H. Koch & Sons

National Labor Relations Board - Board Decisions

Oct 6, 1975

220 N.L.R.B. 1103 (N.L.R.B. 1975)

H. KOCH & SONS 1103
H. Koch & Sons and Leather , Plastic & Novelty
Workers Union, Local 31, International Leather
Goods, Plastic and Novelty Workers Union, AFL-
CIO. Case 20-CA-9099
October 6, 1975
DECISION AND ORDER
BY MEMBERS FANNING, JENKINS, AND PENELLO
On April 30, 1975, Administrative Law Judge Irv-
ing Rogosin issued the attached Decision in this pro-
ceeding . Thereafter , Respondent filed exceptions and
a supporting brief, General Counsel filed limited
cross-exceptions and an answering brief in support of
the Administrative Law Judge's Decision, and Re-
spondent filed a reply brief to the General Counsel's
answering brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings,' and
conclusions of the Administrative Law Judge and to
adopt his recommended Order.
The Administrative Law Judge concluded that Re-
spondent and Charging Party, Leather, Plastic &
Novelty Workers Union, Local 31, International
Leather Goods, Plastic and Novelty Workers Union,
AFL-CIO, herein the Union, entered into a valid
oral agreement on June 5, 1974, concerning the
granting of severance pay to unit employees repre-
sented by the Union, and, thereafter, on June 10,
1974, Respondent unlawfully repudiated the agree-
ment . The Administrative Law Judge therefore
found Respondent 's continuing refusal to execute a
written agreement with the Union, embodying the
terms and conditions of the oral agreement reached
on June 5, to be in violation of Section 8(a)(1) and (5)
of the Act. We agree with this conclusion of the Ad-
ministrative Law Judge.
In reaching his conclusion, the Administrative
Law Judge noted that Respondent had several times
' The Respondent has excepted to certain credibility findings made by the
Administrative Law Judge . It is the Board's established policy not to over-
rule an Administrative Law Judge 's resolutions with respect to credibility
unless the clear preponderance of all of the relevant evidence convinces us
that the resolutions are incorrect . Standard Dry Wall Products, Inc., 91
NLRB 544 (1950), enfd . 188 F.2d 362 (C.A. 3, 1951). We have carefully
examined the record and find no basis for reversing his findings.
We hereby correct the Administrative Law Judge's finding that Bruno
asked Respondent's Plant Manager Tucker , in mid-January 1974, to negoti-
ate regarding the relocation of the plant . Bruno asked Tucker to do so in
mid-February 1974.
asserted during the negotiations with the Union that
no agreement concerning severance pay would be en-
tered into with the Union unless similar agreement
could be reached with another union, Marin County
Lodge 238, International Association of Machinists,
herein IAM, which represented another segment of
Respondent's employees. However, the Administra-
tive Law Judge credited the testimony of the Union's
representative, Charles Bruno, that, on June 5, when
Respondent's representative, Henry Kelleher, asked
Bruno if IAM, as well as the Union, had agreed to
Respondent's most recent proposal, Bruno stated,
"They're [IAM] not exactly happy with it but [the
IAM representative] told me: `Yes, we'll finally go
along with it too, if that settles the matters' [sic]."
Thus, the Administrative Law Judge found that Kel-
leher was informed on June 5 that the necessary
predicate for agreement between Respondent and
the Union, i.e., IAM approval of the same agree-
ment, had been secured, and that Respondent was
thus bound to sign a contract embodying this agree-
ment.
We agree with this conclusion of the Administra-
tive Law Judge and we note, as did the Administra-
tive Law Judge, that any doubt on Kelleher's part
that IAM had, in fact, accepted his proposal could
have been resolved by a call by him to IAM. Instead,
Kelleher, as he had done previously in the negotia-
tions, depended on Bruno to investigate IAM's posi-
tion relative to agreement, and, in this instance, re-
lied on Bruno for an answer as to whether IAM had
accepted the plan proposed by Respondent. We also
note that under credited testimony Kelleher was ob-
viously satisfied that IAM had approved the agree-
ment because he told Bruno in their June 5 conversa-
tion that, upon his return to his office in New York,
he would have the agreement revised and retyped for
signature.
Further, we note that in their June 10 conversa-
tion, when Kelleher repudiated the agreement, Kel-
leher raised no question to Bruno as to whether IAM
had actually accepted the proposal, and made no
contention that there was no valid agreement with
the Union because IAM had not also approved the
agreement. Rather, it appears as Kelleher had there-
after discovered that the Regional Director had re-
fused to issue a complaint against Respondent based
on the charge by the Union which had precipitated
the negotiations, that Kelleher thought Respondent
was now no longer under any obligation to bargain,
and that the agreement could thus be abrogated un-
der the subterfuge that Bruno's failure to inform Kel-
leher on June 5 that the charge had been dismissed
somehow warranted the cancellation of negotiations.
However, as the Administrative Law Judge noted,
220 NLRB No. 170
1104 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the refusal of the Regional Director to issue a com-
plaint did not relieve Respondent of its duty to bar-
gain or of its obligation to consummate any valid
enforceable agreement previously reached with the
Union, such as the agreement here. Respondent is
thus in violation of Section 8(a)(1) and (5) of the Act
in its continued refusal to sign the agreement that it
and the Union reached on June 5, 1974.2
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the Respondent, H. Koch & Sons, Ana-
heim, California, its officers, agents , successors, and
assigns, shall take the action set forth in the said rec-
ommended Order.
