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Title: United Beverage Company and Teamster Local No. 838
Date: March 20, 2007
Arbitrator: David Gaba
Citation: 2007 NAC 104

Federal Mediation & Conciliation Service

 
UNITED BEVERAGE COMPANY, INC.,

                                                        Employer,

And                                                                               

TEAMSTER LOCAL NO. 838  

                                                        Union.

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Romaker and Petersen Grievances

I.  INTRODUCTION

This arbitration arises pursuant to a collective bargaining agreement (hereinafter the AGREEMENT) between the TEAMSTER LOCAL NO. 838 (hereinafter the UNION), on behalf of Brian Romaker and Terry Petersen, and UNITED BEVERAGE COMPANY, INC., (hereinafter the EMPLOYER), under which DAVID GABA was selected to serve as Arbitrator and under which his Award shall be final and binding among the parties.

            A hearing was held before Arbitrator Gaba on February 5, 2007, in Kansas City, Missouri.  The parties had the opportunity to examine and cross-examine witnesses, introduce exhibits, and fully argue all of the issues in dispute.    Both parties filed post-hearing briefs on March 9, 2006.

APPEARANCES:
On behalf of the Union:

Stephen Douglas Bonney
Bonney Law Office
818 Grand Avenue
Suite 550
Kansas City, MO 64106

On behalf of the Employer:

Michael F. Delaney
Spencer Fane Britt & Browne, LLP
1000 Walnut Street
Suite 1400
Kansas City,  MO  64106

II.  ISSUES

The parties agreed to the following statement of the issue:

Whether the Company had just cause for the discipline administered to Mr. Romaker and, if not, what should be the remedy? 

Whether the Company had just cause for the discipline administered to Mr. Petersen and, if not, what should be the remedy?

III.  CONTRACT PROVISIONS

The parties Collective Bargaining Agreement contains the following language:

ARTICLE IV

DISCHARGE AND SUSPENSIONS

            Section 4.1.  Discharge.  Good and sufficient reason shall be given any regular employee for discharge, and the business agent of the Union must be notified thereof, who with the Employer shall investigate the reason for discharge.  No employee who has acquired seniority shall be discharged on account of sickness or accident.  The Employer shall have the right to discharge a probationary employee, with or without cause, prior to the completion of his probationary period.  Any employee who has completed his probationary period shall be considered a regular employee.

            Section 4.2.  Posted Rules.  Without limiting the general statement above, violation of posted rules of the Employer shall be conclusively presumed to be good and sufficient reason for disciplinary action in accordance with the terms of the posted rules.  A copy of such rules and any amendments shall be provided to the Union two weeks before they become effective.  Changes shall be subject to the grievance procedure if filed during the two-week notice period.

* * *


6.4(b)   The arbitrator shall have no power to add to, subtract from, or modify any of the terms of this Agreement.


* * *

            Section 12.3  Driver/Salesman.  Any drivers delivering goods to branch houses, for redelivery, shall receive regular driver’s wages.  Included in the duties of all Driver/Salesmen  is the collection of money and checks from customers on that day’s route at the direction of the Employer and to deliver beer products and collect empties and return the same.  He shall call the office as directed by the Employer or foreman and any order transmitted to him shall be filled by him.  Employees required to call the office shall be reimbursed daily for all necessary phone calls.

* * *

Section 16.9.  Management Rights.  The management of the business in all its phases remains vested in the Employer.  Nothing contained in this Agreement shall be deemed to limit the Employer in any way in the exercise of such management, including the making in connection therewith of all rules relating to its operations as it deems advisable.  The direction of the working forces, the right to hire, promote, suspend or discharge for cause is vested exclusively with the Employer, provided it is not contrary with this Agreement.

FACTS             

United Beverage Company, Inc. (“Company” or “Employer”) is a wholesale beer distributor holding a franchise to distribute Anheuser Busch (Bud) products and other beverages in a territory consisting principally of areas in Kansas City, Missouri south of the Missouri River.  As a wholesaler of Anheuser Busch products the Company sells beer to a variety of “on-premises” (bars, restaurants, night clubs and casinos) and “off-premises” (package, grocery and convenience stores) accounts. 

Much of the Company’s sales and merchandising activity and substantially its entire product deliveries are handled through a team of “driver/salesmen,” who are members of Teamsters Local 838 (“Union”) which represents a bargaining unit of the Employer’s driver/salesmen and warehouse employees.   

