International Harvester Co.

National Labor Relations Board - Board Decisions

Feb 4, 1980

247 N.L.R.B. 791 (N.L.R.B. 1980)

INTERNATIONAL HARVESTER COMPANY
International Harvester Company and Muller Inter-
national Trucks, Inc. and Teamsters, Chauffeurs,
Helpers & Taxicab Drivers Local Union No. 327.
Case 26-CA-7548
February 4, 1980
DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS JENKINS
AND PENELLO
On September 11, 1979, Administrative Law Judge
Leonard M. Wagman issued the attached Decision in
this proceeding. Thereafter, each Respondent filed
exceptions and a supporting brief.' The General
Counsel filed a brief in support of the Administrative
Law Judge's Decision.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the record and the
attached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings,' and
conclusions of the Administrative Law Judge and to
adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the Respondents, International Harvester
Company and Muller International Trucks, Inc.,
Nashville, Tennessee, their officers, agents, successors,
and assigns, shall take the action set forth in the said
recommended Order.
, we herein grant Respondent Muller International Trucks' motion and
permit its late filing ofits exceptions and supporting brief
We affirm the Administrative Law Judge's finding that Respondent
Muller International Trucks' refusal to bargain with the Union on and after
November . 1978. was not based on a good-faith doubt that the Union lacked
majority status. Notwithstanding the petition circulated by employee Vernon
Duncan and presented to Bernard Muller on November . we agree with the
Administrative Law Judge that Bernard Muller had already, in late
September and in Duncan's presence. rejected the Union's request for
recognition. We find that Duncan's personal motives for obtaining employee
support for his petition are not relevant.
' Unless otherwise stated, all dates refer to 1978.
DECISION
STATEMENT OF THE CASE
LEONARD M. WAGMAN, Administrative Law Judge:
Upon a charge and an amended charge filed by Teamsters,
Chauffeurs, Helpers & Taxicab Drivers Local Union No.
327, referred to herein as the Union, the Regional Director
for Region 26 of the National Labor Relations Board issued
a complaint on January 31, 1979.' The complaint alleged
that Respondents International Harvester Company, re-
ferred to below as IH, and Muller International Trucks,
Inc., referred to below as Muller International had violated
Section 8(a)(5) and (1) of the National Labor Relations Act,
as amended (29 U.S.C. §151. et seq.). herein called the Act.
Respondents, by their timely answers, denied committing
the alleged unfair labor practices.
Upon the entire record, including my observation of the
witnesses, and after due consideration of the parties' briefs, I
make the following:
FINDINGS OF FACT
I. JURISDICTION AND THE LABOR ORGANIZATION
INVOI.VED
Respondent IH is now, and at all times material to this
case has been, a corporation which, until October 31,
maintained offices and a place of business at Nashville,
Tennessee, where it engaged in the sale and the servicing of
new and used trucks. In the course of those business
operations at Nashville, Tennessee, IH annually purchased
and received at that location products valued in excess of
$50,000 directly from points located outside the State of
Tennessee, and annually received gross revenues in excess of
$500,000.
Muller International has been since November 1, a
corporation doing business in the State of Tennessee, with an
office and place of business at Nashville, Tennessee, where it
has engaged in the sale and the servicing of new and used
trucks. Since its inception, Muller International has, in the
course and conduct of its business operations, purchased and
received at its Nashville, Tennessee, location products
valued in excess of $50,000 directly from points located
outside the State of Tennessee. During the same period,
Muller International received gross revenues exceeding
$500,000 from the sale of its goods and services. Respon-
dents admit, and I find that Respondents them are, and have
been at all times material herein, employers engaged in
commerce within the meaning of Section 2(2), (6), and (7) of
the Act.
Respondents concede, and I find, that the Union, Team-
sters, Chauffeurs, Helpers & Taxicab Drivers Local Union
No. 327, is, and at all times material herein has been, a labor
organization within the meaning of Section 2(5) of the Act.
247 NLRB No. 140
791
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
II. IHi Al I EGED UNFAIR ABOR PRACIC-.S
A. Background and Isues
On August 22, 1975, IH entered into a 3-year collective-
bargaining agreement with the Union covering the following
unit at IH's Nashville, Tennessee, truck branch.