2 Respondent contends that Bruno 's account to Kelleher that he , Bruno,
had been told by LAM that IAM had agreed to Respondent's most recent
proposal is hearsay which is not sufficient evidence to legally establish the
proposition for which it is cited We note that the evidence is based on
Bruno's credited testimony regarding his telephone conversation with Kel-
leher. Since that evidence is Bruno's recitation of what he told Kelleher, it is
not hearsay as to that . And, to the extent one might consider the statement
to be hearsay , it still has probative value . We note that Respondent did not
object to this portion of Bruno's testimony at the hearing . In such circum-
stances, the Administrative Law Judge could consider Bruno's testimony
and give to the contested statement "its natural probative effect as if it were
in law admissible ." Diaz v . United States, 223 U.S. 442,450 ( 1912). In doing
so, the Administrative Law Judge credited Bruno's testimony over the deni-
al of Kelleher and, in essence , found that Bruno's testimony could support
the 8(a)(5) finding because it was not contradicted by credible evidence.
This the Administrative Law Judge could also correctly do. See American
Art Clay Company, Inc., 148 NLRB 1209, 1219, fn. 16 (1964); but, cf. Ander-
son Air Activities, Inc, 128 NLRB 698, 700, In. 5 (1960); Orenduff& Kappel,
Inc., 118 NLRB 859, 862 (1957).
Respondent also objects to the Administrative Law Judge 's observation
as to why neither General Counsel nor Respondent saw fit to call as a
witness the LAM representative who allegedly told Bruno that IAM had
agreed to Respondent 's proposal . Respondent contends that by this obser-
vation the Administrative Law Judge switched the burden of proof to Re-
spondent . In essence , Respondent is disputing the Administrative Law
Judge's conclusion that the General Counsel's evidence , even without the
IAM representative 's testimony , established a prima facie case for finding a
violation . If it did , and the Administrative Law Judge so concluded, then
the burden of going forward with the evidence , including possibly the call-
ing of the IAM representative , did, in fact, switch to Respondent . The Ad-
ministrative Law Judge 's Decision cannot be fairly read, however, to have
ever switched the burden of proof vis-a-vis the burden of going forward to
Respondent . Nor can his Decision be construed to have drawn an adverse
inference against Respondent in its not calling the IAM representative as its
witness , as Respondent also argues.
DECISION
STATEMENT OF THE CASE
IRVING Ro0OSIN, Administrative Law Judge: The com-
plaint, issued November 22, 1974, alleges that Respondent
has engaged in unfair labor practices within the meaning of
Sections 8(a)(l) and (5) and 2(6) and (7) of the Act. Specifi-
cally, the complaint alleges that since about June 10, 1974,
and continuing to date, Respondent has refused to bargain
in good faith with the Union as exclusive representative of
Respondent's employees in an appropriate unit, by failing
and refusing to execute a written agreement incorporating
the terms and conditions of an oral agreement reached
with the Union on or about May 24, 1974, concerning the
effects of the relocation of Respondent's operations from
Corte Madera to Anaheim, California.
Respondent's answer, filed on December 4, 1974, admits
generally the procedural and jurisdictional allegations of
the complaint but denies the appropriateness of the unit
alleged in the complaint , and denies generally the substan-
tive allegations of the complaint and the commission of
any unfair labor practices.'
Hearing was held before me on December 19, 1974, at
San Francisco, California. All parties appeared and were
represented by counsel or other representatives ; were af-
forded full opportunity to be heard, to examine and cross-
examine witnesses , to introduce oral and documentary evi-
dence relevant and material to the issues , to argue orally
and to file briefs and proposed findings of fact and conclu-
sions of law. The parties declined to argue orally but, pur-
suant to an extension of time duly granted , the General
Counsel and Respondent filed briefs on January 30, 1975.
No proposed findings of fact or conclusions of law have
been filed by any of the parties.
1. THE BUSINESS OF RESPONDENT
The complaint alleges , Respondent 's answer admits, and
it is hereby found that , at all times material, Respondent, a
manufacturing division of Gulf & Western Industries, Inc.,
with an office and place of business located in Anaheim,
California, has been engaged in the manufacture of lug-
gage and other goods.
During the calendar year preceding issuance of the com-
plaint, in the conduct of its business , Respondent pur-
chased and received at, and sold and shipped from , its fa-
cilities in the State of California , goods and products
valued in each instance in excess of $50 ,000 directly from
suppliers, and directly to customers outside the State of
California.
The complaint further alleges, Respondent's answer ad-
mits, and it is hereby found that , at all times material, Re-
spondent has been an employer engaged in commerce and
in operations affecting commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
i Designations herein are as follows: The General Counsel, unless other-
wise stated or required by the context, his representative at the hearing; H.
Koch & Sons , Respondent, the Company or the Employer ; Leather, Plastic
& Novelty Workers Union, Local 31 , International Leather Goods, Plastic
and Novelty Workers Union, AFL-CIO, the Charging Party, the Union or
Local 31; the National Labor Relations Act as amended (61 Stat. 136, 73
Stat. 519, 29 U.S.C. Sec. 151, et seq.), the Act; the National Labor Relations
Board , the Board . The charge was filed and served on Respondent on April
10, 1974 . Respondent's denial of the appropriateness of the unit is based
solely on the fact that certain of its employees , other than production em-
ployees, with the customary exclusions , alleged to constitute the appropriate
unit, are, as will later appear , represented by another union . Unless other-
wise stated, all events occurred in 1974.
H. KOCH & SONS
If. THE LABOR ORGANIZATION INVOLVED
Leather, Plastic & Novelty Workers Union , Local 31,
International Leather Goods , Plastic and Novelty Workers
Union, AFL-CIO, the Union herein, is, and at all times
material has been , a labor organization within the meaning
of Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. Introduction
Respondent has been party to two separate collective-
bargaining agreements ; one, covering production employ-
ees, with the customary exclusions , and other exclusions,
not here material , at its Corte Madera plant ,2 represented
by Local 31, the Union here, for the term August 1, 1971,
to August 1, 1974, automatically renewable annually there-
after, subject to modification or termination on 60 days'
notice prior to any anniversary date.
