Commercial Heating & Service Co.

National Labor Relations Board - Board Decisions

Jun 27, 1974

212 N.L.R.B. 109 (N.L.R.B. 1974)

COMMERCIAL HEATING & SERVICE CO.
Commercial Gas Boiler & Heating Co. and Marjorie
Koosed, Dennis Malkin, and Belinda Malkin, Co-
Partners d/b/a Commercial Heating and Service
Co. and Pipe Fitters Local Union 120, United Asso-
ciation of Journeymen & Apprentices of the Plumb-
ing and Pipe Fitting Industry of the United States
and Canada, AFL-CIO. Case'8-CA-7667
June 27, 1974
DECISION AND ORDER
By MEMBERS JENKINS, KENNEDY, AND PENELLO
On March 29, 1974, Administrative Law Judge
Thomas A. Ricci issued the attached Decision in this
proceeding. Thereafter, the General Counsel and the
Charging Party filed exceptions and supporting briefs,
and the Respondent filed a brief in answer to the
exceptions.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings, and
conclusions of the Administrative Law Judge and to
adopt his recommended Order.'
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the complaint be, and it hereby is, dis-
missed in its entirety.
i In its exceptions, the Charging Party contends that the Administrative
Law Judge erred by refusing its request for an extension of time in which to
file its brief, and implies the brief was not considered by him. The record
reveals the Administrative Law Judge received the brief 5 days before the
Decision issued, which is ample time for him to have considered it In any
event, the Board has considered the brief as part of the record in this case
and finds the Charging Party was in no way prejudiced by the Administrative
Law Judge's refusal to extend the time for receipt of briefs. Accordingly, we
find this exception to be without merit
DECISION
STATEMENT OF THE CASE
THOMAS A. Ricci, Administrative Law Judge: A hearing
in this proceeding was held on February 21 and 22, 1974,
at Cleveland, Ohio, on complaint of the General Counsel
against Commercial Gas Boiler & Heating Co. and Marjorie
109
Koosed, Dennis Malkin, and Belinda Malkin, Co-Partners
d/b/a Commercial Heating and Service Co., herein jointly
called the Respondent. The complaint issued on January 24,
1974, upon a charge originally filed on May 4, 1973, and
amended on January 24, 1974. The sole issue is whether the
Respondent unlawfully refused to bargain with Pipe Fitters
Local Union 120, United Association of Journeymen &
Apprentices of the Plumbing and Pipe Fitting Industry of
the United States and Canada, AFL-CIO, herein called the
Union or Local 120, in violation of Section 8(a)(5) of the
Act.
Upon the entire record and from my observation of the
witnesses, I make the following:
FINDINGS OF FACT
I THE BUSINESS OF THE RESPONDENT
Commercial Gas Boiler & Heating Co., a corporation, is
engaged in the sale and installation of heating equipment on
commercial, industrial, and residential properties, with its
principal place of business in Cleveland, Ohio. Annually it
derives gross revenues in excess of $500,000, and annually
it receives products valued in excess of $50,000 directly from
out-of-state sources.
Commercial Heating and Service Co. is a copartnership
owned by Marjorie Koosed, Dennis Malkin, and Belinda
Malkin, engaged in the sale and installation of beating
equipment, also with its principal place of business in Cleve-
land, Ohio. Annually this partnership derives gross revenues
in excess of $500,000, and annually it receives products
valued in excess of $50,000 directly from out-of-state
sources.
I find that both these companies are engaged in com-
merce within the meaning of the Act.
II THE UNION INVOLVED
I find that Pipe Fitters Local Union 120, United Associa-
tion of Journeymen & Apprentices of the Plumbing and
Pipe Fitting Industry of the United States and Canada,
AFL-CIO, is a labor organization within the meaning of
Section 2(5) of the Act.
