Frank Hennigan, et al.

National Labor Relations Board - Board Decisions

Jul 13, 1978

236 N.L.R.B. 1517 (N.L.R.B. 1978)

FRANK HENNIGAN. ET Al.
Frank Hennigan; Garfield Packing Co.; NBC Packing
Corporation; St. Louis Meat Packing Corp.; Mis-
souri River Industries of Missouri, Inc. and Local
545, Amalgamated Meat Cutters and Butcher
Workmen of North America, AFL-CIO
Missouri River Industries of Missouri, Inc. and Ilya
Ochakovsky
Frank Hennigan; Garfield Packing Co.; NBC Packing
Corporation; St. Louis Meat Packing Corp.; Mis-
souri River Industries of Missouri, Inc. and local
545, Amalgamated Meat Cutters and Butcher
Workmen of North America, AFL-CIO and United
Industrial Packing and Allied Workers Union, Par-
ty to the Contract. Cases 14-CA 9302, 14-CA
9918, 14-CA-10219, and 14-CA-10356
July 13, 1978
DECISION AND ORDER
BY CHAIRMAN FANNING ANI) MEMBERS JtNKINS
AN[D PENIEI O
On March 31, 1978, Administrative Law Judge
Robert A. Giannasi issued the attached Decision in
this proceeding. Thereafter, the General Counsel
filed exceptions and a supporting brief. Respondent
Missouri River Industries of Missouri, Inc., then filed
limited cross-exceptions and a supporting brief.
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.2 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 Re-
lations Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the complaint be, and it hereb) is, dis-
missed in its entirety.
'In view of our decision herein. ve find it unneccss.lrs to pass oin the
exceptions of Respondent Missouri River Industries of Mlss.uil. Inc
'The General Counsel has excepted to certain credihllits findines nad!e
by the Administrative Law Judge. It is the Board's etabhlshed plcss slat tli
overrule an Administrative Law Judge's resolutions with respect to credlbhil-
ty unless the clear preponderance of all ot the relevant evidence convinces
us that the resolutions are incorrect Standard ),rl tI al Product. It, .. 91
NLRB 544 (1950), enfd. 188 F.2d 302 (' A 3, V911 We hoae carefuil
examined the record and find no basis fo reverT:lig hls filndings.
DECISION
STATEMNIFS OF IriE CASF
RoH-Rr A GIANNASIt Administrative Law Judge: On Feb-
ruary 11. 1977. the Acting Regional Director issued an or-
der in Case 14- CA- 9302 revoking a settlement agreement
which had provided, inter alia, that Respondent Frank
Hennigan d/b/a Garfield Packing Company would, in the
event that he again engaged in the meatpacking industry in
the St. Louis area, either individually or through a succes-
sor business. notify and bargain with the Charging Party
Union. The Acting Regional Director concluded that,
upon evidence submitted to him, the agreement was
breached. Accordingly, on the same date, he issued a con-
solidated complaint in Case 14-CA-9302, which was
reinstituted, and Case 14- CA-9918 which charged a refus-
al to bargain as required by the settlement agreement. The
complaint alleged that Hennigan, who operated a meat-
packing plant on Garfield Avenue in St. Louis, Missouri,
had violated Section 8(a)(3) and (I) of the National Labor
Relations Act, as amended, by discharging certain employ-
ees because of their union activities and interfered with
protected rights in other respects: and Section 8(a)(5) and
(I) of the Act by refusing to bargain with the Charging
Parts Union which had been selected by a majority of the
employees as bargaining representative. This conduct took
place before Ilennigan closed the plant on June 16. 1976.
and before entrN of the settlement agreement on July 13,
1976. Ihe complaint, which was amended on March 9,
1977. also alleged that the other Respondents, the corpo-
rate entity Garfield Packing Company. NBC Packing Cor-
poration, and St. Louis Meat Packing Corporation were
elter egos of Hennigan and of each other and thus responsi-
ble for the alleged unfair labor practices of Hennigan as
well as the refusal to reinstate certain named former Hen-
nigan employees after the plant reopened in December
1976. The Respondents. through a single attorney, Charles
E. Sykes. filed an answer essentially densing the allega-
tions.
On March 22 and 23, 1977. I heard testimony on these
issues. After the close of the hearing. I granted the General
Counsel's motion to reopen the hearing, to further amend
the original complaint, and to add as a party respondent a
new firm. Missouri Riser Industries of Missouri. Inc..
which the evidence had suggested was also instrumental in
the operation of the plant in the above case. The allega-
tions werc essentially that all previous respondents wuere
alter p si of teach othier and that theN and Missouri River
Industries xsere, alternatively, successors of Hennigan and
that Mlssouli River Industries was a joint employer of the
other respondents after December 2. 1976. 1 also granted
the General Counsel's motion to consolidate the existing
case wuith tw o new Lomplaints: Case 14 (A 10219 wherein
Missouri Riser Industries and the other Respondents were
charged tioh disci inmatorily discharging an emplosyee in
violation of Section S(a)(3) and (1) of the Act;' and Case
1The toitinlai m I( cse 14 ('A 111l21l) sas d n ised. tipi Respondritt
rnStion hec.l,,fe oi irsiU'fftent1 cidcnce thI (Genc t I i n"cl ] ic Il
(.:1 .1 thils dil'mil'.
