MI PUEBLO FOODS, INC.

National Labor Relations Board - Administrative Judge Opinions

Feb 9, 2012

32-CA-025677 (N.L.R.B. Feb. 9, 2012)

JD(SF)–06–12
Northern California

UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
SAN FRANCISCO BRANCH OFFICE
MI PUEBLO FOODS
and Case 32-CA-25677
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS LOCAL 853, a/w
CHANGE TO WIN
Gary M. Connaughton and Gabriela Alvaro
for the General Counsel.
Patrick W. Jordan and Noah J. Woods
for the Respondent.
Teague Patterson and Susan Garea
for the Charging Party.
DECISION
Statement of the Case
Eleanor Laws, Administrative Law Judge. This case was tried in Oakland, California, on
October 3-5, 2011. The International Brotherhood of Teamsters, Local 853, a/w Change to Win
(the Union) filed the charge in Case 32-CA-25505 on December 7, 2010, and filed the charge in
Case 32-CA-25677 on April 13, 2011. The General Counsel consolidated the cases and issued
a Consolidated Complaint on July 29, 2011. Respondent filed a timely Answer on August 11,
2011. The General Counsel issued an Amended Consolidated Complaint on September 13,
2011, and Respondent filed a timely Answer on September 23, 2011, denying all material
allegations in the Complaint. On September 29, 2011, the General Counsel issued on Order
Severing Cases and Withdrawing Portions of the Amended Consolidated Complaint. The Order
withdrew the allegations set forth in Case 32-CA-25505. Both the hearing and this decision,
therefore, address the allegations from Case 32-CA-25677 only.
The Complaint alleges that Respondent violated Sections 8(a)(1) and 8(a)(5) of the
National Labor Relations Act (the Act) by unilaterally: (1) Subcontracting out some of the work
its delivery drivers had previously performed; (2) Reducing the frequency of deliveries from its
Distribution Center to its retail stores; (3) Changing the schedules of its delivery drivers,
including elimination of Sunday deliveries; (4) Changing the manner in which products from one
of its vendors, Unified, were delivered to its stores.
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On the entire record, including my observation of the witnesses’ demeanor, and after
considering the General Counsel and Respondent’s briefs,1 I make the following
Findings of Fact
I. Jurisdiction
Respondent, a California corporation, is engaged in operating a chain of retail grocery
stores in Northern California. During the past twelve months and at all material times, it derived
gross revenues in excess of $500,000 and purchased and received goods valued in excess of
$50,000 directly from points outside the state of California. Respondent admits, and I find, that
Respondent is engaged in commerce within the meaning of Sections 2(2), (6) and (7) of the Act.
I further find, and it is uncontested, that the Union is a labor organization within the meaning of
Section 2(5) of the Act.
II. Alleged Unfair Labor Practices
A. Background
Respondent operates a chain of retail grocery stores in Northern California. At the
hearing, Respondent operated 21 stores and had roughly 3,200 employees. As discussed in
detail below, its operations include a Distribution Center in Milpitas, California, where it stores
and stages products for delivery to its stores. Respondent employs drivers to deliver grocery
and other products to its retail stores. (Tr. 305, 336-7).2
On or around December 1, 2010, a majority of Respondent’s transport drivers who voted
in a representation election selected the Union as their exclusive collective-bargaining
representative. The Union was certified as the exclusive collective-bargaining representative on
December 9, 2010.3 On December 14, 2010, the Union filed a charge, and on December 29,
2010, the General Counsel issued a complaint that Respondent unlawfully failed to recognize
and bargain with the Union.4 The Region filed a Motion for Summary Judgment with the Board,
and on March 4, 2011, the Board issued a decision finding that Respondent had violated
Sections 8(a)(1) and (5) by refusing to recognize and bargain with the Union. Mi Pueblo Foods,
356 NLRB No. 107 (2011). Respondent challenged the Board’s decision, and on December 27,
2011, the Court of Appeals for the District of Columbia denied Respondent’s petition for review
and granted the Board’s cross application for enforcement. Mi Pueblo Foods v. NLRB, Nos. 11-
1074, 11-1100 (December 27, 2011; not selected for publication in the Federal Reporter). The
Union, therefore, is the exclusive collective-bargaining representative for Respondent’s drivers.
The collective-bargaining unit is comprised of all full-time and regular part-time drivers employed
by Respondent at its Milpitas, California facility; excluding all other employees, guards, and
supervisors as defined in the Act. Mi Pueblo Foods, supra.
It is undisputed that, as of the time of the hearing, Respondent did not recognize the
unit, and therefore did not engage in collective bargaining with it.

1 The Union did not file a brief.
2 Abbreviations used in this decision are as follows: “Tr” for transcript; “R” for Respondent’s
exhibit; “GC” for General Counsel’s exhibit; “R. Br.” for Respondent’s brief.
3 The election was conducted and certification issued in case 32-RC-5794.
4 Case 32-CA-25518.
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B. The Distribution Center
Since roughly 2006, Respondent has operated a Distribution Center (“DC” or
“warehouse”) to service and support its stores. In early 2007, based on expectations that
Respondent would open an additional 20 stores, Respondent leased an 89,000 square-foot
warehouse in Milpitas, California to operate as its DC.5 (Tr. 299). The DC is a “cost center,”
meaning that it is a cost to run, and has no potential to generate profits independently. (Tr. 118).
Prior to the December 2010/January 2011 time period, the DC employed seven
receivers, responsible for unloading trailers, reviewing incoming products for quality, and
receiving incoming product into the warehouse’s inventory. There were three shippers, also
referred to as loaders, responsible for loading Respondent’s trailers for delivery to its stores.
Roughly, 30 order selectors6 at the DC received orders for products from stores on “picking
tickets” and retrieved the products from their storage locations in the warehouse. Finally, there
were sixteen drivers to deliver Respondent’s products. (Tr. 119-21, 127, 143). With regard to
relevant equipment, Respondent delivers its products using tractor-trailers and smaller bobtails.
As of the hearing, Respondent utilized eight tractors, fifteen 53' refrigerated trailers, and two
smaller bobtail trucks. (Tr. 57; R 1). A Class A license is required to drive a tractor-trailer and a
Class B license is required to drive the bobtail. Respondent had previously leased 30 trailers,
but only about 20 were being used. It also had leased 11 tractors. (Tr. 142).
Vincent Alvarado was Respondent’s Vice President of Operations from approximately
2005-2007. Respondent re-hired Alvarado in 2010, as VP of Operations, and he was later
promoted to Chief Operating Officer. (Tr. 282, 293-94). In both capacities, he oversaw the DC.
When Alvarado returned in 2010, driver Oscar Vega informed him that there was thievery at the
DC and that its Director, Luis Alcala, was mismanaging it. (Tr. 294). Alvarado followed-up, and
on his first visit to the DC, he observed that it was in a state of “chaos.” He described what he
saw as follows:
As I observed how they were operating the warehouse, it was complete chaos. There
was no structure in the warehouse. Everybody was doing what they wanted. Drivers
were coming in at 5 in the morning, not leaving until 8, 9:00, midmorning. And so I mean
they were wasting four hours just waiting for loads.
The warehouse was completely disorganized. My first visit there, all the aisles were
blocked. You could not pick an order. It was in complete disarray. I would add that there
was (sic) so many employees that you couldn’t find a parking spot at the location.
(Tr. 295). Alvarado also observed that trailers would leave the DC only partially full, and he
witnessed order selectors just walking around the warehouse. Alvarado determined that he
either needed to fix the warehouse or shut it down. He gave Alcala three to four weeks to
improve the DC’s operations, and when this did not occur, Alcala was terminated. Alvarado
placed Francisco Ochoa, a store manager, into the DC Director position on a temporary basis.
(Tr. 299-300).
Ochoa made some improvements during his tenure as temporary DC Director, including
elimination of some slow-moving products from the warehouse, “re-slotting” products so that