All mechanics, mechanics' apprentices, and mechanics'
helpers employed by [IH] in its Nashville, Tennessee,
Motor Truck Service Station, but excluding the service
station foreman, the service station assistant foreman,
all parts department employees, all office and clerical
employees, all supervisory employees with the authority
to hire, promote, discharge, discipline, or otherwise
affect changes in the status of employees or effectively
recommend such action, and all other employees of
[IH's] Nashville, Tennessee, Motor Truck Branch.
On June 9, the Union's business representative, Billy R.
Burrows, notified D. J. Culotta, IH's Nashville branch
manager that the Union desired "to change or terminate the
existing contract expiring August 23 as provided by Article
XX of the current agreement." On August 18, IH and the
Union concluded negotiations on a new contract subject to
ratification by the Union's membership. On August 19 the
membership ratified the agreement. Thereafter, on August
21, the Union executed the contract which was to be
effective for 3 years ending August 23, 1981.
On November 1, Muller International, whose president at
all times material to this case has been Bernard N. Muller
III, took over IH's Nashville truck branch. Since November
1, Muller International has refused to honor the contract
covering the Nashville mechanics, and has unilaterally
granted the unit employees a wage increase and instituted a
new insurance policy covering those same employees. Muller
International has also refused to recognize the Union as
representative of the bargaining unit. The General Counsel
and the Charging Party contend that Muller International,
as an alter ego of IH, has by its treatment of the Union and
the contract violated Section 8(a)(5) and (1) of the Act. The
General Counsel and the Charging Party also urge a finding
that IH is also guilty of these unfair labor practices. The
General Counsel and the Charging Party argue, in the
alternative, that, as a successor to IH, Muller International
violated Section 8(a)(5) and (1) of the Act by refusing to
recognize the Union and by unilaterally altering terms and
conditions of employment of the unit employees.
B. The Facts
Bernard N. Muller III began his employment with IH in
1952 as a forklift driver at its Memphis parts depot. Until he
became manager of IH's Nashville truck branch on August
14, Muller had advanced to become regional marketing
manager of parts for IH's Southeast Region, based at
Atlanta, Georgia. On March 28, while headquartered at
Atlanta, Muller began his quest for an IH truck dealership
through what is known as a "DealCor Plan." His transfer to
Nashville on August 14, though a demotion, was a step
forward in his plan. According to IH's brochure entitled
"International Harvester DealCor Plan, " this plan has two
major objectives:
I. To increase penetration of suitable markets for
International Trucks, Agricultural Equipment, Indus-
trial Equipment, and Construction Equipment by
strengthening IH dealer representation in these mar-
kets.
2. To make it possible for qualified, highly motivated
people to progress rapidly to independent IH retail
ownership although initially lacking some of the capital
needed to buy or establish a viable dealer or distributor
operation.
The brochure describes the DealCor Plan's fundamentals as
follows:
Prospective dealer and International Harvester joint-
ly invest capital to form a DealCor retail franchise
operation. Both parties own stock in proportion to their
initial investment. The dealer becomes the salaried
president of the corporation and serves on its board of
directors. Half the dealer's yearly bonus and his full
share of the corporation's dividends are used to pur-
chase IH stock owned by the dealer.
Six regional teams assist IH's DealCor dealers. Each team
consists of a regional manager, a financial expert, and a
marketing expert. According to IH's DealCor brochure, the
teams' functions are as follows:
(1) Aid in startup
Assist the new dealer in installing the dealer account-
ing system, daily operating control system, purchase
controls, inventory controls and other internal controls
designed to help the dealership run smoothly, effective-
ly, and successfully.
(2) Regular contract and counseling
Assist in preparation and publication of the initial
financial and operating statements and counsels as
required on subsequent statements.
Maintains frequent contact with corporation's offi-
cers, offering counsel as required on financial or
operating problems.
Make periodic checks to assure that financial records
are current, complete and accurate.
Through board membership, counsels on desirability
and timing of capital loan application.