236 NLRB No. 209
1317
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
14-CA-10356 which contained an allegation that all Re-
spondents- in view of their interrelationship-had unlaw-
fully recognized and entered into a contract with another
union--United Industrial Packing and Allied Workers
Union-at a time when they were obligated to bargain
with the Charging Party Union, in violation of Section
8(a)(2) and (1) of the Act. Missouri River Industries ap-
peared through its counsel, Kenneth Carr, and denied the
allegations in the second consolidated complaint to the ex-
tent that they involved his client; the other Respondents
denied the additional allegations involving them.
I heard further evidence concerning the second consoli-
dated complaint on September 12 and 13, 1977. All parties
appeared through their counsel. No one appeared on be-
half of the United Industrial Packing and Allied Workers
Union, the party to the contract.
The Respondents - all of them---filed proposed findings,
conclusions, and a bnef which was signed by both Mr.
Carr and Mr. Sykes with a disclaimer that this be con-
strued as an admission that the various Respondents were
"joint-employers." The Charging Party also filed proposed
findings, conclusions, and a brief. The General Counsel
filed a brief and proposed conclusions.
Based on the entire record, including my observation of
the witnesses and consideration of the briefs and argu-
ments of the parties, I make the following:
FINDINc;S OF FACT
I THsE LABOR ORGANIZATIONS
The Charging Party, Local 545, Amalgamated Meat
Cutters and Butcher Workmen of North America, AFL-
CIO (hereinafter the Union or Local 545), is a labor orga-
nization within the meaning of Section 2(5) of the Act.
United Industrial Packing and Allied Workers Union is
a labor organization within the meaning of Section 2(5) of
the Act.
I1 rIL. BULSINLSS OF RI SPONDEN rs
Frank Hlennigan. who did business as G(arfield Packing
Company, was engaged in hog slaughtering, meat packing.
and other related activities at a plant located at 3953 G(ar-
field Avenue in St. ILouis, Missouri, from April 9, 1976.
until June 16, 1976. During a representative period, Henni-
gan sold and delivered to customers outside Missouri from
the St. I.ouis plant meat products valued in excess of
$50,000.
St. I.ouis Meat Packing Corporation is a Delaware cor-
poration engaged in the meatpacking industry, authorized
to (lo business in Missouri. It operated at all material times
since its incorporation on November 22. 1976, and at pres-
ent operates, the i,!ant at 3953 Garfield Avenue, St. Louis.
Missouri. During .i representatlve 1-year period, St. Louis
Meat Packing C(orp. purchased products from outside Mis-
souri valued in excess of $50,000 and sold products valued
in excess of $50).00 drectlyv to nonretail customers outside
the State of Mi' souri from its St. Louis location.
Garfield Packing Company is a Delaware corporation
authorized to do business in Missouri. It was chartered on
August 13, 1976, and its stated purpose is to engage in the
business of meatpacking and other related activities. On
November 2, 1976, the name was changed to NBC Packing
Corporation. Garfield Packing Company and, after No-
vember 2, 1976, NBC Packing Corporation, was the owner
of the premises at 3953 Garfield Avenue, St. Louis, Mis-
souri. NBC Packing Corporation leases the property to St.
Louis Meat Packing Corporation and its stockholders, offi-
cers, and directors are identical to those of St. Louis Meat
Packing Corp.2
Since December 2, 1976, Missouri River Industries of
Missouri Inc., a Missouri corporation whose charter is dat-
ed December 3, 1976, has operated at least the employee
relations aspect of the plant on Garfield Avenue in St.
Louis pursuant to a contract with St. Louis Meat Packing
Corp. During a representative I-year period, Missouri Riv-
er Industries processed, at the Garfield Avenue plant,
products valued in excess of $50,000, of which products
over $50,000 were sold and shipped from the plant directly
to points located outside the State of Missouri.3
Respondents Frank Hennigan, St. Louis Meat Packing
Corp., NBC Packing Corporation, and Missouri River In-
dustries of Missouri, Inc., are employers within the mean-
ing of Section 2(2) and 2(6) of the Act.4
111. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
In January 1976, the Contris family purchased and
thereafter operated a meatpacking plant located at 3953
Garfield Avenue in St. Louis, Missouri. Frank Hennigan
purchased the plant and the business on April 9, 1976. Be-
tween April 9 and June 16, 1976, Hennigan engaged in the
hog slaughtering and meatpacking business as Garfield
Packing Company.
In this proceeding, Respondent Hennigan admitted that,
A.ccordingly, NBC Packing Corporation and St. I.ouis Meat Packing
('ror constitute a single employer for the purposes of this case.