III THE ALLEGED UNFAIR LABOR PRACTICES
A. A Picture of the Case
Sanford Malkin is a heating engineer who for 20 years has
been in the business of selling boiler and other heating
equipment, installing it, and servicing it. He incorporated
his operation in 1953, calling it Commercial Gas & Heating
Co.; the corporation was still in existence at the time of the
events giving rise to this proceeding. Malkin has, over the
years, contracted to fulfill both union and nonunion jobs;
at times some of his employees were members of Pipe Fit-
ters Local 120, the Charging Party here. At times he had no
union members working for him at all. Always a percentage,
if not all, of his employees were nonunion. And, of course,
when some employees were in the union, he paid them
union scale-both hourly rate and fringe benefits; when
212 NLRB No. 15
110 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
they were not, as was most often the case , he paid them on
whatever basis he could arrange with them individually.
Late in 1970, he decided to separate the union as against
nonunion parts of his business into a more clearly definable
arrangement . On January 1, 1971, he put together a formal
partnership called Commercial Heating and Service Co.,
and from then on did all his nonunion jobs-again selling,
installing , and servicing heating and such equipment-as he
simultaneously continued to do under the corporate name
for his union jobs. He made his three children the partners
and owners of the nonunion business; they were then stu-
dents, a boy, age 19, and two girls, age 20 and 21. At the
hearing Malkin candidly conceded he did this in part for
IRS purposes and in part to provide for inheritance. The
children, still students away from home now, simply have
nothing to do with the business of either the corporation or
the partnership
For the past 10 years, the Union has been nibbling away
at Malkin trying to get him to go union , but with little
success. There came a time-in 1969-when Malkin joined
a multiemployer association, the Mechanical Contractors
Association of Cleveland (MCAC), in the name of the cor-
poration; this, of course, was only with respect to his union
jobs, or union employees. Things continued on in this fash-
ion, with six or eight of Malkin's employees working on the
union side of his operation, and six always on the nonunion
portion The Union lived with this arrangement all the time.
But in March 1973 it decided enough was enough, and
demanded that Malkin discontinue all nonunion jobs, that
he work only with union members and stop hiring people
on any basis except full payment-direct and indirect as
called for in the area contract between the Union and
MCAC. Malkin took the position that he could not afford
to do that, what with his nonunion jobs being in the "ghet-
to," in the disadvantaged, or government, construction area
of the business.
The complaint here being considered now alleges
Malkin's entire operation was always covered by his con-
tract, not just his occasional union members but all of his
employees. It says his membership in MCAC, which he
accepted in 1969, affected his then nonunion members as
well, that the partnership formality was a paper shell that
never really divided his business so as to bring into being
two separate companies, or employers. And in the end the
General Counsel asks that all Malkin's employees-no mat-
ter by what technical legal entity they seemed to be em-
ployed-be declared covered by the MCAC multiemployer
contract, today and retroactively to 1969. In terms of money
remedy, he demands that Malkin now pay to all of his
employees-back to 6 months before the filing of the charge
(see Sec. 10(b) of the statute)-the difference between union
and nonunion scale, about $3 for every hour worked since
approximately October 1972.
In defense, the Respondent contends the nonunion em-
ployees were never covered by Malkin's contract with
MCAC via his corporation, that they were never repre-
sented by the Union in collective bargaining at all, and that
therefore there can be no finding of illegal refusal to bargain
as to them, to say nothing of any conclusion that they were
always underpaid because the union contract called for
higher wages than they received.
B. The Pertinent Facts
There are Board decisions which turn upon the question
whether two companies, separate entities i n a legal sense,
are nevertheless to be deemed a single employer for purpos-
es of application of several sections of this statute. I find
that Malkin's two companies-his corporation and the
partnership-for purposes of this proceeding are a single
employer. The principal test is unified day-to-day control
and supervision of labor relations, that is, single-minded
determination of those aspects of any business which affect
the conditions of employment of the employees. The two
businesses are exactly of the same kind, the skills practiced
by the employees are the same, the office and shop of both
are the same, the hiring all centers upon Malkin himself for
final approval-albeit he has two subordinate managers
who report to him, the funds are mingled, and Malkin func-
tions literally as the boss-financial and otherwise-over
both operations. But most significant of all, if Malkin is not
the day-to-day boss of a truly unified business enterprise, it
means that the partnership has no top management at all,
for the children go to school and know nothing of what is
going on-even assuming they care.
