Blue & White Cabs

National Labor Relations Board - Board Decisions

Dec 13, 1988

291 N.L.R.B. 1047 (N.L.R.B. 1988)

BLUE & WHITE CABS 1047
Pioneer Holding Company of Minnesota d/b/a Blue
& White Cabs and Guild of Taxi Drivers and
Associated Workers, Local 3025, Brotherhood
of Railway, Airline and Steamship Clerks,
Freight Handlers, Express and Station Employ
ees, AFL-CIO
Pioneer Holding Company of Minnesota d/b/a Blue
& White Cabs and Blue & White Service Cor
poration and Guild of Taxi Drivers and Associ
ated Workers , Local 3025, Brotherhood of Rail
way, Airline and Steamship Clerks, Freight
Handlers, Express and Station Employees,
AFL-CIO Cases 18-CA-7822 and 18-CA-
8006
December 13 1988
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
JOHANSEN AND HIGGINS
On September 19 1984 and February 8, 1985
Administrative Law Judge William F Jacobs
issued the attached decision and erratum respec
tively The General Counsel filed exceptions and a
supporting brief and the Respondent Blue and
White Service Corporation filed an answering
brief to the General Counsels exceptions
The National Labor Relations Board has delegat
ed its authority in this proceeding to a three
member panel
The Board has considered the decision and the
record in light of the exceptions and briefs and has
decided to affirm the judge s rulings, findings, and
conclusions as modified below, but not to adopt the
recommended Order
The judge dismissed the complaint in its entirety
finding that Respondent Service (Service) is not
the alter ego of or the successor to Respondent
Pioneer (Pioneer), and that Respondent (collective
ly Pioneer and Service) did not violate Section
8(a)(5) and (1) of the Act by the following acts de
manding that the new collective bargaining agree
ment include a provision restricting the Union s
representation unilaterally refusing to submit and
then delaying remittance of union dues unilaterally
operating a committee to arbitrate cabdriver dis
putes , unilaterally transferring unit work to super
visors, canceling the employees health insurance
plan retroactively , without notice to the Union de
manding that the Union agree to separate contracts
for Pioneer and Service covering unit employees
and placing conditions on its acceptance of the
Union s unconditional offer to return strikers to
work We adopt the judges findings in all re
spects' except that we find merit in the General
Counsels exceptions to the judges dismissal of the
consolidated complaint allegation concerning the
retroactive termination of the employees health in
surance plan
1 The facts concerning the relationship between
Respondent Pioneer and Respondent Service are as
follows Respondent Pioneer was incorporated in
1965 as a holding company to own and operate
Blue and White Taxi Company cabs Pioneer
owned the cabs and employed and supervised the
cabdrivers Lee Sherman and David Barnhard Pio
neer s president and vice president respectively,
owned minority shares of Pioneers stock Lee
Sherman s grandfather and great uncle were Pio
neer s majority shareholders
In 1976 the Union organized certain employees
including drivers and dispatchers, and the parties
negotiated a contract That same year Pioneer
began experiencing financial problems and sought
to change its operations by leasing cabs instead of
continuing the employer/employee relationship
Although the contract permitted the leasing of
cabs a city ordinance prohibited leasing and the
city council refused to change the law without
labor's consent The Union opposed any such
change in the law
In April 1982 as its financial problems mounted
Pioneer formed Service as a nonprofit corporation
to provide telephone answering radio dispatching
advertising recordkeeping maintenance and relat
ed services to taxicab owners Initially Sherman
and Barnhart were the sole directors of Service
and Pioneers shareholders owned Services stock
The reorganization plan envisioned that Pioneer
and its shareholders would sell their cabs to new
owners along with one share of Service stock per
cab 2 Ultimately Service would own no cabs but
1 In finding that Respondent Service is not the successor to Respond
ent Pioneer we do not rely on the judge s findings of separate ownership
since separate ownership is inherent in any successorship finding We
agree with the judge that Service did not violate Sec 8(a)(5) and (1) by
creating the Longhood Committee to arbitrate disputes among cabdnv
ers However we do so for different reasons The judge found that be
cause the parties bargained to impasse over the creation of the Commit
tee its creation was lawful We note that the Longhood Committee was
created solely to arbitrate problems concerning Service s cab owners
and/or their drivers Because we find that Service is neither the alter ego
of nor the successor to Pioneer and because Service does not have a
separate bargaining relationship with the Union Service was not obhgat
ed to bargain with the Union about the creation of the Longhood Com
mittee Consequently any discussion of impasse in this regard is irrele
vant We also note that even if a bargaining relationship existed between
Service and the Union we would still dismiss the complaint allegation
because it appears on this record that the cab owners and/or drivers are
independent contractors See Checker Cab Co 273 NLRB 1492 (1985)
No exceptions were taken to the judge s dismissal of the complaint al
legation that the Respondent violated Sec 8(a)(5) and (1) of the Act by
transferring unit work to supervisors
2 Pioneer was also to transfer certain assets (dispatching office and
garage equipment and its radio) to Service in exchange for a note reflect
Continued
291 NLRB No 147
1048 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
would instead provide only the dispatching serv
ices described above to the new cab owner/
shareholders Thus Service would be owned by
the cab owners and each cabdriver would be re
sponsible to the cab owner/shareholder whose cab
he drove
The Union filed a grievance over Pioneers plan
and the case went to arbitration On July 19 1982
the arbitrator issued a decision finding that Pio
neer s action did not violate the parties labor
agreement3 and that Pioneer was not prevented
from selling its business 4
Thereafter Pioneer began selling its assets and
Service was formally created In mid August 1982
Pioneer and its shareholder began selling their cabs
along with one share of stock in Service Sales
continued through May 1983 at which time all but
one cab had been sold
The General Counsel contends that an alter ego
relationship existed between Pioneer and Service at
the time the alleged unfair labor practices oc
curred We disagree Because that particular period
covers only the formative stages of Services exist
ence limiting our focus on this transitional stage
would ignore the evidence that by the time Serv
ice had been fully phased in to carry out its intend
ed purpose of providing dispatch and related serv
ices to its shareholder/cab owners it was under
different ownership and management than Pioneer
Thus to restrict consideration of the alter ego issue
to Services formation would distort the picture of
Services essential identity and purpose Further it
is undisputed that Service was openly created in
1982 when Pioneer was still operating and that
Service was set up primarily to provide dispatching
and related services for independently owned cabs
and did not own or operate any cabs (Pioneer pri
marily was in the business of operating cabs) It is
also undisputed that Service was formed wholly
for economic reasons and not for antiunion reasons
In this regard Pioneer had been having financial
difficulties since 1976 and was on the verge of fi
nancial collapse when the owners of Pioneer estab
lished Service as a nonprofit corporation with the
idea that Pioneer would sell its cabs to independent
contractors who in turn would acquire a share of
stock in Service for each cab purchased Signifi
cantly the sales of Pioneers cabs were not made to
the owners of Pioneer or their agents and were
mg the purchase price of the assets and enter into a lease arrangement
with Service to operate jointly out of Pioneer s premises The record
shows that Service did not intend to stay at this address
The contract between the parties was due to expire August 15
The arbitrator also predicted that Service would not be the alter ego
of or single employer with Pioneer after all the sales and transfers were
completed The judge acknowledged that this was merely the arbitrators
prediction and that he was not bound by it
made at arms length It is also significant that
ownership of Service changed with the sale and
purchases of Pioneers cabs from the owners of
Pioneer to the new owners of its former cabs that
Service still owns no cabs and that Service func
tions operationally as it has throughout its exist
ence to provide dispatching and related services to
cab owners and drivers
Nor does the fact that Service and Pioneer
shared common ownership and management during
Services formative period establish an alter ego re
lationship between the two companies 5 It is clear
that any element of common ownership was tem
porary as the owners of Pioneer intended and that
they were fully cognizant that controlling interest
in Service would pass to the purchasers of Pio
neer s cabs as the sales of those vehicles pro
gressed This in fact occurred By January 1983 the
majority of the stock in Service was owned by per
sons other than the owners of Pioneer and by May
1983 the latter retained at best merely a vestige of
ownership in Service
As for common management of Pioneer and
Service that too proved to be transitory In Janu
ary 1983 a new seven member board of directors
was elected consisting of David Barnhart E Lee
Sherman and five new owner/operators By the
end of the summer of 1983 Barnhart and Sherman
who had served on the original board and had also
served as officers and managers of Pioneer ceased
holding office and managerial positions with Serv
ice Further Services new board of directors had
by then taken charge of the operations of Service
and had acted independently of the interest of its
former managers Thus the new directors had re
fused on behalf of Service to sign certain con
tracts initially executed by Barnhart and Sherman
Moreover Pioneer eventually asked Service to
vacate their common premises
Finally Services provision of dispatching and
related services to Pioneer from on or about Sep
tember 26 1982 as well as to its shareholder/cab
owners its hiring some of the former dispatching
employees of Pioneer and its receipt of legal and
other assistance from Pioneer in its formative
stages do not establish that Service was formed for
a purpose other than that which it was developed
to serve and did actually serve nor do they blur
the basic differences between the two companies
and their separate operations With the exception
of the former Pioneer employees 6 these common
5 See Electrical Workers Local 3 (Telecom Plus) 286 NLRB (1987)
Eagle Express Co 273 NLRB 501 502 (1984)
s We note that these employees became a minority of Services dis
patching complement by the time of its evolution into an independently
owned company
BLUE & WHITE CABS
elements were present only temporarily Further
Service was compensated for its dispatching serv
ices for Pioneer in the same manner as it was by
others who used its services And the assistance
Pioneer rendered Service at the beginning of its ex
istence is insufficient by itself to establish that an
alter ego relationship existed at any time Such as
sistance as was provided is attributable to the fact
that Service at its inception was formed and owned
by the owners of Pioneer and managed by officers
of the latter Owing to the special relationship that
arose from these circumstances which as we have
noted were temporary and transitional in nature
the startup assistance provided Service by Pioneer
does not outweigh the factors showing companies
fundamentally different in business purposes and
operations 7
Accordingly for the reasons noted above and
those set forth by the judge we adopt his finding
that Service is not the alter ego of Pioneer
2 The consolidated complaint alleges that Pio
neer violated Section 8(a)(5) and (1) by the retroac
tive cancellation of the employees health insurance
benefits to May 30 1982 8 Pioneers employees had
been insured by the New England Life Insurance
Company In the spring of 1982 Pioneer was in
poor financial condition and behind in its premium
payments when it learned that the premiums would
be almost doubled That summer Pioneer advised
the Union during contract negotiations that it
would discontinue the employees health insurance
benefits because of its financial condition During
negotiations Pioneer proposed managing an IRA
for its employees and contributing a nominal
monthly sum toward health insurance in exchange
for the Unions giving up its demands for contin
ued health insurance coverage On September 20
Pioneer gave the Union 10 days to accept its pro
posal or it would cease making payments
Subsequently Pioneer decided to cancel the
policy after learning that if it simply ceased paying
the premiums and did not cancel the policy the in
surance company could conceivably continue the
policy for years and attempt to collect past premi
urns By letter dated November 18 Pioneer in
formed its employees that it was canceling the in
surance policy retroactive to May 30
During negotiations the Union was aware that
Pioneer intended to cancel the health insurance
however Pioneer never informed the Union that
the cancellation would be retroactive and the
Union was not advised of the retroactive cancella
tion until after it became effective The judge
