Hydro Logistics, Inc.

National Labor Relations Board - Board Decisions

Dec 16, 1987

287 N.L.R.B. 602 (N.L.R.B. 1987)

602 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Hydro Logistics, Inc. and James M. Jerard and
Wizard Method Employees Independent Union
Wizard Method , Inc. and Randolph Rotella
Miracle Sales and Service , Inc. and Wizard Method
Employees Independent Union . Cases 3-CA-
10534, 3-CA-11186, 3-CA-11147, 3-CA-
11086-1, 3-CA- 11388, and 3-CA-11086-2
16 December 1987
DECISION AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
JOHANSEN AND CRACRAFT
On 29 September 1983 Administrative Law
Judge James F. Morton issued the attached deci-
sion. The Respondents filed exceptions' and a sup-
porting brief, and the General Counsel filed cross-
exceptions and the brief he had submitted to the
judge. On 22 August 1984 the Board remanded this
proceeding to the judge for consideration in light
of the Board's decisions in Milwaukee Spring Divi-
sion, 268 NLRB 601 (1984), and Otis Elevator Co.,
269 NLRB 891 (1984). On 24 December 1984 the
judge issued the attached supplemental decision.
The Respondents filed new, exceptions and a sup-
porting brief addressing the judge's original and
supplemental decision.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the decision, the sup-
plemental decision, and the record in light of the
exceptions and briefs and has decided to affirm the
judge's rulings, findings,2 and conclusions, to
modify his remedy,3 and to adopt the recommend-
ed Order as modified.
The Respondents contended for the first time in their exceptions that
Sec 10(b) barred the Board's entertaining the allegations that Respond-
ents Wizard and Hydro violated Sec 8( a)(l) and (3) by discharging em-
ployees James Jerard, Kenneth Leonard, and Dennis Leonard As the
Respondents neither pleaded the 10(b) issue as an affirmative defense nor
raised it before the judge, it was waived Federal Management Co, 264
NLRB 107 (1982), Taft Broadcasting Co, 264 NLRB 185, 190 (1982)
Unlike our dissenting colleague, we make no exception to the require-
ment of timely assertion of a 10(b) defense merely because the Board
would have found no merit in the 10(b) defense at the time it was
waived, but now would find merit pursuant to changes in the law See
Ford Motor Co, 269 NLRB 250 fn 1 (1984)
8 In finding that Respondent Wizard unlawfully refused to reinstate
employee Rotella because of his union activities and because it believed
Rotella was responsible for the filing of one of the charges in this case,
the judge inadvertently failed to specify the section of the Act that
Wizard violated We find that Wizard, by the conduct above, violated
Sec '8(a)(I) and (3), as alleged in the complaint
a In accordance with our decision in New Horizons for the Retarded,
283 NLRB 1173 (1987), interest on and after 1 January 1987 shall be
computed at the "short-term Federal rate" for the underpayment of taxes
as set out in the 1986 amendment to 26 US C § 6621 Interest on
amounts accrued prior to I January 1987 (the effective date of the 1986
amendment to 26 U S C § 6621) shall be computed in accordance with
Florida Steel Corp, 231 NLRB 651 (1977)
We agree with the judge's findings that are based
on the status of Respondent Hydro Logistics, Inc.
as the alter ego of Respondent Wizard Method,
Inc. Thus, Hydro Logistics was essentially a corpo-
rate shell having substantially identical manage-
ment, business purpose, operation, equipment, cus-
tomers, and supervision, with Wizard and was used
by Wizard for the purpose of evading responsibil-
ities under the Act as found by the judge. Advance
Electric, 268 NLRB 1001, 1002 (1984); Goodman
Piping Products v. NLRB, 741 F.2d 10 (2d Cir.
1984). While the two corporations did not have the
same ownership, the judge found that Wizard's
president "controlled Hydro's operations overall
and even its daily business," and cited precedent
establishing that such control is a substitute for
ownership. American Pacific Concrete-Pipe Co., 262
NLRB 1223, 1225-1226 (1962), enfd. mem. 709
F.2d 1514 (9th Cir. 1983).
We also agree with the judge that Wizard sub-
contracted work to Respondent Miracle Sales and
Service, Inc., a company over which it exercised at
least some degree of control, in order to avoid its
obligations under the collective-bargaining agree-
ment.4 Because the work transfer decision was mo-
tivated by union considerations, we, agree with the
judge that Wizard was not` exempt from a bargain-
ing obligation under First National "Corp` v. NLRB,
452 U.S. 666 (1981), or Otis Elevator Co., 269
NLRB 891 (1984).5 Wizard did bargain for mid-
contract concessions and threatened that without
these concessions it would change to an equipment-
leasing business, relinguishing the, ' providing of
labor to its customers with the consequent loss of
bargaining unit jobs. When this bargaining failed to
produce the desired concessions, however, Wizard
did not relinquish the labor part of its business on a
permanent basis. Instead, it let some work out to its
alter ego, Hydro Logistics, some to Miracle, over
which it had sufficient control to minimize the risk
of losing' the work permanently, and it retained
some work. Unit employees worked, for whichever
of the ,three was offering work, on, noncontract
terms'when the employer was Hydroror Miracle.
This tactic. worked. The Union eventually made
midcontract concessions with the reasonable expec-
tation that Wizard would take back those labor op-
erations that it controlled and that the unit employ-
ees, again working on Wizard's payroll, would be
governed by the contract. Wizard gained this bar-
gaining advantage by avoiding a true relinquish-
We agree with the judge that the General Counsel failed to prove
that Miracle Sales was also an alter ego of Wizard We find it unneces-
sary to adopt the judge ' s finding that Wizard and Miracle Sales were
either joint employers or joint venturers
5 Strawsrne Mfg Co, 280 NLRB 553 (1986)
287 NLRB No. 62
HYDRO LOGISTICS
ment of the work. This manipulation of its labor
operations and the resulting layoff of employees
from the Wizard payroll was intimately connected
with its creation of an alter ego for the purpose of
avoiding its obligations to its union-represented em-
ployees. As the judge found, there was no bona
fide transfer of the work. In effect, Wizard condi-
tioned employment on the employees' working
under noncontract terms for nonunion Hydro and
Miracle. Therefore, Wizard's conduct violated Sec-
tion 8(a)(3) as well as Section 8(a)(5) and (1). Ad-
vance Electric, supra, 268 NLRB at 1004; Electric
Machinery Co., 243 NLRB 239, 240 (1979).
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge as modified below and orders that the Re-
spondents, Wizard Method, Inc. and Hydro Logis-
tics, Inc., Niagara Falls, New York, and their re-
spective officers, agents, successors, and assigns,
shall take the action set forth in the Order as modi-
fied.
1. Substitute the following for paragraph 1(a).
"(a) Refusing to bargain collectively with
Wizard Method Employees Independent Union by
transferring unit work from Wizard Method, Inc.
to Hydro Logistics, Inc. and ' Miracle Sales and
Service, Inc., without affording the Union an op-
portunity to bargain thereon."
2. Insert the following as paragraph 1(c) and re-
letter the subsequent paragraphs.
"(c) Discouraging membership in the Union, or
any other labor organization, by imposition of ille-
gal conditions of employment."
3. Substitute the attached notice for that of the
administrative law judge.
CHAIRMAN DOTSON, dissenting in part.
I agree with the majority's decision except with
respect to the transfer of work to Miracle Sales
and Service, Inc. and the inapplication of Section
10(b) to certain allegations. I do not find that the
General Counsel proved that Respondent Wizard
Method, Inc. unlawfully transferred work over
which it had control to Miracle Sales and Service,
Inc. Part of the difficulty is that the General Coun-
sel litigated this part of the case on the theory that
Miracle was Wizard's alter ego and that therefore
Miracle's work was Wizard's work. The adminis-
trative law judge correctly rejected this contention,
but found that Wizard and Miracle were either
joint employers or joint venturers. My colleagues
find it unnecessary to pass on the latter finding,
which is based on several unwarranted inferences,
and I agree with them that the real question is
whether Wizard transferred to Miracle work that,
603
but for its desire to avoid its bargaining obligation
would, have been performed by unit employees on
Wizard's payroll.
Miracle's gross business in 1982 was $96,000. Of
this, $22,000 was subcontracted from Wizard ac-
cording to the General Counsel's evidence. But of
the $22,000, $8000 was for work done for a compa-
ny called Durez whose work was subcontracted to
Miracle with the Union's permission because, ac-
cording to the uncontroverted testimony of Wiz-
ard's owner and president, Garlen Stoneman, Wiz-
ard's employees were too busy at the time. The
bulk of the remaining $14,000 in subcontracted
work was for Bethlehem Steel, whose contract
with Wizard permitted Bethlehem Steel at any time
to cease using Wizard's labor and revert to an
equipment-leasing arrangement whereby Wizard
provided only the equipment and one operator.
Stoneman testified that times were becoming hard
to the point where he feared that Bethlehem Steel
and other companies with whom Wizard had simi-
lar contracts would exercise the option to use their
own labor. He subcontracted to Miracle with its
lower labor costs in order to prevent that.' This
arrangement coupled with the fact that Wizard em-
ployees were kept apprised of job opportunities
with Miracle actually enabled them to retain work
they might otherwise have lost. It also tends to
show that Wizard reasonably feared losing control
of the work and did not voluntarily relinquish
work over which it had a secure contractual enti-
tlement. It was counsel for the General Counsel's
burden to show otherwise. Instead, relying on the
unproven theory that Wizard and Miracle were
one and the same, he showed only that Miracle
performed some labor for customers of Wizard for
whom Wizard formerly provided both labor and
equipment.
In fact, Wizard bargained in good faith over pre-
vention of loss of the work. This bargaining initial-
ly produced no agreement, but it fulfilled Wizard's
obligation to the Union. Then, instead of imple-
menting the option which would have caused the
employees a permanent loss of jobs, it subcontract-
ed some of it to Miracle. This is insufficient to es-
tablish any unlawfulness in Wizard's business rela-
tionship with Miracle.
I also find that Section 10(b) precludes a finding
of any violations in the discharge of Jerard and the
Leonards. They were discharged on 25 June 1981.
