. v. Nash-Finch Company, 211 F.2d 622 Citizens Hotel Company, d/b/a Hotel Texas, 326 F.2d 501 (C.A. 5, 1964).
(C.A. 8, 1954); Intermountain Equipment Company v. N.LR.B., 239 F .2d 480 4 Radioear Corporation, 199 NLRB 1161(1972).
(C.A. 9, 1956).
836 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
It is clear that the parties had ample opportunity to
present to the arbitrator the kinds of evidence
suggested by our Radioear decision. Indeed, the
parties presented to him the relevant portions of the
collective-bargaining agreement, and evidence of the
negotiations for the contract, of the practices with
respect to incentive plans engaged in by Respondent
and other employers subject to the contract, and of
the Union's response thereto. The arbitrator clearly
considered and weighed this evidence in rendering
his decision and making his award.
Our dissenting colleagues would find the award
repugnant to the Act, apparently fastening their view
solely upon only one of the factors considered by the
arbitrator; i.e., the silence of the contract on the
specific subject of incentive wage plans. That silence
apparently speaks so loudly to them that they have
no need to weigh in the balance such other factors as
past negotiating history, the past practice of both
parties with respect to incentive matters, the lan-
guage of other contract provisions, and others duly
considered and weighed by the arbitrator. They seem
also to ignore that when the Board, in the past, has
been called upon to interpret agreements, as our
colleagues seem so eager to do here, the Board has
looked at many of the same factors as those
considered by the arbitrator here. See, for example,
some of the cases considered by the arbitrator, such
as Speidel Corporation, 120 NLRB 733, and Interna-
tional Shoe Company, 151 NLRB 693, in both of
which the Board found and gave effect to an intent
to permit unilateral action by employees when the
contracts were silent on the issues involved, but
where, after weighing all of the kinds of factors
examined by the arbitrator here, the Board conclud-
ed that an intent to waive was evidenced.
We fail to understand why our colleagues are
unwilling to accept the findings of an experienced
arbitrator, selected by the parties, on such matters of
interpretation, nor how they can find either in his
award or in our willingness to accept it some
violation of "principles of law thus established and
maintained over the years." The only such principle
we can divine is a principle that only this Board
should interpret agreements-a principle which we
long ago rejected in Spielberg, for reasons which are
at least as valid now as they were then.
As noted, the General Counsel contends that the
arbitrator's decision is repugnant to the purposes and
policies of the Act, and ought to be disregarded
under Spielberg, because of alleged internal inconsis-
tencies, purportedly to be found in that portion of
the decision in which the arbitrator limited its scope
to the unilateral termination of the incentive plan
S It is therefore unnecessary to consider Respondent's defense on the
merits that, under the management rights clause, the Union had waived its
and in which he stated he had no authority to rule on
whether the obligation to bargain on other incentive
plans might still exist . We find no inconsistency, but
rather an attempt by the arbitrator to limit his
decision to the facts of the case before him. In any
event, the inconsistencies alleged by the General
Counsel fall far short of mandating a finding that the
decision is repugnant to the Act.
In these circumstances, we find that, both substan-
tively and procedurally, the decision and award fall
well within the parameters established by Radioear
and satisfy the purposes of the Board's announced
deferral policy. Contrary to the General Counsel, we
conclude that the decision therefore is not clearly
repugnant to the purposes and policies of the Act.
Accordingly, as the arbitrator's decision satisfies the
Spielberg standards, we find merit in Respondent's
second defense, that the Board defer to that decision,
and shall, accordingly, deny the General Counsel's
Motion for Summary Judgment.5 However, as no
party has requested dismissal of the complaint, we
shall order the parties to show cause why the
complaint should not be dismissed.
ORDER
It is hereby ordered that the General Counsel's
Motion for Summary Judgment be, and it hereby is,
denied.
NOTICE TO SHOW CAUSE
Notice is hereby given that cause be shown, in
writing, filed with the Board in Washington, D.C., on
or before July 9, 1974 (with affidavit of service on the
parties to this proceeding), why the complaint herein
should not be dismissed in its entirety.
MEMBERS FANNING and JENKINS, dissenting:
Since 1954, with minor changes, this Employer has
paid his employee-mechanics an "incentive wage,"
amounting in some instances to 50 percent of an
employee's pay. Although their collective-bargaining
contract specified a minimum wage, the Union and
the Employer had never bargained with respect to
the substantial incentive rates enjoyed by the
employees. On May 1, 1972, during the term of an
existing contract, the Employer unilaterally discon-
tinued the wage incentive plan without notification
or bargaining with the Union.