° Marino Electric 285 NLRB 344 (19 1987) L & J Equipment Co 274
NLRB 20 28 (1985)
8 All dates refer to 1982 unless otherwise stated
1049
found that the decision to cancel the health incur
ance program was economically motivated that
Pioneer bargained in good faith to impasse and
that the claims of all employees were fully paid
and thus no employee was adversely affected by
Pioneers conduct Accordingly the judge dis
missed the allegation
The General Counsel while acknowledging that
Pioneer was lawfully motivated in terminating the
health insurance plan and that Pioneer gave notice
to the Union and bargained to impasse in good
faith before implementing its plan contends that
Pioneers failure to notify the Union of the retroac
tive cancellation of the health insurance plan
which resulted in employees being without health
insurance from May 30 to August 15 is unlawful
We find merit in the General Counsels exception
An employer may not unilaterally change the
terms and conditions of employment of a mandato
ry subject of bargaining after the expiration of a
contract without giving the union notice and an
opportunity to bargain about such changes 9 Here
although Pioneer informed the Union of its desire
to discontinue the employees health insurance and
the parties bargained to impasse over Pioneer s
proposal Pioneer never informed the Union of its
decision to make the cancellation of the insurance
policy retroactive to May 30 thereby leaving em
ployees without insurance coverage for 2 1/2
months Although no employee suffered any finan
cial harm as a result of the retroactive application
of the cancellation that is happenstance and it
cannot be gainsaid that Pioneer failed to satisfy its
statutory obligation to notify the Union of the ret
roactive nature of the termination of the health in
surance benefit Therefore we find that by failing
to notify the Union that the employees health in
surance was canceled retroactively Respondent
Pioneer violated Section 8(a)(5) and (1) of the
Act 10
3 The Union commenced a strike against Pio
neer on August 16 The judge found and we agree
that the strike was neither caused nor prolonged by
any unfair labor practices and therefore it was at
all times an economic strike The judge also found
and we agree that Pioneer did not unlawfully
impose conditions on its acceptance of the Union s
unconditional offer to return the strikers to work
See Schmidt Tiago Construction Co 286 NLRB 342 (1987)
° We have not included a make whole remedy section because the
judge found and the General Counsel admits that no employee was ad
versely affected by the retroactive cancellation We also have not includ
ed a provision requiring Pioneer to bargain at the request of the Union
with respect to the decision to make the cancellation retroactive in light
of our finding that the Respondent lawfully bargained to impasse over its
decision to cancel the health insurance benefit
1050 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
On January 7 1983 the Union and Pioneer met
at the Federal Mediation and Conciliation Services
office Union Representative Say indicated that the
Union wanted to find an orderly way of returning
to work and suggested that the seniority system be
used Pioneers vice president, Barnhart rejected
that proposal and stated that the people who went
on strike did not have seniority and that he favored
those people who worked during the strike and
saved the Company Say protested claiming that
Barnhart was penalizing strikers for exercising their
right to strike and Barnhart admitted the truth of
that accusation
Later in the meeting that day, the Union present
ed Barnhart with a letter stating an unconditional
offer on behalf of all strikers to return to work
Sometime after the meeting ended, Barnhart
phoned Say and stated according to Say that
[W]e re going to accept your unconditional offer
on two grounds number one you [will] have to
on your stationary [sic] write a press release
number two [we 11] have to work out a back to
work agreement and a signed contract Say re
plied that Barnhart was placing conditions on the
unconditional offer and rejected Barnhart s re
sponse
On January 10 Barnhart sent the Union a letter
which stated
We accept your unconditional offer for all
strikers against Pioneer Holding Company of
Minnesota to return to work
Our acceptance is subject to your execution
of a written back to work agreement and your
execution of a written contract which we are
in the process of preparing
That same day the Union filed a charge in Case
18-CA-8006 On January 13 Barnhart phoned Say
and said in effect that Pioneer was no longer plac
ing conditions on its acceptance of the uncondition
al offer and referred specifically to a back to work
agreement and a press release Barnhart also stated
however that he would not be reinstating strikers
because he would not be hiring any employees 11
The judge viewed Barnhart s and Say s discus
sions as negotiations for a strike settlement and
concluded that Pioneers January 7 demands in
eluding the condition placed on the striking em
ployees recall rights were lawful
The General Counsel continues to argue that the
strike was an unfair labor practice strike and there
fore the striking employees should have been rein
stated on the unconditional offer to return to work
The General Counsel also specifically excepts to
11 Pioneer did not recall any striking employees or hire any other em
ployees after the strike ended
the judge s finding that the Respondent did not un
lawfully impose as a condition for rehiring that
nonstriking employees have supersenionty 12
We have found that the strike was an economic
strike It is well settled that absent legitimate and
substantial business justification an employer may
not attach conditions to accepting an unconditional
offer to return to work on behalf of economic
strikers 13 In the instant case the evidence as set
forth above reveals that Barnhart s demand that
employees be recalled on the basis of shifts worked
since August 15 because he favored those employ
ees who did not go out on strike preceded the
Union s unconditional offer to return to work The
record provides no basis for finding that Pioneer
insisted on its seniority proposal after the Union
made the unconditional offer Further any doubt
that the Union might still have entertained con
cerning this proposal would likely have been dis
pelled by Barnharts statement to Say on January
13 that Pioneer no longer placed conditions on its
acceptance of the offer Accordingly we find no
merit in the General Counsels exceptions 14
ORDER
The National Labor Relations Board orders that
the Respondent Pioneer Holding Company of
Minnesota Minneapolis Minnesota its officers
agents, successors and assigns shall
1 Cease and desist from
(a) Refusing to bargain collectively with the
Guild of Taxi Drivers and Associated Workers
Local 325 Brotherhood of Railway Airline and
Steamship Clerks Freight Handlers Express and
Station Employees AFL-CIO as the exclusive rep
resentative of the employees in the appropriate
unit concerning the decision to cancel the employ
ees health insurance retroactively
(b) In any like or related manner interfering
with restraining or coercing employees in the ex
12 The General Counsel has not excepted to the judges finding that
the other conditions imposed by Pioneer-a back to work agreement and
a union press release-were not unlawful because they were retracted
shortly after being made
19 See Lindy s Food Center 232 NLRB 1001 1008 (1977)
14 The General Counsel also contends in her exceptions that Pioneer
violated Sec 8(a)(5) of the Act by giving superseniority to replacements
and taking away the seniority of striking employees during negotiations
At fn 4 of his decision the judge found it unnecessary to make a finding
on this issue because this allegation was not made in the consolidated
complaint but was made in the General Counsels brief to the judge We
will rule on this issue since circumstances surrounding this issue were
fully litigated and are referred to in the judge s decision in the paragraphs
beginning with On November 9 and A bargaining session was
held on November 17 Southwire Co 282 NLRB 916 fn 12 (1987) After
a careful examination of these circumstances we find that the General
Counsel has failed to demonstrate that Pioneer insisted on such a plan
and note that because Pioneer told the Union that it would not hire any
new employees or recall strikers it effectively withdrew its proposal See
Gehnrich & Gehnrich Inc 258 NLRB 528 fn 2 (1981)
BLUE & WHITE CABS
ercise of the rights guaranteed them by Section 7
of the Act
2 Take the following affirmative action neces
nary to effectuate the policies of the Act
(a) Post at its facility in Minneapolis Minnesota
copies of the attached notice marked Appen
dix 15 Copies of the notice on forms provided by
the Regional Director for Region 18 after being
signed by the Respondents authorized representa
tive shall be posted by the Respondent immediate
ly upon receipt and maintained for 60 consecutive
days in conspicuous places including all places
where notices to employees are customarily posted
Reasonable steps shall be taken by the Respondent
to ensure that the notices are not altered defaced
or covered by any other material
(b) Notify the Regional Director in writing
within 20 days from the date of this Order what
steps the Respondent has taken to comply
16 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 Nation
al 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
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 the National Labor Relations Act
and has ordered us to post and abide by this notice
WE WILL NOT refuse to bargain collectively in
good faith with the Union as the exclusive repre
sentative of our employees in the appropriate unit
concerning our decision to cancel employees
health insurance retroactively
WE WILL NOT in any like or related manner
interfere with restrain or coerce you in the exer
cise of the rights guaranteed you by Section 7 of
the Act
PIONEER HOLDING COMPANY OF
MINNESOTA
Marlin 0 Osthus Esq for the General Counsel
Fredrick E Finch Esq of Minneapolis Minnesota for
Respondent Pioneer Holding Company
Robert J Mdlavetz Esq of Crystal Minnesota for Re
spondent Blue & White Service Corporation
Richard H Say of Elk River Minnesota for the Charg
ing Party
DECISION
STATEMENT OF THE CASE
1051
WILLIAM F JACOBS Administrative Law Judge This
case was tried before me on January 3 4 and 5 1984 at
Minneapolis Minnesota The charge in Case 18-CA-
7822 was filed August 13 1982 by Guild of Taxi Driv
ers and Associated Workers Local 3025 Brotherhood of
Railway Airline and Steamship Clerks Freight Han
dlers Express and Station Employees AFL-CIO (the
Union) The original charge in Case 18-CA-8006 was
filed January 10 1983 and amended January 13 1983
by the Union On September 30 1983 the Acting Re
gional Director for Region 18 issued an order revoking
approval of and vacating and setting aside settlement
agreement in Case 18-CA-7822 dated September 30
1982 and simultaneously issued an order consolidating
cases consolidated complaint and notice of hearing in
Cases 18-CA-7822 and 18-CA-8006 The consolidated
complaint alleges violations of Section 8(a)(1) (3) and
(5) of the National Labor Relations Act More particu
larly the consolidated complaint alleges that Pioneer
Holding Company of Minnesota (Pioneer) established
and commenced the operation of Blue & White Service
Corporation (Service) as a subordinate instrument to and
continuation of Pioneer and thereafter Pioneer and Serv
ice operated as alter egos and as a single employer or in
the alternative' with Service operating as a successor to
Pioneer that Pioneer and Service collectively (Respond
ent) refused to bargain collectively and in good faith
with the Union as the exclusive collective bargaining
representative of Respondents employees by 2 demand
ing as a condition of consummating any collective bar
gaining agreement that the Union agree to include in
such agreement a provision restricting the Union to
being the exclusive collective bargaining representative
only of its members bargaining to impasse over this
demand thereby withdrawing recognition of the Union
refusing unilaterally to submit then delaying remittance
of union dues to the Union unilaterally terminating its
employees health insurance plan unilaterally offering to
forward deducted union dues to its employees rather
than to the Union unilaterally creating a committee to
arbitrate disputes among drivers un laterally transferring
unit work to supervisors demanding as a condition of
consummating any collective bargaining agreement that
the Union agree to separate contracts with Pioneer and
Service for employees in the unit thereby withdrawing
recognition of the Union as the exclusive collective bar
gaining representative of the employees in the unit that
the Respondents unfair labor practices caused and pro
longed an unfair labor practices strike and that the
Union made an unconditional offer on behalf of the stnk
' The names of the Respondents were amended at the hearing
2 Although not alleged in the complaint as a separate violation of Sec
8(a)(1) and (5) counsel for the General Counsel in his brief requested
that I find that on or about November 17 1982 Respondent instituted a
proposal eliminating seniority earned by sinking employees and giving
strike replacements supersenionty In my view under the circumstances
present in this case to grant the request would be unjust and would not
serve the interests of judicial economy or orderly ad judication Sea
ward International 270 NLRB 1034 (1984)
1052 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ing employees to return to work but that Respondent