This finding of single employer does not, however, dis-
pose of the issue of the case Malkin Joined the MCAC in
1969, he was still a member in 1973, his entire operation is
a single business-ergo, according to the General Counsel,
the "Respondent" violated Section 8(a)(5) when in 1973 it
refused to acknowledge Local 120 as bargaining agent of its
nonunion employees and admit that the MCAC contract
governed their conditions of employment. This one-sided
view of the total picture of the case suggests a Picasso draw-
ing-half a face, a very large eye, one ear, part of a mouth,
and a candle shedding light but suspended in air. The reali-
ties of human experience always show instead a more com-
plete picture, a coherent story, a balanced and
understandable portrayal of life. This is not the first time a
union seeking to organize a nonunion employer was satis-
fied, or had to be satisfied, with making progress a little step
at a time. And in the jockeying for advantage between the
disputants, the line of advance sometimes goes forward and
sometimes recedes If at any given moment union and em-
ployer are in agreement that only some of the employee
complement will be union represented, and work under
union conditions, and if their joint conduct shows imple-
mentation in fact of such understanding, their agreement
does not cease to be a fact of life merely because they
simultaneously sign a 40-page contract that really has no
application to a substantial segment of the working force.
This is the Respondent's true defense. It contends that
Malkin's nonunion employees, a number of whom he al-
ways had, were always excluded from any contract the
Company may have signed with Local 120, this regardless
of whether or not the two entities be considered as one. The
Union now asserts there never was such a collateral under-
standing, and in support it offered the testimony of three of
its business representatives, each of whom said at the hear-
ing he never knew, before March 1973, that Malkin's busi-
ness, or businesses, used a single nonunion employee. On
this total record, I do not credit their denials.
I credit instead the testimony of Malkin. Apart from the
COMMERCIAL HEATING & SERVICE CO.
question of the Union's knowledge of his nonunion opera-
tions, most of what he related, and that is set out below, was
not significantly denied by the opposing witnesses. The sto-
ry started in 1963 when Malkin had eight regular pipefitter
employees. He made an arrangement with Local 120 that
two of the eight should be members of the Union and work
under union conditions. The General Counsel proved that
in his then corporate name Malkin signed a contract on
March 7, 1963; it is in evidence and shows a multiemployer
agreement between Local 120 and the MCAC. Malkin had
no relationship either with the Association or the making of
that contract. Asked what the signature page of the agree-
ment was, Malkin answered: "It is a photocopy of my signa-
ture at the back of a book which I signed back as of this date
permitting me to have two of my employees in the union
and the remaining six not . . . because the Union did not
want the company, per se. They wanted two of my men in
the Union." The contract bears the signatures, on behalf of
the Union, of Donahue, Dingow, and Walsh, three profes-
sional and long-time business representatives. These men
took no issue with Malkin's clear testimony, yet on the
witness stand they swore they knew nothing about Malkin's
nonunion work until 1973. I do not know why the General
Counsel placed that 1963 document in evidence; in the light
of Malkin's absolutely credible testimony it was literally a
meaningless scrape of paper so far as this case is concerned.
The two union men of 1963 soon left and Malkin contin-
ued a completely nonunion operation again until 1967..A
fair reading of the testimony about what happened then and
thereafter warrants an inference that Malkin was no less
interested in having some of his employees be regular union
members as was the Union later, in 1973, that they all be
members. The difficulty throughout was that whereas the
Union, logically, would have liked all of Malkin's people to
be covered by union contract, Malkin felt that the nature of
his business made it economically impossible. He said, and
again no one contradicted him, that the kind of jobs he
,often bids for are low grade, only service, "ghetto" type
contracts, without enough money to pay union scale and
benefits.