The first sentence of the management rights clause
provides as follows: "All matters except those
pertaining to rates of pay, hours and conditions of
employment as provided in this Agreement shall be
considered the prerogative of the Employer." Para-
right to require bargaining about the unilateral termination of the incentive
wage plan.
FRIENDLY FORD
graph 2 of the wage schedule provides: "The wage
rates specified herein are minimum and no employee
shall have his pay reduced as the result of the signing
of this agreement. Nothing herein shall prohibit the
paying of higher rate of pay at the discretion of the
Employer."
An arbitrator to whom this dispute was originally
referred pursuant to the grievance-arbitration ma-
chinery of the contract has ruled on the basis of his
interpretation of the contract; i.e., the above-quoted
sentence from the management rights clause and the
Union's failure to insist upon its bargaining rights
previously that such statutory rights have been
waived by the Union.
The majority, relying solely upon its precedent in
Radioear Corporation, 199 NLRB 1161 (1972), holds
that the arbitrator's decision is not repugnant to the
policies of the Act and that the Board should defer to
his ruling in this case.
The issue before us is one of unusual importance in
the administration of the Act. For 28 years it has
been the established law of labor relations, enunciat-
ed by this Board and approved by the courts of
appeals and the Supreme Court, that employees
cannot be held to have waived their statutory rights
in the absence of clear and unmistakable evidence.
Ignoring these long existing precedents, set forth
below, the majority rejects the "clear and unequivo-
cal" rule in favor of its own novel rule which permits
the finding of a waiver of statutory rights on the basis
of ambiguous, equivocal evidence, such as that relied
on by the arbitrator in this case.
As long ago as 1946 the Board refused to find that
a union had waived its bargaining rights where, as
here, the contract set forth a minimum wage rate, but
was silent as to other incentive wage increments in
the form of merit increases. J. H. Allison Company, 70
NLRB 377 (1946). In that case the employer had
previously granted such increases on a unilateral
basis without objection from the union. A few
months after execution of a new contract the
employer granted 31 merit increases without notifica-
tion or bargaining with the union. The union
requested information as to the names of the
employees who had received the increases and the
amounts. The employer refused on the ground of
management prerogative. The Board found an 8(5)
violation, a finding affirmed by the Court of Appeals
for the Sixth Circuit in the following words: "Nor do
we see logical justification in the view that in entering
into a collective bargaining agreement for a new
year, even though the contract was silent upon a
controverted matter, the union should be held to
6 Tide Water Associated Oil Company, 85 NLRB 1096 (1949)
Ibid at 1098.
8 California Portland Cement, 101 NLRB 1436, 1439 (1952), Hekman
837
have waived any rights secured under the Act,
including its right to have a say-so as to so-called
merit increases. Such interpretation would seem to be
disruptive rather than fostering in its effect upon
collective bargaining, the national desideratum dis-
closed in the broad terms of the first section of the
National Labor Relations Act . . .." N.L.R.B. v. J.
H. Allison & Company, 165 F.2d 766, 768, cert.
denied 335 U.S. 814 (1948). The court emphatically
rejected the notion that the employer under the
existing contract and practice did not have obligation
to bargain about merit increases. "We think the
logical deduction to be drawn from the opinions of
the Supreme Court is that by virtue of the National
Labor Relations Act the obligation of the employer
to bargain collectively with representatives of its
employees with respect to wages, hours and working
conditions, includes the duty to bargain with such
representatives concerning individual merit wage
increases." Ibid, citing, among other cases, J. I. Case
Co. v. N. L. R. B., 321 U.S. 332 (1944); Order of
Railroad Telegraphers v. Railway Express Agency,
Inc., 321 U.S. 342 (1944); Medo Photo Supply Corp. v.
N.L.R.B., 321 U.S. 678 (1944). In 1949 the Board
held that a management rights clause could not be
interpreted as a waiver by a union of the employer's
duty to bargain with respect to a retirement allow-
ance plan.6 "We are reluctant," the Board said, "to
deprive employees of any of the rights guaranteed
them by the Act in the absence of a clear and
unmistakable showing of a waiver of such rights." 7
In 1952 the Board stated the rule in stronger terms:
"Assuming, without deciding, that this statutory right
[to receive information for bargaining purposes] may
be waived by a union, the Board will not, in any
event, give effect to any purported waiver of such
right unless it is expressed in clear and unequivocal
language." 8
In 1953 Judge Clark, speaking for a unanimous
Court of Appeals for the Second Circuit in N. L.R.B.
v. Otis Elevator Company, 208 F.2d 176 (1953),
rejected the employer's contention that the union
had bargained away its right to time study informa-
tion through operation of a management rights
clause. In the atmosphere of collective bargaining, he
held, the fact that a collective-bargaining agreement
was silent as to a particular subject of bargaining did
not warrant "the drawing of broad inferences of
waiver from their silence would be disruptive rather
than fostering of amicable relations." Ibid at 179,
citing N. L. R. B. v. J. H. Allison & Co., supra.