5 The DC had previously been housed in a 20,000-square-foot building. (Tr. 289, 292).
6 The order selectors are sometimes referred to as order “pickers” or “pullers.” There were
employees other than order selectors who also helped pull orders. (Tr. 126).
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they could be pulled by weight, and better rotation of products. He also enforced work
schedules, including the drivers’ schedules. (Tr. 301-02).
On December 6, 2010, Alvarado hired Augustin Arreaga as the DC Director.7 Arreaga
had managed several of Respondent’s stores. Prior to that, he had gained extensive experience
with warehouse operations, having worked his way up to Assistant General Manager at Costco
over the course of 15 years. (Tr. 93, 303-04). Upon his arrival, Arreaga promptly returned three
leased tractors and 15-leased trailers. (Tr. 142).8
Alvarado charged Arreaga with making the DC more efficient and productive. (Tr. 59).
Arreaga began this process by reviewing the order selectors’ productivity reports. He
determined that they were very slow. To Arreaga, order selector problems were “key” to the
DC’s inefficiencies, because if orders were not pulled on a timely basis, pallets could not be
loaded and ready for the delivery trucks at 5:00 a.m. He observed that employees were both
pulling orders and driving forklifts, so he designated each employee to do one or the other,
based on his observation of the employees’ respective strengths and weaknesses. He
implemented a stamp time clock to track how the order selectors were working hour by hour.
Arreaga also separated the order selectors into two teams, one for produce, and one for grocery
items. Following these changes, order selector productivity increased significantly, from an
average of 80-90 cases per day in the Fall of 2010 to more than 130 cases per day in January
2011. This created greater overall efficiencies, because products were staged and ready for the
loaders when they arrived at 2:30 a.m., and the trucks were loaded and ready to go when the
delivery drivers arrived at 5:00 a.m. (Tr. 131-40; R 7).
As a result of the order selectors’ increased productivity, and based on Arreaga’s belief
that efficiencies were increased even more with fewer employees, 14 order selectors were laid
off in January 2011. Arreaga created a productivity incentive plan effective March 2011,
whereby order selectors who pulled more than 1,200 cases per day would receive $.016 per
case pulled each quarter, and order selectors who pulled more than 1,500 cases per day would
receive .0344 cents per case. With implementation of the program, the order selectors’
productivity continued to increase. (Tr. 135-41; R 6, 7).
C. Changes to Driver Routes and Schedules
The DC’s top priority is to service its stores. (Tr. 146). Accordingly, after becoming DC
Director, Arreaga promptly talked to all of the store directors in an effort to improve service.
Many of the store directors wanted to eliminate Sunday deliveries because that is the busiest
day of the week at the stores, making it more difficult for store employees to take the time to
receive products. Arreaga also discussed with the store directors ways to make deliveries to the
stores more efficient. (Tr. 147-150; GC 14). He informed them that he was going to enforce the
8:00 a.m. cutoff time for the stores to place orders to the DC. This had not previously been
enforced, resulting in stores placing multiple orders, and drivers making multiple piecemeal
deliveries. (Tr. 108, 206). He also asked the store directors to have their receivers prioritize
deliveries from Respondent’s trucks, and to have the receivers unload the products more
efficiently. (Tr. 207).
Arreaga counted the number of pallets going to each store to give him an idea of how
many trailers he could fill. He concluded that the DC was using an inefficient delivery system,

7 Three days later, on December 9, 2010, the Union was certified.
8 Arreaga estimated this created a savings of approximately $100,000.
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with stores receiving deliveries every day, sometimes in multiple shipments, and with drivers
delivering products using only partially full trucks. He began to group stores for delivery
according to their geographic locations and service needs. (Tr. 61-62, 143-51; GC 14, 16, R 14).
He grouped together stores 22, 12, 14, and 3, all of which are in San Jose, for night deliveries.
Previously, the night driver only delivered to stores 4 and 12. He also determined that similar
changes to the various day driver routes, and elimination of Sunday deliveries, resulted in fewer
deliveries with fuller trucks. (Tr. 65-66, 115-16, 143, 156-64, 270-72; GC 15).
On or around January 24, 2011, Respondent eliminated Sunday deliveries and made the
route consolidation changes described above. On February 7, 2011, the night driver’s hours
were changed from 5:00 p.m.-1:30 p.m. to 1:00 p.m.-9:30 p.m. On February 14, the night
driver’s hours were changed to noon-8:30 p.m. (R 12). The delivery route consolidations and
schedule changes led to the elimination of 46 routes. (Tr. 156-7, 272).
D. Elimination of Backhauls and Pickups
Respondent purchases products for its stores from various vendors. The products are
transported to the DC, placed in the warehouse stock, and then delivered to the retail stores as
they are ordered. (Tr. 56-7, 76). Prior to 2011, Respondent’s drivers as well as some third-party
carriers transported the vendors’ products. Some of these deliveries were referred to as
“backhauls” and “pickups”. A backhaul occurs when a driver delivers a load to a store, and then
hauls back a product to a nearby vendor. A pickup occurs when the driver goes to a vendor
empty and comes back full. (Tr. 76, GC 2). In January 2011, Arreaga began looking at
alternatives to having Respondent’s drivers perform backhauls and pickups. (Tr. 76-82).
Historically, Respondent’s drivers had delivered Morton Salt products to the DC as
backhauls after making store deliveries. Arreaga noticed that drivers were experiencing long
delays when they went to pick up Morton Salt’s products. This occurred because, to transport
the salt, the trailer had to be dry with zero humidity. Because the products that were delivered to
the stores were refrigerated, when the driver arrived, the humidity in the trailer was not where it
needed to be in order to load the salt. As a result, the drivers had to wait, often for several
hours, to load the trucks with salt for the backhaul. Arreaga considered this to be an inefficient
use of the drivers’ time. Consequently, beginning in January 2011, Respondent decided to
eliminate the backhauls, and it contracted with Continental C, and later RJR Trucking, to
transport the salt from Morton Salt’s warehouse in Newark, California to the DC. (Tr. 76-78; GC
2; R 20). Of the 33 deliveries from Morton Salt to the DC between February 10, 2009 and
January 13, 2011, Respondent’s drivers made 30 and Continental C made three. Of the 11
deliveries from Morton Salt between February 15, 2011 and August 26, 2011, Respondent’s
drivers made two, Continental C made three, and RJR Trucking made six.9 (GC 2).
Between 2009 and early 2011, C&H Sugar10 products were delivered to the DC as
backhauls from the C&H facility in Crockett, California. Arreaga discontinued these backhauls
because his drivers were experiencing extreme delays waiting for C&H’s products to be loaded
onto their trucks. In January 2011, Respondent contracted with Continental C, and later RJR

9 Respondent does not explicitly argue that having third party contractors do some of the
backhauls and pickups was a “past practice” that the Union had accepted, thus barring its
current contesting of contracting out. Given that Respondent did not recognize the Union as the
collective-bargaining representative, any such argument would be misplaced.
10 C&H is also referred to as Domino Foods, which is C&H’s distributor. (Tr. 79).
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Trucking and “JT”11, to deliver C&H’s products to the DC. (Tr. 80, 231-32; R 18, 19). Between
February 3, 2009 and February 2, 2011, Respondent’s drivers made 18 of 25 deliveries of
C&H’s products to the DC, with Continental C making the remaining seven.12 Between March 4,
2011 and August 25, 2011, of the 16 C& H deliveries to the DC, Respondent’s drivers made
none, Continental C made seven, RJR Trucking made seven, and JT made two. (GC 2).
Durango Packaging provides produce products to Respondent. When Arreaga began as
DC Director, Respondent’s drivers drove to Dinuba, California to pick up the produce from
Durango. It was taking drivers up to 12 hours to drive to Dinuba, which is approximately 200
miles from the DC, pick up the produce, and return to the DC. (Tr. 80-81). Beginning in January
2011, Respondent contracted with Juarez Transportation to pick up and deliver Durango
Packaging’s produce. From December 15, 2010 to February 12, 2011, Respondent’s drivers
made eight of the 10 scheduled pick-ups, with Continental C making the remaining two. From
February 19, 2011 through September 2, 2011, Juarez Transportation made all of the 39
scheduled deliveries. (GC 2).
Prior to April 2011, Respondent’s drivers backhauled Mazola Oil products from ACH
Food Companies’ warehouse in Tracy, California. Between February 2, 2009 and April 7, 2011,
Respondent’s drivers made 21 deliveries and Continental C made six. In April 2011,
Respondent discontinued ACH Mazola Oil backhauls.13 (Tr. 81-82; GC 2).
E. Driver Layoffs
Following the route and schedule changes, Arreaga determined that he no longer
required 16 drivers, and that he needed only eight Class A drivers and two Class B drivers. (Tr.
164, 270; GC 16, R 9, 10).
On January 21, 2011, Respondent’s attorney, Patrick Jordan, called Union attorney,
Teague Patterson, to inform him “off the record” that Respondent was making operational
changes at the DC, including impending layoff of six drivers on Monday January 24. Jordan
followed up the conversation with a letter recounting his view of the conversation, and stating
that while Respondent had no duty to bargain over its decisions, it was willing to “discuss” a
process for implementing the layoffs if the Union wanted them based on something other than
seniority. Patterson responded, disagreeing with Jordan’s recollection of the conversation, and
informing him that the individuals authorized to bargain for the Union were business
representatives Bobby Blanchett and Bill Hoyt. (Tr. 44-50; GC 4-5). Following the layoffs, a
series of exchanges between Jordan and Hoyt ensued, and it is unclear whether or not they
met. It is clear that they did not meet prior to Respondent’s implementation of the layoffs,
however, and that they never engaged in collective bargaining. (GC 6-13).