On July 27, Muller applied to IH for "investment in a
DealCor corporation in the Nashville, Tennessee, market
area." A cover letter signed by IH Southeast Regional
Manager Ruth and two other IH officials recommended
approval of the application. Included in the letter was the
following: "There is a labor union in the service department,
but the applicant is hopeful this union can be dissolved."
On August 17, 3 days after Muller became IH's Nashville
branch manager, he joined in contract negotiations with the
Union as part of IH's negotiating team. The two other IH
negotiators were former Branch Manager D. J. Culotta and
Nick Lee of IH's corporate labor relations office. The union
negotiators were Business Agent Billy Burrows, Shop
Steward Vernon Duncan, bargaining unit employe Larry
Walker, and on August 18 Business Agent John Harris.
In the course of negotiations on August 18, Business
Agent Burrows asked IH representative Lee if the Nashville
792
INTERNATIONAL HARVESTER COMPANY
truck branch was for sale. Lee answered that Nashville, just
as every other IH branch, was up for sale. After revealing
that IH had at least one qualified applicant Lee refused to
answer when Burrows asked if Muller was an applicant.
Burrows next turned to Muller and asked if he was
contemplating purchase of the branch. Muller replied that
he was considering the possibility.:
I also find from Burrows' credited testimony that he asked
Lee if there was a provision in the proposed contract
requiring the transferee of the Nashville branch to live up to
the contract. When Lee responded negatively, Burrows said
that the Union would propose one. Lee responded that such
a provision would be contrary to IH's policy. When Burrows
insisted that there might be one in the contemplated
contract, Lee said he did not see why it would be such a big
problem as it had not been a problem "for the past 25
years." At that point, the Union abandoned the issue.
International Harvestor and the Union reached agreement
on a new contract on August 18 subject to ratification by the
unit employees. The unit employees ratified the contract on
August 19, and the Union signed a typewritten letter
agreement on August 21. Early in September, a typed
contract signed by IH negotiator Lee arrived at the Nash-
ville branch. Branch Manager Muller sent the contract to
Business Agent Burrows, who executed the typed contract
on September 29.
In the meantime, IH had processed and approved Mul-
ler's DealCor application. By letter dated September 6, T. L.
Warren, [H's regional DealCor manager, notified H. V.
Ruth, IH's truck sales manager for its southeast region, of
that approval. Ruth shortly passed the notification on to
Muller. On September 27, Ruth met with IH's Nashville
employees and announced Muller's purchase of the branch.
He stated that after October 31 the employees would cease
being IH employees. IH distributed a letter to the Nashville
employees dated September 29 which stated as follows:
This letter will confirm the announcement made
September 27, 1978 that the International Harvester
Company branch in Nashville, Tennessee, is being sold
to an independent dealer effective with the close of
business October 31, 1978.
The name of this new dealership will be Muller
International Trucks, Inc., and Mr. B. N. Muller will be
president of the new dealership.
As announced to you during several meetings on
September 27, 1978, effective with the opening of the
new dealership, the International Harvester Company
: My finding that Burrows asked Muller if he was an applicant fior the
Nashville facility was based upon Burrows' testimony. Muller expressed
uncertainty about his testimony that. after Lee refused to reveal the identity of
the applicant for the Nashville facility. Burrows dropped the topic. Shop
Steward Duncan's unlikely testimony was that Lee did all the talking on
August 18. This assertion cast doubt upon Duncan's reliability, as it flies in
the face of Muller's testimony showing a conversation involving Burrows and
Lee. In contrast, Burrows appeared to he certain of his testimony and
generally impressed me as a candid witness.
As part of its contract obligations IH had agreed "to continue the existing
Health Security program" and "to continue the existing Noii-Contributory
Pension Plan" for the service unit employees until August 23 1981. The
contract also had a dues-checkoff provision
' Under questions by the General Counsel. Muller testified on the first day
of the hearing, emphatically. that he had no recollection of such a encounter
with Burrows Muller returned on the next day and testified that in late
will not be engaged in the business of retail sales in the
Nashville area. As a result of this change, your
discontinuance of employment with the International
Harvester Company becomes necessary.