'n view of the above and the evidence set forth In mole detail infra in
ti:i Decision, particularly the evidence that two of the three owners of NBC
Packing and St. Louis Meat Packing were supervisory employees of Mis-
soeuii River Industries and all three were authorized to sign checks on the
larter's behalf. I find that Missouri River Industries is a joint employer with
NH(' Packing and St. Louis Meat Packing. notwithstanding its alleged inde-
pendent contractor status. See Boire v. Greyhound Corp.. 376 U.S. 473. 480-
481 (1964) In any event. Missouri River Industries is at the very least an
agent of those two corporations for the purpose of providing and managing
a work force for the corporations at the Garfield Avenue facility. See
5i L R. B. *. Pa terson Menhaden Corporation, d h a Gallant Man, and Fletch-
,r Miller. Agent, Surprise, Inc, d/h/ a Surprise. and Flercher Miller, Agent,
389 F 2d 701, 703-704 IC.A. 5, 1968) Ma.son (Cit' Dressed Beef, Inc., 231
NLRi 735. fn. 3 (1977).
4 I make no findings with respect to the jurisdictional status of the corpo-
rate entity Garfield Packing Company during the period August 13, 1976, to
November 1. 1976. Thai Respondent's jurisdiction is not admitted and the
General Counsel has not submitted any evidence establishing jurisdictional
amounts for this Respondent as a separate entity before its name change to
NBC' Palcking Corp.
1518
FRANK HENNIGAN, ET AL.
in the period from January 28. 1976, to April 27, 1976, he
interfered with, restrained, and coerced employees in the
exercise of their Section 7 rights by threatening employees
and prospective employees with plant closure if the plant
were unionized, telling employees that job applicants had
not been hired because of their union membership, condi-
tioning employment of prospective employees on their
nonunion status, interrogating employees concerning their
signing and distributing union authorization cards, refus-
ing to hire an employee because of his union membership,
promising increased benefits to employees if they refrained
from union membership, threatening an employee with dis-
charge if he became a union member. and promulgating a
no-solicitation rule directed at union solicitation.
By April 29, 1976, 9 of Respondent Hennigan's 11 em-
ployees in the following appropriate unit signed union au-
thorization cards:
All production and maintenance employees employed
at Hennigan's St. Louis, Missouri facility excluding
office clericals and professional employees, guards
and supervisors as defined in the Act.
Respondent Hennigan also admitted in this proceeding
that, on various dates in late April 1976, he discriminato-
rily discharged employees Robert John Fisher, Stergious
Evangelopoulous, Michael Tsahiridis, Richard Turner, and
Mark Vilbert because of their union activities.
On April 28, 1976, the Union notified Respondent Hen-
nigan of its majority status and requested recognition and
bargaining. Hennigan declined to recognize the Union by
letter dated May 5, 1976, from his attorney.5
On May 3, 1976, the Union filed an unfair labor practice
charge against Hennigan alleging violations of Section
8(a)(5), (3), and (1) of the Act. Subsequently, the General
Counsel issued a complaint on these charges.
On June 16, 1976, Hennigan closed the plant and ceased
operations for lawful business reasons.6 He was losing
money, primarily because of antiquated machinery at the
plant as well as marketing and supply problems. All re-
maining employees were terminated except that Hennigan
retained his two brothers to help provide routine and gen-
eral maintenance for the plant. At this time, Ilennigan be-
gan to make contacts with an object towards selling the
plant and the business. In addition to making personal
contacts, he advertised in newspapers and industry jour-
nals.
On July 13, Respondent Hennigan. the Union. and the
Acting Regional Director entered into a settlement agree-
ment in Case 14-CA-9302 purporting to resolve the issues
in that case, including payment of backpay to the alleged
discriminatees who the agreement said did not desire rein-
statement. The settlement includes a typical form agree-
ment together with a notice to employees which states, in-
ter alia, "I WILL, in the event that I again engage in the meat
packing industry in the St. Louis Metropolitan area, either
5That attorney was with a different firm tram that with s himh Aitornes
Sykes, the present counsel for all Respondents e,, ept Misoul i River Indstii
tries. is affiliated.
6 The General Counsel conceded ihal the clhure w.as nil
t
!- ans unla.i-
ful reason under the Act
individually or through any successor business, notify and
bargain upon request with the Union" in the appropriate
unit. The agreement states nothing about the circumstanc-
es concerning what obviously prompted the agreement.
Hennigan's closure of the meatpacking plant, hut it con-
tains a nonadmission clause which states that, by entering
into the agreement, Hlennigan "does not admit that it com-
mitted an)y unfair labor practices." The notice apparently
remained posted in the plant for 60 days as provided in the
settlement agreement.
In the course of his efforts to sell the Garfield Avenue
plant, Hennigan spoke to a former associate. Robert }Hof-
man, on several occasions about the latter's purchasing the
business. FHe first contacted Hofman in May or June and
concluded a "handshake" deal with Hofman in late July
1976. It was agreed that Hofman was to purchase
Hennigan's equity in the business and Hofman was to
bring two other former associates of his and of Hennigan.
Chris Mikkelsen and Norm McCabe, into the business.
The purchase price was paid by virtue of two notes: the
first from a corporate entity created by Hennigan and the
three new owners (Garfield Packing Company, later
changed to NBC Packing Corporation) to which Hennigan
had transferred his business assets in exchange for stock
and the three new orders individually and severally: the
second from Hofman for $35,740. secured by Hofman's
residence in Chicago which had substantial equity to cover
the loan. The latter was in payment for Hennigan's 3.574
shares of $10 par value stock in Garfield Packing Compa-
ny. Hlennigan's testimony in this respect is corroborated by
Hofman and the corporate records introduced into evi-
dence in this case.