failed and refused to reinstate the striking employees
unless and until the Union agreed to supersenionty for
striker replacements to a letter for distribution to the
press to a written back to work agreement and to accept
a written contract prepared by Respondent Pioneer and
Service in their answers 3 denied the commission of any
unfair labor practices
All parties were represented at the hearing and afford
ed full opportunity to be heard and to present evidence
and argument Briefs were filed by all parties
On the entire record my observation of the demeanor
of the witnesses and after giving the consideration to the
briefs I make the following
FINDINGS OF FACT
I THE BUSINESS OF THE RESPONDENT
Pioneer a Minnesota corporation with an office and
place of business in Minneapolis Minnesota has been at
all times material engaged in the furnishing of taxicab
transportation and related services During the calendar
year ending December 31 1982 Pioneer in the course
and conduct of its business operations derived gross rev
enues in excess of $500 000 During the same period Pio
neer in the course and conduct of its operations pur
chased and received at its Minneapolis facilities products
goods and materials valued in excess of $50 000 directly
from points outside the State of Minnesota Pioneer is an
employer engaged in commerce within the meaning of
Section 2(6) and (7) of the Act
Service a Minnesota corporation with an office and
place of business in Minneapolis Minnesota has been at
all times material engaged in telephone answering radio
dispatching maintenance and related services in connec
tion with the operation of taxicabs as well as the furnish
mg of taxicab transportation Annually Service in the
course and conduct of its business operations derives
gross revenues in excess of $500 000 and purchases and
receives at its Minneapolis facilities products goods and
materials valued in excess of $7000 directly from points
outside the State of Minnesota Service is an employer
engaged in commerce within the meaning of Section 2(6)
and (7) of the Act
II THE LABOR ORGANIZATION INVOLVED
The Union is a labor organization within the meaning
of Section 2(5) of the Act
III THE ALLEGED UNFAIR LABOR PRACTICES
A Issues
The issues as reflected by the allegations contained in
and the amendments to the complaint and the answers
there are whether
1 Service is the alter ego of Pioneer and both consti
tute a single employer
2 Service is a successor to Pioneer
8 Respondents motions to amend their answers are granted
3 Respondent refused to bargain collectively and in
good faith in violation of Section 8(a)(5) and (1) by
(a) Demanding as a condition of consummating any
collective bargaining agreement that the Union agree to
include in such agreement a provision restricting the
Union to being the exclusive collective bargaining repre
sentative only of its members
(b) Bargaining to impasse over this demand thereby
withdrawing recognition of the Union
(c) Unilaterally refusing to submit then delaying re
mittance of union dues to the Union
(d) Unilaterally terminating its employees health insur
ance plan
(e) Unilaterally offering to forward deducted union
dues to its employees rather than to the Union
(f) Unilaterally creating a committee to arbitrate dis
putes among drivers
(g) Unilaterally transferring unit work to supervisors
(h) Demanding as a condition of consummating any
collective bargaining agreement that the Union agree to
separate contracts with Pioneer and Service for employ
ees in the unit thereby withdrawing recognition of the
Union as the exclusive collective bargaining represents
tive of the employees in the unit
4 Respondents unfair labor practices caused and pro
longed an unfair labor practice strike
5 The Union made an unconditional offer on behalf of
the striking employees to return to work but Respondent
failed and refused to reinstate the striking employees
unless and until the Union agreed to superseniority for
striker replacements to a letter for distribution to the
press to a written back to work agreement and to
accept a written contract prepared by Respondent
B Background
Pioneer was incorporated as a holding company in
1965 to own4 and operate Blue and White Taxi Compa
ny cabs Thereafter it employed and supervised the dnv
ers of the cabs it owned as a profit making enterprise In
1972 it moved to the University Avenue address and op
erated Blue and White cabs at that location through the
period of time during which the alleged unfair labor
practices occurred
In 1976 the Union organized certain employees of Pio
neer including its drivers dispatchers service personnel
and janitors A contract was negotiated which among
other things granted Pioneer the right to lease its cabs
There was however in effect a city ordinance that pre
vented Pioneer from doing so and although it and other
cab companies lobbied to get the ordinance changed the
city council refused to comply with its request unless
and until labor agreed The Union was adamantly against
any such change and resisted the efforts of the cab com
panes to change the law
Starting in 1976 Pioneer began to run into financial
difficulties Between 1976 and 1981 it lost between
$400 000 and $500 000 Because of these losses David
Barnhart Pioneers vice president and chief negotiator
The cabs were owned for the most part by Pioneer and its stock
holders Two or three out of 73 were owned by nonstockholders
BLUE & WHITE CABS 1053
approached the bargaining table in 1981 convinced that
substantial changes in the Company s operation would
have to be made He felt as did the executives of other
cab companies also in financial straits that the Company
should be permitted to lease its cabs to the drivers rather
than to continue the employer/employee relationship and
commission structure of the past With this in mind
Barnhart told Richard Say the Union s chief negotiator
that the Company had to be able to lease its cabs in
order to become financially viable and requested that the
Union drop its opposition to the hoped for change in the
no leasing ordinance Say however refused and insisted
on the maintenance of the then current employer/
employee relationship with its commission system
With the parties on opposite sides of the leasing ques
tion negotiations in the summer of 1981 were both hard
and heated Questions concerning raising rates changing
the commission structure having the drivers pay for part
or all of the gasoline were all raised in hopes of finding a
formula satisfactory to both sides but no agreement was
reached Finally on September 15 a 1 year agreement
was reached and executed covering the period August
15 1981 to August 15 1982 but containing a 90 day re
opener provision enabling Pioneer to force the Union
back to the bargaining table if the new agreement did
not result in a reversal of the Company s financial slide
Shortly after the execution of the 1981 contract it
became clear to the Company that its financial plight had
not been sufficiently ameliorated by that agreement
Losses continued to pile up on a monthy basis Pioneer
could not pay its creditors It was $30 000 in arrears to
Standard Oil and that particular creditor insisted that in
order to continue to do business Pioneer would subse
quently have to pay cash for its purchases plus $5000 per
month on the arrearage until caught up Penzoil and
other small creditors refused to do business with Pioneer
The Company s attorneys refused to represent it unless it
agreed to sign a second mortgage to assure payment of
fees Whereas previously Pioneer had been permitted by
the Insurance Commissioner of Minnesota to self insure
up to $25 000 permission was withdrawn and the Com
pany was forced to purchase additional commercial in
surance
Faced with these financial problems Barnhart once
again requested that the Union drop its opposition to the
no lease ordinance but was once again refused He there
upon announced that he would reopen the contract at
the end of 90 days as provided for in the agreement The
Union objected that the agreement had not been given a
sufficient test period Nevertheless the Company exer
cised its option to reopen after 90 days and additional
negotiations took place at that time Though Barnhart
put forth new proposals for additional changes in the
1981 agreement these were all rejected and the Union s
membership subsequently voted to strike if Pioneer im
plemented any of its proposed contract changes Faced
with the threat of a work stoppage Barnhart agreed to
maintain the agreement as it was for the contract year
without change realizing however that the Company
could not continue to operate permanently under the ex
istmg conditions
In the winter of 1981-1982 the Yellow Cab Company
suffering under similar adverse financial conditions as
Pioneer and convert it into a cooperative but nothing
came of the proposal
C Negotiations Between Pioneer and the Union and
the Formation of Service
Faced with the above-described financial dilemma
Pioneer directed Kent Richey its attorney on April 13
1982 5 to draft Articles of Incorporation of Blue &
White Service Corporation the new corporation to be
located at the same address as Pioneer with its purpose
described as engaging in the business of providing tele
phone answering radio dispatching maintenance and re
lated services to taxicab owners E Lee Sherman
president of Pioneer signed the document as Incorpora
tor Three days later Sherman as incorporator of Serv
ice named himself and Barnhart as the sole directors of
the new company and as such approved and adopted
bylaws for the new company which had been drafted by
Richey and which vested in the board of directors virtu
ally all managerial authority
Within the next few days Richey advised the Secun
ties Division of the Minnesota Department of Commerce
that his firm had acted as legal counsel to Service re
garding its incorporation and would so act thereafter
with regard to a proposed offer and sale of 75 8 shares of
common stock In a second letter to the same agency
also dated April 19 Richey explained how Pioneer and
its shareholders intended to establish Service which ini
tially would be wholly owned by Pioneer shareholders
The plan he explained was for Pioneer to transfer cer
tarn assets to Service in return for a note from Service
reflecting the purchase price of those assets Additional
ly Richey advised Service would enter into a lease ar
rangement with Pioneer for use of their joint address for
business purposes Richey explained that thereafter Serv
ice would render the services described in its articles of
incorporation to cabs owned by Pioneer and its share
holders and to third party cab owners pursuant to a serv
ice agreement Because the service agreement would
permit cabdrivers to use the name and colors of Service
a franchise would be involved and he was therefore sub
mitting a franchise application along with other neces
sary filing documents Later Richey explained it was in
tended that current owners of cabs primarily Pioneer
and its shareholders would on an individual basis sell
their cabs to new owners along with one share of stock
of Service per cab with the idea that eventually all cabs
as well as all stock in Service would be under the exclu
sive control of the new cab owners as a group
Sometime in the spring Pioneer advised the Union it
was considering a proposal to sell its taxicabs to mem
bers of the public including to its current drivers The
Union s response was to file a grievance under the exist
ing labor agreement Despite the grievance however
Barnhart and Sherman as directors of Service continued
with their plans as outlined in Richey s letter to the Se
cunties Division to purchase Pioneers cabs and other
5 All dates are in 1982 unless otherwise Indicated
1054 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
assets to lease the premises from Pioneer and to sell
stock in Service The vast majority of the 75 8 shares of
Service stock was purchased by the Sherman family the
sale to be effective as of June 3 On that date the Union
sought and obtained a temporary restraining order from
the District Court for the State of Minnesota restraining
Pioneer from changing the form of its business of
owning and operating taxicabs until the issuance by the
arbitrator of his decision and award resolving the gnev
ance already filed
Meanwhile in anticipation of the forthcoming contract
negotiations Barnhart on June 18 forwarded to the
Union a propsed new labor agreement with an accompa
nying list or index of changes In his cover letter Barn
hart explained that he had gone through the entire con
tract and made the changes that he felt necessary for the
continued operation under the employer/employee
system Barnhart in rewriting the contract was attempt
ing to start all over and get some of the old 'anguage
out and some of the more relevant language in He re
wrote the entire contract line by line and paragraph by
paragraph the way he thought it should be Among the
various changes which Barnhart who had had no legal
training included was a provision in section lA that
The Union shall be the sole representative of its mem
bers in collective bargaining with the Employer When
the proposed contract was received by the Union it ob
jected to the inclusion in the labor agreement of this and
other language in section lA
Before the first negotiation session was held the arbi
tration hearing was conducted on June 28 At the hear
ing the Union was provided with all of the relevant doc
uments concerning the establishment of Service the sale
of taxicabs by Pioneer to Service the issuance of stock
etc thus informing the Union precisely of the various
efforts being made to change the structure of the buss