11 “JT” is presumably Juarez Transportation.
12 Respondent’s drivers making a delivery in early February does not negate testimony that
the decisions to enter into the contract with the third-party carrier occurred in January, as it is
logical that there would be a brief period of time between the decision and its implementation.
13 Arreaga testified he was not sure what company assumed this work. (Tr. 82).
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On January 24, 2011, Respondent laid off six bargaining unit drivers in order of
seniority.14 The DC was able to deliver its products efficiently following the layoffs, without
incurring additional overtime. (Tr. 176).
F. Elimination of Cross-Docking Unified Products
Unified, one of two wholesale grocery suppliers in Northern California, supplies a large
volume of dry goods and perishables to Respondent.15 (Tr. 290). Its warehouse is located in
Stockton, California. Respondent’s retail stores order products they need directly from Unified,
which has its own ordering system that operates independently from the DC’s ordering system.
Prior to 2008, Respondent had Unified deliver its products directly to Respondent’s retail stores
utilizing Continental C, a contract carrier. (Tr. 82, 274-75, 290). Beginning in 2008, Respondent
changed this practice, and instead had Continental C deliver Unified products to the DC. Once
at the DC, Unified products were unloaded, staged, and then reloaded onto Respondent’s
trucks for delivery to the stores.16 This process is referred to as cross-docking.17 (Tr. 82-85).
Shortly after Alvarado returned to work for Respondent at the end of April 2010, he
asked Hector Mantilla, Wholesale Buyer, to look into prices for other third-party carriers to
deliver Unified products to the DC. The process of obtaining quotes from contractors took
several months, in part because escalating fuel prices made it difficult to get companies to give
hard quotes. (Tr. 284-85, 315). In or around mid-September 2010, Mantilla informed Alvarado
that there was potential savings in having Unified products delivered directly to the stores. As of
October 2010, Respondent was looking at all options for delivery of Unified products, but was
primarily focused on direct transport to the stores. (Tr. 284-85).
Alvarado could see “no productivity or logic” to cross-docking Unified products. He
questioned the previous DC Director, Alcala, about this practice, and received no valid
explanation.18 Alvarado observed that cross-docking Unified products resulted in delivery delays
of the products to the stores, because Unified’s products arrived late. (Tr. 241, 298). When
Arreaga became DC Director in December 2010, he expressed concern over problems related
to cross-docking. He observed that it created congestion because Unified products were staged
in the warehouse aisles. This occurred because other areas of the warehouse were already
being used for the various different products the DC received. (Tr. 244). Arreaga discussed the
potential to discontinue cross-docking with Mantilla and Hector Salas, Vice President of Human
Resources, in the December 2010/January 2011 timeframe. Arreaga and Mantilla discussed
that, given Unified’s independent system for the stores to order its products, it made sense to
have their products delivered directly to the stores. (Tr. 249-50).
Around February/March 2011, Respondent created a “Distribution Center Utilization
Analysis,” proposing changes to how Unified’s products should be delivered. The analysis

14 The laid-off drivers are Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo,
Guadalupe Quezada, Juan Caballero, and David Barreras. (Tr. 30). On April 2 2011, driver
Oscar Vega was terminated, and Barreras, who was next in line based on seniority, was offered
and accepted his job back. (Tr. 239).
15 Unified is also referred to as “Western Growers.”
16 Unified would continued to deliver directly a newly opened store in its initial phase of
operations. (Tr. 101).
17 “Cross-docking” is repeatedly referred to mistakenly as “cross-stocking” in the transcript.
18 Alvarado opined that Alcala was cross-docking Unified products to make the warehouse
look busy. (Tr. 298).
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addressed concerns about the DC’s finite space and the increase in Respondent’s private label
products being stored at and shipped from the DC. The analysis concluded that eliminating
cross-docking would result in considerable savings.19 (R 21).
In April 2011, Respondent decided to resume direct delivery of Unified products to its
stores.20 (Tr. 86-87, 241, 254, 286). As a result, Continental C no longer delivers Unified
products to the DC for Respondent’s drivers to deliver to the stores. Instead, Respondent
contracts with RJR Trucking to have the products delivered from Unified’s warehouse in
Stockton, California directly to its stores.
The number of deliveries from the DC to the stores has remained generally the same
both before and after April 2011. This is due to an increase in private label products Respondent
carries at its stores. (Tr. 241). No drivers had their hours reduced or were subject to layoffs as
the result of the decision to eliminate cross-docking Unified products. (Tr. 240-41, 273-74).
III. Analysis and Discussion
A. The Duty to Bargain
The National Labor Relations Act, at § 8(a)(5), provides that it shall be an unfair labor
practice for an employer "to refuse to bargain collectively with the representatives of his
employees." Collective bargaining is defined in § 8 (d) as "the performance of the mutual
obligation of the employer and the representative of the employees to meet at reasonable times
and confer in good faith with respect to wages, hours, and other terms and conditions of
employment." The duty to bargain only arises if the changes to terms and conditions of
employment are “material, substantial and significant.” Alamo Cement Co., 281 NLRB 737, 738
(1986); Flambeau Airmold Corp., 334 NLRB 165, 171 (2001). The Act does not define “terms
and conditions” of employment. Consequently, as discussed in context below, the Board and
Supreme Court’s decisions have helped define this phrase. Regarding topics other than wages,
hours or other terms and conditions of employment, “each party is free to bargain or not to
bargain, and to agree or not to agree.” NLRB v. Borg-Warner, 356 US 342, 349 (1958).
It is undisputed that Respondent did not bargain over the various issues presented in
this case. Rather, what is contested is whether or not there was a duty to bargain.
B. The Decision to Eliminate Backhauls/Pickups and Contract out those Deliveries
Because the law serving as the framework for most of the issues in this case initially
arose in the context of subcontracting out unit work, I will begin with the issue of whether there
was a duty to bargain over the decision to subcontract out delivery work previously performed
by unit drivers. As set forth fully above, in January 2011, Respondent ceased its practice of
backhauling Morton Salt and C&H Sugar products to the DC, and discontinued having its drivers
pick up citrus products from Durango Packaging. Instead, it contracted with Continental C, and
later RJR Trucking, to have outside drivers perform this work. It also discontinued backhauls
from ACH Mazola in April 2011.

19 The initial calculation was a savings of $1.2 million per year, but Salas testified that he
had made a mathematical error, and the actual savings would be approximately $577,000. (Tr.
345; R 22).
20 For some of the smaller stores, cross-docking Unified products continued. (Tr. 87).
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For the reasons detailed below, I find that Respondent violated Section 8(a)(1) and (5) of
the Act by its failure to bargain with the Union prior to eliminating the backhauls and pick-ups,
and replacing this work with subcontractors.
Determining whether the decision to subcontract work is a mandatory subject for
bargaining starts with a discussion of the Supreme Court’s decisions in Fibreboard Paper
Products Corp. v. N.L.R.B., 379 U.S. 203 (1964), and First National Maintenance Corp. v.
NLRB, 452 U.S. 666 (1981).
Fibreboard involved a paper manufacturing plant in Emeryville, California. The East Bay
Union Machinists, Local 1304, United Steelworkers of America, AFL-CIO (the Union),
represented a unit of the company’s maintenance employees. The company undertook a study,
and realized it could save money by contracting out its maintenance work. A series of
communications between the company and the Union ensued. The end result, however, was
that the company terminated the employment of its maintenance workers, and employees of
Fluor Maintenance, Inc., an outside company, took over their work.
The Court in Fibreboard found that there was a duty to bargain, noting that “inclusion of
‘contracting out’ within the statutory scope of collective bargaining . . . seems well designed to
effectuate the purposes of the National Labor Relations Act.” 379 U.S. at 211. The Court
emphasized that the company's basic operation was not altered, as the work in question had to
be performed regardless. No capital investment was contemplated or effectuated. The company
merely replaced its unit employees with other workers to do the same work.
The Fibreboard Court further emphasized that the decision to contact out the
maintenance work resulted from a desire to reduce labor costs, a matter “peculiarly suitable for
resolution within the collective bargaining framework.” Specifically, the Court explained that the
company “was induced to contract out the work by assurances from independent contractors
that economies could be derived by reducing the work force, decreasing fringe benefits, and
eliminating overtime payments. These have long been regarded as matters peculiarly suitable
for resolution within the collective bargaining framework . . ." Id., at 213-214. The Court
expressly limited the Fibreboard decision to the specific facts of the case, stating:
We are thus not expanding the scope of mandatory bargaining to hold, as we do now,
that the type of "contracting out" involved in this case -- the replacement of employees in
the existing bargaining unit with those of an independent contractor to do the same work
under similar conditions of employment -- is a statutory subject of collective bargaining
under § 8 (d). Our decision need not and does not encompass other forms of
"contracting out" or "subcontracting" which arise daily in our complex economy.
Id. at 215 (Footnote omitted).
In First National Maintenance, the company provided cleaning services. Among its
customers was Greenpark, a nursing home. At some point, Greenpark cut its weekly fee for the
company’s services in half. The company, realizing it was losing money on the contract, asked
Greenpark to restore its fee to the previous level. Greenpark declined, and the company
decided to discontinue the contract. It gave notice of termination to the roughly 35 employees
servicing that contract. The Union attempted to delay the termination in order to bargain over it,
but the company refused, stating, in relevant part, that the termination of the Greenpark contract
was purely a financial matter.
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The Court began its discussion in First National Maintenance by delineating business
decisions into three general categories21:
Some management decisions, such as choice of advertising and promotion, product
type and design, and financing arrangements, have only an indirect and attenuated
impact on the employment relationship. See Fibreboard, 379 U.S., at 223 (STEWART,
J., concurring). Other management decisions, such as the order of succession of layoffs
and recalls, production quotas, and work rules, are almost exclusively "an aspect of the
relationship" between employer and employee. Chemical Workers, 404 U.S., at 178. The
present case concerns a third type of management decision, one that had a direct
impact on employment, since jobs were inexorably eliminated by the termination, but
had as its focus only the economic profitability of the contract with Greenpark, a concern
under these facts wholly apart from the employment relationship. This decision,
involving a change in the scope and direction of the enterprise, is akin to the decision
whether to be in business at all, "not in [itself] primarily about conditions of employment,
though the effect of the decision may be necessarily to terminate employment."
Fibreboard, 379 U.S., at 223 (STEWART, J., concurring). Cf. Textile Workers v.
Darlington Co., 380 U.S. 263, 268 (1965) ("an employer has the absolute right to
terminate his entire business for any reason he pleases"). At the same time, this
decision touches on a matter of central and pressing concern to the union and its
member employees: the possibility of continued employment and the retention of the
employees' very jobs. See Brockway Motor Trucks v. NLRB, 582 F.2d 720, 735-736
(CA3 1978); Ozark Trailers, Inc., 161 N.L.R.B. 561, 566-568 (1966).
452 US at 676-77.
Looking toward labor law practice as an indication of what is feasible through bargaining,
the Court observed that provisions giving unions the right to participate in decisions regarding
alterations to the scope of an enterprise are rare, while provisions regarding notice and effects
are more common. The Court, noting that management must be “free from the constraints of the
bargaining process” so as to run a profitable business, held that “bargaining over management
decisions that have a substantial impact on the continued availability of employment should be
required only if the benefit, for labor-management relations and the collective-bargaining
process, outweighs the burden placed on the conduct of the business.” Id. at 679. It concluded
that the potential harm to the company’s “need to act freely when deciding whether to shut down
part of its business solely for economic reasons outweighed the incremental benefit that might
be gained through the union's participation in making the decision.” Id. at 684. Accordingly, it
held that the decision to cease doing business with the nursing home was not a “term or
condition of employment” requiring bargaining.22
The Court distinguished Fibreboard, explaining that the company there had merely
replaced its unit employees with other workers to perform the same work, and pointing out the
emphasis on labor costs, which the Fibreboard Court found to be “peculiarly suitable for
resolution within a collective bargaining framework.” Id. at 680, quoting Fibreboard, 379 US at
214. It further noted that unlike in Fibreboard, the most the union could do in First National
Maintenance would be to offer advice and concessions that the customer, Greenpark, had no