A timely charge alleging that the discharges were
discriminatory was dismissed by the Regional Di-
I This testimony is consistent with Stoneman's statements to an em-
ployee that he had to lease out his equipment instead of providing labor
because his competitors were underbidding him
604 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
rector. There was no appeal from that dismissal. A
new charge and an amended charge alleging the
same conduct were filed in August 1982. On 27
September 1982 the Regional Director rescinded
his dismissal of the 1981 charge. Subsequently he
issued a complaint alleging that the June 1981 dis-
charges were unlawful. At the time the Respond-
ents answered the complaint and at all times the
case was before the judge the controlling Board
precedent permitted counsel for the General Coun-
sel in his discretion to reinstate dismissed timely
charges outside the 10(b) period. California Pacific
Signs, 233 NLRB 450 (1977); Winer Motors, 265
NLRB 1457 (1982). However, after this proceeding
was transferred to the Board, we overruled Califor-
nia Pacific Signs and Winer Motors in that respect.
We held that Section 10(b) bars reinstatement of a
dismissed charge beyond the 6-month limitation
period absent fraudulent concealment by a respond-
ent. Ducane'Heating Corp., 273 NLRB 1389 (1985).
The Respondents did not raise Section 10(b)
before the judge, who would have had no author-
ity to overrule existing Board precedent, but antici-
pated Ducane Heating by arguing Section 10(b) in
its exceptions to the judge's decisions. Counsel for
the General Counsel argued in response that the re-
instatement was valid under California Pacific Signs
and Winer Motors and that the original dismissal
was precipitated by concealment by the Respond-
ents, an assertion for which the' General Counsel
produced no supporting evidence.2 The General
Counsel does not argue that the 10(b) issue was un-
timely raised.
While my colleagues are correct in asserting that
Section 10(b) must be raised in a timely manner,
timeliness is a flexible principle that must, be ap-
plied according to the circumstances presented.
Thus, although it is desirable to have Section 10(b)
pleaded as a defense, the Board permits its asser-
tion at the hearing. Ducane Heating Corp., supra at
1390. It is timely if litigated at the 'hearing even if
not expressly asserted as a defense. Consolidation
Coal Co., 277 NLRB 545, 548 (1985). The rule cor-
rectly stated then is that Section 10(b) is timely as-
serted if presented in a pending case at a time
when it was reasonable in the circumstances to do
so and when no one is prejudiced by failure to
raise it sooner. In the instant case there was no
viable defense to raise in answer to the complaint
and nothing to litigate at the hearing concerning
the expiration of the 10(b) period. The Respond-
ents had every right, however, to argue to the
Board as they in effect did that California Pacific
2 Although counsel for the General Counsel's submission to the Board
was his brief to the judge, he added the 10(b) argument in a final foot-
note not included in the original version
Signs and `Winer Motors were incorrectly decided.
As the Board now agrees with the Respondents
that reinstatement of a dismissed charge is improp-
er in circumstances like those presented here, I
would dismiss the allegation of discriminatory dis-
charges.
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 with
Wizard Method Employees Independent Union by
transferring unit work from Wizard Method, Inc.
to Hydro Logistics, Inc. and Miracle Sales and
Service, Inc. without affording the Union an op-
portunity to bargain thereon.
WE WILL NOT lay off unit employees as a result
of such transfer.
WE WILL NOT condition our employees' employ-
ment on their acceptance of employment without
representation by the Union.
WE WILL NOT discharge any employee for filing
a grievance pursuant to the provisions of a collec-
tive-bargaining agreement covering that employee.
WE WILL NOT refuse to reinstate any employee
because of his activities on behalf of the Wizard
Method Employees Independent Union or because
he is believed to be responsible for that Union's
unfair labor practice charges with the National
Labor Relations Board.
WE WILL NOT threaten to sue any of our em-,
ployees to discourage the Wizard Method Employ-
ees Independent Union from filing unfair labor
practice, charges with the National Labor Relations
Board., -
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.
WE WILL recall all employees laid off as a conse-
quence of the above-mentioned unlawful transfer of
unit work and offer them reinstatement to the posi-
tions they held before their unlawful layoff or, if
those positions no longer exist, to substantially
equivalent positions, without prejudice to their se-
niority or other rights and privileges, and make
them whole, with interest, for any loss of earnings
they may have suffered as a result of the discrimi-
nation against them.
HYDRO LOGISTICS 605
WE WILL offer James Jerard, Kenneth Leonard,
and Dennis Leonard reinstatement to the positions
they held before their unlawful discharge and to
Randy Rotella, reinstatement to the position he
held before he was discriminated against or, if
those positions no longer exist, to substantially
equivalent positions, without prejudice to their se-
niority or other rights and privileges, and make
them whole, with interest, for any loss of earnings
they may have suffered as a result of the discrimi-
nation against them and WE WILL remove from
their personnel records all references to discipline
imposed on them as a result of the discrimination
against them and will give no effect to any such
references.
WE WILL pay the Wizard Method Employees
Independent Union all dues and other moneys they
are entitled to have received since 1 July 1981
under the terms of the contract we have with it.
WIZARD METHOD, INC. AND ITS
ALTER EGO, HYDRO LOGISTICS, INC.
Carl B. Newsome, Esq., for the General Counsel.
Angelo Massaro, Esq. (Hovey & Massaro), of Niagara
Falls, New York, for Wizard Method, Inc. and Hydro
Logistics, Inc
DECISION
STATEMENT OF THE CASE
JAMES F. MORTON, Administrative Law Judge. The
hearing in these consolidated cases was held in Buffalo,
New York, on 8 days between February 7 and June 7,
1983. The principal issues are whether: (a) The 3 named
respondents are a single enterprise; (b) 3 named employ-
ees were discharged on June 25, 1981, because of their
union activities; (c) a fourth employee was laid off in
June 1982 and not recalled because he was believed to be
responsible for starting a wage and hour investigation,
because he filed a charge with the National Labor Rela-
tions Board, or because of his union activities; (d) 14
named employees were laid off in June 1982 because
they voted against surrendering benefits due them under
their union contact; (e) unit work was transferred to non-
union enterprises without bargaining and to discourage
union membership; and (f) numerous alleged independent
acts, violative of the statutory rights of employees, were
committed
On the entire record, including my observation of the
demeanor of the witnesses, and after due consideration of
the briefs filed by the General Counsel and the Respond-
ent, I make the following
FINDINGS OF FACT
I JURISDICTION
Wizard Method , Inc. (Wizard ), a New York corpora-
tion located in Niagara Falls, New York, is engaged in
providing industrial cleaning services to major compa-
nies, such as Bethlehem Steel Corporation and Union
Carbide Corporation. Wizard's annual purchases of
goods delivered directly to it in New York from loca-
tions outside New York exceed $50,000 in value
Hydro Logistics, Inc. (Hydro) is also a New York cor-
poration engaged in providing industrial cleaning serv-
ices, its principal office is in Buffalo, New York In 1980
its gross annual revenues totaled $68,865; in 1981 it to-
taled $71,841 57. These services were rendered to Bethle-
hem Steel Corporation, to Republic Steel Corporation,
and to other major manufacturers.
Miracle Sales and Service, Inc (Miracle) is another
New York corporation engaged in providing industrial
cleaning services. Its office is in Niagara Falls, New
York The General Counsel contends that Wizard,
Hydro, and Miracle comprise a single employer within
the meaning of the National Labor Relations Act (the-
Act) The evidence relating to that issue is set out below.
II. THE LABOR ORGANIZATIONS
Wizard Method Employees Independent Union (Inde-
pendent Union) and the Painters District Council #4
with its affiliated maintenance local, Local 1581, AFL-
CIO (Painters Union) are both labor organizations as de-
fined in Section 2(5) of the Act.
A. The Relevant Evidence
1 Background
Wizard has been owned and controlled by its presi-
dent, Garlen Stoneman, since it was incorporated in
1969 Its operating equipment consists principally of tank
trucks that use powerful vacuum motors to suck up
debris and dirt through hoses handled by laborers. It op-
erated originally in and about Niagara Falls, New York.
About 1973, Wizard recognized the Independent Union
as the exclusive representative of its operators and driv-
ers for purposes of collective bargaining. By the late
1970s, Wizard had expanded its operations and was pro-
viding industrial cleaning services to plants located in
and around Buffalo, New York, about 25 miles from Ni-
agara Falls It had signed a series of renewal collective-
bargaining agreements with the Independent Union, the
last one on February 20, 1981, effective until February
1984.
Hydro was incorporated in July 1979. It was inactive
until December 1980. Its president then, Paul Mullen,
was a consultant in the employ of Wizard, he also had
negotiated on Wizard's behalf the collective-bargaining
agreements Wizard had with the Independent Union.
Hydro's treasurer then was Alfred McDonald, a full-time
lieutenant in Buffalo's police department. McDonald
then, as now, worked several days a week as an officer
of Wizard, in overall charge of its operations in the Buf-
falo area.
McDonald testified that, in about 1980, Wizard was
having problems with its employees, particularly those
who lived in Niagara Falls and who wanted travel pay
to work in Buffalo, 30 miles distant, and who apparently
objected to the arduous working conditions in the plants
serviced by Wizard in the Buffalo area It is undisputed
606 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
that Wizard discussed with the Independent Union the
matter of Wizard's forming a company and hiring new
employees in the Buffalo area to service the, Buffalo ac-
counts
Wizard's president, Stoneman, financed Hydro's oper-
ations and obtained servicing contracts for it in the Buf-'
falo area, apparently without recompense to himself
Wizard lent its trucks and other equipment to Hydro.
The foregoing arrangements had 'been made informally;
there is no written agreement between Wizard and
Hydro spelling out their respective rights and obliga-
tions Hydro became active in late 1980, as discussed
below -
Sam Saunderson, conceded to be a supervisor within
the meaning of the Act, testified that he was working as
a supervisor for Wizard when Stoneman told him that
Hydro would become operative because it was necessary
to cut out the travel pay of Wizard's employees in Niag-
ara Falls assigned to work in the Buffalo area. Saunder-
son further testified that, after he was transferred to
Hydro's payroll, he continued to attend "managers'
meetings". which were held every Friday by Wizard's
president, Stoneman, for all Wizard foreman. McDonald,
Hydro's treasurer in 1981 who-is now its president, testi-
fied that Stoneman, can tell him what employees Hydro
may use and that Stoneman "counselled" Hydro in nego-
tiating its contract with the Painters Union, referred to
below. McDonald explained that Stoneman did that be-
cause he was the one who was putting up the money.