ness and to alter the existing employer/employee rela
tionship At the arbitration hearing Pioneer was repre
sented by Attorneys Kent Richey and Robert A Brunig
both of the firm 0 Connor & Hannan
At the hearing Say had occasion to speak to Richey
aoout the labor agreement which Barnhart had forward
ed to the Union on June 18 He showed Richey a copy
of the document and told him that section lA was an it
legal union security clause and in violation of the Nation
al Labor Relations Act He told Richey that the Union
had the obligation to represent all employees not just
members and that the Company should clean up section
IA of its proposal Richey after looking at the docu
ment stated that he had had nothing to do with drafting
the proposal and would talk to Barnhart about it
Negotiations toward a new contract began on July 1
with additional sessions being held at uneven intervals
thereafter Though the record is not clear as to precisely
what was said and done at each of the meeting over the
first few collective bargaining sessions the positions of
the parties regarding the subjects covered appear to be
as follows
Paragraph lA
Union
The Union took the position that the first sen
tence of paragraph lA should remain the same as it
was in the old agreement
The Union shall be the sole representative of all
employeese covered by this agreement in collective
bargaining with the Employer
The Union s interpretation of the cited section was that
all employees meant that the Union would follow the
letter of the law and represent all employees whether
members of the Union or not including employees of
Service
Pioneer
Pioneers position was reflected in the first sen
tence of Section IA of Barnhart s June 18 proposal
The Union shall be the sole representative of its
members' covered by this agreement in collective bar
gaining with the Employer
During the July 1 bargaining session Say brought up
the subject of section IA and told the company repre
sentative8 that Pioneers section lA proposal was illegal
and that the Company could not compel the Union to
agree to it Barnhart explained that the purpose of the
members only sentence in section lA concerned the
Company s plan to sell its cabs and make the drivers in
dependent operators The Company s intention as Barn
hart explained it was to have the bargaining agreement
reflect that once a person purchased a cab and began op
erating it as a business separate from Pioneer that person
would not necessarily have the Union as his sole repre
sentative He informed Say that sale of the cabs was ne
cessitated by Pioneers financial problems and about the
time of the first bargaining session or before offered to
and in fact did show the Union the Company s books to
prove the point that the Company could not operate
profitably on a commission basis given the city regulated
rates Despite Barnhart s explanation Say insisted that
the Union could not accept the members only Ian
guage Although he offered no specific alternative Ian
guage to solve the Company s problem he told Barnhart
that the Union had no intention of representing owner
operators and suggested that perhaps the Company could
protect itself by inserting new language in section 35 of
the existing labor agreement dealing with successors Say
insisted that the Union would not accept the members
only language repeated that the phraseology was illegal
and recommended that the Company obtain the services
of an attorney to clean up the language At one of these
early meetings Sherman unlike Barnhart stated that he
was aware of the problem and that the Company would
seek legal advice
Following the July 1 bargaining session Barnhart con
sulted Richey regarding the language contained in his
proposed contract Richey advised him that certain
changes would have to be made including deletion of the
members only language Subsequently the language
a Emphasis added
Ibid
s The description of the July 1 bargaining session is based primarily on
Say s credited testimony
BLUE & WHITE CABS 1055
was dropped but according to Barnhart he could not
recall if this was before or after the strike
On July 19 Arbitrator Thomas P Gallagher issued his
decision and award on the grievance filed by the Union
which alleged that the Employers proposed plan of fran
chising the taxicabs then operated by the Employer
would eliminate the work of the bargaining unit and
would thus violate the labor agreement between the par
ties In his decision the arbitrator specifically stated that
he was not deciding whether Pioneers action was a vio
lation of the Act only whether it was a violation of the
labor agreement He concluded that it was not and that
Pioneer was not prevented from selling its business by
the contract The arbitrator also determined that after all
sales and transfers were completed Service would not be
the alter ego of Pioneer nor a single employing enter
prise with Pioneer 9
Immediately following the issuance of the arbitrators
decision and award Pioneer began selling its assets and
in general to effectuate its plan to sell the business
Thus on July 27 Lee Sherman as president of both Pic,
veer and Service executed a number of documents that
resulted in the establishment of Service These consisted
of an agreement of sale between the two companies
whereby Pioneer sold its dispatching garage and office
equipment radio and other assets to Service a security
agreement and promissory note a lease whereby Pioneer
]eased the premises where both were located to Service
a service agreement describing the rights and obligations
flowing to and from Service and the cab owners and the
franchise offering circular for prospective franchises
Kent Richey representing both Pioneer and Service
prepared most all of these documents
Following the restructuring on July 27 Service con
tinued initially to be managed by Lee Sherman as presi
dent and Barnhart as vice president and secretary Both
for the time being served as the only two members of
the board of directors
The intent underlying and the result of the restructur
ing and the creation of Service was the establishment of
a nonprofit corporation to service the shareholder/cab
owners Thus currently 10 Service owns no cabs itself
and neither employs nor supervises any drivers Rather
each driver is responsible to the particular
shareholder/cab owner whose cab he drives The oper
ation of Service is financed through service fees paid to
it directly by the owners of the cabs
The services rendered by Service to its share
holder/cab owners are similar to the services previously
rendered by Pioneer to its driver employees Thus Serv
ice provides a telephone answering and dispatch service
for owner/operators and their drivers employs a sales
person to obtain business for the cab owners maintains
the accounts for charge customers and collects fees from
them and from credit card customers and pays drivers
after collection takes care of liability insurance advertis
Olin Corp 268 NLRB 573 (1984) is not controlling The collateral
finding of the arbitrator on the alter ego issue at the June 28 1982 arbi
tration was a prediction on his part at a time when all the events ordinar
ily to be considered in determining this issue had not yet occurred I am
therefore ^iot bound by his decision
10 At the time of the hearing
ing costs and recordkeeping and maintains a lost and
found department
Service also serves as a clearinghouse for drivers It
gives city required tests to applicants test drives them
interviews them and clears them through the motor ve
hicle records Because city ordinances require that cab
drivers be insured Service checks about whether appli
cants can comply with insurance companies require
ments so that cabs can be insured It determines whether
applicants have licenses checks drunk driving and acci
dent records and makes certain that applicants have
maps and can speak English Service maintains applica
tion forms at its offices at the University Avenue ad
dress A clerical provides such forms to applicants to fill
out after which the forms are returned to the clerical
who goes through the applicants motor vehicle records
The completed form is then reviewed by Services gen
eral manager and if the applicant is satisfactorily
cleared his application is placed in the file and his name
on a list Thereafter any of the shareholder/cab owners
can choose to lease a cab to anyone on the list Lessees
must be chosen from this list because only individuals on
the list have been cleared for insurance purposes
The owner/operators need keep no records for Serv
ice except for the trip sheets as required by the city
These list the starting time of the drivers place of
pickup fare and place of dropoff The trip sheet is
turned in to Service where it is kept on file for the use of
the city if needed
Service does not control the drivers It does not keep
track of their traffic violations nor enforce standards on
driver lessees of the individual cab owners except as re
quired by city ordinances Lessees lease cabs directly
from the shareholder/cab owners for a fixed amount for
a fixed period of time and keep whatever fares they col
lect Lessees are free to work as much or as little as they
wish They dress as they wish limited only by the re
quirements of city ordinances They buy their own gas
wherever they want and may or may not wash and
vacuum their cabs as they prefer The lease arrangements
are usually verbal and are broken at will that is if the
arrangement fails to work out the owner simply will not
allow the lessee to use the cab again he gets rid of him
Though Service does not directly employ drivers it
does employ the employees in the dispatchers office
These employees are paid by Service and receive such
fringe benefits as sick leave and paid vacation They are
supervised by the head dispatcher who is an employee of
Service Any problems that arise between the drivers
and the dispatching personnel are usually worked out be
tween themselves and if not then the general manager
head dispatcher or board of directors of Service will
work out the problem The board of directors meets
every week to solve such problems as these and any
other problems that might arise As of the time of the
hearing there were about 15 dispatch office employees
including a janitor The wages of these employees are
determined by Service who pays them directly Service
also pays workmen s compensation on their behalf but
does not do so for the drivers
1056 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
On July 30 another bargaining session took place
dunng which once again Barnhart proposed his mem
hers only language hoping thereby to keep the Union
from claiming that it would represent the purchasers of
cabs and their dnvers It did not occur to him that there
would be other considerations in the use of such Ian
guage He advised Say that what he was trying to do
was to keep individuals who bought cabs and their dnv
ers from automatically being strapped into a contract
with the Union Say replied that the language which Pio
neer was proposing was illegal and besides the Union
did not intend to bind new cab owners anyway He sug
gested that the Company change the language of para
graph IA and deal with its concern in paragraph 35
which covers successors He asked if the Company had
sought legal advice as he had suggested during the earli
er meeting and was told by Sherman that legal advice
had in fact been sought that this was still the Compa
ny s proposal and that the Union could take it or leave
it Sherman added that he wanted to be able to sell his
business without the Union s interference
In addition to the discussion concerning the members
only section the parties on July 30 apparently consid
ered Pioneers proposed deletion of section 35 that deal
ing with successors and assigns Say voiced opposition to
its deletion stating that the Union was there to add to the
contract not subtract from it He also expressed concern
for protecting employee jobs in the event the cabs were
sold and for the Union s right to negotiate thereafter on
the driver s behalf Say offered no proposed modification
of section 35 to prove that the term successors should
not include corporations with different functions than
Pioneer Rather he took the position that the Union
would regard successor corporations having only some
of the functions of Pioneer as still having employees
within the unit Barnhart refused to modify his proposal
and Say announced that he would take it back to the
membership but would recommend rejection
Beginning in August Pioneer and its shareholders
began selling their cabs one or two at a time and with
each cab the purchaser also was issued one share of
stock in Service Sales continued through May 1983 by
which time all cabs save one had been sold As of
August when the first cab was sold the majority of Pio
neer stock was owned by the Sherman family
Meanwhile on August 2 Say wrote to Sherman as
president of Pioneer restating the Union s position
Please be advised that it is our position that Sec
tion 35 the successors and assigns clause requires
you to make as a condition of any sale of a fran
chise the collective bargaining agreement between
Pioneer Holding Company of Minnesota and the
Guild of Taxi Drivers Local 3024 B R A C
About the same time the Union held a meeting at which
a strike vote was taken after discussion of Pioneers pro
posal and a recommendation from Say that the proposal
be rejected Say testified that he recommended to the
members that they reject the Company s proposed con
tract because it contained an illegal union security clause
to which the Union should not be a party He also dis
cussed with the membership the arbitration section of the
contract with which he was dissatisfied and the fact that