Since each of you has different circumstances pertain-
ing to accrued benefits or pension rights, it is necessary
that each case be handled on an individual basis. If
applicable, you will be contacted around October 31,
1978, and notified of benefits in your particular circum-
stance. You are also cautioned that effective October
31, 1978, your insurance plans with International
Harvester Company will be terminated. You were
advised that you should plan to provide adequate
insurance coverage for yourself and your family regard-
less of the employment choices you take after October
31, 1978.
We would like to thank each of you for the efforts
that have been put forth by you throughout your career
with the International Harvester Company in Nash-
ville, Tennessee. You are reminded that corporations,
whether it be International Harvester Company or
Muller International Trucks, Inc., are comprised of
people who give it its strength and continuity.'
On or about September 29, Business Agent Burrows,
accompanied by Shop Steward Duncan, visited Muller in his
Nashville office. Burrows sought and obtained Muller's
confirmation that he had purchased the Nashville branch.
Burrows asked what Muller's intentions were regarding
employee benefits, including pension and health and welfare
benefits. Muller remarked that he had no programs of that
type in mind. After some further heated discussion, Muller
stated that he would not longer recognize the Union, and
that he would not comply with the contract, and asked
Burrows to leave.
In preparing to take over the branch, Muller recruited
among IH's Nashville employees. In individual interviews he
told the prospective employees that there would be no
pension program and that there would be a new insurance
program. Of the 32 rank-and-file employees in Muller
International's employ on November 1, 26 had been IH
rank-and-file employees at the Nashville branch on October
31.
In setting the wages for Muller International's employees,
Muller made no reference to the recently executed collective-
bargaining agreement covering IH's Nashville service em-
ployees. Muller generally granted all of the transferring
employees, including the bargaining unit employees, a 15-
September. in the course of a meeting with Burrows in Muller's office,
Burrows asked if Muller intended to honor the Union's contract with IllH
Muller testified. "I advised him emphatically, no." However. Muller's
testimony. which was largely in response to leading questions by his counsel,
denied that he ever said anything about not recognizing the Union or that he
ordered Burrows to depart The leading questions coupled with his unex-
plained return of memory caused me to doubt the reliability of his estimony
Nor was this doubt allayed by the testimony of Shop Steward Duncan
Duncan could not at first remember any such meeting. Upon further
questioning, he testified in essence that the only thing that he recalled being
said at this conference was that "Mr. Burrows said that the company didn't
have a contract, and that was all." Duncan testified that he did not recall
hearing Muller ask Burrows to leave. However. his answer came under the
prodding of a leading question. As Burrows gave his version in a full and
forthright manner. without help from leading questions, I have credited him
wherever his testimony disagreed with that of Muller or Duncan
793
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
cent hourly wage increase. He also provided insurance
coverage for them which he considered was equal to or
better than that provided under the 1978 collective-bargain-
ing agreement.
Muller did not notify the Union on and after November 1
that he had assumed control of IH's Nashville branch and
service facility. Nor did he consult with the Union at all
regarding the wages and conditions of employment of the
service unit employees. DealCor regional management ad-
vised Muller that other DealCor dealers had not honored
IH's collective-bargaining agreement after taking over an IH
branch.
Prior to Muller's takeover of the IH Nashville operations
some of his prospective employees approached him about
their prospective conditions of employment under the new
management. Muller explained that, after he acquired the
facilities, "We would have to negotiate a new contract, and I
could not tell them what benefits they would have under that
contract; but they would be different from the contract that
they had now."
Since November 1, when Muller International began
operations, it has not complied with the 1978 Union-IH
contract. Muller International has provided neither a pen-
sion plan nor health and welfare benefits.
On October 9, IH notified the Union as follows: "This
letter is to inform you that our Nashville, Tennessee Truck
Branch will be sold effective November 1, 1978." Thereafter,
the Union did not request IH to honor their contract at
Nashville. Nor did the Union make further attempts to
bargain with Muller International. On November 1, employ-
ee Vernon Duncan, the Union's steward, presented Muller
with the following petition:
TO WHOM IT MAY CONCERN:
Effective from this day forward we the undersigned no
longer desire Teamsters Local 327 to represent us.
Below the statement were the signatures of 12 of the 13
service bargaining unit employees. The 13th employee
signed the petition on November 2.