It appears that the sale was consummated on November
1, 1976, through the creation of several corporate entities
which resulted in the surrender of Hennigan's proprietary
interest in the plant and the business at the Garfield Ave-
nue facility. Both Hennigan and Hofman testified that
their sale contemplated that Hennigan would stay on to aid
in needed plant modernization and in the reopening of the
business, but that the sale would be consummated by the
end of the vear.
Garfield Packing Company was incorporated orn August
13. 1976. Corporate records show that Hennii an and Rob-
ert Hofman. Norman McCabe and Chris Mikkelsen were
elected as directors of Garfield Packing Companv. Henni-
gan was also elected president. Mikkelsen. vice president.
McCabe. treasurer. and Hofman, secretary. Tlhese four of-
ficers were also the shareholders of the corporation.
tlennigan's share of the stock swas paid for by sale tI, the
corporation of the plant and assets of his sole proplrt-
etorship and the corporation assumed an SBA loan of the
proprietoiship in the amount of $40.425.66. The fair mar-
ket value of Hlennigan's interest was set at $80.(0):0 $35,740
Was allocated to stock issued to tHennigan; and the remain-
dcr, $44,260. was treated ais a loan by Hclnnigan to the
corporation. In additio! it ssas provided that the salary of
Frank llenigan as presidlent would be SO00 i nr %week be-
ginning August 19. i97t.
Corporate records also shioss that on November 1, 1976,
Frank Ilennigan resigned as an off;cer direcior. and ein-
ployree eof (i;:!ticld Packino (sMmpans. As at this date
1519
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Ilennigan's stock in GCarfield Packing was sold to Hofman.
As mentioned above, in exchange for a note secured by
Hofman's residents. Hennigan's stock was canceled and
reissued to Hofman. Also on this date the corporation and
its remaining stockholders signed a note in the amount of
$44.322.02 to complete the purchase of Hennigan's busi-
ness.
On a corporate record dated November 2, 1976, the re-
maining directors and stockholders of Garfield Packing
Company voted to amend its certificate of incorporation to
change its name to NBC Packing Corporation. This was
accomplished by certificate of amendment dated Decem-
ber I, 1976.
Corporate records also indicate that, on November 22.
1976, St. Louis Meat Packing Corporation was incorporat-
ed. The officers were Chris Mikkelsen, president; Robert
Hofman, vice president; Norman McCabe, secretary-trea-
surer. These persons also constituted the board of direc-
tors. Hofman is the major stockholder; the other directors
hold 30 percent of the stock. The corporation had the au-
thority to lease the plant on Garfield Avenue from the
NBC Packing Company.
Basically the new owners of the business, Hofman, Mik-
kelsen, and McCabe, own the assets, primarily the plant,
through NBC Packing and operate the business through St.
Louis Meat Packing Corp.
During the late summer and fall of 1976, Hofman, Mc-
C'abe, Mikkelsen, and Hennigan devoted their energies to
renovating and modernizing the plant at 3953 Garfield Av-
enue. Previously it was an antiquated plant: it was turned
into a modern hog killing facility, primarily by the infusion
of new capital, over $100,000. All of the new capital was
contributed by the new owners Mikkelsen, Hofman, and
McCabe: none of it by Hennigan. Pursuant to the sale
arrangement with Hofman, Hennigan stayed on to aid in
the renovations, particularly to oversee the design, installa-
tion, and operation of a new hog dehiding process concern-
ing which he had considerable expertise. Hennigan was
paid $500 per week from Garfield Packing Company from
late August 1976. Hlennigan resigned from Garfield Pack-
ing on November 1, 1976, when the sale was consummated
as related above. He continued to receive payments of $500
per week frorl; the new owners during November 1976.7
During the renovations, independent contractors were
used, but there is also evidence that Garfield Packing Com-
pany utilized some five or six employees, two of whom
were Hlennigan's brothers and former employees. No meat-
packing or hog slaughtering was performed during the pe-
riod from late August until December 2, 1976.
On December 2, 1976, the plant reopened as a meat pro-
cessing operation. St. Louis Meat Packing utilized a new
firm, Missouri River Industries of Missouri, Inc., to oper-
ate the plant.
fhe contract between Missouri River Industries and St.
McCa.be.h ho,,e h:ackground iA as in engineering. wasa at the pliant almorst
daily fior!ll aihtoul let August and Hofman, whose expertise was in saies and
mlarkelilg. ccasionailly, but Hennigan testified he did not tell Ihe new own-
ers about the seitCmelDCt agreenment iand he was corroborated hb lofmin.
Hfolnmln ;lso testified that he did not see the notice posted pursuant t,, the
settlerent u hile he ias ia the plant Mikkelsen, whose spetialt, is in plrant
operaltilns. testified Ihi.l lic began orking at the plant in abou,lt Novenmber.