A driver/salesman typically is responsible for calling on customers on a regular schedule, helping the customer to determine the customer’s requirements for various products, preparing an order and invoice for the products, delivering the products from the driver/salesman’s truck into the account’s facility, assisting in merchandising the product by stocking coolers and rotating stock and collecting payment from customers.  Driver/salesmen report through team leaders or account managers to the Sales Manager, Ted Brooks.  They also report to the Fleet Manager, Jeff Brooks.

This dispute arises out of grievances filed by two members of the bargaining unit, Brian Romaker and Terry Petersen (“Grievants”) after they received disciplinary suspensions arising out of their violation of the Company’s work rules.  (Jt. Exs. 2, 3). The rules state in part: “all employees of United Beverage Company shall fully perform the duties in their job description each day” (Rule IV), and “. . . all employees shall comply with reasonable requests of customers, which are not inconsistent with United Beverage Company policy.”  (Rule IX).  Pursuant to Article 4.2 of the collective bargaining agreement, “. . . violation of posted rules of the Employer shall be conclusively presumed to be good and sufficient reason for disciplinary action in accordance with the terms of the posted rules. . . .”

The sale of beer is a highly regulated business in Missouri at both the wholesale and retail levels.  In the context of this arbitration, credit terms for sales by a wholesaler to a retailer are restricted under state law to a period not exceeding 15 days.  In the event that a retailer fails to make timely payment for credit purchases from the wholesaler, the wholesaler is required to suspend purchases to that retailer’s account.  The state also restricts a wholesaler or retailer’s ability to sell product “below cost” or for less than the price at which the product was purchased. 

The Employer, as a wholesaler, is generally free to establish its own sales prices for merchandise within the parameters established by state law.  In most years, the Company institutes a general price increase for each package of its products once Anheuser Busch has implemented its annual price increase.  Typically, the brewery staggers the effective dates for its annual increases.  Accordingly, the Company’s price increases are also staggered.

Among the Company’s largest customers is Berbiglia, Inc., a Kansas City, Missouri based chain of package stores with seven stores located in the Company’s franchise territory. Berbiglia purchases approximately 75,000 cases annually representing about 5% of the Company’s sales, making it the Company’s second largest single customer. 

In late 2005 Anheuser Busch announced its price increases for 2006.  These increases were to be implemented beginning in early January and extending through February 15.  Increases for certain popular larger package sizes with high sales volumes were delayed until dates in February, after the NFL Super Bowl, which is a peak sales period. As soon as the brewery’s price increase schedule was locked in, the Company announced its own revised price list for 2006.  Copies of the new schedule of prices were distributed to and discussed with the sales force and other employees at an “all employee meeting” in December 2005.  Thereafter, the driver/salesmen and other sales staff were reminded of the price increase schedule at the Company’s weekly sales meeting, which occurred on alternate Tuesday mornings before the driver/salesmen began their routes.

The Company and certain of its customers sometimes attempt to coordinate their promotional activities with the schedule for price increases.  In January, soon after the 2006 increase schedule was announced, Jim Brooks, the Company’s General Manager, and Ted Brooks, the Sales Manager, met with Jack Bondon, the General Manager of Berbiglia, to discuss a promotion by Berbiglia of certain packages of Anheuser Busch products to be held during the month of February.  The particular packages involved in the promotion included larger 20 and 30 count packages of popular products such as Budweiser, Budweiser Select, Bud Light and other brands.  Mr. Bondon agreed to run an ad in the local newspaper and in each of his stores during the entire month of February promoting a February retail price below the new wholesale cost to him of beer purchased on or after February 15.  Key to this promotion was the requirement that the Company “stock up” each of the Berbiglia stores with enough of the promoted items on or before February 14 to satisfy the full month’s demand for the product, because under state law, it would be a violation of the applicable regulation for Berbiglia to sell beer purchased by it on or after February 15 at the advertised price in that the retailer would be selling such beer below cost.  Presumably, Berbiglia’s plan would permit it to substantially undercut its competitors’ prices during the last half of February for those retailers who failed to “stock up” at the pre-increase price.

Company representatives assured Mr. Bondon that appropriate stocks of the promoted products would be delivered to Berbiglia stores before the price increase took effect, and Mr. Bondon agreed to accelerate his regular payment by a few days in order that his account would be current when these deliveries were made and it would be lawful for the driver/salespersons to sell and deliver the beer to his stores.  Berbiglia began to run its ads promoting the products at the end of January.