The other collective-bargaining agreement covers a sin-
gle unit of machinists , including all maintenance workers,
tool-and-die makers , and all other employees , including
specially designated classifications , but specifically exclud-
ing employees covered by the collective -bargaining agree-
ment with Local 31, and other specified classifications,
with the customary exclusions . The machinists unit is rep-
resented by Marin County Lodge 238, International Asso-
ciation of Machinists , herein variously called Local 238,
the IAM, or the Machinists, under a contract for the term
June 1, 1971, through May 31, 1974, automatically renewa-
ble annually thereafter , subject to modification or termina-
tion on 60 days' notice prior to any anniversary date.
Both collective-bargaining agreements contain union se-
curity, health and welfare, pension, vacation, and sever-
ance pay pros isions.
With regard to severance pay, the collective-bargaining
agreement with Local 31, the Union here, provides:
Section 28. Severance Pay
In the event of a permanent shut-down, the Em-
ployer shall notify the Union at least thirty (30) days
prior to said close-down. The Employer shall provide
severance pay to employees who are permanently laid-
off as a result of the plant closedown based on the
formula of one (1) day's pay for each year of service.
Payment of severance pay is conditioned upon the em-
ployees remaining on the job until final release by the
Employer.
The agreement with Lodge 238 contains an identical sev-
erance pay provision (art. XV, Severance Pay).3
2 By the terms of the agreement , coverage includes the Employer's ex-
isting or future operations in the counties of Mann, San Francisco, San
Mateo , Alameda, Contra Costa , and Santa Clara . Although the Corte Mad-
era plant is not specifically mentioned in the agreement , that plant is the
only one involved in this proceeding.
i Although the severance pay provisions deal with a "permanent shut-
down," and relate to employees "permanently laid off as a result of the
plant close-down ," the parties have apparently regarded the provisions
equally applicable to the relocation of Respondent 's Corte Madera plant
B. Sequence of Events
1105
Late in 1973 or early in January 1974, Gulf + Western
Industries, Inc., Systems Company Division, the parent
company of Respondent, began to explore the feasibility of
relocating the Company's plant which was then situated at
Corte Madera, California. Various sites, both inside and
outside the State of California, were considered. Henry F.
"Hank" Kelleher,4 director, and later vice president of em-
ployee relations for the parent company, was designated to
compile essential information concerning comparative
skills and labor costs in various areas. Kelleher was aware
in December 1973 of the expiration dates of the two collec-
tive-bargaining agreements to which Respondent was a
party, and discussed with Albert M. Brinskele,
Respondent's president, the problems attendant on the
plant relocation.
On January 24, 1974, Joe Tucker, Respondent's plant
manager, telephoned Charles Bruno, business manager and
secretary-treasurer of the Union (Local 31), and invited
him to meet at the plant the following afternoon. At the
appointed time, Bruno went to the plant office, where he
found Brinskele and Tucker, representing the Company;
Tom Bevan, Lester Young, and Chuck Young, shop stew-
ard, all representing the Machinists. Brinskele delivered an
envelope to the representatives of both unions, and told
them that copies of the letter were being distributed simul-
taneously to the employees. The letter announced that the
parent company had decided to close down the Company's
operations at Corte Madera and to relocate the plant in
Southern California. According to the announcement, no
definite date had been established but it was anticipated
that the transfer would be accomplished by early summer,
specific dates to be announced later. The notice informed
employees that members of the two bargaining units, who
would not be relocated, would receive severance pay, as
provided in the respective collective-bargaining agree-
ments.
Although it is apparent, on the basis of Kelleher's testi-
mony, as well as the announcement itself,5 that the plant
relocation had been under consideration at least as early as
December, according to Bruno's undisputed testimony,
this was the first notice the Union had received of the
Company's contemplated relocation. During the meeting,
IAM Shop Steward Young asked Brinskele whether he in-
tended to negotiate with the Unions regarding the reloca-
tion. According to Bruno's uncontradicted testimony,
Brinskele replied that there was nothing to negotiate, that
the Company was moving.6
About mid-January, when Bruno had occasion to be in
the plant, he asked Plant Manager Tucker whether the
Company would be willing to negotiate regarding the relo-
cation of the plant in Southern California. Tucker replied,
"We told you there's nothing to negotiate, but let's wait
4 The name has been misspelled as "Kellerfier" throughout the official
report of the proceedings . The record is hereby corrected to reflect the
proer spelling of the name wherever it appears.
5pThe announcement included the following statement : "The decision of
our Corporate Management has been arrived at with the greatest reluctance,
and after long and thoughtful discussion " (Emphasis supplied.)
6 Neither Brinskele nor any of the IAM representatives testified. Kelleher
was the only witness to testify for Respondent.
1106 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and see Mr . Brinskele ." Bruno accompanied Tucker to
Brinskele 's office , where Bruno repeated his request.
Brinskele again told him there was nothing to negotiate but
said he would consult with his superiors.
On March 11 , Brinskele posted an announcement, noti-
fying the employees that the "target date" for relocation of
the plant was June 1, and that employees might be "re-
leased" during the period between the beginning of May
and the end of June, more specific information to be forth-
coming when available . Employees were reminded that to
qualify for severance pay, they would be required to re-
main on the job until released by the Company.
When the Union learned of the posting of this notice,
Bruno consulted counsel and, next day, March 12, a letter
was dispatched to Respondent , demanding negotiations
concerning severance pay, job rights, pension benefits, and
related matters , arising out of the termination of operations
and relocation of the plant. The letter closed with a warn-
ing against any unilateral action in that regard , prior to
completion of negotiations , on pain of immediate legal ac-
tion.