McDonald also related that he reported to Stoneman the
employee demands made at. a meeting Hydro held on
January 10, 1981, also recounted in detail below, and
that Stoneman advised him that Stoneman would take
care of the problem. -
The uncontroverted testimony establishes also that
Robert Wilson, a Wizard foreman, supervised Hydro's
employees for a 2-month period in 1982-the only work
done by Hydro that year.,
The following accounts reveal how Hydro made its
initial appearance. James Jerard testified for the General
Counsel as follows. He was hired on March 3, 1980, by
Wizard's personnel director, McDonald, and worked for
Wizard at Republic Steel and other locations in and near
Buffalo. In October 1980 McDonald asked him to come
to his house. There, McDonald told him that he heard
that one of Jerard's coworkers was trying to bring in a
Teamsters Union McDonald told Jerard that he did'not
want the Teamsters and informed him that he' is "to be in
the Painters Union " McDonald handed Jerard authori-
zation cards for the Painters Union, directed him to pass
them out to his coworkers, and informed Jerard that he
would be the Painters Union steward. McDonald also
told Jerard that the "company would be Hydro Logistics
and (that the employees) were going to be with the
Painters Union." Jerard followed McDonald's instruc-
tions. His coworkers signed the authorization cards.
Jerard turned the signed cards in at McDonald's office.
Jerard's account regarding the foregoing is uncontrovert-
ed. -
Jerard further testified that in November 1980, one of
his coworkers arranged to have the business manager of
Mullen to negotiate a collective-bargaining agreement.
Negotiations began in December 1980. Jerard testified
that, during the period of those negotiations, McDonald
called 'him several times to criticize several of the em-
ployees who were "holding up the contract" as a
"sweetheart contract." McDonald told Jerard then that if
a contract was not signed,' "we would close up" and that
"the AFL-CIO was needed because (the ' Independent
Union) would not be recognized " McDonald also stated
that the employees should either get the contract signed
or they would go back working as stockboys-a- refer-
ence to previous jobs they held Counsel for Wizard and
Hydro noted in his brief that unions affiliated with the
AFL-CIO represented the production and maintenance
employees in the factories in which Hydro's work was to
be performed.
In late December 1980 Hydro's president signed a con-
tract with the Painters Union. The agreement was dated
December 1, 1980, and, by its terms, was to be effective
then and until January 31, 1984 Nevertheless, Jerard and
the other employees purportedly covered by the contract
continued to be paid by Wizard until sometime in the
spring of 1981 when, without explanation, they began re-
ceiving paychecks drawn by Hydro. 'Also, the Painters
Union' reportedly 'discharged its business, manager for
having negotiated- that contract with Hydro and brought
a civil action for rescission of that contract; the present
status of that suit is unclear. '
None of the matters-set'out above are alleged as unfair
labor practices. The General Counsel' notes that no
unfair labor practice charge has been filed, particularly
one alleging a violation of Section 8(a)(2)'of the Act.
The complaint alleges no violations for the year 1980 for
presumably the 'same reason. In any event, it appears that
the "Painters Union has disclaimed the contract and, as
discussed further in detail below, Hydro has been de-
funct for at least a ,year.
2. The meeting on January 10, 1981
The General Counsel contends that, Paul Mullen,
Hydro's president' and Alfred McDonald, its treasurer
who was also Wizard's personnel director; engaged in
unlawful coercion of employees at a meeting. in Hydro's
office on January 10, 1981, and by, their conduct, the
Painters Union was unlawfully bypassed-as the employ-
ees' representative. The employees had requested 'that
meeting to seek' (a) travel pay for the times when they
were assigned by McDonald to work at locations in Ni-
agara Falls, (b) double pay for work on Sundays, and (c)
the use of seniority in job assignments The employee
who asked for double time pay was told by McDonald
that he would get it but would never work for McDon-
ald again.' Another employee related, that he was not
working while others with less seniority were Mullen
drafted a document that reportedly was an amendment
to the Painters Union contract and gave it to most of the
employees present They signed it The employees testi-
the Painters Union meet with Hydro's then president that employee He did not testify and his status was not fully litigated
i There is no allegation in any of the compaints before me respecting
HYDRO LOGISTICS 607
feed they never received a copy of that document and
none was offered in evidence.
3 The Hydro paychecks
In the spring of 1981 the Wizard employees who lived
in the Buffalo area (including James Jerard and Kenneth
and Dennis Leonard) no longer were given weekly pay-
checks drawn by Wizard. Instead, their foreman then
began to give them checks drawn by Hydro. Otherwise,
the checks were identical (deductions, benefits, and net
wages), to the checks previously drawn by Wizard. On
the occasions, however, the employees on Hydro's pay-
roll were assigned by McDonald to work in the Niagara
Falls area, they were paid by checks drawn by Wizard.
They thus understood that when they worked in Buffalo,
they were "Hydro employees" and when in Niagara
Falls they were "Wizard employees." They had not
signed any separate W-2 forms or job applications for
Hydro.
4. June 25, 1981 meeting
The General Counsel alleges that three employees
were discriminatorily discharged on June 25, 1981.
It appears that work being done by Hydro slowed
down by late May 1981 and only several employees
were on the Hydro payroll then.
James Jerard testified that he complained to his fore-
man, Sam Saunderson, about the end of May or begin-
ning of June 1981 concerning the fact that he was not
working although he was the most senior employee.
Jerard testified he referred Saunderson to earlier discus-
sions on this subject and his earlier stated intent to file a
grievance. According to Jerard, Saunderson, who is con-
sidered to be a supervisor as defined in the Act, told him
that he had mentioned the subject to McDonald and that
McDonald told him that nothing could be done. Jerard
then went to the office of the Painters Union and was
told by its acting business manager how to prepare and
submit a written grievance. He was given assistance but
was also informed that the Painters Union did not seek
to enforce that contract. Jerard drafted a grievance, and
signed it, along with coworkers Dennis Leonard, Ken-
neth Leonard, and Paul Reid. Shortly afterwards, Jerard
received a telephone call from McDonald who told him,
in substance, that he, Dennis Leonard, and Kenneth
Leonard could not go back to work until they met with
him The meeting was set for June 25, 1981.
Jerard, Dennis Leonard, and Kenneth Leonard testi-
fied in substance as follows respecting the events of that
meeting. They met with McDonald , Mullen , and their
foreman, Robert Stafford, at Hydro's office on that day.
Jerard gave McDonald the signed grievance. McDonald
looked at it and handed it to Mullen, who began reading
it. McDonald then said he had his own grievances with
them. Mullen read the grievance and said to McDonald,
"You know who we're dealing with here" and made a
vulgar gesture using his arms. McDonald then said to the
three employees that he had gotten complaints about
their work from officials of Republic Steel. Dennis Leon-
ard interrupted to say that he never had worked there.
McDonald then said that his comments also applied to
Bethlehem Steel . Dennis Leonard said he never worked
at Bethlehem Steel either. McDonald then said that his
remarks apply to Donner - Hanna, Hydro's only other
active customer then . McDonald then asked each of the
three employees if they could do "high pressure work"
and, when they said they could, he told them that they
could not McDonald then told them that he had been
told by their supervisor , Stafford , that they had violated
safety rules by not wearing safety glasses They informed
McDonald that Stafford had told them that they did not
have to wear them as long as they had them on their
person . Stafford said that was so . McDonald, according
to their accounts , then became flustered and angry. He
told them that the three of them were fired for not wear-
ing safety glasses They testified that Mullen commented
that that 's a good reason . They thereupon left.
McDonald testified as follows regarding the foregoing.
He and Wizard 's president , Stoneman , had received com-
plaints about unsatisfactory work done by Jerard , Dennis
Leonard, and Kenneth Leonard and that Stoneman had
instructed him not to discharge them but only to suspend
them for 3 days each in accordance with ' the established
progressive disciplinary system in effect. (No evidence
was submitted about such a system .) McDonald met with
Jerard and the Leonards on June 25 to discuss that
matter, but they insisted instead on talking first about
their grievance . When he told them that that could wait,
they began to walk out. He became annoyed and told
them they were fired. McDonald testified he was
shocked that he said this as it was contrary to Stone-
man's express instructions McDonald testified that his
was a reflex action, caused by his desire to have the last
word . He further explained that he meant that they had
in effect quit when they walked out but he did not want
to give them that satisfaction.
Mullen testified that at the June 25 meeting he read
the grievance submitted by the employees and asked
what it was all about as "we don't have a contract with
the Painters Union " He further testified that there were
"some comments back and forth and the things, that is,
what we wanted to talk about and they got up and they
left." Mullen testified that he had no recollection of any-
thing being said regarding the employees being dis-
charged.
Stafford, the foreman then, was deceased as of the
hearing in this case
Stoneman testified about a discussion he had with
McDonald prior to the June 25 meeting . His account
was completely confused. Respondent 's counsel, using
principally leading questions , adduced from him testimo-
ny that he told McDonald that the Leonards and Jerard
were not to be fired but just suspended
The three employees filed claims for unemployment
compensation benefits that Hydro opposed on the
ground that they had been fired for cause. Hydro did not
contend in that matter that the three employees had quit
their employment . After a hearing , they were found to
have been discharged for presenting a grievance and
were granted unemployment compensation.
I credit the accounts of Jerard , Dennis Leonard, and
Kenneth Leonard . Especially as Mullen did not begin to
608 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
corroborate McDonald's account, as Stoneman for all
practical purposes undermined McDonald's version of
his discussion with Stoneman; as it also seems highly un-
likely to me that Jerard, who was always previously re-
ceptive to McDonald's wishes about bringing in the
Painters Union and otherwise, would present McDonald
with an ultimatum whereby his grievance must be dis-
cussed first, as McDonald's version would have it, and
lastly because it is extremely improbable that an experi-
enced police official such as McDonald would have bla-
tantly disobeyed the express order he said was dust given
him by Stoneman about how to conduct himself at that
meeting.
5. Hydro's dormant stage
Hydro's operations virtually ceased as of mid-1981 It
stopped leasing any equipment from Wizard and
McDonald devoted his time to Wizard's matters The
lawsuit by the Painters Union to rescind its contract with
Hydro may have had something to do with its demise. In
any event, Mullen resigned as president of Hydro and
McDonald assumed that post as of January 1982 together
with all its stock-which he conceded was valueless.
The Hydro foreman, Saunderson, and employee Paul
Reid were transferred to Wizard's payroll.
6 The demands for concessions
Wizard operated in the last half of 1981 and for sever-
al months in early 1982 as it had before Hydro had
leased any of its equipment or performed cleaning serv-
ices. Thus, Wizard directly serviced industrial accounts
in both the Niagara Falls and the Buffalo areas.
