Reference no: EM131730156

You Be The Arbitator

Background

Should either party desire to discontinue or modify the existing agreement upon any termination date, at least thirty (30) days prior written notice of such intent must be given to the other party hereto. In the event of notice of cancellation or modification of the agreements, it shall be the duty of the parties to meet in conference not less than ten(10) days prior to the expiration date of said agreement for the purpose of negotiating new or modified agreements. It is further agreed that proposed changes or new agreements shall be presented not later than the first day of the conference by the party serving notice. Facts The parties were signatories to a collective bargaining agreement ending June 15, 2009. Faced with labor costs $10 an hour over its major competitors in the flat glass market, the Company wished to modify the collective bargaining agreement and engage in concessionary bargaining. The Company sent a letter, dated April 22, 2009, to the Union stating that the Company intended to open negotiations for the existing labor agreement and suggested that the parties begin negotiations on June 1, 2009. At approximately the same time as the letter was sent, the Company’s chief negotiator telephoned the Union’s chief negotiator and requested a meeting. The meeting took place on May 14, 2009. Two Company officials accompanied the Company’s negotiator; the Union’s negotiator was the sole Union representative. The Company’s negotiator stated the purpose for the meeting was to update the Union regarding the economic state of the Company’s plant. He explained that the Company’s competitors had labor costs of $22 and $26, while the Company carried labor costs of $37. He explained that labor costs had to be brought below $27 if the Company was to remain viable. He referenced negotiations concluded at a sister plant in Fresno, California, where a two-tiered wage system had been introduced. The Company’s negotiator indicated that the Company intended to introduce at the upcoming negotiations the two-tiered wage system and that they hoped to buyout some current employees and that new hires would be placed on the second [lower] tier of the two-tier system. At the meeting, the Union negotiator requested that the Fresno settlement be given to him and that the Company provide “blended” labor costs for the proposed two-tiered wage system. The Company provided the Union with the information requested. Negotiations between the parties began on June 1, 2009. The Company negotiator made an opening statement in which he stressed the flat glass market was depressed, that the Company’s competitive advantages had eroded, and that the Company needed to get labor costs down to $27. He also stressed the need for the Company to obtain a two-tier wage system. Thereafter, he announced that he was prepared to present “noneconomic” proposals. Those proposals also indicated a reference to a revised two-tier wage system and overtime. The explanation of the proposals consumed the bulk of the day and the session effectively ended at 4:00 p.m. At that point, the Company’s negotiator indicated that he may have one more noneconomic proposal. When asked what time the proposal would be ready, he replied that he could be ready at approximately 4:30 p.m. The Union did not wait to hear the proposal. There were no Union bargaining proposals made on June 1, 2009. The parties met the next day, June 2, 2009, at which time the Union agreed to the noneconomic proposals offered by the Company the day before. However, the Union negotiator indicated that pursuant to Article XXXIV of the current contract, the Union was not obligated to bargain regarding proposals which followed the first day of bargaining, that is, June 1, 2009. The Company negotiator disagreed and presented the economic proposals that included a two-tier wage system. When the Union refused to bargain, the Company took the issue to arbitration. Position of the Parties The Union argued that Article XXXIV, Section 7, is clear and unambiguous. The provision mandates that a party serving notice of its desire to modify the contract must provide the other side with its specific proposed modifications to the contract by the end of the first day of formal bargaining. It was further argued by the Union that the term “proposed changes” unambiguously refers to specific proposed modifications to the contract. A proposed change means an offer by one person to another of terms and conditions with respect to some work or undertaking and the acceptance thereof will make a contract between them. The wording of Article XXXIV, Section 7, clearly requires the party serving notice of its desire to modify or terminate the agreement “shall present” its proposed changes. The word “shall” is a mandatory one and does not give the moving party in negotiations leave to delay the presentation of its proposals. The Company presented its specific noneconomic proposals on June 1, 2009, but failed to present any specific economic proposals until the second and third days of bargaining. The overviews of thoughts regarding negotiations during the May 14, 2009, preliminary meeting, and the opening statement on June 1st were not sufficiently specific or sufficiently tied to the language of the agreement to meet the requirement of Article XXXIV. The Company argued that the unmistakable intent of Article XXXIV, Section 7, was to preclude late introduction of new bargaining topics. It points out that the language in question requires the party wishing to amend the agreement to provide 30 days’ notice to the other side and directs that the parties “shall . . . meet in conference” at least ten days before the contract’s expiration in order to negotiate changes or a new agreement. The Union’s position focuses on the next sentence which states that the party giving notice shall present “proposed changes or new agreements . . . not later than the first day of conference.” The Company asserts that these words do not require that proposed changes or new agreements either be in writing or be presented with a parti-cular level of specificity. It maintains the word “conference” to mean formal table bargaining. As the language refers to presenting proposed changes or agreements “not later than the first day of conference,” it clearly contemplates that presentation may be made before the first day of conference. Because the Company informed the Union’s chief negotiator on May 14 and at the beginning of June 1 negotiating session that it would be proposing to reduce its labor costs from $37 to $27 per hour and that it would need a two-tier wage system that would apply to new hires to do that, the Union could not say that it was surprised regarding the Company’s economic proposals.

Questions

As arbitrator, what would be your award and opinion in this arbitration? Identify the key, relevant section(s), phrases or words of the collective bargaining agreement (CBA), and explain why they were critical in making your decision. What actions might the employer and/or the union have taken to avoid this conflict?