Several days later, Brinskele telephoned Bruno and sug-
gested a meeting on March 22, when he said, a representa-
tive of the parent company would be available. The meet-
ing was held at the plant office. Present on behalf of the
Company were Brinskele and Tucker, with Kelleher repre-
senting Gulf & Western ; Bruno and Shop Steward Rich-
ard Gray appearing on behalf of the Union. Kelleher iden-
tified himself as head of labor relations for Gulf &
Western, and, indicating that he was present in response to
the letter of union counsel , asked Bruno to state the
Union's position. Bruno asked (1) whether the Company
would be willing to employ any union members who de-
sired to move to Anaheim, where the plant was to be relo-
cated; (2) whether the Company would agree that the ex-
isting collective-bargaining agreement , which did not
expire until August 1, 1974, should apply at the new loca-
tion; (3) whether the Company would agree to pay employ-
ees represented by the Union unused accumulated sick
leave since they would not have the opportunity of using
such sick leave; (4) whether the Company would agree to
pay employees their regular weekly wages until August 1,
the expiration date of the contract , as severance pay; and
(5) whether the Company would be willing to arbitrate
these issues . As to the first of these demands, Kelleher re-
plied in the negative , but added that the employees would
be considered , upon application for employment at the
new location . Kelleher rejected all the other demands, re-
marking that , although he was always willing to arbitrate,
he could perceive nothing to arbitrate.
On April 10, the Union filed an unfair labor practice
charge against Respondent alleging violations of Section
8(a)(1) and (5) of the Act.
Early in May, Kelleher telephoned Bruno and told him
that he wanted to resolve the issues and have the unfair
labor practice charge withdrawn. Kelleher asked Bruno
what it would take to settle the matter, and whether the
Union's members would prefer additional severance pay or
health and welfare benefits . Bruno told Kelleher that he
believed the members were more concerned with addition-
al severance pay. Kelleher asked Bruno what he had in
mind . Bruno stated ' that the Machinists had established a
pattern in the area of 5 days' severance pay for each year
of service, and that that would constitute the Union's de-
mand. Kelleher told Bruno that that was unacceptable but
that a lesser number of days might be considered. Bruno
then proposed 3 days' severance pay for each year of ser-
vice. Kelleher said that that was still too high but indicated
that the Company might agree to 2 days' severance pay (in
addition to that provided for in the collective-bargaining
agreement), provided both Unions, Local 31 and the Ma-
chinists, would agree. Bruno said that he could not speak
for the Machinists but that he was certain the proposal
would be acceptable to the members of his Union. Kelleh-
er asked Bruno to sound out the Machinists Union, and
told him that if that union concurred , an agreement would
be reached. Bruno told Kelleher that he would communi-
cate with Lester Young, spokesman for the IAM. Kelleher
told Bruno that he would be returning to the plant shortly.
On or about May 14, Kelleher telephoned Bruno to find
out whether he had received a response from the Machin-
ists Union. Bruno reported that the Machinists were stand-
ing on their demand for 5 days' severance pay, which they
felt confident they could obtain because their contract
with Respondent did not expire until June 1, and they felt
that the plant would not have been relocated by that date.
Bruno also told Kelleher that the Machinists Union want-
ed severance pay retroactive to January 25, the date the
Unions were notified of the Company's plan to relocate,
especially since a number of the Machinists members had
left Respondent's employ to accept other jobs.
Kelleher told Bruno that retroactivity was out of the
question but that if the Union were willing to accept 2
additional days of severance pay, the Company would
agree in order to resolve the issue . Kelleher mentioned that
it would be necessary to have another meeting later that
month.
On May 24, a meeting was held at a hotel in San Rafael.
Brinskele and Kelleher were present on behalf of the Com-
pany; Lester Young and Bevan, for the IAM; and Bruno,
for the Union. Although, according to Kelleher, the pur-
pose of the meeting was to discuss the conditions for the
termination of the bargaining agreements in existence be-
tween the Company and the Unions, the principal subject
for discussion was the issue of severance pay. When man-
agement representatives asked the position of the Unions,
Bruno said that, as far as Local 31 was concerned, it would
accept 2 additional days of severance pay. On behalf of the
Machinists, Young said that he was agreeable to the 2
days' severance pay, provided the agreement was made ret-
roactive to January 25. Kelleher responded that that was
unacceptable.
Brinskele commented that the Company was not actual-
ly required to grant anything more than the severance pay
provided for in the contract, and that the Company ought
not to be required to grant the employees more than I
additional day's severance pay in order to resolve the dis-
pute. Asked whether this proposal would be acceptable,
H. KOCH & SONS 1107
both Unions rejected it. Kelleher then proposed a day and
a half's severance pay as a compromise ? Bruno requested
an opportunity to caucus with the Machinists representa-
tives, which was granted . During the caucus, Bruno stated
that in his opinion the Company's offer was the best they
could expect , and urged that both Unions accept it. Young
said that he would take the matter up with his superiors.
After conferring with someone in the Machinists ' office,
Young reported to the management representatives that
the day and a half additional severance pay would be ac-
ceptable , provided the amount would be paid to the Ma-
chinists Union in a lump sum, to be distributed among the
employee members at that Union 's discretion . It does not
appear what management's reaction was to this proposal.
Local 31 , however , agreed to accept the day and a half's
additional severance pay.
Kelleher then drafted two separate longhand agree-
ments, one for each of the Unions , effective June 1, 1974,
terminating the existing collective -bargaining agreements
as of June 1, 1974; acknowledging settlement of any out-
standing grievances , disputes, and complaints between the
parties; agreeing that no new such action should be initiat-
ed by either party through the grievance procedure, gov-
ernmental agency or courts; agreeing that any action cur-
rently pending before any governmental agency or court
would be withdrawn ; and providing for the termination of
the pension plan by negotiation among the trustees of the
plan. With regard to severance pay, provision was made
for payment to employees listed on a schedule , to be at-
tached to the agreement , on condition that the employee
remained on the job until released by the Company.