the Employer planned to eliminate pension benefits and
health insurance Finally he noted that the Company had
failed to forward to the Union the dues it had deduct
ed 11 and advised the membership that this too was a vio
lation of the Act
The parties met for the next bargaining session on
August 6 At this time Say reported to the Pioneer rep
resentatives that the membership had turned down the
Company s last proposal He told Barnhart and Sherman
that in his opinion the reason was the illegal union secu
my clause i e members only wording the penalties
other than discharge provisions and the economic pack
age in general He added that the Union also wanted the
dues that Pioneer had deducted and not forwarded The
company representatives denied that the members only
language was illegal and refused to change the wording
As for the other provisions of its proposal the Company
briefly offered to revise its position regarding pension
benefits and hospitalization but declined to put the revi
sions in writing Thereafter there was little discussion at
this session about the Company s members only pro
posal because according to Barnhart the subject matter
fell into the background or faded away Instead the par
ties sought to solve the problem of drivers future repre
sentation by concentrating on section 35 the successor
and assigns provision Barnhart continued to insist that
section 35 be deleted while the Union came armed with
two sets of proposals one set reflecting demands to be
made if Pioneer continued to employ its dnvers de
mands made earlier the other reflecting demands to be
made if Pioneer sold its cabs as it was apparently intend
ing to do Under the latter circumstances according to
the Unions written demands section 35 was to be
strengthened by the inclusion of the following language
Addendum to Sect 35
The employer further agrees that as a condition
of any sale of its taxicabs operating under the Blue
and White colors utilizing Blue and White dispatch
service that any or all prospective buyers shall be
bound by all the terms of this agreement
On August 10 Pioneer issued a memorandum to its em
ployees concerning the content of the August 6 bargain
ing session The memorandum advised the employees
that a proposed tradeoff discussed at the previous bar
gaining session whereby the employees would keep their
pension rights and health benefits in return for their
paying a larger percentage of the gasoline costs would
probably not be acceptable to the drivers because more
of them would be adversely affected by the increased
costs of fuel than would benefit from the pension and
health benefits The memorandum went on to state that
the only changes that the Company was proposing at
that time was to drop the health insurance and pension
plans and to reword some sections of the contract so as
to prevent the Union from hindering its sale of cabs The
I I Discussed infra
BLUE & WHITE CABS 1057
memorandum stated that the Company s primary objec
tive was the sale of its business that the sale was pro
gressing and that it was hoped that more employees
would purchase cabs It closed with a statement that
there would be no layoffs during the transition and with
the stated hope that there would be no strike
A day or two latter Pioneer issued a second memoran
dum to its employees entitled WILL THERE BE AN
OTHER VOTE referring of course to the employees
strike vote of several days before In this memorandum
the Company informed its employees that it had been ad
vised that the original strike vote would stand that this
was unfortunate because it had tried to negotiate an
agreement that would preserve business and jobs while
[it was] trying to sell the business The memorandum
explained that removal of health insurance and pension
benefits was necessary in order for the company to con
tinue to operate while the cabs were being sold It stated
further the changes in wording we have proposed for
the new contract simply allows us to sell our cabs with
out continuous opposition from the union leaders The
memorandum promised to continue to operate as many
cabs as possible and voiced the hope that there would be
no picket lines to cross
On August 13 the Union filed a charge with the Board
alleging interrogation and surveillance in violation of
Section 8 (a)(1) of the Act and a broad nonspecific refus
al to bargain in violation of Section 8(a)(1) and (5) which
eventually turned out to be based on Pioneers failure to
properly handle dues deductions
On August 16 the Union struck Pickets carried signs
bearing the wording ON STRIKE AGAINST BLUE
& WHITE UNFAIR LABOR PRACTICES and simi
lar messages Barnhart credibly testified however that
at no time prior to the strike did Say or anyone else tell
him that the Union would strike to protest Pioneers in
clusion in its proposal of the section 1A members only
language or because the Company had failed to forward
the paid union dues to the Union 12 Rather the Union
advised Barnhart that the reasons it was going to strike
were because Pioneer was selling its cabs and taking the
position that the buyers would not be bound by the con
tract and because of economic demands for the dispatch
room personnel particularly pension and health insur
ance benefits that Pioneer was unable to grant because of
its financial problems
Because virtually all the drivers honored the picket
line and refused to work Pioneer immediately began
hiring replacements Barnhart told the replacements that
their jobs would be permanent and that they would not
be replaced after the strike ended The strike lasted into
January 1983 during which period Pioneer continued to
sell its cabs and with each cab there was a reduction in
vacancies available for any of Pioneers returning driver
employees
During the strike Pioneer continued to meet and nego
tiate with the Union on the average of about once per
month At the September 20 bargaining session the rep
resentatives of management Barnhart and Sherman pro
posed that there be two contracts rather than one the
2 The union dues issue is covered separately infra
first between the Union and Service covering dispatch
ers order takers gas people and starters the second be
tween the Union and Pioneer covering drivers It was
explained that two separate contracts were necessary be
cause once all the cabs were sold Pioneer would no
longer have any employees and Service would employ
the above described classifications of employees other
than drivers Say agreed to look over the two separate
contracts but said he would not be interested in splitting
up the bargaining unit as it then existed and really pre
ferred one contract
On September 23 the first Service stockholder meeting
was held Four cabs had been sold 13 by that date and
the new owners or part owners and Sherman and Barn
hart attended the meeting Negotiations with the Union
legal problems the strike and the sale of assets by Pio
neer to Service were discussed Charges to be made by
Service to the cab owners in the near future to cover ex
penses were also discussed and agreed on as was other
general business
September 25 marked the last day that dispatch room
employees were employed by Pioneer and the last day
Pioneer operated the dispatching service Up to this time
these employees had been supervised by Barnhart and by
Bonnie DeSota As of September 26 they were employed
by Service Five of the seven rank and file employees
i e order takers and dispatchers were retained by Serv
ice and three others added All were still supervised by
Barnhart and DeSota Similarly the same mechanics14
continued to be employed the same suppliers used and
Barnhart continued supervising for Service as he had for
Pioneer under an oral agreement The servicing of cabs
by Service remained the same as it had been under Pio
neer Ultimate control of Service and its operations was
in the hands of its stockholders beginning on September
26 but for the time being at least these Service stock
holders were still Pioneer people Gradually however
the cabs and Service stock changed hands and the new
owners took over control of Service
Between September 27 and 30 the Union Pioneer and
the Regional Director entered into an informal settle
ment agreement providing for Pioneer to forward to the
Union all dues withheld and to refrain from forwarding
or offering to forward directly to employees dues col
lected during the life of the 1981 - 1982 collective bar
gaining agreement Subsequently Pioneer forwarded the
dues to the Union and posted a notice in conformance
with the settlement agreement 15
At the regular union membership meeting held Sep
tember 28 Say brought to the attention of the members
the management proposal that there be two contracts
He advised those present that Pioneer was trying to
divide the unit up which was potentially illegal He
said that there were no solid proposals from the Compa
ny therefore there was nothing to vote on
The second meeting of Service stockholders took
place on October 28 the time and agenda having been
drawn up by Barnhart in consultation with Sherman
13 Four others were in the process of being sold
14 The mechanics were represented by another union
15 Expiration of the 60 day posting period occurred December 4
1058 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Barnhart was at the time personnel manager for Service
and had held the same position for Pioneer prior thereto
By this time there had been nine cabs sold", and of
course nine shares in Service likewise sold Attending
the October 28 meeting were nine shareholders besides
Barnhart At this meeting union negotiations and court
proceedings were discussed Operational matters were
discussed freely with suggestions being offered and
adopted by those present including the new share
holder/cab owners One of the suggestions made by
some of the new shareholders was that a committee be
set up to arbitrate questions about certain drivers lying
about locations and stealing loads It was decided that a
committee of five should be organized to be comprised
of two owner operators two employee drivers and one
member of management Minutes of the meeting reflect
full and effective participation of all in attendance
On November 9 Barnhart wrote to Say about several
contemplated changes First Barnhart proposed chang
ing the seniority system to be fair to our new employ
ees who have joined us since August 15 1982 (when
the strike began) He proposed to base seniority on the
number of shifts worked since August 15 Second it
would no longer be required that a driver work 13 shifts
per month Third day drivers would have to be off the
street by 5 p in or perhaps 4 p in to make day shift and
night shift more equally profitable Fourth in accord
ance with the decision made at the October 28 share
holders meeting Barnhart advised Say of the organiza
tion of the committee to oversee and arbitrate grievances
concerning stealing loads the committee to have power
to levy fines Barnhart offered in his letter to meet with
Say to discuss the contemplated changes and advised
him of his intent to implement the changes before De
cember 1 Say interpreted the proposed seniority change
as granting seniority only to those who worked after the
inception of the strike Before the strike seniority was
used for purposes of bidding on shifts days off and dis
patch room and garage jobs
A bargaining session was held on November 17
Among the matters discussed were the proposed changes
described in Barnhar s letter of November 9 and 17 Re
garding the seniority question management proposed that
striking employees have their seniority begin as of the
day they return to work while nonstriking employees be
credited with seniority for shifts worked after the strike
began as a reward for saving the Company during the
strike Say objected to Barnhart s new seniority proposal
because it penalized employees for striking in violation of
the National Labor Relations Act Say told Barnhart that
the Union was adamantly against the Company s new se
nionty plan Barnhart replied that he did not owe the
strikers anything whereas he did owe the people who
crossed the picket line something According to Say the
Union tried to get the Company to agree to a back to
work agreement based on seniority but the Company
took the position that the people who had taken jobs
during the strike should keep them and strikers should
have a seniority date based on their return date after the
strike ended
16 In all there had been by this time 19 sales finalized or pending
There was also some discussion concerning the
Longhood Committee established previously to deal with
drivers stealing fares Although no specific cases had
been arbitrated before the November 17 meeting the
Union took the position that it was within its province to
deal with such problems as it had in the past Barnhart
took the position that the new owners and their drivers
should have their own committee and would implement
the plan as conceived because there would be more
owner operators and drivers working for them than for
Pioneer and they should be involved in resolving such
problems Despite Barnhart s position Say felt and stated
that the Union still represented the owners and their
drivers
Regarding Barnhart s plan to use supervisors in the
dispatch room Say asked Barnhart if this was a tempo
rary or permanent plan Barnhart replied that it would
be permanent that after the strike was settled Barnhart
wanted the right to install one or more supervisors in the
dispatch room if and when he desired routinely doing
bargaining unit work Supervisors had been dispatching
however ever since the strike began to replace unit dis
patchers who were on strike The Union agreed that this