Without consultation with Bernard Muller III, IH went
through the legal steps to create Muller International. IH
drew up articles of incorporation, provided the initial
incorporators, and filed the articles in the State of Delaware.
As the sole, voting stockholder, IH appointed Muller
International's board of directors, drew up the minutes for
that first meeting, and enacted a set of bylaws for the new
corporation.
IH inserted in the first board meeting's minutes a number
of resolutions designed to protect its majority investment.
One such resolution provided:
That the officers of [Muller International] are not
authorized to borrow money on behalf of the corpora-
tion or to execute security instruments for security
purposes encumbering the assets of the corporation
without the prior approval of the Board of Directors.
IH required that three of the four board members be IH
officials with one vote per director. Thus, under this
resolution, absent approval by IH, President Bernard Muller
could not borrow money to assist his firm. Another
provision of the minutes required Muller International to
appoint the firm of Wolf and Company, independent public
accountants, of Chicago, Illinois, to examine its financial
statements for each fiscal year ending October 31. IH also
provided that Muller International must "carry a primary
commercial blanket bond in the amount of $25,000 on all
employees."
IH also limited President Muller's authority to make
capital expenditures. Thus, a resolution provided: "That it
shall be the policy of the corporation to empower the
President to make capital investments in fixed assets up to
the amount of $1,000 each fiscal year without approval of
the board of directors." The minutes went on to require that
capital investments in excess of $1,000 be submitted to the
board of directors for approval. Another example of the
strictures IH imposed upon President Muller was the
following resolution:
That it be and hereby is the policy of this corporation
that no lease or contract of any kind, land and buildings
included, and including advertising, professional ser-
vices, retirement plans, and employment where the
term is for a period or periods exceeding one month and
the expense commitment is over $200 (excluding parts
and service, mailings, and directory advertising) shall
be entered into without specific prior board approval.
President Muller's authority to hire was also limited. IH
inserted a proscription against employment of relatives of
corporate offices without the directors approval.
IH also required that the board keep check of Muller
International's travel and entertainment expenses for busi-
ness purposes. A resolution directs that such expenses be
accounted for in reports to be reviewed by the board. If the
directors found such expenses were either unauthorized or
excessive, the board was empowered to order a charge back
to the officer or employee concerned.
The board was also empowered to dismiss President
Muller by the following resolution.
That any acts of dishonesty, conflicts of interest,
unethical conduct, or failure to follow corporate policy
will be subject to a severe reprimand and/or immediate
dismissal of the president, secretary-treasurer or any
other corporate employee.
IH also controlled the salaries of corporate officers. The
minutes of the first meeting of Muller International's board
reveal a resolution setting President Muller's salary and that
of the secretary-treasurer. The resolution provided that the
vice president and assistant secretary "shall serve without
compensation." However, at all times material to this case,
Muller International's vice president has been IH employee
Al Bukvich and its assistant secretary-treasurer has been IH
employee W. H. Mitchell.
By his testimony, Regional DealCor Manager Thomas L.
Warren, who until mid-November 1978 served on Muller
International's board of directors, and who thereafter was
succeeded as a director by another IH regional DealCor
manager, shed further light on the board's role in Muller
International's business. I find from Warren's testimony that
794
INTERNATIONAL HARVESTER COMPANY
board approval is necessary before Muller International
enters into a collective-bargaining agreement.' If President
Muller attempted to bypass the board and enter into such a
contract, the board has authority to impose sanctions,
including termination of his presidency or a cut in salary.
Banking and financing of retail sales also received the
board's attention. The selection of a bank for Muller
International's deposits was also subject to the board's
approval. Further, the board prescribed the form of agree-
ment between Muller International and the bank. The
minutes of the first board meeting declare: "That retail
financing with other than International Harvester Credit
Corporation will be on a 'nonrecourse basis." Warren
described nonrecourse financing as follows:
Well, that is where a dealer will sell a truck on a retail
installment contract to a customer. The contract is
purchased by a bank who essentially says-bank or
another lending institution who essentially says that
O.K, now the responsibility for that particular sale now
rests entirely with us as the lending institution. We have
no recourse to you if the gentleman decides never to pay
for this truck.