Sales Manager Brooks discussed this Berbiglia promotion among other issues at the twice monthly Company sales meetings.  He explained the necessity of having all deliveries of the promoted products occur before the price increase went into effect.  These discussions took place at the two sales meetings that occurred in December, two more in January and one in early February, the week before the February 15 increase date. 

In accord with its plan, Berbiglia paid its account current on Wednesday, February 8, several days earlier in the month than usual in order to facilitate delivery of the promoted products before the 15th.  As soon as Berbiglia delivered its check to the Company, each of the Berbiglia route drivers was notified that deliveries to Berbiglia were authorized.  Mr. Bondon met again with the Company’s General Manager and Sales Manager for breakfast on February 9 and reminded them of his expectation that all promotion items would be delivered before the increase took effect.

Grievant Brian Romaker had two Berbiglia stores on his route.  Mr. Romaker called on one of the two stores (Main Street) on Thursday, February 9, and made deliveries of sufficient quantities of the promoted products to last through the month. Mr. Romaker also made a call on his second Berbiglia store, located on Belleview on Monday, February 13, to write up an order for the store in order to ensure that he had the appropriate packages on his truck when he made his delivery.  The order included fifty cases each of Bud Light 20 and 30 packs that were a part of the Berbiglia promotion whose wholesale prices were due to be increased on February 15. 

On Wednesday, February 15, after the price increase became effective, Mr. Romaker and his account manager called on the Belleview Berbiglia store and filled the order Mr. Romaker had prepared earlier in the week.  Romaker specifically inquired whether it was “okay” to stock 30 packs.  The Berbiglia Store Manager did not object to Romaker’s delivery of 30 packs or 20 packs, whose price also had increased on February 15.

Grievant Terry Petersen called on his one Berbiglia store (Gillham Road) prior to the February 15 increase and delivered some merchandise to the store.  He returned to the store on February 15 and delivered fifty cases of Budweiser 30 packs, notwithstanding that their price had increased that day. 

On Thursday morning, February 16, Fleet Manager Jeff Brooks was reviewing the records of the prior day’s sales and deliveries when he noticed the invoice showing Mr. Romaker’s sales of fifty 30 and fifty 20 packs to the Belleview Berbiglia store.  Mr. Brooks brought the matter to Sales Manager Ted Brooks’ attention.  Realizing that the Company had a significant customer relations issue to deal with, Sales Manager Brooks asked the Fleet Manager to review the remaining invoices to determine whether any other deliveries of promoted products had been made to Berbiglia after the price increase took effect.  Jeff Brooks’ further review of invoices turned up the invoice showing Grievant Petersen’s sale to the Gillham Road Berbiglia of fifty cases of Budweiser 30 packs, also on February 15.  Sales Manager Ted Brooks spoke first with Grievant Romaker to try to ascertain why the February 15 delivery had been made.  Mr. Romaker’s response to Mr. Brooks was simply that “he forgot” that product needed to be in the store before the 15th in order to beat the price increase.

Sales Manager Brooks then spoke with Grievant Petersen.  Petersen explained that he had already delivered enough beer in the particular package sizes to carry the store through the end of the month and was just putting in “extra.”  Mr. Petersen offered to return to the store and pick up the items in question for credit.  There was no evidence presented at the hearing that would contradict Mr. Petersen’s assertion.

The Employer believed that each of the driver/salesmen with a Berbiglia store on his route had received clear, timely and repeated guidance concerning the Berbiglia promotion and the importance of delivering products affected by the February price increase into Berbiglia stores before the increase took effect.    Management viewed each employee’s infraction as a violation of his duty to follow instructions and cited both employees for a violation of Work Rule VI, “all employees of United Beverage Company shall fully perform the duties in their job description each day.”

DECISION

The Applicable Standard is Just Cause.