21 These three categories came from Justice Stewart’s concurring opinion in Fibreboard,
which was influential to the Court in deciding First National Maintenance.
22 The Court found, however, that First National Maintenance violated the Act by failing to
engage in effects bargaining.
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duty to consider. Finally, the Court emphasized the limitations of its holding. It stated, “In this
opinion we of course intimate no view as to other types of management decisions, such as plant
relocations, sales, other kinds of subcontracting, automation, etc., which are to be considered
on their particular facts.” Id. at footnote 22.
I find that the present situation is governed by the principles set forth in Fibreboard, and
that Respondent was under a legal obligation to afford the Union an opportunity to negotiate
and bargain concerning its unilateral decision to discontinue the backhauls and pick-ups, and
hire subcontractors to perform that work.
The decision to use subcontractors to do a relatively small portion of the work the unit
drivers used to perform, under the facts presented here, is not a “change in the scope and
direction of the enterprise” that is “akin to the decision whether to be in business at all” as
contemplated by First National Maintenance. Here, as in Fibreboard, Respondent did not decide
to shut down part of its business. It decided to change how one relatively small component of its
deliveries were made. The result was it paid an outside company to perform essentially the
same work its unit drivers had previously performed. See Acme Die Casting, 315 NLRB 202
fn. 1 (1994).
The backhauls and pick-ups occurred on a sporadic basis and were not part of
Respondent’s daily operations. For example, backhauls from Morton Salt generally occurred
anywhere from once a month to three times a month between February 2009 and January
2011, with no backhauls in February or May 2010. Respondent’s drivers made 17 backhauls
from C&H between February 2009 and January 2011. (GC 2). Rather than an alteration of the
basic operation of its enterprise, the decision to subcontract out this work was an incremental
improvement to its method of transporting certain grocery products, and did not alter the nature
or scope of its business – the operation of retail grocery stores.23
Moreover, no external changes beyond Respondent’s control drove the decision to
subcontract out the backhauls and pickups. In First National Maintenance, the driving factor
behind the decision to terminate the contract at issue was the customer’s unwillingness to
negotiate a fee. The vendors did nothing here to alter the terms of their respective relationships
with Respondent. Had the vendors demonstrated an unwillingness to do business in a manner
that was economically feasible to Respondent, the situation would be somewhat more akin to
First National Maintenance.
Respondent argues that this case is distinguishable from Fibreboard because labor
costs did not factor into its decision to contract out the backhauls and pickups. The Board held,
in Torrington Industries, 307 NLRB 809, 810 (1992), that when the record shows that essentially
Fibreboard subcontracting is involved, “there is no need to apply any further tests in order to
determine whether the decision is subject to the statutory duty to bargain.” Specifically, it stated
that it did not see the usefulness in applying the “labor cost concession” test set forth in
Dubuque Packing Co., 303 NLRB 386 (1991), “in cases involving decisions that, unlike the plant

23 The situation would be somewhat closer to First National Maintenance if Respondent had
determined that it was no longer profitable take or receive deliveries from these vendors and
therefore decided to terminate its respective relationships with them altogether. See also
Holiday Inn of Benton, 237 NLRB 1042 (1978) (Changing restaurant that utilized waiters and
waitresses to a cafeteria operation was not an alteration of company’s “basic operation.”).
Though Holiday Inn of Benton was decided before First National Maintenance, its rationale is
nonetheless instructive.
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relocation decision at issue in Dubuque, are not likely to be entwined with changes in the
operation of the enterprise that go well beyond merely the replacement of one set of employees
doing work by another set of employees.” Torrington, supra,. at footnote 14. It therefore declined
to independently analyze whether labor costs drove the company’s decision therein.24
Though under Torrington Industries, disposition of this case does not necessarily turn on
the impact of labor costs, Fibreboard considered labor costs as a significant factor, and
therefore the topic merits discussion.25 The apparent logic behind Respondent’s argument is
that since the DC is only a cost center, it is not required to maintain its labor costs as a
percentage of sales, as it has no sales; consequently, it cannot consider labor costs.26 Arreaga
testified he has no labor costs budget, and the DC does not consider labor costs as part of its
operations. Rather, his “decisions were based sheerly upon increasing efficiency, productivity,
and better use of company assets.” (R Br. 44).
I find Respondent’s argument on this point lacks merit, and conclude that labor costs
plainly factored significantly into Respondent’s decision to discontinue having its drivers do
pickups and backhauls and to contract out that work. That the DC is not a revenue-generating
facility is inapposite, and strikes me as somewhat of a red herring. Respondent has pointed to
no authority in support of its contention that the term “labor costs” is so narrowly defined as to
require measurement against a profit.27 In addition, Respondent’s repeated assertions, based
on Arreaga’s “unrefuted testimony” that labor costs were not considered are belied by the
evidence, and impress me as a cumbersome post hoc justification to comport with troublesome
case law.28 To start, it is difficult to square Arreaga’s testimony that, as DC Director, he was
given control over operating and labor costs, with his testimony and Respondent’s argument
that he did not consider labor costs as part of his operations. (Tr. 55). Admittedly, one of
Respondent’s key concerns was the amount of time drivers were wasting waiting for products to
be ready to load onto its trucks. As such, the changes were driven by Respondent’s
understandable desire to utilize its drivers’ time more efficiently. That these driver wait times
translated into labor costs is not only common sense, but is demonstrated by a January 4, 2011,
email Yurida Estrada29 sent, noting that a driver’s three-hour wait at C&H “can be very costly to
our payroll.” (R 19). Moreover, Arreaga acknowledged that the strategy to reduce costs

