El San Juan Hotel

National Labor Relations Board - Board Decisions

Feb 13, 1985

274 N.L.R.B. 13 (N.L.R.B. 1985)

EL SAN JUAN HOTEL
San Juan Hotel Corporation d/b/a El San Juan
Hotel and Union de Trabajadores de la Indus-
tria Gastronomica de Puerto Rico , Local 610,
Hotel and Restaurant Employees and Bartend-
ers International Union , AFL-CIO. Case 24-
CA-4712-2
13 February 1985
DECISION AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
HUNTER AND DENNIS
Upon a charge filed by the Union on 29 Septem-
ber 1982, the General Counsel of the National
Labor Relations Board issued a complaint on 12
November 1982 against the Company, the Re-
spondent, alleging that it has violated Section
8(a)(5) and (1), Section 8(d), and Section 2(6) and
(7) of the National Labor Relations Act.
The complaint also alleges that the most recent
collective-bargaining agreement between the Union
and the Respondent was effective by its terms from
25 May 1979 to 24 May 1982 and that, by written
stipulations executed by the parties, it was extended
through 15 October 1982. The complaint further
alleges that since 29 March 1982 the Respondent
has failed to continue in full force and effect all the
terms and conditions of the collective-bargaining
agreement by discontinuing the monthly contribu-
tions to the employees' pension fund as required by
article XXII of the collective-bargaining agree-
ment. On 24 November 1982 the Respondent filed
its answer, admitting in part and denying in part
the allegations of the complaint, submitting affirma-
tive defenses, and requesting that the complaint be
dismissed in its entirety.
On 29 March 1983 the General Counsel filed a
Motion for Summary Judgment. On 5 April 1983
the Board issued an order transferring the proceed-
ing to the Board and a Notice to Show Cause why
the motion should not be granted. The Company
filed a response.
On the entire record, the Board makes the fol-
lowing
Ruling on the Motion for Summary Judgment
In its answer and its motion in opposition to the
Motion for Summary Judgment, the Respondent
admits that since about 29 March 1982 it has failed
to make its payments to the employees' pension
fund as required by its collective-bargaining agree-
ment with the Union, but contends that its failure
to do so has been the result of its bankrupt status.
The Respondent also contends that its noncompli-
ance with this provision of the collective-bargain-
ing agreement did not constitute an unfair labor
13
practice and, therefore, that the Motion for Sum-
mary Judgment should be denied and the com-
plaint dismissed in its entirety.
As explicated below, we find merit in the Re-
spondent's contention that its discontinuance of
payments to the employees' pension fund does not
warrant our finding of an unfair labor practice. We
shall therefore deny the General Counsel's Motion
for Summary Judgment and dismiss the complaint
in its entirety.
In NLRB v. Bildisco & Bildisco, 104 S.Ct. 1188
(1984), the United States Supreme Court held that
a collective-bargaining agreement is unenforceable
within the meaning of Section 8(d) of the Act from
the date of the filing of the employer's petition in
bankruptcy until formal acceptance of the parties'
collective-bargaining agreement. Furthermore, the
Court noted that, in the case of a conversion from
a Chapter 11 reorganization to a Chapter 7 liquida-
tion proceeding, the Bankruptcy Code requires that
the trustee must decide whether to accept or reject
the collective-bargaining agreement within 60 days
from the date of an order for relief. i If the collec-
tive-bargaining agreement is not accepted within
this 60-day period, the Bankruptcy Code provides
that it is automatically rejected 60 days after the
conversion. 2
In the instant case, the Respondent's petition in
bankruptcy was filed under Chapter 11 of the
Bankruptcy Code on 20 May 1980, more than 1-
1/2 years before it commenced the discontinuance
of payments to the employees' pension fund on 29
March 1982, and over 2 years prior to the Union's
filing of the unfair labor practice charge in this
case. Thereafter, on 31 March 1983 the Respondent
closed its operations and, pursuant to the approval
of the U.S. Bankruptcy Court for the District of
Puerto Rico, this case was converted from a Chap-
ter 11 reorganization to a Chapter 7 liquidation
proceeding, and the Respondent's assets were sold
to a third party via a public auction.3
Accordingly, we find that the collective-bargain-
ing agreement between the Respondent and the
Union was unenforceable during the relevant
period of time herein, and that, consistent with Bil-
disco, the Respondent did not commit an unfair
labor practice when it discontinued its payments to
the employees' pension fund following the filing of
its petition in bankruptcy under Chapter 11.
' Bildisco, supra at 1198, 11 U S C § 365 (d)(2)
2 The conversion of a Chapter l1 proceeding to a Chapter 7 proceed-
ing in itself constitutes an order for relief G Pettigrew, Federal Bank-
ruptcy Code Theory Into Practice, at 140, 201 (1982)
9 Thus, by operation of law, the collective-bargaining agreement was
automatically rejected 60 days after the conversion
274 NLRB No. 3
14 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
On the basis of the entire record, the Board
makes the following
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
The Respondent is an employer engaged in com-
merce within the meaning of Section 2 (2), (6), and
(7) of the Act.
IT. THE LABOR ORGANIZATION INVOLVED
Union de Trabajadores de la Industria Gastrono-
mica de Puerto Rico, Local 610, Hotel and Restau-
rant Employees and Bartenders International
Union , AFL-CIO is a labor organization within
the meaning of Section 2(5) of the Act.
CONCLUSIONS OF LAW
Respondent did not violate Section 8(a)(5) and
(1) or Section 8(d) of the Act by discontinuing its
payment to the employees' pension fund, as re-
quired by the collective-bargaining agreement be-
tween the Respondent and the Union, after filing
its petition in bankruptcy with the U.S. Bankruptcy
Court for the District of Puerto Rico.
ORDER
The Motion for Summary Judgment is denied
and the complaint is dismissed in its entirety.
MEMBER DENNIS , dissenting.
Contrary to my collegues, I would remand the
case to the Regional Director for further investiga-
tion and consideration in light of Bildisco . See Earle
Equipment, 270 NLRB 827 (1984). The Respondent
admitted in its answer that the collective-bargain-
ing agreement was extended while the Respondent
was under Chapter 11 reorganization and that the
contract was still in effect . This admission raises
genuine issues concerning a possible violation
during the Chapter 11 period, before the conver-
sion to a Chapter 7 liquidation proceeding.