In March 1982 Wizard's president, Stoneman, met
with representatives of the Independent Union and told
them that he had to have concessions as Wizard's com-
petitors were underbidding Wizard because of their low
wage rates Stoneman told them that, unless Wizard
competitors are organized and pay the same wages as
Wizard or unless Wizard gets concessions, Wizard would
"just lease [its] equipment and go i strictly leasing." The
inference was clear that, in that event, the Wizard em-
ployees would no longer be employed by Wizard.
Wizard then had about six trucks with powerful vacuum
cleaners on them Each such truck was valued at
$175,000, and all were mortgaged.
Shortly after that first meeting about concessions, Wiz-
ard's president met with all its employees, including the
ones who were the president and vice president of the
Independent Union Stoneman told them then that, to
remain competitive, Wizard had to have their consent to
reduce the contractual wage rates, to give up one of the
holidays, and to permit Wizard to schedule employees to
perform weekend work without having to pay them
overtime rates In seeking these concessions, Stoneman
told the employees that he was losing contracts to his
competitors who paid lower wages than Wizard did
Stoneman stated to them if those concessions were not
granted, Wizard would be forced to close down
The employees rejected Stoneman's demands. On
March 30, 1982, Stoneman prepared a ballot which he
gave to each employee, together with a covering letter
he signed as Wizard's president, addressed to "Dear
Union Member." The letter stated, in substance, that if
they wanted "to forestall a possible company liquida-
tion," a majority of the union members had to cooperate.
They were instructed to mark the ballots, not to sign
them, and to return them by April 2 so that Stoneman
could count them, along with a representative of the In-
dependent Union. On the annexed ballot the employees
were asked to place a mark on the "Yes" line or on the
"No" line In substance the ballot indicated that they
were voting to accept or reject Wizard's request for
elimination of double-time pay and of a paid holiday and
its request for a flexible workweek, all in return for a
promise that "all future work will be given present em-
ployees until they are back to a 40-hour week before re-
calling or hiring others" and a promise of merit pay for
any who might warrant it The employees again voted to
reject the demands for concessions.
Randy Vangorder, the president of the Independent
Union, testified that Stoneman asked him what he
thought of Wizard's "proposals" and that Vangorder re-
plied that they might be accepted if Stoneman withdrew
his demand for a flexible work-week Somehow arrange-
ments were made to take a third vote Vangorder testi-
fied that a relative of his prepared the ballots for the
vote. The members of the Independent Union looked at
those ballots at a meeting held in a tavern. The record
testimony indicates that they threw the ballots away. It
is not clear about when that meeting was held.
Altogether there were about 15 meetings, formal and
informal, between Wizard's president and officials and
representatives of the Union-relating to Wizard's de-
mands for concessions In each of those meetings, Stone-
man made it clear that he had to get those concessions
or else he would "close down" Wizard and go into the
leasing business exclusively
In the spring and for most of the summer of 1982, the
Independent Union refused to grant those concessions
Neither did it challenge Stoneman's statements that
Wizard could not compete because of the wages it paid
its employees. Nor did the Independent Union ask Stone-
man to furnish it with any information relative to his de-
mands for concessions Moreover, Wizard adduced evi-
dence that it was under intense pressure from its custom-
ers to submit lower, more competitive bids, and that it in
fact had lost accounts to competitors
7 The alleged unlawful layoff in June 1982
The General Counsel contends that the following em-
ployees were laid off on June 11, 1982 because they had
refused to renegotiate the contract in effect then between
Wizard and the Independent Union-
Alan L Ortiz Tony Brenetti
Dave Knappert Pat Foote
Doug Rehrauer Randy Rotella
Mike Rehrauer Larry Szwedo
Dave Wilson John Myrtle
Tom Miles Bob Counts
Ken Zortman James R. Garlitz
HYDRO LOGISTICS
The record indicates that a substantial number of Wiz-
ard's employees were laid off in mid-1982, no precise
records were submitted in evidence disclosing the identi-
ties of the laid-off employees or the respective layoff
dates. The record shows the following about the above-
named individuals
Ortiz testified he was laid off on June 11, 1982, under
circumstances described in detail in the next subsection
and that he has not been recalled to work since.
Dave Knappert, the two Rehrauers, and Wilson
worked as a crew in the summer of 1982, also as dis-
cussed in more detail in the next subsection.
Miles testified that he had been laid off from Wizard
from February to May 1982 and that he did not take any
part in the discussions pertaining to contract concessions
Miles was recalled in May 1982 and has worked for
Wizard since then
Zortman testified he worked on June 11 and that he
was laid off on June 21, 1982, for 1 week, having been
told then that Stoneman was going broke Zortman also
testified that McDonald had said to him that there would
not have been a layoff if the employees had not slapped
Stoneman in the face and if instead they had agreed to
the concessions Stoneman wanted
There is no evidence about the employment status of
Tony Brenetti or Pat Foote.
The matters involving Randy Rotella are discussed in
the subsection below dealing with his status.
Larry Szwedo testified that he was laid off in June
1982 and was never given a reason for being laid off
then He has not been recalled
The president of the Independent Union, Randy Van-
gorder, testified that the 12th individual listed above,
John Myrtle, had been president of the Independent
Union when Stoneman initially had sought and was re-
fused contract concessions Vangorder's testimony indi-
cates that, sometime later in the spring of 1982, employ-
ees Myrtle, Zortman, Bob Counts, and William Cody
were laid off
James Garlitz testified that he worked steadily several
days a week for Wizard, all throughout 1982.
Employee Zortman also testified that in July 1982 he
was working at Stoneman's house when he and Stone-
man talked about "the union guys going to the Labor
Board," a reference to the charge in Case 3-CA-11086
Zortman related that Stoneman said then that he would
sue everyone of the employees who "went to the Labor
Board and that, if he had to, he would garnish their
wages to get back the money he had to spend for law-
yers." Stoneman summarily denied having made any
threats I credit Zortman's testimony.
8. The reappearance of Hydro
Douglas Rehrauer testified as follows for the General
Counsel. He was working for Wizard at the Donner-
Hanna Coke jobsite in Buffalo in the spring of 1982.
McDonald, Wizard's personnel director, came to that
jobsite then and talked separately with him and with
each of the other employees of Wizard who were work-
ing there McDonald gave him a layoff slip from Wizard
and told him that he would be rehired by Hydro and
that he would receive no fringe benefits. McDonald said
609
that Wizard was no longer operating and that it was
only a leasing company. On the following day, Douglas
Rehrauer returned to that same work location, worked
with the same crew under the same foreman He contin-
ued to work there for about 2 months In that period, he
received paychecks drawn by Hydro, not Wizard. Al-
though the wage rate he received was unchanged, it ap-
pears deductions for union dues and fringe benefits were
no longer made He was laid off from that job and later
recalled by Wizard to work at another location. It ap-
pears that he was called back after Wizard finally
reached agreement with the Independent Union on the
matter of concessions
Michael Rehrauer testified that the exact date that he
was laid off by McDonald along with his cousin, Doug-
las Rehrauer, as related above and others, was June 11,
1982 His account otherwise corroborates that of Doug-
las Rehrauer. In addition, his testimony indicates he had
to pay for medical treatment that would have been pro-
vided for under Wizard's contract with the Independent
Union Further, he testified that when the Donner-Hanna
job ended on July 9, 1982, he was laid off. He called
Wizard's office and was assigned to work at the Bethle-
hem Steel plant with a different crew and where he was
paid by Wizard.
Another employee, Alan Ortiz, testified along the
same lines as the Rehrauers respecting the events on
June 11, 1982. In addition, Ortiz asked McDonald if he
would be covered by a union contract and McDonald
answered that there was no union and that McDonald is
the contract Ortiz said he would not work on that basis.
He has not worked for Wizard or Hydro since then.
The foregoing accounts were not materially contro-
verted.
9. The emergence of Miracle
The General Counsel placed into evidence copies of
invoices from Miracle to Wizard for labor furnished to
jobsites at which Wizard had contracts to furnish labor
and equipment for purposes of performing industrial
cleaning services . Those invoices reflect that, from June
12, to August 18, 1982, Miracle billed 2040 man-hours of
work to Wizard for cleaning services performed at
Union Carbide, Bethlehem Steel, and other locations,
which Wizard itself normally serviced.
One of Wizard's employees who was laid off in June
1982, Larry Szwedo, testified that he worked for Miracle
on several of the jobs covered by the above invoices.
Miracle's history as a company is as follows. At vari-
ous times in the 1970s, James Szwedo was employed by
Wizard in different capacities-first as a laborer and later
as a shop mechanic. From 1976 through 1979, he was
self-employed, doing industrial cleaning under the name
of Western Power Clean. He returned to work for
Wizard in 1979 and left at the end of 1980 for another
period of self-employment, this time d/b/a Miracle Sales
and Service. That company was incorporated in April
1981.
In May 1982 Stoneman telephoned James Szwedo and
proposed that Miracle perform work for Wizard's cus-
tomers and lease Wizard 's equipment in return for not
610 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
competing with Wizard. Szwedo accepted. As noted
above, Miracle began in about June 1982 to perform a
substantial amount of work pursuant to that arrangement
In 1982, it grossed $98,000, compared to $49,000' in 1981
Miracle rented an office located in a building owned
by Stoneman. That building adjoins Wizard's facility.
Miracle used Wizard's office in June 1982 to distribute
job application forms. It also posted a sign on a car be-
longing to a Wizard foreman that directed those appli-
cants to go to Wizard's office. Miracle also placed news-
paper ads for job-applicants. Most of its employees had
responded to those ads. One of the General Counsel's
witnesses , Michael Rehrauer, testified without contradic-
tion that he heard Wizard's general foreman say, in June
1982, that "We are starting up'Miracle Sales and Serv-
ice."
In the summer of 1982 Stoneman informed James
Szwedo that a Wizard employee had to work with Mir-
acle's crew because of insurance requirements, apparent-
ly a reference to the coverage carried by Wizard on its
trucks. On those -occasions when Miracle performed
work for Wizard, as reflected by the invoices placed in
evidence, the employees doing the work identified them-
selves as Wizard employees at the plants at which they
were assigned to work. They did so because the security
guards at those plants had, in effect, orders to permit
entry only to employees of Wizard, the nominal contrac-
tor. -
Miracle also serviced its own accounts, e g., Airco,
leasing equipment from Stoneman for about $45 an hour.
The General Counsel adduced testimony from an em-
ployee, Ken Zortman,- that Wizard 's president , Stone-
man, instructed him to report to the Airco jobsite and to
work with Miracle employees there, to do the same
work they do. On another occasion according to Zort-
man's uncontroverted testimony, Wizard's general fore-
man, John Kozlowski, referred him to work for Miracle.