24 In footnote 14, the Torrington Industries majority stated that “to the extent” the concerned
employees’ ability to operate new trucks, could be considered a “labor cost” in the broad sense
of the term, it made the finding that labor costs were involved.
25 Discussion of this topic is also useful in the event that a reviewing body determines the
test set forth in Dubuque Packing Co., 303 NLRB 386 (1991), applies here, as concurring
Member Raudabaugh asserts it should in Torrington Industries and in other decisions.
26 As Respondent points out in its brief, Alvarado testified that the DC had a profit and loss
(P&L) accounting, but Arreaga testified he had never seen a P&L. For reasons discussed
herein, the presence or absence of a P&L does not impact the outcome of this decision.
27 Referenced for illustration purposes only, businessdictionary,com defines the term “labor
costs” as “The cost of wages paid to workers during an accounting period on daily, weekly,
monthly, or job basis, plus payroll and related taxes and benefits (if any).”
www.businessdictionary.com/definition/labor-cost.html.
28 Any assertion that labor costs are not considered as part of Respondent’s operations is
squarely refuted by the Chief Operating Officer, Alvarado, who testified that his input into the
analysis regarding cross-docking, discussed below, was to provide “labor numbers, fuel
numbers, and how much the equipment cost . . .” (Tr. 248). Clearly, labor is accounted for at
the DC.
29 Her job title us unknown.
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“includes reduction of labor force and use of unnecessary equipment,” and noted a 33%
reduction in labor in connection with his decision to consolidate routes, discussed below. (GC
16). For these reasons, I discredit Arreaga’s testimony that labor costs could not be considered,
and were not considered, at the DC.
Respondent admits and even emphasizes that the changes that transpired, including the
decision to discontinue backhauls and pick-ups and contract out that work, were part of a
concerted effort to make the DC, an existing entity, more efficient. This was a successful effort,
in no small part due to the vision and leadership of Arreaga, who is clearly highly competent at
running the DC. As detailed above, an integral part of making the DC more efficient was the
elimination of employees, i.e. reduction of labor costs.30 Respondent’s attempt to separate out
labor costs from the desire to run an efficient DC therefore fails.
Respondent argues, inter alia, that it based its decisions on a desire to decrease fuel
and equipment costs. (Tr. 248; R Br 37). Turning to fuel costs, Arreaga testified that he did not
know how much fuel the trucks held. Alvarado testified he gave input into the fuel costs in
connection with the February/March 2011 utilization analysis that supported elimination of
cross-docking, discussed below. (Tr. 246, 248, R 21). Likewise, Salas testified about
consideration of fuel costs in connection with elimination of cross-docking. (Tr. 344-47, R 23).
There is no evidence to support that, before the decision was made to discontinue the
backhauls and pickups, fuel costs were calculated or considered.31
Regarding equipment, here as in Fibreboard, there was no significant expenditure or
withdrawal of capital. It is undisputed that Respondent discontinued leases on tractors and
trailers, as discussed above. The underutilization of the excess tractors and trailers Respondent
leased was present, however, when Arreaga arrived at the DC, before the changes at issue
took place. (Tr. 141-2). The tractors and trailers were excess assets even when the DC was not
operating efficiently, and therefore the rationale for the decision to end the leases was present
before and after the changes.32 Accordingly, the decision to return three leased tractors and
approximately 15 leased trailers is attenuated from the decision to discontinue backhauls and
pickups. The only other evidence regarding reduction of equipment costs is tied to the decision
to eliminate cross-docking, discussed below.
One difference between Fibreboard and the instant case that requires discussion is that
the subcontracted maintenance workers in Fibreboard performed work in the company’s plant
using the company’s equipment. Regarding location, both Respondent’s drivers and the
subcontracted drivers performed work on the road delivering vendors’ products.33 The use of

30 Because this is not an animus case, the fact that both unit and non-unit employees
comprised the labor costs is not relevant on this point.
31 Both common sense and the record reflect that fuel costs are a consideration in the fee
Respondent pays to the contractors. (Tr. 315).
32 Respondent’s also discusses in its brief the return of leased pallet jacks as part of the
overall plan to increase efficiency. While this decision may have been possible due to the
elimination of cross-docking, described below, Respondent has not shown how having drivers
other than unit drivers deliver products to the DC relates to the return of pallet jacks, as the
products would need to be unloaded regardless, either at the DC or the stores.
33 While logic dictates that there will be some differences in schedules and routes, as the
subcontractors would not sometimes combine their deliveries with deliveries to Respondent’s
stores as the unit drivers did, the evidence shows there was no set schedule beforehand, and
therefore this is not a material difference. (GC 3).
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equipment, however, differs. Once the work was contracted out, the drivers used their own
company’s trucks, not the trucks Respondent leased. I find this difference insufficient,
particularly in light of the discussion of expenditure/withdrawal of capital directly above, to
negate Fibreboard’s applicability. See Whitehead Bros., 263 NLRB 895 (1982)(Duty to bargain
existed despite the fact that company sold its trucks and subcontractors used their own); See
also Acme Die Casting, 315 NLRB 202 (1994)(applying Fibreboard and Torrington Industries
despite change in location of subcontracted work).
The instant case is distinguishable from Summit Tooling Co., 195 NLRB 479, 480
(1972), and like cases where a company discontinues a line of business. In Summit Tool, the
Board found the company’s decision to close a subsidiary was not a mandatory subject because
“its practical effect was to take the Respondent out of the business of manufacturing tool and
tooling products.” Here, Respondent’s business stayed the same. Respondent still operated
grocery stores, ran a distribution center, and delivered products using drivers.
This case is also meaningfully distinguishable from NLRB v. Adams Dairy, 350 F.2d 108
(8th Cir. 1965), upon which Respondent relies. There, the company completely shut down its
entire distribution function and sold all its trucks to independent distributors. Once the
independent distributors took the products from the company’s docks, Adams had no further
responsibility to sell the products. As the Court noted, “the work done by the independent
contractors, contrary to the situation in Fibreboard, was not performed at the Adams plant for
the benefit of the dairy.” 350 F.2d 111. Here, the work the subcontractors perform is for the
benefit of Respondent, i.e. to deliver the products to Respondent’s DC so Respondent can sell
the products at its stores. Moreover, Adams Dairy involved a complete liquidation of the
company’s dairy distribution function, replacing all its driver-salespersons with independent
distributors. Respondent’s decision here to utilize contractors rather than unit drivers to
transport vendors’ products to the DC falls far short of Adams’ decision to entirely close out the
distribution end of its business.
The Court in Adams Dairy also found significant that Adams had recouped its capital
investment by selling all of its trucks to independent distributors. Here, as discussed above,
Respondent discontinued some leases, and made the decision to do so, at least for some of the
equipment, prior to the decision to use subcontractors to deliver products from its vendors. It
neither made a significant capital investment nor recouped significant capital through the sale of
assets.34
Respondent also points to Oklahoma Fixture Co., 314 NLRB 958 (1994) for support.
There, the Board held that the company’s decision to subcontract out all of its electrical work
was not a mandatory subject of bargaining. It based its conclusion on credited testimony from a
company vice president that the decision was based on concerns about legal liability and the
risk of losing “virtually all” of its customers in the event of electrical damage. The Board pointed
out that Oklahoma Fixture Co. was the “unusual situation” it had referred to in Torrington
Industries where a “nonlabor-cost reason for subcontracting may provide a basis for concluding
that the decision to subcontract is not a mandatory subject . . .” 314 NLRB at 960. 35