Louis Meat Packing, dated December 2, 1976, is effective
for 3 years. It provides that Missouri River Industries is to
staff and operate the meatpacking facility at Garfield Ave-
nue "which St. Louis Meat Packing Corp., has leased from
NBC Packing Corp." Missouri River Industries is to pro-
vide all employees to operate the plant and the contract
provides that all employees at the facility will be employed
by Missouri River Industries which is described as an inde-
pendent contractor.
The payment to Missouri River Industries by St. Louis
Meat Packing for its services amounts to $800 per month
plus costs, including expenditures for FICA contributions,
payroll preparation, wages, and other fringe and insurance
benefits.
Hennigan was to be employed as a consultant to Mis-
souri River Industries for a period of 6 months from De-
cember 6, 1976, at a salary of $2,100 per month, essentially
a continuation of his $500-a-week salary from the new
owners. His duties were to "use his best efforts to assist"
Missouri River Industries "to efficiently operate the pork
slaughtering facility" on Garfield Avenue and that he be
"available at reasonable periods" in St. Louis to advise
Missouri River Industries. In fact, he spent some 3 or 4
days a week at the plant, primarily in order to work out
any "bugs" in the new dehiding process he designed and
help install. He had no responsibilities with respect to em-
ployee relations.
The new owners, either through their corporate entities
or through Missouri River Industries, began hiring new
employees for the plant in about mid-November 1976. It is
unclear how many employees were hired initially, although
at the time of the reopened hearing in September 1977
there were about 20 nonsupervisory employees. Only two
employees previously employed by Hennigan before his
June 16 shutdown were employed by the new owners: the
two Hennigan brothers.
It was stipulated that approximately 85 to 90 percent of
Hennigan's sales in April, May, and June, 1976 went to
Amelio Brothers of Chicago and Fiesta Meats in St. Louis,
and that, in March 1977, 85 to 90 percent of the sales of the
business went to Amelio Brothers, Fiesta Meats, and Guar-
ino Meats of Chicago; and that 90 percent of the live hogs
purchased by Hennigan were from Sparks and Company
in National City, Illinois, that, in March 1977, 35 to 40
percent of the hogs were purchased from Sparks and that
Morresy is presently a large supplier of hogs to the plant,
but that Morresy did not supply hogs to Hennigan.
Robert Newman, plant manager under Hennigan, no
longer works at the plant, having been terminated when
Hennigan ceased operations in June 1976. The day-to-day
supervision of the plant and its operations, including em-
ployee relations, is accomplished by owners McCabe and
Mikkelsen who are employed and paid by Missouri River
Industries. Mikkelsen is the plant manager. Hofman is pri-
marily involved with sales and is not employed by Missouri
River Industries. Neither McCabe, Mikkelsen, or Hofman
was involved in Hennigan. However, all three of the new
owners are authorized to sign checks on behalf of Missouri
River Industries.
In a bargaining agreement entered into on December 5,
1976, Missouri River Industries recognized the United In-
1520
FRANK HENNIGAN. ET AL.
dtistrial Packing and Allied Workers as the exclusive repre-
sentative of the production and maintenance employees at
the Garfield Avenue plant. The contract contains a union-
security clause and sets forth an agreement on wages,
hours, and working conditions for the employees. The con-
tract is effective for 3 years.
Lonnie Simpson and Willie Collins, two employees who
were terminated in June 1976 when Hennigan closed the
Garfield Street plant, went to the plant in January 1977
and sought employment. They both spoke initially to Hen-
nigan. Hennigan referred them to Chris Mikkelsen, the
plant manager. Mikkelsen told them in separate conversa-
tions that the plant was not hiring at that time. Although it
was stipulated that these two employees signed cards in the
spring of 1976 there is no evidence that they were denied
employment because of their union activities.
On January 5, 1977, the Union wrote a letter to Henni-
gan stating that, pursuant to the settlement agreement. it
was requesting that he bargain with it with respect to the
"production and maintenance employees working at 3953
Garfield." There was no reply to this letter and it was ap-
parently turned over to Hofman who testified that this was
the first time that he learned of the prior settlement agree-
ment entered into by Hennigan.
B. Discussion and Analysis
The threshold question is whether Hennigan violated
the settlement agreement thus justifying revocation of that
agreement and reinstitution of the original complaint. The
Acting Regional Director revoked that agreement on the
ground that Hennigan breached it by violation of the pro-
vision of the notice which, according to the agreement. is
part thereof. The notice states that Hennigan would, if "1
again engage in the meat packing industry in the St. Louis
Metropolitan area, either individualily or through any suc-
cessor business, notify and bargain upon request with the
Union." The order revoking the settlement states that
"thereafter the Region received the evidence" that Frank
Hennigan had resumed operations and failed to notify and
bargain with the Union. The General Counsel offers very
little in the way of argument in support of this action by
the Acting Regional Director, relegating the issue to a con-
clusionary statement in a footnote. Yet the General Coun-
sel has the burden of showing that the settlement agree-
ment was properly set aside and thus I turn to an analysis
of the "evidence" that the settlement agreement was
breached.