Szwedo set the wage scales for Miracle's employees;'
neither Stoneman nor McDonald told him how much
Miracle's employees were to be paid
Szwedo testified that Miracle gave up its contract with
Airco "at the request of Mr. Stoneman to help alleviate
the problem he was having with his union." It appears
that, about the time Szwedo did that, the Independent
Union had agreed to the concessions sought by Stone-
man in connection with discussions to resolve issues'
raised by the initial unfair labor practice charge in this
case. That matter is considered separately below. Con-
cerning Miracle; Szwedo's testimony indicates that its
operations have been materially reduced and that Wizard
has taken over the servicing of the Airco contracts and
the other industrial accounts th t Miracle had been han-
dling.
10. The unit as of July-1981
Hydro has been defunct since about the end of July
1981 (except for a brief revival in mid-1982) and Mir-
acle's arrangements with Wizard to service its customers
ended about mid-August 1982. The uncontroverted testi-
mony is that the Painters Union, by late June 1981, had
discharged its business manager for having entered into a
contract with Hydro in late 1980, that the Painters Union
had brought a civil action in 1981 to rescind that con-
tract, and that, while its acting business manager assisted
James Jerard in drafting a grievance in June 1981, he
also informed Jerard in essence that the employees
would have to submit it themselves as the Painters Union
was taking the position that the contract was null and
void.
As of about July 1, 1981, Wizard resumed servicing its
own accounts in both the Niagara Falls and Buffalo
areas and continued to do so to date, except for the inci-
dents in the summer of 1982, discussed above. Wizard,
together with the Independent Union, have applied their
contract to all employees performing such work In
effect, Wizard and the Independent Union have reverted
to essentially the arrangement in existence before the
advent of the Hydro-Painters Union contract in late
1980. That arrangement has been modified by certain
contractual changes effected in September 1982 whereby
the Independent Union finally acceded to some of Stone-
man's requests for concessions. The significant point,
however, is that since July 1981 the appropriate bargain-
ing unit in existence has consisted of all employees em-
ployed by Wizard excluding all office clerical employees,
managerial employees and all supervisors as defined in
the Act.
11. Alleged discrimination against Randolph Rotella ,
The General Counsel contends that- Rotella was laid
off by Wizard in June 1982 because of his activities on
behalf of, the Independent Union and because he cooper-
ated in an investigation conducted by the wage and hour
division of the U.S. Department of Labor. The General
Counsel further contends that Respondent about October
10, 1982, failed and refused to recall Rotella from layoff
because of those same reasons, and also because it be-
lieved that, Rotella was the one responsible for, the filing
of the unfair labor practice charges by the Independent
Union in this case.
Respondent asserts that Rotella requested to be laid off
because he was going into business with his wife and that
he was.not laid off for unlawful reasons. It contends fur-
ther, that it did not have any work for Rotella when he
sought on October 19, 1982, to be recalled from layoff.
Rotella began working for Wizard in 1978 as a laborer,
was soon assigned to work as a truckdriver, and then
was, promoted to, foreman About the end of 1981, he
married a sister of James Szwedo (Miracle's president)
and of Edward Szwedo (one of Wizard's foreman). Ro-
tella asked, in late 1981, to go back to work as a bargain-
ing unit employee and his request was granted. No
reason appears in the record about why he made that re-
quest. 2
At one of the meetings of the Independent Union in
the spring of 1982, Rotella told the employees present,
after its consultant, James Stewart, had talked to them
about Stoneman's demands for concessions, that Stewart
2 1 note that late in July 1982 the wage and hour division calculated
that Rotella, among others in Wizard's employ, was entitled to pay for
working what it termed, unrecorded hours of work in 1981 It is specula-
tive that Rotella wanted to go back to the bargaining unit to ensure that
he obtained full compensation for the hours he may have worked
HYDRO LOGISTICS
was "in cahoots" with Stoneman. Rotella then accused
Stewart of informing Stoneman of all that transpired at
meetings of the Independent Union, of having accepted
personal loans from Stoneman, and obtaining medical in-
surance coverage for his family through Stoneman.
Stewart did not deny those statements and the record in
this case discloses that he did accept loans and had medi-
cal coverage from Wizard. Stewart's testimony before
me is that he had told Stoneman that Rotella had made
statements at a meeting of the Independent Union that
"made it difficult to get the concessions through "
In May 1982 an investigator for the wage and hour di-
vision of the U.S. Department of Labor interviewed Ro-
tella, but Rotella then declined to sign any statement in
that investigation.
Rotella was laid off on June 4, 1982, with five other
employees. He testified that at some point before he was
laid off, James Szwedo, Miracle's president, told him that
Stoneman was going to lay him off because he believed
that Rotella had filed a complaint with the wage and
hour division along with two other individuals, one of
whom was Samuel Saunderson. Saunderson had left
Wizard's employ sometime in 1981.
Stoneman testified that he had to lay off a number of
employees in June 1982 because business was slow and
that he selected Rotella as one of the employees to be
laid off as it was his understanding that Rotella was
opening up a restaurant with his wife.3
The only evidence before me that Rotella was inter-
viewed in May 1982 by an investigator of the wage and
hour division that can be attributed to Wizard was a
form dated late July 1982, apparently served on Wizard
then and that claims that moneys are owed various indi-
viduals, including Rotella and Saunderson, under the
Wage and Hour Act
On June 7, several days after his layoff, Rotella signed
a statement prepared for him by an investigator from the
wage and hour division. That statement appears to be the
same one Rotella had previously declined to sign. The
following developments took place later in 1982 and led
to Rotella's seeking reinstatement on October 10, 1982.
In August 1982 representatives of the Independent
Union met with Wizard's president at the office of Wiz-
ard's attorneys and an agreement was reached that pro-
vided that the Independent Union would withdraw its
unfair labor practice charges. The Independent Union
then requested withdrawal of those charges Board
agents for Region 3 apparently wanted confirmation that
all employees affected by the agreement were aware of
its provisions and had no objections thereto. When it de-
veloped that at least two, Rotella and the former presi-
dent of the Independent Union, John Myrtle, expressed a
desire to be recalled to work, the consultant employed
by the Independent Union, Stewart, instructed them to
report to Wizard's office on October 10, 1982. Mean-
while, the Board's Regional Office withheld action re-
specting the withdrawal requests.
Rotella testified as follows concerning the events on
October 10, 1982 He arrived at Wizard 's premises and
3 That restaurant, the Poor Man's Restaurant, opened for business on
June 8, 1982-4 days after Rotella's layoff
611
waited for Stoneman When Stoneman came in about 40
minutes later, Stoneman looked at him, said nothing
then, and walked into his office. He returned a few min-
utes later and asked Rotella what he was doing there.
Rotella replied that he was there for a meeting with
Stoneman Stoneman told him that he knew of no meet-
ing, that Rotella was unwanted, and that Rotella should
get off Stoneman's property. Rotella left. Rotella saw
Myrtle outside and told him what happened. Myrtle
went into the office and came out 10 minutes later.
Mytle told Rotella that Stoneman "threw [him] out of
the office too" Stewart arrived next and was told by
Rotella and Myrtle what had just occurred.
Stewart testified as follows respecting the events of
October 10, 1982. He arrived early and was in Stone-
man's office making personal calls Stoneman came in.
Stewart asked if he could make one more call before the
meeting with Rotella and Myrtle began Stoneman re-
plied that there would be no meeting and stated that he
just "threw [Rotella and Myrtle] off [his] property."
Stoneman said that he had "found out from other people
[that] Rotella is a snake," that Rotella "was double cross-
ing him and working behind his back and all the troubles
[Stoneman] was having were [Rotella's] fault and that
why [Stoneman] is not going to have him back "
Stewart testified further that in June 1982 Stoneman
called him and wanted to know why the unfair labor
practice charge was filed, apparently a reference to the
charge filed in Case 3-CA-11086 on June 23, 1982.
Stewart related that, in that discussion, Stoneman said
that "it had to be Rotella" who was responsible for the
filing of that charge. Stewart further testified that, on an-
other occasion, Stoneman told him that he would spend
every dime he had to fight Rotella.
Stoneman's testimony respecting the foregoing matters
is as follows. After the concession agreement was signed,
he had a meeting with Stewart. That took place in his
office in the fall of 1982. He, Stoneman, had approached
the employees to get the concessions he sought and later
he met with Stewart who told him that he would get
"no kind of concessions as long as Randy Rotella and
Larry Szwedo [are] here." Stewart reported that Rotella
had been telling the employees that Stoneman has
"money stashed away " Stoneman then likely referred to
Rotella as a snake In response to a series of leading
questions, Stoneman denied having knowledge of any
protected activities on Rotella's part until after Rotella
filed his own charges with the Board Stoneman testified
he had refused to take Rotella back because he did not
have any work 'for him and not for any of the reasons
alleged in this case by the General Counsel.
On cross-examination Stoneman testified, in reference
to Rotella's appearance at Wizard's premises on October
10, 1982, that Stoneman was aware that a meeting had
been set for that day with Rotella and that, instead, he
"asked" Rotella to leave the premises because he was not
employed there and as Wizard was not then hiring em-
ployees. Stoneman acknowledged that Rotella and
Myrtle were there on that occasion because they wanted
their jobs back . Stoneman testified that he would not
"lay off an employee that was loyal to bring these people
612 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
back " Stoneman also acknowledged that Rotella's name
was contained on forms sent to Wizard in the summer of
1982 by the wage and hour division of the U.S. Depart-
ment of Labor in connection with an investigation being
conducted there regarding overtime pay practices.
I credit the above accounts of Rotella and Stewart'
Stoneman 's testimony on direct examination did not con-
test these accounts in any material way and his testimony
on cross-examination confirmed many aspects of them
The General Counsel also offered the following un-
controverted testimony on the ground that the remarks
made by James Szwedo, the president of Miracle, are
binding also on Wizard as its alleged alter ego. Counsel
for Wizard and Hydro objected to that testimony The
merits of those contentions are discussed later in this de-
cision.
On two occasions in January 1983, James Szwedo
asked Rotella why he filed the unfair labor practice
charge against Stoneman . When Rotella answered that
he did it to get his job back, Szwedo told him that Ston-
eman would not give him his job back unless ordered to
do so and even then it would be without backpay and
that Stoneman would give him the worst job possible to
force him to quit and would fire him anyway
ties pursuant to the arrangements whereby Wizard leased
equipment therefor to Miracle and billed Wizard for
labor supplied 7 Stoneman ,, Wizard 's president , was the
controlling force in that period respecting the work cov-
ered by those invoices Not only did he control the size
of the crews , he also had James Szwedo surrender to
Wizard the, purchase order Miracle had directly with
Airco. The evidence does not establish that Wizard and
Miracle were engaged in a joint venture before June
1982 or after August of that year.