Be that as it may, there was another arrangement between
Malkin and Local 120 in 1967. It is evidenced, in part, in
the form of a letter between them detailing an oral under-
standing (1) that Malkin could have three class A and five
class B men, (2) that all these employees should become
union members, (3) that Local 120 would produce agree-
ments signed by each of the men individually guaranteeing
they would stay with Malkin for 5 years and not seek or
accept work elsewhere, and (4) that Malkin would keep
them for 5 years "as long as it is economically feasible for
us to do so." None of the individual commitments was ever
produced, Malkin never signed any kind of contract with
the Union, and he regularly continued to take both union
and nonunion contract jobs. On the union jobs he paid
union wages; on the nonunion ones he gave what was called
class B wages-variously said at the hearing to be $2.50 or
$3 less per hour than union scale. For all of his people he
sent monthly payments to the Union for pension, insurance,
etc., based on the payroll.
In 1969 Malkin, in his corporate name, joined the MCAC.
He concedes his corporation-which, as now revealed, is
111
that part of his single-employer enterprise which operates
on union conditions-then became bound by the 1967-70
multiemployer contract Local 120 had with the Association,
and continued to be bound by the successor 1970-73 con-
tract. Malkin never resigned from MCAC and at the hear-
ing he expressed the view his corporation, now operating
only a single union job in a location 400 miles away from
Cleveland, is today bound by the Association's 1973-76
contract with Local 120.
Of special importance here is Malkin's explanation, again
not really contradicted, of how the class A and class B
businesses operated for 3 years, until the end of 1970, when
he changed the system. To start with, the entire class B
concept-a union member being paid $3 per hour less than
scale-did complete violence to whatever contract Local
120 had with any employer. To say, therefore, that in 1969
Malkin became bound by the MCAC contract, even with
respect to his nonunion employees, is a play on words. He
did not. One wonders whether Mickey Donahue, 10 years
an AFL Pipe Fitter business agent, would say to out-of-
work members of his Union that pipefitters cutting the
Union's scale by working for $3 an hour below contract
terms are union members and covered by union contract.
Malkin said his arrangement with the Union was that he
would pay the class B men the lesser rate whenever he
successfully bid on a nonunion job, and just so long as the
project on which these men worked, large or small, was
entirely nonunion. In the event it ever developed there were
any union craftmen on that job-no matter what craft-the
B men had to be paid full class A rates for their entire
performance there, no matter how much Malkm's bid had
been.'
Towards the end of 1970 Malkin decided he could not
continue to operate this way-not knowing in advance what
his labor on a nonunion contract job would cost him. He
therefore made a clean break between union and nonunion
operations, taking union jobs in the corporate name and
nonunion ones under the partnership. And he discontinued,
at the start of 1971, sending welfare, pension, and vacation
money to the Union for any of the nonunion employees.
Asked at the hearing whether the Union was aware of the
fact that he abolished the B rate, he answered: "They were,
they make the payroll." Neither the Union nor the General
° From Malkin's testimony:
The Union said that the A and B men did the same The union
statement was that the B rate was to be paid whenever the B men were
on jobs that no other union construction activity was involved. If there
were other trades on the job, even though the man was a B man, he
ultimately got the A rate which is what I was told
If he [the B man] worked a job for 3 months and there was a plumber
putting in the toilet, the whole thing would become A rate
Whenever other trades were on their remodeling job where they were
carrying cards, whether it be a bricklayer or a carpenter or a plumber,
in order to keep peace in the family, that was an A rated Job and A rated
men would be employed on that job
112 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Counsel took issue with this statement at the hearing. I take
it to mean the Union, in one way or another, looked over
his shoulder to ascertain the correctness of the monthly
report he sent to the Union accompanying his contribution
check.
Malkin also testified that from time to time during 1971
and 1972 some of his union employees complained to Local
120 about nonunion employees of Malkin's working too
close to their projects-it irritated them. According to Mal-
kin he received telephone calls from all three of the Union's
representatives-Donahue, Dingow, and Walsh-about
this. He said he explained to them why he had had to
separate the groups, because he could not afford A rates on
the nonunion jobs, and was told by the agents "I should
keep them separate," meaning union as against nonunion
employees, and "I was told to keep the nonunion men off
the job at the time that the union men are there even if they
were doing a different function."