34 See also Whitehead Bros., supra, (Duty to bargain existed before ceasing delivery of
products to customers using company’s own trucks even though decision to have outside
carriers make all its deliveries was based on desire to cut costs and retrieve the capital it had
invested in its trucking fleet. Significant that operations remained the same, i.e. the company
continued to deliver its products to its customers by way of truck.)
35 The Board held that the Respondent in Oklahoma Fixture Co. violated the Act by failing to
Continued
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Respondent argues in its brief that discontinuing the leases on some of the equipment
lessened its legal liability. There was no testimony or documentary evidence regarding the legal
liabilities associated with either the leased trucks or the contracts at issue, much less how any
particular liabilities factored into the decision to discontinue the backhauls and pickups.
Therefore, any argument that concerns for legal liability motivated Respondents’ decision-
making fails.36 Likewise, Respondent presented no evidence or argument that its decision was
based on concerns about losing “virtually all” of its customers. Because of these important
factual distinctions, reliance on Oklahoma Fixture Co. is misplaced.
Finally, because the decision to subcontract the deliveries at issue contributed to
reduction of work for drivers, ultimately resulting in layoffs, I find it had a significant impact on
the unit.37
Based on the foregoing, I find the instant case is properly analyzed under Fibreboard.
Torrington supra.38 Accordingly, for the reasons set forth above, I find Respondent violated §
8(a)(1) and (5) when it decided, unilaterally, to cease having unit drivers do backhauls/pickups,
and to subcontract out those deliveries.
C. Changes to Driver Routes and Schedules and the Subsequent Layoffs
1. Work Schedules
I find that failure to provide notice to or bargain with the Union about the changes to
driver work schedules violated § 8(a)(1) and (5) of the Act. 88 Transit Lines, 300 NLRB 177, 184
(1990).
As noted above, on or around January 24, 2011, Respondent unilaterally eliminated
Sunday deliveries and, on various dates thereafter, changed the hours for the night drivers. The
Union requested bargaining over the schedule changes on January 6, 2011. (GC 3).
The duty to bargain regarding work hours comes from the Act itself, and therefore
resolution of this issue requires little discussion. Consistent with the statutory language, the
Board has held that hours are a mandatory subject of bargaining. NLRB v. Borg-Warner Corp.,
Wooster Div., 356 U.S. 342, 349 (1958). The term “hours” has been interpreted to include work
schedules and whether there should be work on Sunday. See Timken Roller Bearing Co., 70
NLRB 500 (1946). Likewise, the “particular hours of the day and the particular days of the week
during which employees shall be required to work are subjects well within the realm of ‘wages,
_________________________
engage in effects bargaining.
36 As there was no evidence presented regarding legal liabilities, this argument appears to
have been thought up after the fact to comport with existing caselaw.
37 The discontinuation of ACH Mazola Oil backhauls did not result in layoffs, as this change
did not take place until April 2011.
38 Respondent argues that relying on Fibreboard without conducting the First National
Maintenance balancing test is error. While it is true that some courts have disagreed with the
Board’s approach in Torrington Industries, the law that applies to the instant proceeding, at least
at this juncture, comes from the Board and the U.S. Supreme Court. Accordingly, consistent
with Fibreboard and Torrington Industries, I find that balancing test does not apply here.
Respondent also urges application of Dubuque Packing Co., 303 NLRB 386 (1991). That case,
however, is limited to relocation of unit work and does not apply. Torrington Industries, supra.
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hours, and other terms and conditions of employment’ about which employers and unions must
bargain." Local 189, Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 691 (1965).
Respondent argues that the changes to the drivers’ work hours should be analyzed
under First National Maintenance, supra. The statutory language explicitly includes “hours” as a
mandatory topic of bargaining, and I therefore need not belabor the application of First National
Maintenance or its progeny to determine that changing the unit drivers’ work hours without first
bargaining violated the Act.
2. Route Consolidations and Layoffs
Detailed in the statement of facts, Respondent decided to deliver products to its stores
more efficiently by filling its trucks and consolidating delivery routes based on store needs. The
changes led to the elimination of 46 routes. Arreaga testified that he grouped together stores 22,
12, 14, and 3, all of which are in San Jose, for night deliveries. Prior to this change, the night
driver only delivered to stores 4 and 12. By making this change, the night driver delivered to four
stores rather than two in the same 8-hour shift. (Tr. 156-7, 272). Similar changes to the various
day driver routes resulted in fewer deliveries with fuller trucks. The end result was the layoff of
six drivers.
The General Counsel argues that the increase in deliveries from two stores to four
imposed greater duties on the night driver because the drivers are expected to help unload the
trucks once they reach the stores. The record is devoid of evidence as to how many pallets the
night driver helped unload before and after the changes. Similarly, it is not clear from the record
whether the day drivers had established routes, or how the stores were grouped for product
delivery prior to Arreaga’s changes. (Tr. 67-68). What is apparent, however, is that the
consolidation of routes and the decision to send out trucks as full as possible resulted in fewer
drivers delivering a similar volume of products than before the layoffs. This alone would not
necessarily translate into additional work for the drivers. Arreaga testified, however, that, as a
result of his directives, drivers began working more efficiently with the receivers “on a daily per
load occurrence.”39 (Tr. 115). As the daily load per driver has increased, there has clearly been
an increase in the work the drivers and receivers perform unloading the products. 40
The General Counsel analyzes the layoffs separately from the decisions to change the
volume of the loads and consolidate routes. In my view, however, the Board’s approach in
Holmes & Narver, 309 NLRB 146 (1992), which evaluated the decision to consolidate work in
conjunction with the layoffs that ensued, is the better approach. Holmes & Narver involved
consolidation of work and layoffs within the employer’s motor pool. The Board described the
issue before it as follows:

39 Prior to Arreaga becoming the DC Director, some drivers helped unload, while others did
not. (Tr. 113).
40 The General Counsel relies on Ironton Publications, 321 NLRB 1048 (1996), to argue that
the imposition of additional duties is a mandatory bargaining topic. In that case, however,
pressroom employees were given a new duty to empty trashcans and an assistant foreman was
given a new position description that set forth a number of supervisory duties not previously
performed. There were no new and different duties alleged here, and therefore this case is not
directly on point.
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We are dealing with layoffs that are made in connection with a decision to continue
doing the same work with essentially the same technology, but to do it with fewer
employees by virtue of giving some of the employees more work assignments.
309 NLRB at 147.
Viewing the case in light of Fibreboard and First National Maintenance, the Board in
Holmes & Narver noted that the employer “did not abandon a line of business or cease a
contractual relationship with a particular customer, or make any other change that significantly
altered the scope and direction of its business.” Id. Though performed with fewer employees,
the Board pointed out that the actual work performed in the motor pool did not change
appreciably. Accordingly, it found that the decision to consolidate work and lay off employees
fell within the category of “management decisions, such as the order of succession of layoffs
and recalls, production quotas, and work rules,” that are “almost exclusively ‘an aspect of the
relationship’ between employer and employee” Id., citing First National Maintenance Corp. v.
NLRB, supra, 452 U.S. at 677, quoting Allied Chemical Workers Local 1 v. Pittsburgh Plate
Glass Co., 404 U.S. 157, 178 (1971). It therefore declined to apply “any extended multistep
analysis to determine whether the parties must bargain over layoffs thus linked to work
reassignments.”41
One important factual distinction between the instant case and Holmes & Narver is that
in the latter case, the employer “did no more than consolidate and change the jobs in the motor
pool -- a small unit -- and lay off a few employees elsewhere.” Here, the layoffs were part of a
broader set of changes involving multiple types of employees, most significantly the order
selectors. This factual distinction, however, does not result in a legal distinction for a couple of
reasons. First, the Board in the next sentence, stated: “Indeed, the Respondent's decision might
fairly be analogized to increasing the production quotas of certain employees so that others may
be laid off.” That is what happened in the instant case, albeit with both unit and non-unit
employees.
More importantly, the analytical significance of the fact that the company in Holmes &
Narver merely consolidated work in a small unit and laid off a few employees elsewhere relates
to the category of management decision applicable under First National Maintenance,
discussed above. The question in the instant case is the same: Were the changes here in more
akin to “management decisions, such as the order of succession of layoffs and recalls,
production quotas, and work rules” that are almost exclusively “an aspect of the relationship”
between employer and employee? First National Maintenance, supra; citing Chemical Workers,
supra. If so, the second category applies. Or were the changes “a third type of management
decision, one that had a direct impact on employment, since jobs were inexorably eliminated by
the termination, but had as its focus only the economic profitability of [a contract]. . . a concern
under these facts wholly apart from the employment relationship”? If so, the third category
would apply.
I find the facts presented in this case are more akin to Holmes & Narver than First
National Maintenance, and the pertinent decisions therefore best fit into the second category of

41 Member Raudabaugh issued a concurring opinion, asserting, inter alia, that the test set
forth in Dubuque Packing Co.,, supra, has broader application and is not limited to decisions
over relocation of unit work. Applying that test, he came to the same result as the majority. For
essentially the same reasons set forth in the concurrence, applying Dubuque to the facts herein
would yield no different result.
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management decisions First National Maintenance delineates. The analysis regarding the lack
of change in the scope and direction of the business, set forth in the section on subcontracting,
is applicable to the decisions to operate fuller trucks, consolidate routes, and conduct layoffs,
and is incorporated by reference. Likewise, the prior observation that the changes resulted from
internal rather than external forces is reiterated in the context of these decisions. At its core, the
very same operation ran more efficiently following the changes Respondent implemented. That
the changes impacted both unit and non-unit works, or that they may have originated from
inefficiencies outside the unit, does not alter this fact.
The changes resulting in fuller trucks, consolidation of routes, more efficient operations,
and layoffs once again inexorably lead to the question of labor costs. The Board in Holmes &
Narver, in an analysis parallel to Torrington Industries, supra, held that there was no need to
engage in a multi-step analysis, including the consideration of labor costs, where the decision
fell into the second category of management decisions under First National Maintenance. Even
so, a discussion of labor costs is warranted here in light of the Supreme Court’s emphasis on
them in Fibreboard, and considering Respondent’s repeated assertions that bargaining would
have been futile.42
Crediting Respondent’s assertions that inefficiencies in the DC led to the instant
changes, these inefficiencies, in the end, boil down to labor costs. The inefficiencies resulting in
the layoff of order selectors stemmed from too many employees doing too little work in an
inefficient manner. The inefficiencies of half-full trucks, poor route planning, chaotic deliveries
and the like boil down to too many people being paid to do what fewer may accomplish.
Moreover, Arreaga acknowledged that the strategy to reduce costs “includes reduction of labor
force and use of unnecessary equipment,” and noted a 33% reduction in labor in connection
with his decision to consolidate routes. (GC 16).
Respondent again points to fuel costs as a reason for its decisions. As discussed in the
section on subcontracting above, there is no evidence that fuel costs were considered for any
decision other than the elimination of cross-docking. For other decisions, it is a post hoc
justification, no matter how logical or environmentally sound. Likewise, any argument regarding
equipment or capital investments fails for the reasons explained above.
Finally, even though the layoffs may be economically motivated, as the Respondent
contends in this case, the Respondent must still notify the Union of contemplated action and
bargain over the question. Gulf States Mfrs., 261 NLRB 852 (1982); Farina Corp., 310 NLRB
318, 320 (1993). “[I]n the absence of an agreed-upon contractual provision on the subject, an
employer is obligated to bargain with an incumbent union with respect to both the decision to
conduct a layoff and the effects of any such decision.” Alpha Associates, 344 NLRB 782, 785
(2005).43
Accordingly, I find Respondent violated Section 8(a)(1) and (5) of the Act by failing to
bargain over the decisions to consolidate work and impose layoffs.