was the Company s right Say who could foresee man
agement placing two or three supervisors in the dispatch
room at the same time all doing unit work objected
strenuously Nevertheless Barnhart insisted that he in
tended to implement the plan
On November 23 at a union meeting Say discussed
the proposed changes with the membership He advised
the members that the Company was trying to divide the
unit up and that such was illegal He told them that the
Company had made no solid proposals so that there was
nothing to vote on He said that both the Company s se
niority proposal and its formation of the new committee
were illegal He said that the Company s sale of cabs and
its replacement of dispatch room employees with super
visors was virtually eliminating the unit Say testified
that at the fall meetings unfair labor practice charges
negotiations the members only union security clause
hospitalization the Company s failure to forward dues
and wage structures were all discussed
On November 30 there was a meeting of Service
stockholders The meeting was scheduled by Barnhart
and Sherman Barnhart drew up the agenda Besides
Barnhart and Sherman there were 21 stockholders in at
tendance At the meeting Barnhart announced that there
were 23 owner operated cabs operating and 7 more with
money down Various business problems were discussed
including use of the garage cost of repairs and progress
in union negotiations Various committees were orga
nized to look into obtaining a gas contract and hiring a
lawyer to consult concerning a decertification petition
The Longhood Committee it was announced had held
one meeting and levied one fine Meetings of this com
mittee would thereafter be held weekly According to
Barnhart by this time the Union had already been noti
feed of the existence of the Longhood Committee
In late November and December the number of taxi
cabs on the street increased Though most of the original
drivers were still on strike a number had returned to
BLUE & WHITE CABS
work while others had been replaced The number of va
cancies was reduced as more cabs were sold and strikers
replaced
On January 6 1983 17 another meeting of Service
stockholders was held Twenty four stockholders attend
ed According to the minutes of this meeting about half
the shares in Service had been sold by this time It was
decided therefore to organize a new board of directors
to oversee the operations of Service The board was to
consist of seven members Sherman Barnhart and five
owner operators The term of the board of directors was
to be from January 31 1983 until January 31 1984
Election of the new Board was scheduled for January
20 In addition to the reogranization of the board of di
rectors other business decisions were made by the stock
holders present at this meeting including the decision in
favor of an increase in the service fee to be paid to Serv
ice and the continuation of a $5 fee per cab for legal fees
in connection with union negotiations
On January 7 a meeting was held at the office of the
Federal Mediation and Conciliation Service In attend
ance were Barnhart Sherman Say and Attorney Brunig
who had represented the Company during injunction
proceedings earlier Brunig advised the Union that he
was only interested in the dispatchers and order takers
and stated that he would be willing to negotiate a con
tract only if and when the Union was able to establish its
majority status Say replied that the Union did not have
to establish its majority because it already had a majority
in the single unit which had existed before the strike and
which he was not interested in having divided Brunig
then said that he did not represent the drivers and would
leave He then did so Barnhart remained behind to dis
cuss the drivers with Say
After Brunig left Say asked Barnhart if he would ne
gotiate a back to work agreement Barnhart replied that
he did not know how to do this Say suggested that he
simply use tl-e original seniority system Barnhart refused
stating that the strikers did not have a seniority system
Barnhart refused stating that the strikers did not have se
nionty under his system He said that he favored those
people who had not gone out on strike and who had
saved his Company He complained that the strikers had
tried to ruin his Company and therefore had no seniority
Say replied that Barnhart could not take that position be
cause he was penalizing the strikers for exercising their
right Barnhart agreed that that was what he was doing
but stated I m committed to those people who didn t
strike and came to work for me and I in not ever going
to change my mind
Later after contacting counsel Say called Brunig
again and advised him that the Union s position had not
changed that there was just one unit including both
drivers and dispatch room employees and the Union
represented a majority of employees in that unit Say
told Brunig that a recent decertification petition had
been dismissed for lack of interest and the unit should
not be broken up Brunig replied that Service was a new
company with different owners Say insisted that the
17 Subsequently in this subsection all dates are in 1983 unless other
wise noted
1059
principals were the same Neither Say nor Brunig
changed his position
Still later that day Say again talked with Barnhart He
handed him a letter signed by the Union s general chair
man addressed to Sherman and Barnhart Pioneer Hold
ing Company containing an unconditional offer to return
to work on behalf of all strikers He also specifically
stated that it was an unconditional offer to return to
work The meeting then broke up
About 5 p in on the same day Say received a phone
call from Barnhart who told him that he would accept
his unconditional offer to return to work provided the
Union would write a press release on its own stationery
stating that the strike was over and provided further
that the parties could work out a written back to work
agreement and a signed contract Say told Barnhart that
what he was doing was placing illegal conditions on an
unconditional offer to return to work Barnhart replied
that there was no other way of getting the employees
back to work Say again told Barnhart to obtain legal
advice
The Company after the unconditional offer to return
was made offered to meet with Say and work out a
means of calling the strikers back However Barnhart
would not consider original seniority as the basis for
recall insisting that the only seniority that it would con
sider was one based on the number of shifts worked
since the strike began Thus no employee who went out
on strike would have seniority unless he returned and
worked some shifts after August 15 There was then in
Say s view no orderly way to get the strikers back to
work As it turned out after the unconditional offer to
return to work was made Pioneer neither recalled any
strikers nor hired any new employees
On January 9 Barnhart called Sav and read to him a
letter that the Union later received in the mail The
letter signed by Barnhart advised the Union that Pio
neer accepted the Union s unconditional offer for all
stnkersi against Pioneer to return to work subject to the
execution by the Union of a written back to work agree
ment and a written contract then in the process of prepa
ration Say told Barnhart that what he was doing was it
legal and asked him if he had checked with his attorney
Barnhart replied that he had The following day the
Union filed the charge in Case 18-CA-8006 alleging a
broad refusal to bargain Also on January 10 Say advised
Brunig by letter that his unconditional offer of January 7
included all dispatchers and order takers
On January 13 Barnhart called Say and told him that
he was no longer insisting on a back to work agreement
or a press release as a condition to accepting the Union s
unconditional offer to return to work He added howev
er that he would not be hiring back any strikers anyway
because the Company would not be hiring anybody The
same day the Union amended its charge in Case 18-CA-
8006 by adding an 8(a)(3) allegation that Pioneer and
Service's had since January 7 discriminated against its
striking employees
18 Service was represented at this time by Attorney Robert Brunig
Pioneer by Barnhart
1060 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
On January 14 Brunig responded to Say s letter of Jan
uary 10 concerning the inclusion of the dispatchers and
order takers in the unconditional offer to return to work
Brunig stated that although the Union had struck Pio
neer no one had ever struck Service 19 Brunig added
that none of the dispatchers and order takers who struck
Pioneer were ever employees of Service As before he
then offered to meet and negotiate with the Union once
it demonstrated majority support or to go to an election
on a showing of 30 percent support Without a showing
of support Bruntg stated Service would not negotiate
because to do so would be in his estimation unlawful
On January 20 the Service stockholders held another
meeting By this time Pioneer held only one third of the
stock in Service Nominations for the new board of di
rectors were considered Votes were in accordance with
the number of shares in Service Five new members all
owner operators and shareholders joined Sherman and
Barnhart who altogether comprised the seven member
board Though shareholders and board of directors con
trol of Service had shifted from Pioneer to the new
owners Sherman continued on as president and general
manager and Barnhart as vice president Barnhart contin
ued to supervise the dispatch office employees In addi
tion to the election of a new board of directors the
meeting of January 20 was taken up with matters of gen
eral concern to those present i e licensing and ordi
nances The shareholders according to the minutes of
the meeting all appear to have been involved in these
discussions
The Service board of directors met on January 28
with matters of mutual concern to all shareholders/cab
owners freely discussed among those present Consider
ation was given to permitting outside cab owners who
were not shareholders in Service to join Blue & White
without becoming shareholders in Service Subsequent
meetings of the board were held at which various day
to day operational problems were discussed and re
solved e g cab repairs driver/owner operator person
nel problems licensing requirements dispatch room/
driver problems etc The board of directors appear to
have begun about this time to operate as a part of man
agement making operational and managerial decisions on
an independent basis
Pioneer sold its last cab in May 1983 Thereafter Pio
neer did not operate Blue & White cabs As of the
summer of 1983 the new board of directors decided that
certain contracts initially signed by Sherman and Barn
hart as the old board of directors were not in the best
interest of Service and therefore refused to sign them 20
Service has since been asked to vacate by Pioneer As
for Service in midsummer 1983 it added employees to its
dispatch room complement for the first time since Janu
ary 7 These were individuals who had been driving pre
19 By January 14 40 cabs and 40 shares of stock in Service had been
sold Service at this point in time was independently owned Brunig s
statement notwithstanding the labor dispute was with Service as well as
Pioneer and both were being picketed The wages hours and working
conditions of the dispatchers and order takers were in the eyes of the
pickets in issue
20 E g repairs on the building leased from Pioneer by Service were to
be paid for by Service
viously for owner operators Owner operators did not
hire any of the striking employees as far as the evidence
indicates
In August 1983 Barnhart ceased being vice president
of Service and ceased being supervisor in the dispatch
office One month later Sherman ceased being president
and general manager
On September 30 the Regional Director for Region 18
issued an Order revoking approval of and vacation and
setting aside settlement agreement in Case 18 -CA-7822
on grounds that Respondent had engaged in substantial
postsettlement unfair labor practices some of which
were of the same type as those encompassed by the set
dement agreement As noted the consolidated complaint
issued the same date
D The Health Insurance Issue
Before the spring of 1982 Pioneers employees were
insured by the New England Life Insurance Company
At that time Pioneer was behind in its payments In May
of that year Pioneer was advised that its premiums
would thereafter be almost doubled due to the severe
loss experienced the previous year which cost the insur
ance company money Pioneer fell further behind
During the negotiations in the summer Pioneer ad
vised the Union that after the expiration of the current
contract it would discontinue fringe benefits including
health insurance because of its financial condition The
Company maintained its position throughout the early
negotiations Although according to a company memo
randum there was an offer from the Union to have the
drivers pay more for gasoline in return for keeping the
health insurance and pension plan this tradeoff was
never agreed on A second company memorandum to
employees issued just before the strike confirmed its in
tention to discontinue the health insurance
In negotiations following the initiation of the work
stoppage there was some discussion of the Union giving
up its demand for health insurance in return for the
Company s managing an IRA for its employees and con
tributing a very nominal monthly sum toward health in
surance for them Nothing came of these negotiations
and the Company continued to insist on the deletion of
the health insurance provision from the contract On
September 20 the Company once again put forth its pro
posal and announced that if the Union did not accept its