2. The discharges of three employees on
June 25, 1981
The credited testimony discloses that James Jerard,
Kenneth Leonard, and Dennis Leonard, presented a writ-
ten grievance under the Painters Union contract to
McDonald and Miller on June 25, 1981 , and were sum-
marily discharged after McDonald obviously sought to
find a pretextual basis to discipline them and after
Mullen, with a vulgar gesture , told McDonald that they
knew what they were dealing with. McDonald's later
futile efforts to show that those three employees had quit
emphasized the showing that those employees were dis-
charged because they filed that grievance and I so find.
B. Analysis
1. The single, employer issue
The uncontroverted evidence established that Wizard's
president and sole stockholder, Stoneman, supplied the
money to establish Hydro. He did so to save Wizard the
expenses it would otherwise have incurred by reason of
the travel pay provisions of Wizard's contract with the
Independent Union. That he controlled Hydro's oper-
ations overall and even its daily business; as Hydro's
president himself acknowledged that Stoneman could tell
him what employees Hydro was to use. Noting the fore-
going, the overall testimony in the record, and also the
testimony of Stoneman and McDonald that they dis-
cussed before the June 25, 1981 meeting, the nature of
the discipline to be meted out to three Hydro employees,
I find that Hydro is the alter ego of Wizard The fact
that Stoneman does not own the stock of Hydro is of no
moment.5 Further, the individual who does, McDonald,
has acknowledged that the stock of Hydro is valueless
The evidence, however, is insufficient to find that Mir-
acle is also an alter ego of Wizard. Miracle was in exist-
ence as , a sole proprietorship for a number of years and
-later as a corporation for a whole year before the inci-
dents giving rise to this case occurred During that
period, Miracle had been separately owned and operated
by James Szwedo. At all times, Szwedo has on his own
established the wage rates of Miracle's employees.6
The evidence does clearly show, nevertheless, and I
thus find that Wizard and Miracle functioned as a joint
employer from June 12 to August 18, 1982, when Mira-
cle took over Wizard's contracts at various Buffalo facili-
4 Respondent introduced evidence of a matter admissible under Fed R
Evid 609 for the purpose of impeaching Rotella ' s overall testimony I
have considered that evidence in making this determination
5 American Pacific Concrete Pipe Co, 262 NLRB 1223 (1982)
6 Pinter Bros , 263 NLRB 723 (1982)
3. Alleged discrimination about Rotella
The evidence is inconclusive to 'establish that Rotella
was laid off on June 4, 1982, because of his activities on
behalf of the Independent Union or, because he took part
in an investigation by the wage and hour division of the
U.S. Department of Labor Respecting the wage and
hour investigation , the evidence indicated that the first
knowledge Respondent had of Rotella's involvement in a
claim filed with it in late July 1982-long after. Rotella
was laid off. As to his union activities , there is evidence
that the.consultant for the Independent Union , at some
point, informed Stoneman that Rotella , along with
others, was opposed to granting concessions sought by
Stoneman and that Rotella had been persuasive in having
that request rejected by the unit employees. It appears,
however,,that that information may have been furnished
Stoneman after Rotella was laid off. In any event, the
General Counsel has not persuaded me that it occurred
just prior to Rotella's layoff on June 4, 1982. The evi-
dence-is insufficient to establish that Rotella was selected
for layoff and then laid off on June 4, 1982, because of
his earlier union activities.8
His layoff appears to have occurred as part of the
much longer layoff, discussed in the next section. '
Regarding the events of October 10, 1982, the evi-
dence is clear that Wizard had indicated it would rein-
state Rotella on his application therefor but that, when
he arrived at its premises for that purpose , Stoneman
could not face up to the prospect of reinstating him. The
credited evidence discloses that he first vacilated and
then ordered Rotella off the premises. Stoneman's refer-
ence to Rotella as a "snake" that he threw "off his prop-
erty" because Rotella "was double-crossing him and
7 Trend Construction Corp, 263 NLRB 295 (1982)
8 Cf Townsend & Bottum , Inc, 259 NLRB 207, 218 (1981)
HYDRO LOGISTICS 613
working behind his back" too clearly expresses the dis-
criminatory motivation behind Stoneman's acts. I thus
find that Rotella's reinstatement was denied because of
his activities on behalf of the Independent Union and, re-
lated thereto, because of Stoneman's belief that Rotella
was the employee responsible for the filing of the charge
in Case 3-CA-11086.9
4. June 1982 layoffs
The General Counsel alleges that 14 named employees
were laid off in June 1982 because they refused to grant
concessions demanded by Stoneman and in violation of
Wizard's duty to bargain collectively thereon.
The evidence discloses that there was a layoff of
Wizard employees in June 1982. The exact number of
employees laid off, their identities, and the lengths of
their respective layoffs are not fully ascertainable from
the evidence submitted. It is clear that some of the 14
employees named in the complaint were laid off then and
that others of the 14 were not. It seems likely that
Wizard employees not named in the complaint were also
laid off in June 1982.
The record evidence is clear also that the Wizard em-
ployees, who were transferred to Hydro's payroll in
June 1982, were told then by McDonald that they no
longer were covered by the Independent Union's con-
tract and would not receive the fringe benefits they had
received as Wizard's employees. Paystubs and the testi-
mony of Douglas Rehrauer and of Michael Rehrauer
confirm that not only were those benefits discontinued
but also dues deductions for the Independent Union were
no longer made.
I have already found that Wizard and Hydro were
alter egos of each other In substance, Stoneman manipu-
lated Hydro to obtain on his own what the Independent
Union had, in June 1982, declined to give Wizard-
modifications in the existing agreement.
The Board has made it clear that an employer may
not, without union consent, relocate bargaining unit
work during the terms of an existing collective-bargain-
ing agreement, change contract terms, and layoff em-
ployees because it wished to relieve itself of the labor
costs of its union contract.1° That holding is particularly
applicable to the facts in the instant case that disclose
that Wizard acted unilaterally in relocating unit work to
Hydro and Miracle in mid-1982 after it was frustrated in
its efforts to effect contract changes with the consent of
the Independent Union. Its conduct, and that of its alter
ego Hydro, under applicable precedent, are violative of
Section 8(a)(1), (3), and (5) of the Act.
For substantially the same reasons, Wizard's entering
into a joint venture with Miracle in the period June-
August also is violative of Section 8(a)(1), (3), and (5) of
the Act
There is no clear evidence, but only strong suspicions,
that Miracle was a knowing accomplice of Wizard in
violating employee rights I find that the evidence is in-
sufficient to charge Miracle with any liability therefor.
Rather, it appears to have taken on the Wizard accounts,
as a legitimate business interest on its part. i t
5 Alleged independent violations of the Act
The complaint alleges that Respondent unlawfully at-
tempted to bypass its duty to negotiate with the Painters
Union by having dealt directly with employees Jerard
and the Leonards on Hydro's payroll on January 10,
1981. As it appears that the Painters Union has dis-
claimed any interest in representing any of Respondent's
employees,12 as any remedial order respecting that alle-
gation would tend to impair the bargaining rights of the
Independent Union and as any unlawful conduct arising
out of the alleged act would be satisfactorily remedied
by reason of the order remedying the unlawful discharge
of those three employees, it would not effectuate the
policies of the Act to pursue that allegation further
The General Counsel has made it clear in the record
that no remedial order is sought regarding McDonald's
questioning of Jerard in late 1980 and his directing
Jerard then to organize the employees on behalf of the
Painters Union I agree that none should issue , particu-
larly as the Painters Union has taken action to nullify
those events and as those matters were effectively re-
moved from litigation
The General Counsel has alleged too that many state-
ments of economic duress uttered by Stoneman in his
futile efforts to get contract concessions constituted un-
lawful threats of reprisals designed to compel the grant-
ing of his demands. I reject that contention as Stoneman
offered those comments in the course of collective bar-
gaining and , as such, it was capable of being evaluated
for its truth or as a ploy used to obtain the consent of
the Independent Union to Wizard's requests for conces-
sions. It seems clear that, in the context of face-to-face
negotiations , a statement by an employer that it cannot
afford to pay contract rates is not by itself violative of
the Act but obligates that employer, if asked for informa-
tion thereon , to either "withdraw his claim or to provide
documentary support thereof "13 A more stringent rule
applies when an employer informs employees during a
union organizing campaign it would be forced to close
its plant if the union got in. Such a statement would con-
stitute an unlawful threat unless that employer can meet
the burden of providing an objective factual basis for
such a prediction. 14 Even were Wizard held to that
more stringent test , I would find that it did meet its
burden of providing an objective factual basis for having
done so. The evidence in this case is clear that the dete-
riorating economic situation in the Buffalo-Niagara Falls
9 Timberline Energy Corp, 258 NLRB 292, 297-298 (1981) It is specu-
lative that Stoneman was motivated also by the fact that Rotella's name
was among those for which the U S Department of Labor, wage and
hour division in July 1982 sought additional wages I find that General
Counsel has failed to establish by a preponderance of the evidence that
Wizard was so motivated
10 Milwaukee Spring Division, 265 NLRB 206 (1982)
11 Cf Navaho Freight Lines, 254 NLRB 1272 (1981), Wabash Asphalt
Co, 224 NLRB 820 (1976)
12 Cf Rochester Institute of Technology, 264 NLRB 1020, 1021 in 7
(1982)
13 Hi-Grade Materials Co, 239 NLRB 947, 957 (1978)
14 NLRB Y Gissel Packing Co, 395 U S 575, 619 (1969), Crown Cork
& Seal Co, 255 NLRB 14 (1981)
614 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
area was pressuring Wizard to lower its contract prices;
indeed, it is undisputed that it lost key accounts { I thus
find that the evidence is insufficient to establish' that
Wizard unlawfully threatened loss of jobs, termination of
employment, plant closure, reduction of work hours, dis-
continuance of its operations, or the like in the course of
seeking contract concessions from the Independent
Union.
The General Counsel has also alleged that remarks
made by Miracle's president, James Szwedo, in May
1982 and in January 1983 to his brother-in-law, Rotella;
were coercive. I note that, at those times, Miracle was
not engaged in a joint venture with Wizard Szwedo's
statements were not made in the course of the joint ven-
ture and cannot be attributed to Wizard 15 More realisti-
cally Szwedo was talking to Rotella as a brother-in-law-
the January 1983 discussions reveal more that Szwedo
and Rotella were involved in some personal, family argu-
ment and that Szwedo was not speaking in Stoneman's
stead.