The agreement did not state the number of days of sev-
erance pay employees would receive , and the schedule re-
ferred to was not attached . The Company had, however,
prepared separate schedules for both Unions, listing the
employees represented by each showing dates of hire, rates
of pay, and other pertinent data, essential to a determina-
tion of the amount of severance pay to which employees
were entitled according to the collective -bargaining agree-
ment . These schedules had been supplied by Kelleher to
the Unions , according to Bruno , probably at the March 22
meeting, but certainly no later than the May 24 meeting. It
was agreed that these schedules would be used as a basis
for determining the amount of severance pay due the em-
ployees under the proposed agreement . According to Bru-
no, Kelleher had estimated that, based on a day and a
half's severance pay, the total amount due both Unions
would aggregate between $70,000 and $75,000, in addition
to the severance pay provided for under the contracts.
Kelleher told the union representatives that he would
have the longhand contract retyped, inserting the applica-
ble amounts of severance pay due the employees , and for-
7 Kelleher denied that anyone on behalf of the Company proposed a
compromise of a day and a hairs severance pay, and denied that the Com-
pany offered more than I day 's additional severance pay. In view of Bruno's
credible and positive testimony on this subject, including his testimony re-
garding his request for a caucus, presently mentioned , to discuss the propos-
al with the Machinists representatives , and the efforts on both sides to
reach a compromise solution , the logic of the situation supports the finding
that Kelleher probably did propose a day and a hairs severance pay, and
that his memory did not serve him in this regard . In any event , it is unneces-
sary to resolve this disagreement , in view of Kelleher's later proposal, dis-
cussed hereinafter.
ward the completed documents to the Unions. Young said
he would let Kelleher know the Machinists' decision but
told him to have the agreement typed and sent out, stating
that he would consult with his superiors in the meantime.
When the typewritten document was not immediately
forthcoming, Bruno telephoned Kelleher to inquire about
the delay. Kelleher told him that he had been busy but that
he had the document in front of him, and would read it to
Bruno because he had made some changes in the method
of computing severance pay, and wanted Bruno's opinion.
Kelleher then described the "unit plan," which he had de-
vised, under which each year of service would be repre-
sented by one unit, and each employee would receive $70
for each unit of service. The total amount of additional
severance pay to employees represented by both Unions
would still amount to between $70,000 and $75,000, result-
ing, according to Kelleher, in a slightly more favorable ad-
vantage to Local 31 members. Bruno expressed approval of
the plan and told Kelleher to send him the agreement for
his signature. Kelleher told Bruno to discuss the proposal
with the Machinists Union, and stated that if the Machin-
ists approved, the parties could meet on June 4 or 5, when
Kelleher would be in Anaheim.
By letter dated May 30, 1974, addressed to Bruno at
union headquarters, Kelleher explained in some detail the
formula which he had devised for computation of sever-
ance pay, and enclosed typewritten copies of the longhand
document drafted on May 24, which he had furnished the
union representatives. The letter stated, in part,
On the basis of the proposal extended by the Union
(both the Leather Workers and the I.A.M.) termina-
tion pay amounting to two additional days pay per
year of service would represent a satisfactory settle-
ment in exchange for termination of the bargaining
relationship between the Unions and H. Koch and
Sons.
The letter advised that Kelleher would be in Los Angeles
on June 4 and 5, when he would communicate with Bruno,
and requested that Bruno discuss the matter with Young in
the interim. As Kelleher gave no indication whether he had
sent a similar letter to Young, Bruno prepared and sent
him a copy of Kelleher's letter.
Meanwhile, on May 31, 1974, the Regional Director no-
tified the Union, through its attorneys, with copies to the
parties involved, that investigation of the Union's unfair
labor practice charge disclosed no failure to bargain over
the effects of the relocation of the Company's plant, and
refused to issue a complaint.
When Kelleher arrived in Anaheim, he called Bruno and
asked him whether he had received his letter. Bruno ac-
knowledged that he had, and told Kelleher the proposal
was satisfactory. According to Bruno, Kelleher asked him
whether the proposal was acceptable to the Machinists.
Bruno told him, "They're not exactly happy with it, but
Les Young told me: Yes, we'll finally go along with it too,
if that settles the matters." Kelleher expressed approval,
and told Bruno that he would return to his office on June
6, retype the agreements, inserting the dates, amounts due
the employees as severance pay, and send the agreements
to the Unions for signature.
1108 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In Kellerher's version of this telephone conversation,
Bruno stated that he saw no objection to the "unit plan"
for severance pay proposed by Kelleher in his letter of May
30. When Kelleher asked him whether he had been in
touch with Young, of the Machinists, regarding approval
of the proposal , Bruno told Kelleher that he had not,8 but
that he did not anticipate any problem. According to Kel-
leher, it was agreed that Bruno would "follow through with
the Machinists" and get back to him.
In view of Young's position , as expressed at the meeting
of May 24, and particularly, Kelleher's action in preparing
handwritten drafts of the agreements with both Unions,
which were not materially changed by the "unit plan" pro-
posal , Bruno's version of his telephone conversation with
Kelleher is credited.
Bruno did not receive the final typewritten copy of the
agreement which Kelleher had discussed with him on the
phone. On about June 10, Bruno telephoned Kelleher to
inquire where the agreement was. Noticeably upset, Kel-
leher told Bruno, "There's not going to be an agreement.
You didn't negotiate in good faith with me." Continuing,
Kelleher said that when he returned to his office, he dis-
covered that the unfair labor practice charge had been
dropped .9 Kelleher reproached Bruno for having withheld
this information . Bruno countered that he had not regard-
ed the Regional Director 's action important because the
Union would have appealed the action, but that, in any
case , it had no bearing on the agreement reached between
them. Kelleher retorted, "Well, it sure does with me. You
didn't negotiate in good faith; we are withdrawing that
proposal; and you can go ahead and file all the Charges
you want in the National Labor Relations Board or the
Courts. We are not doing anything more about it."
Kelleher testified, incidentally, that Bruno accused him
in this conversation of using Bruno's failure to inform him
of the Regional Director's action as a subterfuge to avoid
reaching agreement on the severance pay; stated that Kel-
leher was not interested in reaching agreement , and was
"just stalling along in order to effect the move ," presum-
ably referring to the plant relocation. Kelleher categori-
cally denied that Bruno gave any indication in this or any
earlier conversation that Young or any other Machinists
representative had approved Kelleher's proposal of May
30.