The union agents denied any such conversations Their
denials must be appraised together with the position of the
Union taken later, in the spring of 1973, when, according to
its witnesses, it for the first time learned Malkin was doing
any nonunion jobs at all. The Union complained to the
MCAC about ajob Malkin was doing in March, contending
he was violating the MCAC contract, and arguing the
Union had a right to file a grievance under the contract. The
issue was considered at several monthly meetings of the
point conference committee under the MCAC contract, em-
ployer representatives sitting opposite Local 120 officers.
Malkin personally appeared at the first , on April 4, 1973 He
explained the history of his business vis-a-vis the Union, as
he did at the hearing here-how the Union always knew
and approved of his two-sided operations. The position of
the MCAC, as reflected in the minutes of some of the meet-
ings of the joint conference, was "the Malkin case is not
subject to consideration by the Joint Conference Commit-
tee," "they do not believe that the Malkin case is arbitra-
ble," "MCA did not view the matter as a violation of the
Agreement," "Malkin's operation of a nonunion shop was
a matter between Local 120 and Sanford Malkin," "MCA
has no right to dictate method of business operations to any
of its members." More important, however, is the position
of the Union expressed at the very first meeting, on April
4. After all of the talk about union and nonunion work done
by Malkin, "The Union stated that Mr. Malkin must make
a choice between operating completely on a union shop
basis or a nonunion shop basis."
The above quotations are from the regularly kept minutes
of the joint conference committee meetings The minutes of
prior meetings are normally read and approved at the next;
it is conceded the Union never raised any question, to the
committee itself, about the accuracy of the minutes as re-
ceived in evidence here; the member of MCAC who regu-
larly is in attendance and prepares them from his notes
testified for the Respondent and vouched for their correct-
ness and regularity Local 120's business agents tried to
create a doubt as to their reliability at this hearing, but their
suggested alternate story of what was really said at the
meetings is ambiguous , vague, and cannot serve to offset the
persuasiveness of the documents under the circumstances.
Moreover, for the Union to tell Malkin in 1973 he had to
choose one or the other-union or nonunion-is entirely
consistent with the total story of the past.
The truth of the matter is the Union always knew Malkin
did part of his business with a cadre of employees never
represented by the Union. It is highly unlikely, for the least,
that an AFL construction union in the city of Cleveland
would not notice sudden, complete, and permanent elimina-
tion of five or six employees from a single contractor's
monthly reporting statement, reflecting substantial reduc-
tion in money contributions to Union-controlled funds. The
rational explanation for the Union's silence on that score all
through 1971 and 1972 is that offered by Malkin-that it
did no more than reflect continued understanding between
him and Local 120 that Malkin used some employees repre-
sented by the Union and others who stood entirely apart
from any collective bargaining at all I credit Malkin and
find the union agents told him a number of times during
those 2 years to keep his nonunion jobs under cover, so to
speak, and not embarrass the Union too much
I find that the MCAC contract never covered Malkin's
nonunion employees, first working under his corporate
name and since 1971 working under the partnership name.
I find the Union never represented this identified group of
workmen. I find the Respondent was never under legal
obligation to bargain with Local 120 for these employees
and that therefore it did not violate Section 8(a)(5) of the
Act as alleged in the complaint. When Malkin picked up the
gauntlet thrown by the Union at the MCAC conference and
went 100 percent nonunion in Local 120's jurisdiction, his
union employees left him. The Union refused to send him
any more. It filed 8(a)(3) charges against Malkin, but they
were dismissed. A few months later some of these craftsmen
could find no other work and came to Malkin, now willing
to accept nonunion wages; some were taken on. Under-
standably the Union wants to represent these people. The
way to do it is by organizing, by producing authorization
cards, by filing a petition with the Board. Representation
cannot be achieved by bludgeoning the employer via an
existing contract that never had anything to do with the
employees involved.
ORDER'
I hereby recommend that the complaint be, and it hereby
is, dismissed.
2 In the event no exceptions are filed as provided by Sec 102 46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, and recommended Ordef herein shall, as provided in Sec 102 48
of the Rules and Regulations, be adopted by the Board and become its
findings , conclusions , and Order , and all objections thereto shall be deemed
waived for all purposes