I credit Zortman's testimony that,in July 1982, Stone-
man threatened to sue Wizard's employees because of the
filing of a charge with the Board, an obvious reference
to the one filed in Case 3-CA-11086. Such a threat is de-
structive of employee rights under Section 7 of the Act
and violates Section 8(a)(1) of the Act. 16
There are other, miscellaneous allegations of independ-.
ent violations set out in the consolidated complaints,
before me. The record does not contain supporting evi-
dence thereon and General Counsel,does not allude, to
them in the brief he filed. I thus find no merit in those
contentions.' 7
CONCLUSIONS OF LAW
1. Wizard, Hydro, and Miracle are each employers en-
gaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
2. The Independent Union and the Painters Union are
each labor organizations within the meaning of Section
2(5) of the Act.
3. -Wizard and Hydro are alter egos of each other;
Wizard and Miracle were engaged in June, July, and
August 1982 as joint employers in a joint venture
4. Wizard and Hydro, as alter egos of each other, dis-
charged employees James Jerard, Kenneth Leonard, and
Dennis Leonard on June 25, 1981, because they filed a
grievance pursuant to Hydro's contract with the Painters
Union and Wizard and they have since failed and refused
to reinstate these employees and, by the foregoing con-
15 Cf Joe & Dodie's Tavern, 254 NLRB 401, 411 (1981) See also
Fed R Evid 801(d)(2)(D)
16 Clara's Restaurant, 263 NLRB 37 (1982)
11 The General Counsel urges that Hydro threatened employees with
discharge on January 10, 1981, when its treasurer told employee Jerry
Panikowski that it would pay him the double wages he claimed was due
him and that he would not work for Hydro again Hydro's treasurer tes-
tified that Panikowski was entitled to regular pay and that he had made it
clear he would no longer work unless he got double pay Panikowski did
not testify Although he no longer worked after January 10, 1981, for
Hydro, there is no allegation that he had been unlawfully terminated In
any event, the equivocal state of the record about the alleged "threat"
warrants dismissal of that allegation
duct Wizard and Hydro have violated Section 8(a)(1)
and (3) of the Act.
5 All employees of Wizard excluding all office cleri-
cal employees, ' managerial employees and all supervisors
as. defined in the Act have, since at least late 1981, com-
prised a unit appropriate for purposes of collective bar-
gaining
6. At all times material herein, the Independent Union
has been the exclusive representative of the employees in
the unit described above in paragraph 5.
7. Wizard and Hydro, as alter egos, and Wizard by
using Miracle in a joint venture, engaged in activities in
June, July, and August 1982 by which ' a substantial
number of employees represented by the Independent
Union were laid off or had their working conditions al-
tered, all in contravention of the contract then in force
between the Independent Union and Wizard and not-
withstanding that the Independent Union did not consent
to such modification By the foregoing conduct, Wizard
and Hydro violated Section 8(a)(1), (3), and (5) of the
Act -
8. ' Miracle, by participating in the joint venture with
Wizard, did not violate the Act.
9. Wizard and Hydro , as alter egos, by Stoneman vio-
lated Section 8(a)(1) of the Act by having threatened to
sue employees because the Independent Union filed an
unfair labor practice charge.
10. Wizard did not select for layoff and lay off Ran-
dolph Rotella on June 4, 1982, because of his activities
on behalf of the Independent Union or for other activi-
ties protected by the Act.18
11 Wizard has, since about October 10, 1982, refused
to employ Rotella, because of his activities on behalf of
the Independent Union, and because it believed that Ro-
tella was the employee responsible for the filing of the
charge in, Case 3-CA-11086.
.12. The unfair 'labor practices found above in para-
graphs 4, 7, 9, and 11 affect commerce within the mean-
ing of the Act.
THE REMEDY
Having found that Wizard, and its alter ego, Hydro
engaged in certain unfair labor practices, I shall recom-
mend that, Wizard and Hydro be ordered to cease and
desist therefrom and to take certain affirmative action de-
signed to effectuate the policies of the Act.
Having found that Wizard's revival of Hydro in 1982
and Wizard's entering into a joint venture with Miracle
from June 12, 1982, to August 18, 1982, violated Section
8(a)(1), (3), and (5) of the Act Wizard shall be ordered
to recall all employees laid off as a result of those unlaw-
ful acts and to offer to reinstate them to the positions
they held before their unlawful layoff or, if those posi-
tions no longer exist, to substantially equivalent positions,
without prejudice to their seniority and other rights and
privileges They shall further make these employees
whole for any loss of earnings they may have suffered
18 It appears that Rotella was one of many Wizard employees laid off
as a result of Wizard's unlawfully relocating unit work to employees on
Hydro's payroll or on Miracle's A determination thereon may have to
await backpay proceedings
HYDRO LOGISTICS
by reason of the discrimination against them, by payment
to them of a sum of money equal to that which they nor-
mally would have earned from the respective dates of
their layoff or discharge to the date of Respondent's
offer to recall or reinstate, less net earnings during such
period, with backpay computed on a quarterly basis,
with interest, in the manner prescribed in F. W. Wool-
worth Co, 90 NLRB 289 (1950), and Florida Steel Corp,
231 NLRB 651 (1977). See generally Isis Plumbing Co.,
138 NLRB 716 (1962). Similarly, they shall offer rein-
statement to James Jerard, Dennis Leonard, and Kenneth
Leonard and make them whole in the same manner for
having unlawfully discharged them on June 25, 1981,
and Randolph Rotella and also make him whole since re-
fusing him reinstatement on October 10, 1982.
On these findings .of fact and conclusions of law and
on the entire record, I issue the following recommend-
ed19
ORDER
I. The Respondent, Wizard Method, Inc. and its alter
ego, Hydro Logistics, Inc., Niagara Falls and Buffalo,
New York, their respective officers, agents, successors,
and assigns, shall
1 Cease and desist from
(a) Transferring work performed by employees em-
ployed in a unit (comprised of all its employees exclud-
ing all office clerical employees, managerial employees,
and all supervisors as defined in the Act) represented by
Wizard Method Employees Independent Union to em-
ployees outside that unit during the term of a collective-
bargaining agreement Respondent Wizard has with the
Independent Union and without its consent.
(b) Laying off unit employees as a result of such trans-
fers.
(c) Discharging any employee for filing a grievance
pursuant to the provisions of a collective-bargaining
agreement covering that employee.
(d) Refusing to reinstate any employee because of his
activities on behalf of the Wizard Method Employees In-
dependent Union or because he is believed to be respon-
sible for that Union's filing unfair labor practice charges
with the National Labor Relations Board.
. (e) Threatening to sue employees to discourage the
Wizard Method Employees Independent Union from
filing unfair labor practice charges with the Board.
(f) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them in Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Recall any employees laid off as a consequence of
the above-mentioned unlawful transfers of unit work and
offer them reinstatement to the positions they held before
their unlawful layoff or, if those positions no longer
exist, to substantially equivalent positions, without preju-
is If no exceptions are filed as provided by Sec 10246 of the Board's
Rules and Regulations , the findings, conclusions , and recommended
Order shall, as provided in Sec 102 48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses
615
dice to their seniority or other rights and privileges, and
make them whole for any loss of earnings they may have
suffered as a result of the discrimination against them, in
the manner set forth above in the remedy section.
(b) Offer James Jerard, Kenneth Leonard, and Dennis
Leonard reinstatement to the positions they held before
their unlawful discharge and to Randy Rotella, reinstate-
ment to the position he held before he was discriminated
against or, if those positions no longer exist, to substan-
tially equivalent positions, without prejudice to their se-
niority or other rights and privileges, and make them
whole for any loss of earnings they may have suffered as
a result of the discrimination against them, in the manner
set forth above in the remedy section
(c) Remove from its files any reference to the dis-
charges of James Jerard, Dennis Leonard, and Kenneth
Leonard, and any reference to the refusal to reinstate
Randolph Rotella and notify them in writing that that
has been done and that evidence of those unlawful acts
will not be used as a basis for any personal action against
them .20
(d) Make whole the Independent Union for all dues
and other moneys which it would have received but for
the unlawful transfer of unit work referred to above.
(e) Preserve and, on request, make available to the
Board or its agents for examination and copying, all pay-
roll records, social security payment records, timecards,
personnel records and reports, and all other records nec-
essary to analyze the amount of backpay due under the
terms of this Order
(f) Post at its Niagara Falls and Buffalo facilities,
copies of the attached notice marked "Appendix."21
Copies of the notice, on forms provided by the Regional
Director for Region 3, after being signed by the Re-
spondent's authorized representative, shall be posted by
the Respondent immediately 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 Respond-
ent to ensure that the notices are not altered, defaced, or
covered by any other material
(g) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
IT IS FURTHER RECOMMENDED that the complaint
against Miracle Sales and Service , Inc. be dismissed as
are all allegations found without merit in the analysis
section above.
20 Sterling Sugars, Inc, 261 NLRB 472 (1982)
21 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 Enforcm an Order of the National
Labor Relations Board "
Carl B. Newsome, Esq, for the General Counsel
Angelo Massaro, Esq. (Hovey & Massaro), of Niagara
Falls, New York, for Wizard Method, Inc. and Hydro
Logistics, Inc
616 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
SUPPLEMENTAL DECISION
STATEMENT OF THE CASE
JAMES F MORTON, Administrative Law Judge. The
Board remanded this proceeding for consideration of its
Decision and Order in Milwaukee Spring Division, 268
NLRB 595 (1984) (Milwaukee Spring II), and its Decision
and Order in Otis Elevator Co, 269 NLRB 891 (1984)
(Otis Elevator II). As those two decisions had issued after
my decision in this matter, the parties sought and were
granted leave to file supplemental briefs. These have
,been received and were fully considered.
So that the holdings in those cases may be examined in
reference to the facts in the instant matter, I will first set
out a brief chronology of those facts.
Chronology
A. Events Antedating the Alleged Unfair Labor
Practices
Wizard Method, Inc. (Wizard) has, since the early
1970s been in the business of providing industrial clean-
ing services to various factories in and about Niagara
Falls and Buffalo, New York. The Wizard Method Em-
ployees, Independent Union (Independent Union), has
since 1973 represented Wizard's employees. In October
1980 Wizard's personnel director told some employees of
Wizard that they would be working for Hydro Logistics,
Inc. (Hydro) and that those employees would be repre-
sented by a Painters Union. He appointed one of those'
employees as steward for the Painters Union. It was
signed in late December 1980 after various of the affect-
ed employees had criticized it as a "sweetheart con-
tract." Those employees and the other Wizard employ-
ees not placed under the Hydro contract were all still
being paid by,Wizard at that time.