Consistently through the years the Board has
adhered to this view. In C & C Plywood, 148 NLRB
Furniture Company, 101 NLRB 631 (1952), citing Leland-Gifford Company,
95 NLRB 1306 (1951).
M DECISIONS OF NATIONAL LABOR RELATIONS BOARD
414 (1964), the Board held that an employer violated
Section 8(a)(5) by unilaterally granting a group of
employees an incentive pay raise and refusing to
bargain with their union about this matter. The
Court of Appeals for the Ninth Circuit reversed (351
F.2d 224 (1965)) on the ground that interpretation of
the parties' contract was for an arbitrator or a court,
not the Board. The Supreme Court affirmed the
Board's finding that the Union had not by contract
clearly and unmistakably yielded its interest in
bargaining about incentive pay. The Act's emphasis,
the Court pointed out, was upon "the protection of
free collective bargaining." (385 U.S. 421, 430
(1967).) On the same day the Court reversed the
holding of the Court of Appeals for the Seventh
Circuit in N.L.R.B. v. Acme Industrial Co., 351 F.2d
258 (1965), to the effect that the grievance-arbitration
provision of a contract foreclosed intervention by the
Board to require an employer to provide a union
with information concerning the removal of machin-
ery and the subcontracting of work. Again the
Supreme Court upheld the Board's position that the
union had not clearly and unmistakably waived its
right to bargaining information despite the existence
of grievance machinery leading to binding arbitra-
tion.
The issue of waiver of statutory rights as a
consequence of a collective-bargaining agreement
was explored in detail by the Supreme Court in
Mastro Plastics Corp. v. N.L.R.B., 350 U.S. 270
(1956). There the contract provided in literal terms
that the union would not "engage in any strike or
work stoppage during the term of this agreement."
Despite this language, the Court held that the
employees had not thereby waived their right to
strike in protest of the employer's unfair labor
practices. A contrary interpretation, the Court
pointed out, would deprive the employees of their
statutory right to strike even though their employer
ousted the union by coercion and threats of
discharge, "Whatever may be said of the legality of
such a waiver when explicitly stated, there is no
adequate basis for implying its existence without a
more compelling expression of it than appears in
Section 5 of this contract." Ibid at 283.
The consequence of the arbitrator's decision in the
instant case is that some of these employees have had
their wages reduced by as much as 50 percent and
their Union has been denied the right to bargain for
them on this matter, contrary to the provisions of the
Act. The Board majority, applying its "announced
deferral policy," holds that the arbitrator's decision is
not under Spielberg repugnant to the purposes and
policies of the Act. Asserting, with no precedent
other than its own opinion, that the Board's clear and
unequivocal rule with respect to waiver of statutory
rights is a "simplistic formula" that will no longer be
in effect, the majority reverses that rule, ignoring the
long line of court decisions, including those of the
Supreme Court, affirming the Board's historic
position.
We cannot agree that principles of law thus
established and maintained over the years can so
easily be thrust aside or simply ignored by an agency
charged with the effectuation of the policies of this
Act. This is not a question of deferring to the arbitral
process in a matter involving essentially a question of
contract interpretation with overtones of an unfair
labor practice. This decision cuts deep into a basic
statutory right, that which requires an employer to
notify and consult with the representative of his
employees before drastically reducing their pay,
whether that pay is in the form of wages, bonuses,
commissions , merit increases , or incentive plans. To
hold, as the majority does, that a union's silence, its
bargaining posture , the ambiguity of a management
rights clause , or a zipper clause in a bargaining
agreement may be sufficient , as in this case, to
operate as a waiver of a mandatory subject of
bargaining goes to the heart of this statute in denying
employees the protection guaranteed them by Con-
gress. As the courts have held, it is destructive of the
collective-bargaining principle . We do not believe it
is the function of this Board to look for ways and
means whereby the parties to collective bargaining
can selectively avoid their bargaining obligation.
Rather, we think every effort should be made by this
Board to assure employees of their full rights and
their full protection under this Act.