The General Counsel has not established by a prepon-
derance of the evidence that Hennigan "engag[ed] in the
meat packing industry" in violation of the settlement
agreement. The evidence shows that Hennigan ceased op-
erations in June 1976. There is no evidence-or even a
contention by the General Counsel-that he did so unlaw-
fully. There is also evidence that Hennigan sought to sell
the plant and worked out a deal to sell the business in late
July to Robert Hofman who brought two associates into
a See Dressmakers Join C(ouncil. Inlernarional Ladies' Garmcnt 4 orkers
Union. AFL CIO ISusan Evans. Inc i, 146 NLRB 559, 560 561 (1964). enfd
342 F.2d 988 ((.A. 2. 1965).
the venture. To this end, a new corporation, Garfield Pack-
ing Company, was formed. Hennigan was given stock in
exchange for his business which he transferred to the cor-
poration; when the sale was consummated he surrendered
his stock. The other shareholders of Garfield Packing were
the three new owners. Fueled by new capital, all provided
by the new owners, the plant was renovated over the next
few months. Hennigan aided in the renovations and the
preparation for the reopening of the plant. Before the plant
reopened as a meat packing operation in December 1976-
indeed. by November I Hennigan had consummated the
sale. Hennigan no longer had a proprietary interest in
either Garfield Packing Company or its successor, NBC
Packing, which owned the assets, or St. L.ouis Packing. the
operational entity created by the new owners of the husi-
ness on Garfield Avenue. Nor did he have a proprietary
interest in Missouri River Industries which actually ran the
plant after it reopened. Hennigan did retain a proprietary
interest in Garfield Packing -- to the extent of the value of
the assets he transferred to it--until November 1976 when
he severed all connections with Garfield Packing and was
paid for his interest by two notes. one from Hofman and
another from GJarfield Packing and its three remaining
owners. Thereafter, his only interest in the entities which
operated the business was as a creditor and as a salaried
employee or consultant for a limited period.'
As I have stated, the settlement agreement contains no
explanation for the conditional bargaining obligation
which would attach if Hennigan again -engageld] in the
meat packing industry . . . either individually or through
any successor business," the breach of which would justify
setting aside the settlement agreement. Presumably it was
revealed at this time that Hennigan discontinued his opera-
tions and it must have been obvious that he would sell his
plant. In the absence of any explanatory statement in the
settlement agreement. I construe the plain words of the
pertinent clause to mean that, in order to trigger a future
bargaining obligation. Hennigan himself would have to re-
tain a proprietar. interest in any successor business in the
meatpacking industry. The language refers to Hennigan'
engaging in a subsequent business; it does not refer to sub-
sequent employee, consultant, or creditor relationships in
defining a successor. In my view. this did not create any
obligation with respect to a bona fide sale of the business.
There is no way in which Ilennigan could bind a bona fide
successor business to ans bargaining obligation by agree-
ment with the Union or the Regional Director before such
successor business was formed or before his relationship to
that business was established. At the time of the settlement
agreement, Hennigan had no authority to bind the pro-
spective new owners, their corporate entities, or Missouri
River Industries. And it would be ludicrous to read the
settlement agreement so as to bind the new owners as a
"successor business" to such an obligation based simply on
lHennigan's subsequent and limited employee or creditor
relationship with them. 10
The record she,sr th:h the notes ,cre oi he paid In full h~ November 1,
1977. and NoSenmher .I198. nd th.tr llinlgan's cmnpli)ment contr:.st
was to terminate In mid-1977.
I his is I Iot i ito n. el mC si2. ur e hait he t Inll omild Ini har e sought .an
t 'onrmnued
1521
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Hennigan did not resume operations "individually" as a
sole proprietor. However, the General Counsel, although
not referring to the settlement agreement, makes the con-
tention that the corporate entities NBC Packing, St. Louis
Meat Packing, and Missouri River Industries are alter egos
of Hennigan. I believe that the language of the settlement
agreement is narrower than the definition of alter ego un-
der Board law since the latter is not necessarily restricted
to a continuing proprietary interest. Nonetheless, even the
General Counsel's alter ego contention fails because it is
unsupported by the evidence.
It is settled law that the question of "[w]hether there was
a bona fide discontinuance and a true change of ownership
or merely a disguised continuance of the old em-
ployer" is a question of fact. Southport Petroleum Companv
v. IN'..R.B.. 31' IU.S. 100, 106 (1942). Under Board law
such a finding depends on whether "the two enterprises
have 'substantially identical' management, business pur-
pose, operation, equipment, customers, and supervision, as
well as ownership." Cratsford Door Sales Company, Inc.,
226 NLRB 1144 (1976). Here, the new owners--Hofmanri.
Mikkelsen, and McCabe had no connection with Henni-
gan and Hennigan severed all proprietary connections with
them after November 1, 1976. The sale was an arms-length
transaction with liennigan's continued interest being only
that of a creditor and as an employee for a limited period.