42 I also think consideration of the futility or, conversely, suitability of bargaining is important
for the reasons set forth in footnote 25.
43 The bargaining obligation occurs even though the layoffs in question are permanent
rather than temporary. Winchell Co., 315 NLRB 526 (1994).
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D. Respondent’s Arguments Regarding the Futility of Bargaining
The decision to eliminate backhauls/pickups and subcontract out that work is governed
by Torrington Industries, supra. The decisions culminating in the elimination of routes are
governed by Holmes & Narver, supra. Neither requires an independent analysis of amenability
to bargaining. Given respondent’s repeated assertions that bargaining would have been futile, I
find it important to briefly address this issue.
Because, as previously discussed, I find consideration of labor costs factored into the
decisions set forth above, I find, in turn, that they were amenable to bargaining. Fibreboard,
supra. As the Board stated in Holmes & Narver, 309 NLRB at 47, relying on a then-recent
survey discussing alternatives to downsizing:
[M]any companies that downsize make efforts to minimize employee separations by
implementing a variety of alternatives, which—had the Respondent been willing to
bargain—the Union might have offered as concessions or accepted as proposals.
Among the many alternatives to downsizing, other than reducing wages, are modified
work rules, nonpaid vacations, restricted overtime, job sharing, shortened workweek,
and reassignment of work and job reclassifications.
(Footnote omitted). Respondent’s assertions that the Union could have offered nothing through
collective bargaining are speculation. Respondent did not claim to know what proposals the
Union would have made regarding the changes, or what alternative solutions the give-and-take
of bargaining might have generated.
Moreover, the record suggests that Respondent had a bias in favor of viewing
bargaining as futile. The Union requested bargaining, but Respondent repeatedly asserted it
had no duty to bargain, as it was contesting the Union’s certification. While steadfast in its
assertion that there was no duty to bargain, Respondent agreed to “meet and confer” and
“discuss” the changes, including the layoffs. (GC 4-13). It is unclear whether or not such
meetings took place. What is clear, however, is good faith collective bargaining did not take
place and was never going to take place as long as Respondent was not recognizing the Union
as the drivers’ bargaining representative. To assert that bargaining would have been futile in this
context strikes me as rather disingenuous.
E. Effects Bargaining
There is no dispute that the union must be given a significant opportunity to bargain
about matters of job security as part of the “effects” bargaining mandated by Section 8 (a)(5).
See, e. g., NLRB v. Royal Plating & Polishing Co., 350 F.2d 191, 196 (3d Cir. 1965); NLRB v.
Adams Dairy, Inc., 350 F.2d 108 (8th Cir. 1965), cert. denied, 382 U.S. 1011 (1966).
“[B]argaining over the effects of a decision must be conducted in a meaningful manner and at a
meaningful time, and the Board may impose sanctions to insure its adequacy.” First National
Maintenance Corp. v. NLRB, supra at 681-682
The Union requested bargaining over the effects of the layoffs. (GC 11). As discussed
above, Respondent offered to “discuss” the matter, but it was not willing to engage in good faith
collective bargaining. As such, I find Respondent failed to engage in effects bargaining in
violation of Section 8(a)(1) and (5).
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F. Elimination of Cross-Docking Unified Products
To summarize, in April 2011, Respondent decided that rather than having Unified deliver
its products to the DC, and then have its drivers deliver the products to the stores, it made more
sense to have Unified deliver its products directly to the stores.
The General Counsel bears the burden of establishing that a change was “material,
substantial, and significant.” North Star Steel Co., 347 NLRB 1364, 1367 (2006). I find, for the
reasons explained below, that the elimination of cross-docking Unified products was not a
“material, substantial and significant” change to the terms and conditions of the Unit drivers’
employment. Angelica Healthcare Services Group, Inc, 284 NLRB 844, 853 (1987); Flambeau
Airmold Corp., 334 NLRB 165, 171 (2001).
It is undisputed that the decision to have Unified deliver its products directly to the stores
did not result in the layoff of any additional drivers, nor did it significantly impact their wages or
hours of work. The nature of the work the drivers performed did not change. Both before and
after cross-docking was eliminated, Respondent’s drivers delivered products from the DC to the
stores.
Though the General Counsel points out that regular hours worked dropped by 86 from
April to May, and overtime hours dropped by 17.5, this snapshot is not useful when viewed in
the context of fluctuations both before and after cross-docking was eliminated. For example,
from July to August 2010, regular hours decreased by 1,085 and overtime hours decreased by
1,035 despite the fact the Unified products were cross-docked both months. In July 2011, after
the implementation of cross-docking, both regular hours and overtime hours were higher than in
any month from January-June and November 2010, as well as February and March 2011.44 (R
15). This evidence shows that there were fluctuations of a similar nature both before and after
elimination of cross-docking Unified products.
The General Counsel also argues that the volume of the deliveries changed. It did not
present evidence, however, to support this contention. It points to the fact that, prior to the
change, 88 pallets of Unified products were cross-docked and then loaded onto Respondent’s
truck daily. (R 21, p. 5). Respondent presented evidence, however, that it made up this volume
by increasing its private label products and adding stores. (R 21, Tr. 241, 274). The General
Counsel did not sufficiently refute this evidence, and therefore did not prove that the volume of
work for the unit drivers changed.45
The General Counsel points to Overnite Transportation Co. 330 NLRB 1275, 1276
(2000), applying Torrington Industries, supra, for the proposition that the bargaining unit is
adversely affected “whenever bargaining unit work is given away to nonunit employees.” I find
this case to be distinguishable, however.46 Unlike in Overnite Transportation Company, the

44 For reasons unknown, January 2011 is not reflected in R 15.
45 The General Counsel did not have any driver testify that the volume of work, or any other
aspect of the work, changed with the elimination of cross-docking, nor did it present
documentation reflecting such a change. It takes issue with Respondent’s exhibit reflecting
pallets shipped to stores for not reflecting Unified products. (R 14). The General Counsel has
the burden of proof, however, and therefore was responsible for gathering and presenting
evidence to establish a change in volume.
46 The General Counsel notes Respondent’s contemplation that it would discontinue leases
on three more tractors and trailers. It is not clear whether or not this took place.
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elimination of cross-docking was not a decision to simply substitute one group of drivers for
another to perform the same work. For two years prior to the changes, a subcontractor delivered
Unified products to the DC. The change that took place here was to have the subcontractor
deliver their products differently, i.e. directly to the stores.47 Deliveries that were previously
subcontracted out were still subcontracted out, just in a different manner. This was part of a
broader decision involving overcrowding in the warehouse and the redundant work on the part
of the loaders, as the products had to be unloaded from the subcontractor trucks, stored, and
then reloaded onto Respondent’s trucks.48
The Board in Overnite Transportation Co. also found that even if the unit did not actually
lose work, the potential that unit employees “might” have lost additional work was sufficient to
require bargaining. This potential for lost additional work is not of significant concern under the
facts presented here. The unrefuted evidence shows that Respondent has moved toward
increasing its private label products and has continued to utilize the DC to store and stage its
products for delivery. Unified is the only vendor from which stores order products directly, and
no evidence was presented to show that Respondent was contemplating expanding this method
to other vendors. Respondent’s utilization analysis specifically states that the elimination of
cross-docking will not require decrease of the labor force. (R 21). Perhaps most importantly,
both witness testimony and the utilization analysis establish that overcrowding and space
considerations in the DC limited the amount of additional products it could service. The General
Counsel has not rebutted this evidence. As the DC was operating at capacity both before and
after elimination of cross-docking, the loss of the potential to expand the unit by increasing the
workload would require expansion of the DC.
Based on the foregoing, I find the General Counsel has failed to prove that the decision
to eliminate cross-docking was a material, substantial and significant change to the delivery
drivers’ terms and conditions of employment. I therefore recommend dismissal of paragraph 14
of the Amended Consolidated Complaint.
CONCLUSIONS OF LAW
1. The Respondent is an employer engaged in commerce within the meaning of Section
2(2), (6) and (7) of the Act.
2. The Union is a labor organization within the meaning of Section 2(5) of the Act.
3. The following employees of Respondent constitute a unit appropriate for purposes of
collective bargaining within the meaning of Section 9(b) of the Act:
All full-time and regular part-time drivers employed by Respondent at its Milpitas,
California facility; excluding all other employees, guards, and supervisors as defined in
the Act.
4. At all times material since December 9, 2010, the Union, by virtue of Section 9(a) of
the Act has been, and is, the exclusive representative of the employees in the aforesaid
appropriate unit for the purpose of collective bargaining with respect to rates of pay, wages,