On July 18, Kelleher wrote Bruno , at union headquar-
ters, reviewing the highlights of the negotiations , and refer-
ring to the pendency of the unfair labor practice charge.
Asserting the Company's continuing availability to discuss
any unresolved issues , Kelleher requested the Union to
communicate with E. Lee Martin, counsel for the parent
8 The word "not" has been inadvertently omitted from the official tran-
script of the proceedings at this point . It is evident from the context that
Kelleher actually used the word "not" and the transcript is hereby corrected
accordingly.
9 Notice of the Regional Director's refusal to issue the complaint had
apparently reached Kelleher's office in New York after he had left for Ana-
heim. Subsequently , on November 22, the Regional Director notified the
parties that, based on additional evidence submitted by the Charging Party,
and further investigation , a prima facie violation had been established, and
he was, therefore , rescinding his previous action, and issuing a complaint on
that date.
Company, concerning the Union's intentions.
On August 12, Bruno wrote to Martin, with copies to
Kelleher , Brinskele , and the Board Field Examiner, refer-
ring to a telephone call on August 1, in which Bruno had
expressed the Union' s willingness to meet as soon as possi-
ble to discuss severance pay for the Koch employees. The
letter stated, in part,
On May 30, 1974, Henry Kelleher, Director of Labor
Relations , sent me a letter stating the position of the
Company and a typed agreement for my signature.
Local 31 will sign the agreement that was attached to
his letter, as I agreed over the telephone with Mr. Kel-
leher when he was in Anaheim, Local 31 will agree to
his proposal contained in the third paragraph of his
letter of May 30, namely, using Mr. Kelleher's unit
theory with each employee, member of Local 31, to
receive $70.00 additional per unit. If this is agreeable
to you, I would suggest that you draw up the agree-
ment and forward it to me as soon as possible and we
will be able to close this case.
On September 19, Martin met with Brinskele and Bruno.
What occurred in that meeting is described in two separate
letters, both addressed to the Board's Field Examiner; the
first from Martin, dated September 25; the second from
Bruno, dated September 27, with copies to the parties and
their representatives.
The letter from Martin read as follows:
This will confirm that Mr. Albert M. Brinskele , Presi-
dent, H. Koch & Sons, and I met with Mr. Charles
Bruno , Business Manager of Local 31 . . . in San
Francisco, on Thursday, September 19, 1974, for ap-
proximately two hours for the purpose of negotiating
the terms and conditions of the termination of H.
Koch & Sons in its operation in Corte Madera. The
Company informed Mr. Bruno that the offer which
had been made to him some months ago and which
was not acceptable to him at that time was no longer
available and that the Company felt that since the
transition period immediately following the closing of
the plant had passed, it saw no reason to offer the
employees any additional termination pay over and
above that provided for in the terminated collective
bargaining agreement . Mr. Bruno suggested another
meeting and we said that we would be glad to talk
with him at any time that was convenient.
Bruno's letter to the Field Examiner sets out the Union's
position. After referring to the meeting of September 19,
and the Company's statement of its position, substantially
as outlined in Martin 's letter , Bruno's letter continued:
I reminded them that this offer [made at the meet-
ing of May 24 and in Kelleher's letter of May 30] was
acceptable to local #31 but the company proposed it
on the basis of a package deal for both local #31 and
the machinist local #238.
I advised them at all meetings that I was in no posi-
tion to speak for the machinist union, but that local
#31 would accept the proposal as I stated on the
phone to Mr. Kelleher and as he proposed it in his
letter of May 30, 1974, which he later withdrew in a
H. KOCH & SONS 1109
telephone call from New York and stated that since
the charges we filed against Gulf & Western were
dropped by the board [sic] he was withdrawing his
proposal.
You will note that the board's [sic] letter stating the
charges were dropped is dated May 31, 1974. Mr.
Kelleher's hand written agreement was drawn up at
the meeting of May 24, 1974 and his letter to me out-
lining his proposal (which I accepted over the tele-
phone) is dated May 30, 1974.
Contentions; Conclusions
The sole issue to be determined, under the allegations of
the complaint and, as conceded by the General Counsel at
the hearing, as well as in his brief, is whether Respondent
has refused to bargain in good faith with the Union by
refusing to execute an agreement providing for the pay-
ment of severance pay to employees represented by the
Union. Although the General Counsel maintains that the
evidence warrants a finding that Respondent also failed to
bargain in good faith concerning the relocation of its plant,
he relies only on Respondent 's refusal to sign the agree-
ment as the basis for the refusal to bargain. No finding is,
therefore, made as to whether Respondent unilaterally de-
cided to relocate its plant without first notifying the Union
or failed and refused to bargain in good faith after having
notified the Union of its decision.
The General Counsel's case is based on his position that
a complete accord was reached between Respondent and
the Union no later than June 5, when Bruno purportedly
notified Kelleher that both Unions had agreed to accept
the severance pay on behalf of the respective employees
whom they represented, in accordance with the "unit plan"
proposed in Kelleher's letter to Bruno, dated May 30. In
the General Counsel's view, nothing further remained to be
done but the signing of the agreements , when Respondent
abruptly and without justification repudiated the oral
agreement previously reached.
Respondent, on the other hand, denies that an oral
agreement was actually reached, contending that it was
clearly understood and agreed by Local 31 that any agree-
ment with that Union was contingent on the acceptance by
Local 238 of a counterpart agreement. According to Re-
spondent , since it was never notified by Local 238, orally
or in writing, directly or indirectly, that it had approved the
"unit plan" or had accepted Respondent's proposal for the
disposition of the severance pay issue, the contingency on
which the offer had been made to the Union had never
been satisfied , and, therefore, no enforceable agreement
between Respondent and the Union had resulted from the
negotiations , requiring Respondent to execute a written
agreement.