Hennigan's plant manager, who was involved in some of
the earlier unfair labor practices, was no longer employed
and it appears that only Hennigan and his two brothers
were retained as employees by the new owners. Hennigan
himself had limited authority and had no responsibility
over employee relations. Fhe management and supervision
was entirely different with the active participation of all the
new owners in the day-to-day operation of the plant. Mik-
kelson, the plant manager, McCabe, and Hofman had not
been involved in flennigan's operation. And, although the
new owners performed essentially the same business at the
same plant, the' had made over $100,000 worth of im-
proveiients in equipment to the plant, all with their own
and not Hennigan's money, and there were new and differ-
ent suppliers of hogs and buyers of meat products. In
short, the sale of the business by Hennigan to the new
owners did not create a disguised continuance but was a
bona fide sale and discontinuance by hinm and a true
change in ownership.
Thus, Ilennigan did not engage in the meatpacking in-
dustry either individually or through a successor business
in violation of the settlement agreement. He had sold the
business by November 1, 1976. Resumption of meatpack-
ing operations after December 2, 1976, was accomplished
by the new owners and Hennigan had no proprietary or
alter ego interest in the corporate entities, including Mis-
souri River Industries, which were operating the business
after December 2, 1976.
It is true that Hennigan played a role in supervising the
agreelment fro iiit leiniglun foI r 1 so,-clled successorship clause prohibiting a
sale to a: successtr 4ihhoul first securing that successor's agreement to as
sa rie lennigan's barg.aining oh hgmtion. Cf. I'nied Minti Workers of Atmi, r
ill, (],,ne Sia, Sieel ( i p,irtsllh 2131 NL RB 573 ( 1977)
renovation work for the new owners, through Garfield
Packing Company, during the period from late August un-
til December 1976 when the plant resumed operations.
However, I do not find that Hennigan's conduct in this
regard violated the settlement agreement. First of all, Hen-
nigan was not engaged in the meatpacking industry during
this period. He was engaged in helping to renovate the
plant for the new owners pursuant to the contract of sale
and he was being paid a salary for his work. Some employ-
ees were utilized, but they were not doing meatpacking
work; they were helping in the renovations. This is presum-
ably the reason underlying the General Counsel's state-
ment made at the hearing that he was not seeking backpay
for the five Hennigan discriminatees for the period from
June 16, 1976, to the reopening of the plant in December
1976. Indeed, in his pleadings (par. 6(G) of the amended
complaint) the General Counsel alleged that "Respondent
again began operating" its plant on December 2, 1976, and
failed "to reinstate" the six remaining former Hennigan
employees after that date. More importantly, Hennigan's
role both in aiding the new owners and in participating in
the corporate entity known as Garfield Packing Company
is consistent with the testimony of Hennigan and Hofman
concerning the sale of the business. Garfield Packing and
the other corporate entities wt : the vehicles by which the
sale was consummated. The Gtiineral Counsel has not
shown that the transactions were anything less than arm's
length and he has not shown that the testimony of Henni-
gan and Hofman should not be believed. I do not find it
unusual that part of the agreement of sale provided that
Hennigan stay on-at a salary -to aid in the installation of
a new dehiding process and preparation for the resumption
of operations under the new owners. Nor is it unusual that
corporate entities were set up- -perhaps for tax considera-
tions or to establish lnimced liability-in order to facilitate
the sale and cover thc Transitional period before the sale
was consummated. In the absence of persuasive evidence
that these were ploss to effectuate a disguised continuance
of Hennigan's interests, I see nothing wrong with the cor-
porate transactions and Hennigan's continued presence at
the plant in supervising the installation of the dehiding pro-
cess. These activities were incidental to the sale. In my
view, the settlement agreement created no obligation to
bargain before Hennigan, individually or through a succes-
sor, actually resumed engaging in meatpacking, an event
which would have occurred on December 2, 1976, but for
the fact that Hennigan had no proprietary or alter ego in-
terest in the entities which resumed meatpacking opera-
tions on that date.
My findings in construing the settlement agreement as I
have are confirmed by reference to existing law concerning
the bargaining obligation of a successor. Thus, the bargain-
ing obligation of a predecessor carries over to a successor
only where the latter employs a majority or a substantial
number of the predecessor's employees. See N.L.R.B. v.
Burns International Security Services, Inc., 406 U.S. 272,
280-281, fns. 5 and 6 (1972). But "the successor has the
right not to hire any of the predecessor's former employees,
provided the successor's decision is not made for discrimi-
natory reasons." Howard Johnson Co., Inc. v. Detroit Local
1522
FRANK HENNIGAN, ET AL.
Joint Executive Board, Hotel & Restaurant Employees &
Bartenders International Union, 417 U.S. 249, 262 (1974),
quoting from Burns.
Under these principles, I find there is no successorship
obligation in this case by operation of law. The General
Counsel has not shown that the new owners, when they
began operating the plant after December 2, 1976, em-
ployed a substantial number of Hennigan's employees. The
evidence shows that only two were retained-Hennigan's
two brothers. And, by September, 1977, the work force
grew to at least 20, as compared to II under Hennigan.