            The Collective Bargaining Agreement in this case provides that the Company must have “[g]ood and sufficient reason” to discipline employees. Jt. Ex. 1, p. 4, Art. IV, § 4.1.  There is no practical difference between “[g]ood and sufficient reason” and other contractual phrasings of this requirement, such as “just cause,” “justifiable cause,” or “obvious cause.”[1] Where there is no contractual definition, it is reasonably implied that the parties intended application of the generally accepted meaning that has evolved in labor-management jurisprudence:  that the “just cause” standard is a broad and elastic concept, involving a balance of interests and notions of fundamental fairness.  Described in very general terms, the applicable standard is one of reasonableness:

…whether a reasonable (person) taking into account all relevant circumstances would find sufficient justification in the conduct of the employee to warrant discharge (or discipline.)[2]

As traditionally applied in labor arbitrations, the just cause standard of review requires consideration of whether an accused employee is in fact guilty of misconduct.  An employer’s good faith but mistaken belief that misconduct occurred will not suffice to sustain disciplinary action.  If misconduct is proven, another consideration, unless contractually precluded, is whether the severity of disciplinary action is reasonably related to the seriousness of the proven offense and the employee’s prior record.  It is by now axiomatic that the burden of proof on both issues resides with the employer.[3]

            Arbitrator Carroll Daugherty has seminally defined the just cause standard as follows:

1.    Did the company give the employee forewarning or foreknowledge of the possible or probable disciplinary consequences of the employee’s conduct?

 

2.    Was the company’s rule or managerial order reasonably related to (a) the orderly, efficient, and safe operation of the company’s business and (b) the performance that the company might properly expect of the employee?

 

3.    Did the company, before administering discipline to an employee, make an effort to discover whether the employee did in fact violate or disobey a rule or order of management?

 

4.    Was the company’s investigation conducted fairly and objectively?

 

5.    At the investigation, did the “judge” obtain substantial evidence or proof that the employee was guilty as charged?

 

6.    Has the company applied its rules, orders, and penalties evenhandedly and without discrimination to all employees?

 

7.    Was the degree of discipline administered by the company in a particular case reasonably related to (a) the seriousness of the proven offense and (b) the record of the employee in his service with the company?[4]

 

If one or more of these questions is answered in the negative, then normally the just cause requirement has not been satisfied.[5]

Has the Just Cause Standard Been Met?

The decision in this case is entirely based on a finding of fact predicated on the Employer having the burden of proof.  There is no question that the Employer’s rules were reasonable and that if the employer can show that either Grievant knew of the rule and disregarded it, they should be subject to discipline. Employees must be expected to follow reasonable instructions from management concerning the manner in which they are to carry out their duties.  This is especially true when the instructions relate to commitments made to important customers and where the employees themselves serve in a crucial customer service role. However, in order to prevail in a discipline case it is necessary for the Employer to show by a preponderance of the evidence that the employees committed the act in question. Preponderance of the evidence can be defined as:

Preponderance of Evidence. As standard of proof in civil cases, is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not. Braud v. Kinchen, La.App., 310 So.2d 657, 659. With respect to burden of proof in civil actions, means greater weight of evidence, or evidence which is more credible and convincing to the mind. That which best accords with reason and probability. The word “preponderance” means something more than “weight”; it denotes a superiority of weight, or outweighing. The words are not synonymous, but substantially different. There is generally a “weight” of evidence on each side in case of contested facts. But juries cannot properly act upon the weight of evidence, in favor of the one having the onus, unless it overbear, in some degree, the weight upon the other side.

            That amount of evidence necessary for the plaintiff to win in a civil case. It is that degree of proof which is more probable than not.

            Preponderance of evidence may not be determined by the number of witnesses, but by the greater weight of all evidence, which does not necessarily mean the greater number of witnesses, but opportunity for knowledge information possessed, and manner of testifying determines the weight of testimony. [6]

In the instant case the Employer has presented substantial evidence to support the discipline that was imposed, the question posed is whether the weight of evidence offered by the Employer rises to the level of  a preponderance.

Mr. Romaker

For an employer to discipline an employee it is incumbent on the employer to communicate the rules to the employees unless it is one that a reasonable employee could infer using common sense. As stated by Arbitrator William M. Hepburn and quoted by Elkouri:

Just cause requires that employees be informed of a rule, infraction of which may result in suspension or discharge, unless conduct is so clearly wrong that specific reference is not necessary.[7]

The issue in Mr. Romaker’s case is; did he ever know of his Employer’s reasonable rule?