proposed agreement by September 30 it would cease
paying health insurance as of October 1
In October or November Barnhart was advised by his
insurance agent that if Pioneer quit paying premiums it
was not necessarily so that the insurance company would
automatically cancel its policy Rather it was possible
that the insurance company might let matters continue
for years then later come back and try to collect for
those years claiming that Pioneer never canceled its
policy Forewarned of this possibility Pioneer by letter
dated November 18 canceled its employees health insur
ance retroactive to May 30 Before canceling the policy
Barnhart checked into the claims that had been filed be
tween May 30 and November 18 to determine whether it
would be cheaper to self insure for that period or to
BLUE & WHITE CABS 1061
keep the commercial carrier Barnhart found that there
had been few claims between May and the expiration of
the contract and therefore determined to cancel retroac
tively to May 30 Although Barnhart had advised the
Union during negotiations that Pioneer intended to
cancel the health insurance plan he did not inform it
that it would be retroactive nor did he advise it that he
had canceled it immediately after doing so Say did not
learn of its cancellation until it came to his attention the
following January Nevertheless all claims arising be
tween May and August 15 were paid by Pioneer
E Dues Issues
According to contract Pioneer was supposed to
deduct dues from employees paychecks on the first
payday after the 10th of each month and forward the
money to the Union by the end of the month As a
matter of practice Say testified frequently Pioneer was a
few days late with its remittance of dues and when Say
would call to ask where the dues were he would be told
by Sherman that he had been busy but would get the
money in the following week then did so According to
company records in the 17 months January 1981
through May 1982 checks were timely dated only twice
Barnhart testified that checks during this period were
held back and not forwarded to the Union immediately
because the Company was using the money for other
corporate purposes and this was because the Company
was constantly overdrawn at the bank and frequently
had to wait for a certain account receivable to come in
before it could cover its check to the Union On occa
sions before June 1982 Barnhart admitted to the Union
that it was using its funds for operating expenses 2 i
In June 1982 dues were deducted but when Say did
not receive them by mid July he called Sherman and
asked him where they were and when they would be
coming Sherman replied that Pioneer was a little short
but he would write the Union a check He asked Say to
hold the check a few days after which it would be good
He said he would let Say know when it would be all
right to deposit the check Say agreed but after a week
passed and he did not receive June s dues he again called
Sherman This time Sherman told Say that Pioneer had
had a board meeting and that he had been instructed by
the directors to pay priority bills first Say asked Sher
man whether he felt the Union was priority Sherman
according to Say facetiously and laughingly said
Sure of course Say then told Sherman that he had no
right to borrow or misappropriate union funds that he
was merely an agent whose obligation it was to deduct
and forward the dues promptly by the end of the month
Sherman replied Well you ve got my position The
dues were not forwarded by July 30 Barnhart admitted
because the money was being used to pay gas and for
other operational expenses
On August 6 Say filed a grievance in letter form di
rected to Sherman based on Pioneers failure to forward
21 Say denied that he was ever told by Pioneer s management before
July 1982 that the dues were being used for operating expenses but ad
nutted that he had been told on one occasion that the dues check was
being held up until a deposit could be made in the bank
the June and July dues He requested a meeting to dis
cuss the matter About a week later Barnhart called Say
and told him that the Union had two choices either
choose an arbitrator to arbitrate the issue or accept the
June dues immediately with the understanding that the
July dues would be forwarded in a couple of weeks Say
chose to accept the June dues which were forwarded
and deposited in the Union s bank on August 16
Meanwhile as noted earlier on August 13 the Union
filed its charge in Case 18-CA-7822 alleging 8(a)(1) and
(5) violations the 8(a)(5) being a broad refusal to bargain
without specifics
On August 20 Pioneer forwarded the following notice
to its employees
TO ALL BLUE & WHITE EMPLOYEES
As you know our contract with the Guild of
Taxi Drivers and Associated Workers expired on
August 15 1982 We are no longer obligated to
deduct Union Dues from your check However as
a convenience to you we have deducted the money
as scheduled and are holding it for your instruc
tions
You may authorize us to forward it to the Union
or return it to you Please check one box below
sign this form and return it to us
[ ] Please forward the money to the Guild
Please return the money to me
In September 1982 the Regional Director approved a
settlement agreement in Case 18 -CA-7822 in which Pio
neer agreed to make the Union whole for dues owed to
it by Pioneers employees that were collected during the
month of August as well as any other dues or fees col
lected from these employees by Pioneer and not yet for
warded under the terms of the labor agreement Pioneer
agreed to post an appropriate notice covering the with
holding of dues and containing among other paragraphs
the following
WE WILL NOT forward or offer to forward to
the employees directly any dues which have al
ready been collected by the Employer and which
were being deducted under continuing authonza
tions by said employees up to the expiration date of
August 15 1982 under the terms of the collective
bargaining agreement
Thus the settlement agreement in Case 18-CA-7822 ap
pears to have dealt solely with the dues issue
On September 30 1983 1 year to the day of the Re
gion s approval of the settlement agreement in Case 18-
CA-7822 the acting Regional Director issued an Order
revoking approval of and vacating and setting aside the
settlement agreement on grounds that
Since September 30 1982 the Regional Director
for Region Eighteen has been apprised of evidence
supporting an allegation that Respondent has en
gaged in substantial post settlement unfair labor
1062 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
practices some of which were of the same type as
those encompassed by the Settlement Agreement
After an investigation the undersigned has deter
mined that to effectuate the purposes of the Act it
is necessary to revoke approval of the Settlement
Agreement
F Analysis and Conclusions
1 The alter ego issue
According to a recent Board decision 22 Absent a
disguised continuance the Board generally has found
alter ego status only where the two enterprises have
substantially identical ownership business purposes
management supervision customers operation and
equipment
In the instant case I find no evidence that Service is a
disguised continuance of Pioneer On the contrary the
record reflects that the creation of Service was based
purely on economic considerations untainted by union
animus or a desire to avoid the proscriptions of the Act
Moreover the record shows that Pioneer and Service do
not have substantially identical ownership Whereas Pio
neer is owned by a few shareholders mostly members of
the same family Service as it has eventually evolved is
owned by approximately 50 separate entities-individ
uals partnerships and corporations Whereas the busi
ness purpose of Pioneer was to make a profit that of
Service is to service the shareholder/cab owners on a
nonprofit basis To accomplish its business purposes the
former employed both drivers and dispatch office per
sonnel while the latter currently employs no drivers but
only dispatch room employees paid by means of fees
charged to the cab owners for services rendered Where
as Pioneers drivers and dispatch room employees were
supervised and controlled by Pioneer s management
Seri ice s drivers are supervised and controlled by the 50
or so individual cab owners Only the dispatch room em
ployees are supervised by Services management As for
equipment Service continues to operate the same dis
patch room equipment as did Pioneer but unlike Pioneer
Service owns no cabs The evidence thus clearly indi
cates that the two enterprises are not substantially identi
cal in these respects and I find them not to be alter egos
2 The successor issue
The Board stated in Spencer Foods 23
The threshold test for the inheritance of bargain
ing obligations developed by the Board and ap
proved by the Supreme Court in NLRB v Burns
Security Service 406 US 272 (1972) is whether
there is substantial continuity of the business enter
prise The Board s application of this test involves
consideration of the totality of the circumstances
surrounding the transfer as well as the operations of
the original and the purchasing enterprises The fac
tors traditionally weighed by the Board include
continuity in operation location work force work
mg conditions supervision machinery and equip
ment methods of production and product
Applying these criteria to the instant case I find that
Service as it eventually evolved is not a successor to
Pioneer Thus Pioneer was originally owned and con
trolled by a small group of investors mostly members of
the Sherman family whereas Service is owned by ap
proximately 50 shareholders who themselves are individ
uals partners or corporations Whereas Pioneer was a
holding company operating a taxicab business for profit
and a dispatching and order taking service in support
thereof Service neither owns nor operates any cabs but
merely furnishes the dispatching order taking and relat
ed services to independent cab owners for specific fees
but not for profit Additionally although there was no
hiatus in the traditional sense between the time when
Pioneer operated its taxicab business and the time when
Service fully evolved as an independent business there
was a transitional period of several months during which
the new controlling entity evolved and Pioneer gradually
lost control In other words the instant case is quite dif
ferent from one in which company A relinquishes con
trol of a going business one day and company B takes
over the following day and continues the business just as
it was Here as it eventually evolved at the time of the
hearing Service has different management supervision
and control than Pioneer Whereas Pioneer employed
139 or more drivers and dispatch room employees as of
August 15 1982 Service employs just 10 only 7 of
whom had previously been employed by Pioneer
Though the vast majority of Pioneers unit employees
were drivers Service employs no drivers at all only dis
patch room employees As for equipment whereas Pio
neer operated between 70 and 75 cabs and serviced the
public directly Service neither owns nor operates taxi
cabs but rather through the use of the dispatching and
order taking facilities previously operated by Pioneer
services independent taxicab owners and their employ
ees In sum I conclude that there is not that continuity
in operation within the employing industry requisite to
finding Service a successor to Pioneer Consequently
Service is not obligated to bargain with the Union con
cerning hours wages and working conditions of its em
ployees 24
3 Refusal to bargain issue
(a) Members only language and impasse
As noted Barnhart at the very beginning of negotia
tions included in his first proposal dated June 18 the ob
jectionable members only language At the various
bargaining sessions in July Barnhart explained that the
purpose of the members only language was to prevent
the Union from forcing the new cab owners into having
to join the Union Say replied that he had no intention of
forcing the new cab owners into the unit but insisted that
the language was still illegal and could not be used He
suggested that Pioneers problem be solved by making
22 TE Elevator Corp 268 NLRB 1461 (1984)
23 268 NLRB 1483 (1984)
24 Universal Electric Co 227 NLRB 1790 (1970) Cf Suburban Yellow
Taxi Co 249 NLRB 265 (1980) revd 721 F 2d 366 (D C Cir 1983)
BLUE & WHITE CABS 1063
changes in section 35 the successor provision This sug
gestion was rejected however Pioneer insisting that sec
tion 35 be deleted entirely Say in turn argued that he
was there to add to the contract not subtract from it He
again advised the company representatives to seek legal
aid
It appears clear from the record that throughout the
July negotiations the Union s interest was continuing to
represent the drivers after the sale of the cabs and have
the contract reflect this objective It is equally clear that
Pioneers interest was to complete the sale of its cabs
free of contractual encumbrances The use of the objec
tionable term members only was only Barnhart s inex
perienced attempt at assuring this objective and really
had nothing to do with the contract failing to cover Pio
neer s nonunion unit employees Thus the members
only wording was not the crux of the problem but
rather was seized on by Say as a red herring to sup
port his later claim that the strike was caused in part by
these words and to bolster his argument that the strike
was an unfair labor practice strike Granted that Say at
the union meeting in early August may have brought up
the subject of the members only language along with
various other considerations as he testified and later on
August 6 reported to Barnhart that the objectionable
language was one of several reasons for the member