Moreover, the complaint did not specifically allege that the
new owners discriminatorily refused to hire the former
Hennigan employees in order to avoid a successorship
obligation. The General Counsel did allege that the Re-
spondent discriminatorily refused "to reinstate" four spe-
cifically named former Hennigan employees in January
1977 after the plant reopened.'I But, even if I treat this as a
refusal-to-hire charge, the allegation must be dismissed
since only two employees applied for jobs and there was no
evidence of discriminatory motivation in the refusal to hire
these employees or in the failure to hire any of the former
Hennigan employees.'2
In these circumstances, the new owners, through their
corporate entities, NBC Packing Corporation and St. Louis
Meat Packing Corp., and through their joint employer
and/or agent, Missouri River Industries, had no obligation
to bargain based on the obligation of a predecessor. A for-
tiori, the new owners had no such obligation under the
settlement agreement signed by a person-Hennigan
whose subsequent relationship to them was at most as an
employee and a creditor for a limited period.
Accordingly, I find that the settlement agreement was
not properly set aside and, since the agreement remains in
force, all allegations concerning the obligations of all Re-
spondents for the unfair labor practices related to and cov-
ered by the agreement are not sustained. Nor has the Gen-
eral Counsel sustained the allegations that, after the plant
reopened in December 1976, Respondents discriminatorily
failed to reinstate four named employees and were obli-
gated to bargain with the Union as successors or alter egos.
In view of my findings set forth above, particularly those
relating to the bargaining obligations of a successor, nei-
ther NBC Packing, St. Louis Meat Packing, nor its joint
employer or agent, Missouri River Industries, is obligated
to bargain with the Union based on its card majority in
April 1976 or the settlement agreement. Thus, the General
Counsel has failed to sustain the allegation that Missouri
River Industries or any other Respondent violated Section
8(a)(2) and (1) of the Act by recognizing and entering into
a contract with United Industrial Packing and Allied
Workers Union.
In an apparent effort to establish an independent basis
for the violation, the General Counsel submits the follow-
ing statement of the evidence:
On its face, the [bargaining] agreement is in effect
from the 5th day of December 1976 until the 5th day
of December 1979. It covers [the samel employees as
Local 545 has demanded to represent. Chris Mikkel-
sen, president of Garfield and St. Louis Meat Packing.
Inc., testified that he first heard of United Industrial
Packing and Allied Workers Union in November 1976
when the president of Missouri River Industries of
Missouri, Inc.. Kerman said he had an agreement with
that Union and would like Mikkelsen to work inside
that agreement. (TR 91 R) At that time, Missouri River
Industries of Missouri, Inc., had not been incorporat-
ed. (G.C. Ex. 19) Moreover. as related above, in No-
vember 1976 Respondent's employees were engaged in
renovating the packing plant not in production. Mik-
kelsen also testified that it was not until after the bar-
gaining agreement (G.C. Ex. 19R) had been executed
that he first saw any agents of United Industrial Pack-
ing House and Allied Workers Union in the vicinity of
the Respondent's Garfield plant. (TR 93R) Although
Mikkelsen, as stated above, is president of St. Louis
Meat Packing, he did not know how the contract was
negotiated or how wage rates were arrived at for em-
ployees. (TR 35R)
In my view, this does not establish that Missouri River
Industries recognized and entered into a contract with the
new union in violation of the Act. The agreement was ap-
parently negotiated by Kerman who was not called or sub-
penaed by the General Counsel. Although the General
Counsel did subpena an official of the United Industrial
Packing and Allied Workers. the official did not appear
and the subpena was not enforced. No present employees
were called as witnesses even though the General Counsel
had received a packet of information from the subpenaed
union official which may have provided some information
as to the names of employees who signed authorization
cards and the dates the)y were signed. In the absence of
such other evidence, the General Counsel raises at most a
suspicion that recognition was accorded to an assisted
union, but he has failed to establish a violation of the Act
by a preponderance of the evidence.
CoN([ i siONS OF LAw
" During the hearing, the General Counsel dropped the allegation that
two other employees were denied reinstatement since it appeared that Ihen
were Hennigan's brothers who actually were reemployed Not included in
this allegation were the five employees who were discriminatorils dis-
charged by Hennigan but who were reimbursed for backpay and declined
reinstatement by virtue of the settlement agreement. The notice specifically
stated that these employees did not desire reinstatement. In these circunmstanc-
es, the owners could hardly be responsible for reinstating the file discharged
Hennigan employees as General Counsel seems to suggest at fn. 4 of his brief
rz Compare Mason Citr Dressed Beef, Inc. supra, and Houston l)iorihii,io, l
Services. Inc.. 227 NLRB 960 (1977)
1. The settlement agreement of July 13, 1976, was not
violated and it was improperly vacated.
2. The Respondents Garfield Packing Compan.y, NBC
Packing Corporation. St. Louis Meat Packing Corporation,
and Missouri River Industries of Missouri. Inc., have not
violated the Act.
3. The alleged and admitted violations of Frank Henni-
1523
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
gan d/'b,/a Garfield Packing Company were remedied by a
viable settlement agreement which remains in force.
Upon the foregoing findings of fact and conclusions of
law, upon the entire record, and pursuant to Section 10(c)
of the Act, I herebN issue the following recommended:
ORDER 3
The complaint is dismissed in its entirety.
3 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 Order 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 tbereto shall be
deemed waived for all purposes.
1524