Beginning in the spring of 1981, those employees who
were for the most part performing cleaning services in
Niagara Falls were paid on checks drawn by Wizard.
Employees dispatched to Buffalo were given Hydro pay-
checks. The latter thus referred to themselves as Hydro
employees. The wage rates paid all. the employees then
were the same, whether paid by Wizard or Hydro.
B. The Unfair Labor Practices
On June 25, 1981, Wizard's personnel director. dis-
charged three employees on Hydro's payroll, because
they had filed grievances concerning their being on
layoff while less senior employees were working
In mid-1981, Hydro ceased operations and no longer
"leased" trucks from Wizard. It appears that there was
no formal agreement between Wizard and Hydro.
After Hydro's disappearance in mid-1981 and until
mid-1982, Wizard operated as it_ had before Hydro had
first entered the scene Thus, as of the spring of 1982,
Wizard had resumed servicing industrial accounts in Ni-
agara Falls and Buffalo under its own name, paid em-
ployees on checks drawn by Wizard, and recognized the
Independent Union as the representative for, all employ-
ees (including those who had been listed at times previ-
ously on Hydro's payroll).
In mid-March 1982 Wizard's president, Garlen Stone-
man, began pressing the Independent Union for wage
concessions His efforts did not succeed.
On June 11, 19821'- Wizard's personnel director (who
was also Hydro's president and sole stockholder then, al-
though it concededly had no assets) informed several of
Wizard's employees that Wizard was -no longer operat-
ing, that they were laid off, that they would be working
thereafter for Hydro, and that Hydro had no union.-
Thereafter, several employees who had been on Wizard's
payroll continued to do the same work as before but
were paid by Hydro checks and they had none, of the
fringe benefits they had when they were on Wizard's
payroll. Other employees'of Wizard continued to be paid
by Wizard and retained their benefits.
On June 25, 1982, the Independent Union filed the
unfair labor practice charge in Case 3-CA-11086 A few
weeks later, Wizard's president, Stoneman, told one of
Wizard's employees that he would sue every employee
who participated in the filing of that charge.
Miracle Sales & Service, Inc (Miracle) made its ap-
pearance in mid-1982 when Wizard's president arranged
to have it service several of Wizard's accounts, using
Wizard's name and some of its employees. In August
1982, after about 2 months, Miracle ceased performing
those services. It ceased at the request of Wizard's presi-
dent in order to help ,Wizard solve its problem, with the
Independent Union.
In September 1982 the Independent Union finally ac-
ceded to Stoneman's requests for contract concessions
and, since then, Wizard has operated as it did before the
reappearance of Hydro in mid-1982 and the emergence
then of Miracle.
On the basis of all the evidence, Hydro was found to
be the alter ego of Wizard during the mid-1982 operation
and Miracle was found to be a point employer with
Wizard during-that same period.
Analysis
Milwaukee Spring II holds that, in the absence of an
express prohibition in the contract against transfers of
unit work and when there is no evidence of union
animus, an employer may relocate unit•work to one of its
nonunion facilities after having • reached a bargaining im-
passe over the proposed change
Otis Elevator II addressed issues left open in Milwaukee
Spring'II and pertained principally to the questions of
whether and when an employer is obligated to bargain
about a decision to transfer unit- work, to consolidate op-
erations, to subcontract, and so on.
As it is obvious that the making of a decision (the Otis
Elevator II issue) antedates the effectuation of a decision
(the critical fact in Milwaukee Spring II), I shall first treat
with Otis Elevator II.
A Otis Elevator II
The decision in Otis Elevator II was based on a com-
posite of three different views. All three views discuss
the holding in First National Maintenance Corp. v.
NLRB, 352 U.S 666 (1981), a case involving the duty to
bargain about a decision to close one facility. Two Board
HYDRO LOGISTICS 617
members in Otis Elevator II set forth one rationale for
their holding A third member, while concurring in the
result, disagreed with the rationale and relied on a differ-
ent view The fourth member also concurred in the
result but on grounds distinct from the other two ap-
proaches. These divergent paths have been followed by
the respective members in subsequent cases. See UOP
Inc., 272 NLRB 999 (1984); Fraser Shipyards, 272 NLRB
496 (1984); and Columbia City Freight Lines, 271 NLRB
12 (1984).
In the absence of a plurality opinion to guide me, I
will undertake an examination of the three separate ap-
proaches. To discuss them intelligently, I will first out-
line the relevant facts in Otis Elevator H.
Otis Elevator II involved a unit of professional and
technical employees in a facility that was partially closed
down; 17 of those unit employees were relocated to a
relatively new major research and development center in
another State that had about 1000 employees, including
30 previously unrepresented professional and technical
employees relocated from another facility.
The relevant complaint allegation in Otis Elevator II
was that the employer there had failed to bargain collec-
tively about its decision to remove the 17 employees
from the represented unit and about its decision to assign
them to work as part of a much larger integrated oper-
ation out-of-state and in which none of the employees
were represented.
Two Board members joined in dismissing the allega-
tion based on their view that the employer there had
based its decision to relocate those 17 employees on its
good-faith opinion that their relocation "would enhance
its research and development and hopefully the market-
ability of its product." The employer's decision there
was held to be one that turned "upon a fundamental
change in the nature and direction of the business [and
not] upon labor costs . . . and thus was not amenable to
bargaining."
A third Board member took a different approach in
reaching the same result. That approach utilized the fol-
lowing technique Management decisions may be divided
into three categories. Category I decisions such as those
involving product type or design financing arrangements
have only an indirect, attenuated impact on the employ-
ment relations and are clearly nonmandatory subjects of
bargaining. Category II decisions, such as those affecting
the order of succession of layoffs and recalls, production
quotas, and the like, are almost exclusively an aspect of
the employment relationship and are clearly mandatory
bargaining subjects. Category III decisions, such as par-
tial closedowns, are those that have as their focus the
economic profitability of an employer's operations and
which also leave a direct impact on employment. Fur-
ther analysis is needed to determine whether a category
III decision is a mandatory bargaining subject and the
test to be applied is as follows Bargaining over manage-
ment decisions that have a substantial impact on the con-
tinued availability of employment should be required
only if the benefit for labor-management relations and
the collective-bargaining process outweighs the burden
placed on the conduct of the business Prior Board hold-
ings in other cases were examined using this approach
for purposes of analysis.
The approach of the fourth concurring member in Otis
Elevator II holds that, when it is found that a proposal
by a union could reasonably alter a company's plan, the
company must bargain about any decision to implement
such plan as, in those circumstances, the matter would be
amenable to resolution through bargaining under First
National Maintenance, supra.
Using the approach developed by the first two mem-
bers in Otis Elevator II, the issue, to be decided as I see
it, is whether the evidence establishes that the employer
did not in good-faith base its decision to transfer unit
work on a fundamental change in the nature and direc-
tion of its business I find, in the instant case, that the
General Counsel has clearly shown that Wizard, in dis-
criminatorily laying off employees, threatening them and
engaging in other unlawful acts, and by reactivating
Hydro and manipulating Miracle did not in good-faith
undertake a fundamental change in the nature and direc-
tion of its business. That is really evident as Wizard,
once it succeeded in obtaining the "givebacks" it pressed
for, resumed its business as before. The first approach in
Otis Elevator II indicates that that test would not be ap-
plied in a "case where alter ego or other such devices
were employed to disguise operations over which the
employer maintained surreptitious control." In the in-
stant case, the record is replete with such evidence. Very
recently, however, one of the two members who joined
in this rationale stated that it was not necessary to decide
the bargaining issue in a case when an employer engaged
in serious unfair labor practices in connection with the
closing of a terminal. See Mash kin Freight Lines, 272
NLRB 427 (1984). Nonetheless, I am directed by the
remand order to make such a decision. I find that
Wizard, in mid-1982, did not, in good-faith, decide to un-
dertake a fundamental change in the nature and oper-
ation of its business in reactivating Hydro and entering
into a temporary joint-employer arrangement with Mira-
cle.
Regarding the approach used by the third Board
member in Otis Elevator II, footnote 7 in Mash kin Freight
Lines, supra, discloses that, using that approach, Wizard's
decision "was motivated by union considerations and had
a direct impact on employment . . . and that it fell
within the definition of Category II decisions, which are
mandatory subjects of bargaining."
The rationale used by the fourth member in Otis Eleva-
tor II also supports the finding of a violation as, in that
view, the rule of First National Maintenance Corp. v.
NLRB, is inapplicable to a situation, such as the instant
case, when union animus has been shown. Consequently,
there was a duty to bargain before the changes involved
in Wizard's dealings with Hydro and Miracle in mid-
1982 could be effected.
B. Milwaukee Spring II
The holding in Milwaukee Spring II is that an employ-
er may, after satisfying any obligation it may have to
bargain about the decision, relocate work from a union-
ized to a nonunion plant during a contract term to obtain
618 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
relief from the contract 's labor costs, unless the contract
contains a provision restricting the employer 's decision-
making regarding the relocation
The facts in the case before me provide Respondent
with no basis to avoid liability under the rule of Milwau-
kee Spring H. As found earlier , Respondent never satis-
fied its obligation to bargain as to transferring unit work
to its alter ego or to its joint-employer in mid-1982. For
that matter it never effected a transfer as such but in-
stead undertook surreptitiously a disguised continuation
of its own operations in order to bring about the wage
givebacks it wanted . I note, however , that the General
Counsel has not asserted that Wizard flaunted any con-
tract provision barring transfers of unit work.
Conclusion
As set forth in the General Counsel's supplemental
brief, Wizard did not change the nature or direction of
any significant facet of its business. Rather, there was
only a disguised continuation of its business for several
months in mid-1982 when it reactivated Hydro and ma-
nipulated Miracle-all to bring about a reduction in its
labor costs. First National Maintenance is thus inapplica-
ble. Each of the three approaches used in Otis Elevator II
support a finding that Respondent violated Section
8(a)(1) and (5) by having failed in mid-1982 to bargain
collectively with the Independent Union respecting the
transfer of work to Hydro and Miracle
Having failed to bargain collectively respecting that
decision, the rule of Milwaukee Spring II is inapplicable.
Accordingly, I adhere to the Order heretofore issued.