The Union does not deny that during the negotiations
Respondent asserted several times that no agreement con-
cerning severance pay would be entered into with the
Union unless similar agreement could be reached with the
IAM Local.
The evidence on which the General Counsel relies to
establish that the Machinists had accepted Respondent's
proposal, thereby satisfying the condition precedent to the
formation of a binding, enforceable agreement with the
Union, consists primarily of Bruno's report to Kelleher in
the telephone conversation of June 5, that Young, on be-
half of the Machinists, had decided to "go along." Any
doubt on Kelleher's part that the Machinists had, in fact,
accepted his proposal could readily have been resolved by
a call to Young but Kelleher chose, instead, to rely on
Bruno for an answer to whether the Machinists had accept-
ed the plan proposed by Kelleher. Surprisingly, neither side
saw fit to call Young as a witness. His testimony should
have been able to remove any doubt as to whether the
Machinists had actually accepted Respondent's proposal.
One can only speculate as to why Young was not called.
Presumably, the General Counsel concluded that Young's
testimony was not essential to establish a prima facie case.
Under Bruno's version of the June 5 telephone conversa-
tion, which has been credited, Kelleher was obviously satis-
fied that the Machinists had approved the arrangement be-
cause Kelleher told Bruno that, upon return to his office in
New York, he would have the agreements retyped, insert-
ing the appropriate amounts due the employees as sever-
ance pay, under the "unit plan," utilizing the schedules
which had been previously prepared.
Instead, when he learned on his return to his office that
the Regional Director had refused to issue a complaint, he
seized on Bruno 's failure to notify him of the Regional
Director's action, as an excuse to repudiate the oral agree-
ment previously reached. It is significant that in his tele-
phone conversation with Bruno, Kelleher raised no ques-
tion as to whether the Machinists had accepted his
proposal, and made no contention that there was no valid
subsisting agreement with the Union because the Machin-
ists had not also approved the agreement. Nor, for that
matter, was such a contention made until the hearing in
these proceedings.
Obviously, the refusal of the Regional Director to issue a
complaint initially did not relieve Respondent of its duty to
bargain or of its obligation to consummate any valid, en-
forceable agreement previously reached with the Union.
Despite Kelleher's protestations that his action in with-
drawing his proposal was prompted by his claim that Bru-
no had failed to negotiate in good faith by withholding the
information regarding the Regional Director' s action,
Kelleher's conduct suggests that he had concluded that,
since the Regional Director had refused to issue a com-
plaint, Respondent was no longer under any obligation to
bargain, and that he seized this as an excuse to repudiate
the agreement orally reached with the Union.
It is, of course, axiomatic that the burden of proving the
existence of a valid contract is on the party asserting it.
This, however, merely requires that this fact be established
by a fair preponderance of the evidence. Stated differently,
if a prima facie case has been established which has not
been overcome by the countervailing evidence, the burden
of proof has been sustained.
This is the situation here. The General Counsel has es-
tablished a prima facie case, which Respondent has not
successfully overcome.
The correspondence between Bruno and Martin, the
management representative, on August 12, and with the
Field Examiner, on September 27, in which no mention is
1110 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
made of the acceptance of Respondent 's proposal by the
Machinists , has been duly considered in arriving at the de-
cision that the Machinists had actually accepted the pro-
posal but it is found that these letters do not compel a
contrary conclusion. Martin's letter to the Field Examiner,
dated September 25, is more revealing as to Respondent's
attitude . The letter states , in part, that "the offer which had
been made to [Bruno] some months ago and which was not
acceptable to him at that time 10 was no longer available
and . . . since the transition period . . . had passed, [the
Company] saw no reason to offer the employees any addi-
tional termination pay over and above that provided for in
the terminated collective bargaining agreement."
It is , therefore, found, on the basis of the foregoing and,
upon the entire record, that Respondent entered into a val-
id oral agreement with the Union, on June 5, 1974, con-
cerning the granting of severance pay to unit employees
represented by the Union and, thereafter, on June 10, 1974,
unlawfully repudiated said agreement, and by its failure
and refusal to execute a written agreement with the Union,
embodying the terms and conditions of said oral agree-
ment, has refused to bargain in good faith with the Union,
thereby engaging in unfair labor practices within the mean-
ing of Section 8(a)(5), and interfering with, restraining, and
coercing employees in the exercise of rights guaranteed in
Section 7, thereby engaging in unfair labor practices within
the meaning of Section 8(a)(1) of the Act.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON
COMMERCE
The activities of Respondent , set forth in section III,
above, occurring in connection with the operations of Re-
spondent, described in section I, above , have a close, inti-
mate , and substantial relation to trade, traffic, and com-
merce among the several States , and tend to lead to labor
disputes burdening and obstructing commerce and the free
now of commerce.
V. THE REMEDY
Having found that Respondent has engaged in unfair
labor practices within the meaning of Section 8(a)(5) and
(1) of the Act, it will be recommended that Respondent
cease and desist therefrom and take certain affirmative ac-
tion designed to effectuate the policies of the Act.
It has been found that Respondent has unlawfully failed
and refused to execute the oral agreement reached on or
about June 5, 1974, providing for severance pay for em-
ployees in the appropriate unit represented by the Union.
It will , therefore , be recommended that Respondent be re-
quired to execute such agreement, effective June 5, 1974,
and make each of Respondent 's employees in the appropn-
ate unit whole for the severance pay to which they were
entitled under the "unit plan" proposed by Respondent
and accepted by the Union, together with interest thereon
at the rate of 6 percent per annum from June 5, 1974, the
10 This assertion is contrary to the facts.
date said agreement was reached until the date of payment
of said severance pay.