ship s rejection of the contract I credit Barnhart s tests
mony that this subject fell into the background and faded
away while the parties attempted to resolve the problem
of the driver s future representation by concentrating on
section 35 the successor and assigns provision
Further Barnhart in early August advised the em
ployees that his purpose in rewording the contract was
to keep the Union from hindering the sale of cabs the
rewording having to do with either the members only
language or the language in section 35 it is not clear
which but dealing quite clearly with the future new cab
owners and/or their employees not with any attempt to
get the Union to restrict its representation of Pioneer em
ployees to union members only to the exclusion of non
union employees in the Pioneer unit
In short I find that despite the unfortunate wording
chosen by Barnhart for inclusion in his contract propos
al Pioneer did not demand as a condition of consum
mating the collective bargaining agreement that the
Union agree to include in such agreement a provision re
stncting the Union to being the exclusive collective bar
gaining representative only of its members as alleged
Moreover I find that impasse was not reached on this
issue as alleged Rather negotiations concerning the
members only language was abandoned while resolu
tion of the problem of the future representation of the
new cab owners and their employees was pursued via at
tempted changes in the successorship provisions
(b) Union dues issue
The general rule is that a settlement agreement with
which the parties have complied bars subsequent litiga
tion of presettlement conduct alleged to constitute unfair
labor practices 25 Record evidence indicates that Re
spondent in the instant proceeding fully complied with
the settlement agreement in Case 18-CA-7822 Conse
quently in view of Respondents compliance with the
cited settlement agreement and the essentially unrelated
nature of the alleged postsettlement violations it appears
unnecessary to rescind the settlement agreement in order
to effectuate the policies of the Act I shall therefore rec
ommend that the agreement be reinstated and the allega
tions concerning the dues issue be dismissed
(c) Health insurance issue
The record clearly indicates that Pioneer was eco
nomically in serious trouble since 1981 and that one of its
problems in this area was the burden of extremely high
health insurance premiums During negotiations in the
summer of 1982 Pioneer made its position perfectly
clear that at the expiration of the then current contract
it would discontinue the health insurance plan Though
various tradeoffs were discussed during negotiations
prior to the strike Pioneer never changed its position
After the strike was initiated the Company advised the
Union that as of October 1 Pioneer would cease paying
premiums On November 18 it canceled its health insur
ance policy retroactive to May 30
I find that the decision to terminate the health insur
ance program was economically motivated that the
Company negotiated long and hard but in good faith
over the issue giving the Union the bargaining opportu
nity to which it was entitled under the Act Finally after
having bargained to impasse over the matter it imple
mented its decision just as it had advised the Union it
would In doing so it did not as alleged violate the
Act 26
As to the decision of management to cancel the hospi
talization plan effective the previous May I find no vio
lation because the claims of all employees were fully
paid and no employee was adversely affected by the fact
that these claims were paid for directly by the Company
rather than through the insurance carrier
(d) The Longhood committee
As of October 28 Service was still in its formative
stage with most of its shareholders On that day at a
meeting of Services stockholders it vas decided that a
five member committee should be formed to handle
problems arising out of Services cab owners and/or
drivers lying about their location and thus stealing fares
from other cab owners or drivers Although Service was
still controlled by Pioneer and was not yet an independ
ent entity the creation of this committee was clearly in
contemplation of the time when Service would be
wholly owned by its shareholders as well as during the
interim formative period Following the decision to orga
nize this committee on November 9 Barnhart advised
Say of the decision and offered to meet and discuss the
matter with him On November 17 at a regular bargain
ing session the organization of the Longhood committee
was fully discussed The Union took the position that it
25 Hollywood Roosevelt Hotel Co 235 NLRB 1397 (1978)
26 E I du Pont & Co 268 NLRB 1075 (1984) Industrial Waste Service
268 NLRB 1180 (1984)
1064 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
had always been within the Unions province to handle
such matters and should remain its function after the for
mation of Service since it would continue to represent
the dnvers employed by Service Bankhart took the posi
tion that the Union would not represent either the new
cab owners/shareholders of Service nor their drivers and
that they should have some means themselves of control
ling such problems Thus with such completely diver
gent views of the situation it is clear that impasse had
been reached without hope of reaching any accord mu
tually satisfactory to both sides Under these circum
stances the subsequent implementation of the plan to or
ganize the committee was permissible and not in viola
tion of the Act 27
(e) Transferral of unit work to supervisors
By letter dated November 17 Barnhart advised the
Union of the contemplated use of one or more supervi
sors to do the dispatching At the bargaining session held
the same day the matter was discussed at length by Barn
hart and Say Say objected to the use of supervisors
doing unit work but Barnhart insisted on having this
right not only during the strike but thereafter as well
Thus it is once again clear that the Union was advised in
advance of the Company s plan to use supervisors for
dispatching after the strike and was given an opportunity
to discuss the matter Discussions took place and neither
party changed position Thus it can be said that impasse
had been reached and the Company could thereafter
make the change desired without violating the Act 28
(f) The two contract issue
On September 20 when Barnhart and Sherman pro
posed separate contracts with the Union one covering
Pioneers drivers the other covering Services dispatch
ers order takers gas people and starters they correctly
explained that once the cabs were sold Pioneer would
no longer have any employees and Service would then
employ all the above classifications except drivers The
Union resisted this proposal on the theory that it would
still be representing drivers as well as the other classifi
cations of employees after the sale of the cabs Barnhart
and Sherman on the other hand suggested the two sepa
rate contracts on the theory that Service would be an
entirely separate newly created independently operated
corporation with no driver employees for whom to bar
gain while Pioneer would continue though temporarily
to employ only drivers as of September 26 until it com
pleted the sale of its cabs In view of the above finding
that Service is neither the alter ego nor the successor of
Pioneer and therefore has no obligation to recognize and
bargain with the Union as the collective bargaining rep
resentative of its employees I find also that Barnhart s
suggestion of separately negotiated contracts was neither
unrealistic nor violative of the Act 29
When on January 7 1983 Brunig representing Serv
ice advised the Union that he would negotiate a con
tract if the Union was able to establish majority status
he did so lawfully because Service was at the time on
the verge of becoming or was already independent net
ther the alter ego nor the successor of Pioneer and
therefore not obligated to bargain with the Union I
therefore find no violation here
4 The alleged unfair labor practice strike
The strike lasted from August 16 1982 to January 7
1983 Because I have found that Respondent did not
commit any unfair labor practices either before or during
this period I likewise find that the strike was neither
caused by nor prolonged by any unfair labor practices
The strike was purely economic in nature and this was
so regardless of the Union s claims to the contrary and
despite the picket sign language chosen
5 Rehiring and supersenionty issues
As of January 7 1983 Service was or was in the
process of becoming an entirely separate corporation
neither the alter ego nor the successor of Pioneer As
such it was not obligated to hire any of Pioneers stnk
ing employees Its refusal to do so was not a violation of
the Act
As for Pioneer Barnhart received an unconditional
offer from the Union on January 7 in which the Union
offered to have the strikers return to work Later that
day Barnhart announced that there would be certain
conditions that had to be met before the striking employ
ees would be taken back namely that the Union write
the press release described above that a back to work
agreement be negotiated and that a contract be signed
by the parties Still later Barnhart told Say that employ
ees would be recalled not on the basis of previously
earned seniority but on the basis of shifts worked since
August 15 On January 9 Barnhart repeated his contract
and seniority conditions in writing and the following day
the Union filed its refusal to bargain charge
In a recent case30 the Board considered a set of facts
similiar to those involved here In that case following an
economic strike the Union made an unconditional offer
to return to work on behalf of the employees The em
ployer in that case agreed to take back the strikers pro
vided the Union agree to the employers last contractual
proposal and to superseniority for striker replacements
already on the job The Union agreed as part of the
back to work agreement to these conditions but charges
were later filed and complaint issued The administrative
law judge relying primarily on and quoting extensively
from Erie Resistor3 i reached the following
CONCLUSIONS OF LAW
27 Ibid
28 Ibid
29 The General Counsel s reliance on National Fresh Fruit & Vegetable
Co 227 NLRB 2014 (1977) revd 565 F 2d 1331 (5th Cir 1978) is mis
placed because the cited case and the instant case are clearly distinguish
able on the facts
3 By insisting and conditioning reinstate
ment of its employees upon acceptance of a final
offer whereby their seniority rights were to be im
so Gem City Ready Mix Co 270 NLRB 1260 (1984)
Si NLRB v Erie Resistor Corp 373 U S 221 (1963)
BLUE & WHITE CABS 1065
paired in favor of nonstriking employees Respond
ent violated Section 8(a)(1) and (3) of the Act
4 By according preferential seniority for pur
poses of retention recall and assignment of daily
and weekend overtime work or other employment
related conditions to Rodney Douglas Frank Baird
and Dick Lockman over other employees for un
lawfully discriminatory reasons Respondent violat
ed Section 8(a)(1) and (3) of the Act
The Board however reversed the administrative law
judge stating
The policy of the National Labor Relations Act
is to encourage the practice and procedure of col
lective bargaining as a means of resolving labor dis
putes including the encouragement of the negotia
tion of strike settlement agreements In furtherance
of this public policy the Board long has recognized
that statutory rights including even the fundamen
tal right to strike can be waived
it is clear that the Union with the subse
quent concurrence of its membership waived full
prestrike seniority on behalf of returning strikers in
return for an opportunity to end the strike and
return to work Under these circumstances it was
satisfactorily demonstrated that awarding top se
nionty to the two nonstriking employees and the
strike replacement was a lawful implementation of a
right clearly understood by all affected to have
been created through the collective bargaining
process Accordingly we shall dismiss the coin
plaint in its entirety
Thus applying the law of the cited case to the instant
situation it appears to be quite obvious that if in the
course of negotiating a strike settlement an employer
and a union can arrive at an agreement whereby a union
accepts the employers final offer which includes besides
economic or contractual provisions also a waiver of se
nionty rights clearly the employer does not violate the
Act by proposing such an agreement as in the instant
case even though it is rejected by the Union 32 For ob
viously there cannot be an acceptance without an offer
and highly unlikely that there will be a lawful waiver of
seniority rights without the same being first proposed
Having found that Pioneer s January 7 proposal33 was
a lawful attempt to negotiate a strike settlement and
having found also that neither Pioneer nor Service have
committed any of the other unfair labor practices al
leged I recommend that the complaint be dismissed in
its entirety
CONCLUSIONS OF LAW
1 Respondents are employers 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 mean
ing of Section 2(5) of the Act
3 Respondents have not engaged in the unfair labor
practices alleged in the complaint
[Recommended Order for dismissal omitted from pub
lication ]
32 The proposal apparently had little or no actual effect because Pio
veer neither recalled its old employees nor hired new ones after the un
conditional offer to return to work was made
83 I find Pioneers short lived demands for a back to-work agreement
and a union press release concerning the strike s termination as part of
the strike settlement to be nonviolative