47 That Unified drivers made some deliveries, or that Respondent decided to change
subcontractors from Continental to RJR, does not change the analysis.
48 The General Counsel does not argue, and has not presented evidence, that labor costs
involving the drivers in the unit factored into this decision in any meaningful way.
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hours of employment, and other terms and conditions of employment within the meaning of
Section 9(a) of the Act.
5. By unilaterally implementing route and schedule changes impacting the unit drivers,
thus reducing the frequency and/or number of deliveries made on a weekly basis from the DC to
Respondent’s retail stores, eliminating or severely restricting unit work involving backhauls and
pick-ups of vendors’ products and subcontracting out that work, and permanently laying off unit
employees Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe Quezada, Juan
Caballero, and David Barreras, without notification to or affording the Union an opportunity to
bargain regarding the effects of these decisions, Respondent has engaged in unfair labor
practices within the meaning of Section 8(a)(5) and (1) and Section 2 (6) and (7) of the Act.
THE REMEDY
Having found that Respondent has engaged in unfair labor practices, I shall recommend
that it be ordered to cease and desist therefrom and to take certain affirmative action, including
the posting of the customary notice, designed to effectuate the policies of the Act.
Having found that Respondent has unlawfully made unilateral changes in the employees'
terms and conditions of employment, I shall recommend that Respondent be ordered to restore
the status quo ante by:
1. Assigning the work involving backhauls and pick-ups from vendors Morton Salt, Inc.,
C&H Sugar Company, Inc., Durango Packaging, Inc., and Mazola (ACH Food
Companies), to unit drivers at the same relative volume, or as similar a volume as
feasible, as the drivers performed this work prior to implementation of the decisions
to subcontract out the vast majority of this work to third party carriers.
2. Restoring the driver routes and hours of work that existed prior their changes in
January and February 2011.
3. Recalling Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe
Quezada, Juan Caballero, and offering to reinstate them to the positions they held
before their unlawful layoff or, if those positions no longer exist, to substantially
equivalent positions without prejudice to their seniority and other rights and
privileges.
4. Making Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe Quezada,
Juan Caballero, and David Barreras49 whole for any loss of earnings they may have
suffered by reason of the unlawful actions against them. Backpay shall be based on
earnings which each such employee would have earned from the January 24, 2011,
the date of the layoffs. The backpay will be less net earnings during such period and
shall be computed on a quarterly basis, plus interest as computed in New Horizons
for the Retarded, 283 NLRB 1173 (1987), compounded daily. Kentucky River
Medical Center, 356 NLRB No. 8 (2010), enf. denied on other grounds sub.nom.,
Jackson Hospital Corp. v. NLRB, 647 F.3d 1137 (D.C. Cir. 2011); see also Times
Union, 356 NLRB No, 69 (2011) (applying remedy to 8(a)(5) violation).

49 Barreras has already been called back, but this was more than three months after the
layoffs.
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I further recommend that Respondent be ordered to cease and desist from implementing
unilateral changes to wages, hours, and other terms and conditions of unit employees without
first bargaining with the Union that represents them.
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended.50
ORDER
The Respondent, Mi Pueblo Foods, Milpitas, California, its officers, agents, successors,
and assigns, shall
1. Cease and desist from
(a) Implementing unilateral decisions with respect to rates of pay, wages, hours of
employment, and other terms and conditions of employment without first engaging in good faith
collective bargaining with The International Brotherhood of Teamsters, Local 853, a/w Change
to Win (the Union) involving the unit consisting of: All full-time and regular part-time drivers
employed by Respondent at its Milpitas, California facility; excluding all other employees,
guards, and supervisors as defined in the Act.
(b) Laying off unit employees, subcontracting out work previously performed by unit
drivers, and changing delivery routes and schedules of unit drivers who are represented by the
Union, or changing any other terms or conditions of employment of employees in the above-
described unit without first notifying the Union and affording it an opportunity to bargain about
such changes.
(c) In any like or related manner implementing unilateral decisions with respect to
rates of pay, wages, hours of employment, and other terms and conditions of employment
without first engaging in good faith collective bargaining with the Union.
2. Take the following affirmative action necessary to effectuate the policies of the Act.
(a) On request, bargain collectively with the Union with respect to the wages, hours,
and other terms and conditions of employment of the employees in the unit described above.
(b) Rescind the practice of subcontracting out vendor deliveries from Morton Salt,
Inc., C&H Sugar Company, Inc., Durango Packaging, Inc., and Mazola (ACH Food Companies),
and assign the work involving backhauls and pick-ups from these vendors to unit drivers at the
same relative volume, or as similar a volume as feasible, as the drivers performed this work
prior to implementation of the decisions to subcontract out the vast majority of this work to third
party carriers.
(c) Restore the driver routes and hours of work that existed prior their change in
January and February 2011.

50 If no exceptions are filed as provided by Sec. 102.46 of the Board's Rules and
Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec.
102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed
waived for all purposes.
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(d) Offer to Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe
Quezada, Juan Caballero, if it has not already done so, immediate and full reinstatement to their
former positions or, if they no longer exist, to substantially equivalent ones, without prejudice to
their seniority or other rights and privileges.
(e) Make whole Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe
Quezada, Juan Caballero, and David Barreras for any loss of earnings or benefits they may
have suffered as a result of their unlawful layoffs in the manner set forth in the remedy section
of this decision.
(f) Preserve and, on request, make available to the Board or its agents for
examination and copying, all payroll records, social security payment records, timecards,
personnel records and reports, and all other records necessary to analyze the amount of
backpay due under the terms of this Order.
(g) Within 14 days after service by the Region, post at its facility copies of the
attached notice marked “Appendix.”51 Copies of the notice, on forms provided by the Regional
Director for Region 19, after being duly signed by the Respondent's representative, shall be
posted immediately upon receipt thereof, and shall remain posted by the Respondent for 60
consecutive days thereafter, in conspicuous places, including all places where notices to
employees are customarily posted. Reasonable steps shall be taken by the Respondent to
ensure the notices are not altered, defaced, or covered by any other material. In addition to
physical posting of paper notices, the notices shall be distributed electronically, such as by
email, posting on an intranet or an internet site, and/or other electronic means, if the
Respondent customarily communicates with its employees by such means.52 In the event that,
during the pendency of these proceedings, the Respondent has gone out of business or left the
jobsite involved in these proceedings, the Respondent shall duplicate and mail, at its own
expense, a copy of the notice to all current employees and former employees employed by
Respondent at any time since January 2010.
(h) Within 21 days after service by the Regional Office, file with the Regional Director
a sworn certification of a responsible official on a form provided by the Region attesting to the
steps that the Respondent has taken to comply.
IT IS FURTHER ORDERED that the complaint is dismissed insofar as it alleges
violations of the Act not specifically found.
Dated: Washington, D.C. February 9, 2012
______________________
Eleanor Laws
Administrative Law Judge

51 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 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.”
52 The question of whether the Respondent electronically communicates with employees is
left to the compliance stage of these proceedings.
JD(SF)–06–12
Northern California
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 Federal labor law and has
ordered us to post and obey this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities
Accordingly, we give you the following assurances,
WE WILL NOT do anything that interferes with these rights. More particularly,
WE WILL NOT unilaterally layoff unit employees, subcontract-out work previously performed by
unit drivers, and change delivery routes and schedules of unit drivers who are represented by
the Union, or change any other terms or conditions of employment of employees in the above-
described unit without first notifying the Union and affording it an opportunity to bargain about
such changes.
WE WILL on request bargain collectively with the Union with respect to the wages, hours, and
other terms and conditions of employment of the employees in the unit described above.
WE WILL rescind the practice of subcontracting out vendor deliveries from Morton Salt, Inc.,
C&H Sugar Company, Inc., Durango Packaging, Inc., and Mazola (ACH Food Companies), and
assign the work involving backhauls and pick-ups from these vendors to unit drivers at the same
volume, or as similar a volume as feasible, as the drivers performed this work prior to
implementation of the decisions to subcontract this work out to third party carriers.
WE WILL restore the driver routes and hours of work that existed prior their change in January
and February 2011.
WE WILL offer to Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe Quezada,
Juan Caballero, if we have not already done so, immediate and full reinstatement to their former
positions or, if they no longer exist, to substantially equivalent ones, without prejudice to their
seniority or other rights and privileges.
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WE WILL make whole Luis Sanchez, Avelardo Geronimo, Juvenal Geronimo, Guadalupe
Quezada, Juan Caballero, and David Barreras for any loss of earnings or benefits they may
have suffered as a result of their unlawful layoffs.
Mi Pueblo Foods
(Employer)
Dated By
(Representative) (Title)
The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor
Relations Act. It conducts secret-ballot elections to determine whether employees want union representation and it
investigates and remedies unfair labor practices by employers and unions. To find out more about your rights under
the Act and how to file a charge or election petition, you may speak confidentially to any agent with the Board’s
Regional Office set forth below. You may also obtain information from the Board’s website: www.nlrb.gov.
1301 Clay Street, Federal Building, Room 300N
Oakland, California 94612-5211
Hours: 8:30 a.m. to 5 p.m.
510-637-3300.
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE
THIS NOTICE MUST REMAIN POSTED FOR 60 CONSECUTIVE DAYS FROM THE DATE OF POSTING AND MUST
NOT BE ALTERED, DEFACED, OR COVERED BY ANY OTHER MATERIAL. ANY QUESTIONS CONCERNING THIS
NOTICE OR COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE REGIONAL OFFICE’S
COMPLIANCE OFFICER, 510-637-3270.