Upon the basis of the foregoing findings of fact, and
upon the entire record in the case , I make the following:
CONCLUSIONS OF LAW
1. H. Koch & Sons , now of Anaheim, California, Re-
spondent herein , is, and at all times material herein has
been, an employer engaged in commerce and in an indus-
try affecting commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
2. Leather, Plastic & Novelty Workers Union, Local 31,
International Leather Goods , Plastic and Novelty Workers
Union , AFL-CIO, is, and at all times material herein has
been, a labor organization within the meaning of Section
2(5) of the Act.
3. All production employees represented by Local 31,
employed at Respondent's former facility located in Corte
Madera, specifically excluding those employees repre-
sented at said facility by Local 238, and excluding office
clerical employees , guards , executives , and supervisors,
constitute a unit appropriate for the purposes of collective
bargaining within the meaning of Section 9(b) of the Act.
4. At all times material , including on about June 5, 1974,
Leather, Plastic & Novelty Workers Union, Local 31, the
Union herein, has been the exclusive representative of all
the employees of Respondent in the aforesaid appropriate
unit for the purpose of collective bargaining within the
meaning of Section 9(a) of the Act.
5. By refusing , on or about June 5 , 1974, and thereafter,
to execute the oral agreement reached on said date, provid-
ing severance pay for the employees in the appropriate unit
represented by the Union, Respondent has engaged in un-
fair labor practices within the meaning of Section 8 (a)(5) of
the Act.
6. By the foregoing conduct , Respondent has interfered
with, restrained, and coerced its employees in the exercise
of rights guaranteed in Section 7, thereby engaging in un-
fair labor practices within the meaning of Section 8(a)(1) of
the Act.
7. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
Upon the basis of the foregoing findings of fact and con-
clusions of law, and upon the entire record, and pursuant
to Section 10(c) of the Act, I hereby issue the following
recommended:
ORDER 11
Respondent H. Koch & Sons, Anaheim, California, its
officers, agents , successors, and assigns, shall:
1. Cease and desist from:
(a) Failing and refusing to execute the oral agreement
reached on June 5, 1974, providing for severance pay for
11 In the event no exceptions are filed as provided by Sec. 102 .46 of the
Rules and Regulations of the National Labor Relations Board , the findings,
conclusions, and recommended Order herein shall, as provided in Sec.
102.48 of the Rules and Regulations , be adopted by the Board and become
its findings , conclusions, and Order , and all objections thereto shall be
deemed waived for all purposes.
H. KOCH & SONS 1111
employees in the appropriate unit represented by the
Union.
(b) In any like or related manner interfering with, re-
straining , or coercing its employees in the exercise of their
right to self-organization, to form labor organizations, to
join or assist Leather, Plastic & Novelty Workers Union,
Local 31, International Leather Goods, Plastic and Novel-
ty Workers Union, AFL-CIO, or any other labor organiza-
tion, to bargain collectively through representatives of their
own choosing, and to engage in any other concerted activi-
ties for the purpose of collective bargaining or other mutu-
al aid or protection, or to refrain from any or all such
activities, except to the extent that such right may be af-
fected by an agreement requiring membership in a labor
organization as a condition of employment, as provided in
Section 8(a)(3) of the Act.
2. Take the following affirmative action, which, it is
found, will effectuate the policies of the Act:
(a) Execute the agreement reached between Respondent
and the Union, on June 5, 1974, providing for severance
pay for employees in the appropriate unit represented by
the Union, and make each of said employees whole for the
amount of severance pay due said employees in accor-
dance with the "unit plan" proposed by Respondent and
accepted by the Union, together with interest on each of
said amounts at the rate of 6 percent per annum from June
5, 1974, the date said agreement was reached, until the date
of payment of said severance pay, in the manner set forth
in the section of this Decision entitled "The Remedy."
(b) Post at its present location at Anaheim, California,
and mail to each of the employees in the appropriate unit
represented by the Union, copies of the attached notice
marked "Appendix." 12 Copies of the notice on forms pro-
vided by the Regional Director for Region 20, after being
signed by Respondent's duly authorized representative,
shall be posted by Respondent immediately upon receipt
thereof, and be maintained by it for 60 consecutive days
thereafter, in conspicuous places, including all places
where notices to employees are customarily posted. Rea-
sonable steps shall be taken by Respondent to ensure that
12 In the event that the Board 's Order is enforced by a Judgment of a
United States Court of Appeals , the words in the notice reading "Posted by
Order of the National Labor Relations Board" shall read "Posted Pursuant
to a Judgment of the United States Court of Appeals Enforcing an Order of
the National Labor Relations Board."
said notices are not altered, defaced, or covered by any
other material.
(c) Notify the Regional Director for Region 20, in writ-
ing, within 20 days from the date of this Order, what steps
Respondent has taken to comply herewith.
IT IS FURTHER RECOMMENDED that in all other respects, the
complaint be dismissed.
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT fail or refuse to execute the agreement
reached by us with the Union on or about June 5,
1974, providing for severance pay for employees in the
appropriate unit represented by Leather, Plastic &
Novelty Workers Union, Local 31, International
Leather Goods, Plastic and Novelty Workers Union,
AFL-CIO.
WE WILL execute the agreement reached by us with
said Union, effective June 5, 1974, and make each of
Respondent's employees in the appropriate unit repre-
sented by the Union whole for the amount of sever-
ance pay to which he is entitled under the "unit plan"
proposed by Respondent and accepted by the Union,
together with interest thereon as provided in the sec-
tion of the Decision entitled "The Remedy."
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce our employees in the exercise
of the rights guaranteed in Section 7 of the Act.
The appropriate bargaining unit is:
All production employees represented by Leather,
Plastic & Novelty Workers Union, Local 31, Interna-
tional Leather Goods, Plastic and Novelty Workers
Union, AFL-CIO, employed at Respondent's former
facility located in Corte Madera, specifically exclud-
ing those employees represented at said facility by Lo-
cal 238, and excluding office clerical employees,
guards, executives, and supervisors.
H. KOCH & SONS