            In late-November 2005, Romaker suffered a lower abdominal strain at work and went on a workers’ compensation medical leave until mid-January 2006.  The evidence at the hearing indicated that during his leave, Romaker did not do any work for the Company and did not attend any sales meetings.  The testimony also indicated that after Romaker returned from his medical leave, he was unable to attend the sales meetings held on the third Tuesday in January or on the first Tuesday in February because a very high volume Quik Trip store on his route required him to make his deliveries to that store at 6 AM on Tuesday mornings. 

            While Mr. Romaker’s response to Mr. Brooks that he simply “forgot” that product needed to be in the store before the 15th in order to beat the price increase would indicate that he knew of the sales directive, other testimony indicates that Mr. Romaker never attended the sales meetings and there was no evidence presented to indicate otherwise.  The preponderance of evidence indicates that although he had received the new price increase list, Mr. Romaker never heard the sales directives the Company gave to drivers at the sales meetings regarding sales of twenty (20) and thirty (30) packs of Bud family products to Berbiglia’s stores. Accordingly, a bare preponderance of the evidence indicates that Mr. Romaker was simply not made aware of his employer’s reasonable directive.

Mr. Petersen

Union Steward Terry Petersen has one Berbiglia’s store, (#64), on his route.  Petersen testified that he attended the sales meetings, received the 2006 price increase sheet, and understood that he was responsible for having enough thirty (30) packs of Budweiser products in Berbiglia #64 at the old wholesale price to assure enough inventory to cover Berbiglia’s marketing plan for the month of February.  Petersen further testified that he had delivered enough “Bud” family twenty (20) and thirty (30) packs to that store before February 15, 2006, to assure the store’s inventory needs through the end of February. 

            Petersen testified that because he is paid on a commission basis and is told at every sales meeting to sell more beer and to exceed previous year sales figures he tries to put as much beer as possible in his customers’ stores.  Petersen further testified that in order to keep his paycheck up and to sell as much beer as possible, he delivered fifty (50) additional cases of Bud thirty (30) pack twelve (12) ounce cans to Berbiglia’s #64 on February 15, 2006, the day the new price increase took effect for that product. 

While employees who shirk their employer’s rules are usually motivated by laziness or sloth, the employee in this case would appear to have been motivated by a desire to sell even more product than was required.  Petersen testified that Berbiglia #64 did not need the additional fifty (50) cases to cover February sales but that the store was a high volume seller of that package and would sell those cases in March 2006. While I am somewhat skeptical of Mr. Petersen’s testimony, there was no evidence presented to contradict it and to show that Berbiglia’s #64 was not already well stocked with beer.  Accordingly, a preponderance of the evidence indicates that Mr. Petersen did not violate his Employer’s reasonable directive.

CONCLUSION

The burden is on the Employer to show by a preponderance of the evidence that just cause existed to suspend Brian Romaker and Terry Petersen.  While the Employer provided substantial evidence to support the suspensions, the Employer has not met its burden of proof, and the grievance is upheld.  While a remedy of back-pay in this situation is harsh given the nature of this case, it is required by arbitral precedent

AWARD

The grievance is sustained.  The Employer will rescind the Grievants’ suspensions and reimburse them for all lost pay and benefits. All fees and expenses charged by the Arbitrator shall be divided equally between the parties, as provided in Article 6.5 of the parties Collective Bargaining Agreement.

                                                                        ___________________________

                                                                        David Gaba, Arbitrator

                                                                        March 20, 2007
                                                                        Lincoln, Nebraska



[1] See, Worthington Corp., 24 LA 1, 6-7 (McGoldrick 1955). 

[2] RCA Communications, Inc. 29 LA 567, 571 (Harris, 1961). See also Riley Stoker Corp., 7 LA 764, 767 (Platt, 1947).

[3] As with any grievance involving disciplinary action against an employee, “the Employer bears the burden of proof, first, that discipline was warranted, and, second, that the discipline actually used was appropriate.” PQ Corp., 101 LA 694, 698 (Pratte 1993).

[4]
Enterprise Wire Co., 46 LA 359, 363-4 (1966).

[5]
Id.

[6] Black’s Law Dictionary, West Publishing (Sixth Edition).


[7]
Lockheed Aircraft Corp., 28 LA 829, 831 (1957).  See also, Federal Aviation Admin., Denver Air Route Traffic Control Ctr., 99 LA 929 (Corbett, 1922); Bayshore Concrete Prods. Co., 92 LA 311, 316 (Hart, 1989); Fairmont Gen. Hosp., 91 LA 930, 932 (Hunter, 1988).

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