Cerni Motor Sales, Inc.

National Labor Relations Board - Board Decisions

Feb 20, 1973

201 N.L.R.B. 918 (N.L.R.B. 1973)

918 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Cerni Motor Sales, Inc. and District 79 of the
International Association of Machinists and Aero-
space Workers, AFL-CIO, Petitioner. Case
8-RC-8694
February 20, 1973
DECISION ON REVIEW
BY MEMBERS FANNING , JENKINS , KENNEDY,
AND PENELLO
On August 4, 1972, the Regional Director for
Region 8 issued a Decision and Direction of Election
in the above -entitled proceeding, wherein he, inter
alia, excluded five individuals employed in the unit
of parts and service department employees found
appropriate because of the substantial stock owner-
ship of their parent , citing Foam Rubber City #2 of
Florida, Inc. d/b/a Scandia. I Thereafter , in accord-
ance with Section 102.67 of the National Labor
Relations Board Rules and Regulations, Series 8, as
amended , Employer filed a timely request for review
of the Regional Director 's Decision and Direction of
Election , urging reconsideration of the Foam Rubber
decision.
By telegraphic order dated August 28, 1972, the
National Labor Relations Board granted the Em-
ployer's Request for Review on the basis that it
raised substantial issues warranting review.
The Board has considered the entire record in this
case , including the Employer 's brief in support of
review , and makes the following findings:
Employer is a closely held family corporation
engaged in truck sales and service in Niles, Ohio. All
of the outstanding stock of Employer is equally
owned by two brothers, John P . and Charles C.
Cerni , who, with their wives , constitute the sole
officers of Employer.
The five individuals in dispute here2-Bridgette,
Charles, John , Joseph , and Steve Cerni-are all
children of Employer's president , John P. Cerni, who
actively manages the business . Four of the children
work in the parts department and the fifth is
classified as a helper .3 All of the children live at
home with their parents.
In Foam Rubber, supra, the facts were very similar
to those present here . There , as here , the corpora-
tion's outstanding stock was entirely and equally
owned by two brothers. There , as here, the individual
' 167 NLRB 623.
2 Petitioner also attempted to exclude from the unit Michael Cerm, who
works in the parts department and is a brother of the two exclusive
shareholders The Regional Director, however, included him in the unit, and
no request for review was filed with regard to that decision
3 There are approximately 18 employees in the parts and service
departments , including the five children and brother of Employees
president.
201 NLRB No. 133
in dispute was the son of one of the brothers who was
president of the corporation and nephew of the
other. The Board, overruling past precedent,4 exclud-
ed the individual from the unit on two grounds.
The first ground was under Section 2(3) of the Act,
which specifically excludes from the status of
"employee," "any individual employed by his parent
or spouse." Although the Board recognized that
technically the disputed employee was employed by
the corporation, and not by his father, it considered
the situation of a corporation entirely and equally
owned by two shareholders to be comparable-for
the purposes of Section 2(3)--to that of a copartner-
ship. And since, under a copartnership, the Board
would have excluded the son of one of the partners
under Section 2(3), it indicated that it would be
unrealistic and at odds with the purposes of Section
2(3) not to do the same where a corporation was
entirely owned in equal shares by two individuals.
The Board then went on to find that "even
assuming, arguendo, that Section 2(3) of the Act is
not susceptible to the foregoing interpretation, we
would, nevertheless, reach the same result in deter-
mining the appropriate bargaining unit in accord-
ance with Section 9(b) of the Act." The Board
reasoned that children of principals of closely held
corporations, "because of their relationship with a
substantial owner of this type of enterprise, have
interests more closely identified with management
than with their fellow employees," and, therefore,
would be excluded under Section 9(b) in any case.
Upon reconsideration of the Foam Rubber deci-
sion, we have decided to adhere to the views
expressed therein where eligibility questions are
raised with respect to children of shareholders having
a 50 percent or greater ownership interest in a closely
held corporation. Where an individual owns 50
percent or more of a closely held corporation, as in
the case of a copartner, that individual is, for the
purposes of Section 2(3), the actual employer of the
employees.
But, in any event, we wish further to note that on
the facts of this case, even if we were dealing with
children of a shareholder owning less than 50
percent, we would find sufficient evidence of a lack
of community of interest with unit employees to
warrant their exclusion. Thus, the challenged em-
ployees are the offspring of a substantial owner, who
is active in the management of the operation, and
4 Adam D. Goettl and Gus Goettl, d/bla International Metal Products
Company, 107 NLRB 65. American Steel Buck Corporation, 107 NLRB 554.
However, it should be noted that prior to these two cases, it had been the
Board's policy since the earliest days of the Wagner Act to exclude
immediate and collateral relatives of an employer's officers solely on the
basis of their family relationship . See P A Mueller and Sons, Inc, 105
NLRB 552 and cases cited therein.
CERNI MOTOR SALES 919
their uncle is the only other individual with an
ownership interest in the business. Furthermore, the
record shows that all the challenged voters live at
home with their parents and are at least partially
dependents on them .6
Accordingly, this case is hereby remanded to the
Regional Director for Region 8 for the purpose of
holding an election pursuant to the previous Deci-
sion and Direction of Election , except that the
payroll period for determining eligibility shall be that
immediately preceding the date of issuance of this
Decision.7
5 While John P. Cerro testified at the hearing that all but one of the
children paid him rent for living at home and pay "most " of their college
expenses , to the extent that the remainder of their college expenses are paid
by him, they are dependent on hun.
s See our decision in PariroffDrive-In Market, Inc, 201 NLRB No. 102,
where we set forth at some length why we find the presence of these factors
significant in determining community of interest under Section 9(b) of the
Act. See also N.L.R.B. v. Caravelle Wood Products, Inc., 466 F.2d 675 (C.A.
7, August 8 , 1972), where the court indicated that the Board could
use the presence or absence of these factors , among others, in deter-
mining community of interest under Sec . 9(b) of the Act.
I In order to assure that all eligible voters may have the opportunity to
be informed of the issues in the exercise of their statutory right to vote, all
parties to the election should have access to a list of voters and their
addresses which may be used to communicate with them . Excelsior
Underwear Inc., 156 NLRB 1236; N. LR.B. v. Wyman-Gordon Co., 394 U.S.
759. Accordingly , it is hereby directed that a corrected election eligibility
list, containing the names and addresses of all the eligible voters, must be
filed by the Employer with the Regional Director for Region 8 within 7 days
of the date of this Decision and Direction of Election . The Regional
Director shall make this list available to all parties to the election. No
extension of time to file this list shall be granted by the Regional Director
except in extraordinary circumstances . Failure to comply with this
requirement shall be grounds for setting aside the election whenever proper
objections are filed.