Warren summed up the extent of IH's control of Muller
International through the board of directors. Warren testi-
fied that the three IH employees on Muller's board of
directors afforded IH "a great deal of the control of that
corporation." I find from Warren's testimony that Muller
needed IH's authority to employ the attorney representing
Muller International in this proceeding. Warren conceded
that he provided Muller with guidelines regarding the fee
Muller International could afford.
In his relations with Muller International Trucks, Inc.,
Watren considered himself "as an employee of that corpora-
tion even though [he was] an employee of [IH]." He also
testified to the effect that the IH employees serving on
DealCor dealers' board of directors, such as Muller Interna-
tional's, made their decisions for "the best interest of that
individual corporation that we are dealing with at the time."
He conceded, however, that it was in the best interest of his
employer, IH, for Muller Internation to succeed. Warren
also testified that, unless a DealCor dealer satisfied IH that
he could operate independently without reliance on an IH
DealCor team, IH would not permit such a dealer to
"operate independently."
President Bernard Muller initially invested approximately
$215,000 in Muller International for which he received 2,150
shares of stock at $100 per share. IH purchased 4,300 shares
of stock in Muller International at $100 per share. Muller's
holdings amounted to 37 percent of the outstanding stock.
IH's holdings accounted for 63 percent.
It was contemplated that Muller would ultimately pur-
chase IH's stock. The terms under which Muller would
accomplish that objective were set out in a stock purchase
agreement between himself and IH. IH drew up the
agreement which the parties executed effective October 31.
The agreement provides that Muller's shares are nonvot-
ing class B stock. Only IH's class A stock carries voting
Muller testified that he did not believe that he needed approval of Muller
International's board of directors before entering into a collective-bargainting
agreement However I have credited Warren's contrary estimolly which
rights. The agreement provides that President Muller has the
right to purchase IH's class A stock. However, until he
purchases all of the class A stock, such shares as he
purchases from IH would automatically be converted into
nonvoting class B stock. According to the agreement, unless
IH permitted otherwise, Muller's further stock purchases
could be made only from profit realized from the operation
of Muller International's Nashville facility. Muller agreed to
use "all dividends received on his stock of [Muller Interna-
tional] and 50 percent of all bonus and interest payments
received by him from [Muller International] to purchase
IH's stock." The agreement provides IH with control of
Muller International's very existence. Article V provides IH
with authority to liquidate Muller International. Article III
provides that, if President Muller ceases to be president of
Muller International, his right to purchase stock from IH
ceases immediately. Article IX entitled voting stock provides
as follows:
The parties recognize that IH owns all the voting
stock and may use such voting power to remove
(Bernard Muller) as a director and to cause his removal
as president of (Muller International). Nothing in this
agreement shall affect this right or any other rights
which IH have by reason of its voting control of
(Muller International).
Article VII of the stock purchase agreement limits
Bernard Muller's right to sell his stock in Muller Interna-
tional Trucks. According to that provision, he may not sell
any of his shares without affording IH an option to purchase
it. Further, Muller must offer the stock to IH "at ten percent
(10%) below its then audited book value." If IH does not
exercise the option to purchase, then Muller may offer the
stock for sale as he chooses. However, if Muller does not sell
his stock within 30 days after he has provided IH with 10
days' notice, he must again offer it to IH at 10 percent below
its then audited book value.
Under the DealCor agreement, the regional DealCor
manager has, and exercises, a power of attorney from IH to
vote its class A stock in Muller International.
In October, following approval of his application for a
DealCor dealership, Muller sought a secretary-treasurer for
his corporation. IH required submission of Muller's choice
for its approval. Malcom Hall Cook, who was Muller's
choice, submitted a resume to IH. IH gave Cook a written
examination, interviewed him, and reviewed his employment
application and medical history. Cook furnished IH with
references as to his financial standing and reputation. IH,
using a form letter with its company name at the top, sent
letters of inquiry to the persons named by Cook. Nowhere
on the letters of inquiry were there any references to Muller
International. An IH DealCor financial analyst recommend-
ed Cook's appointment as Muller International's secretary-
treasurer. Cook's selection as secretary-treasurer occurred
before formation of Muller International's board of direc-
tors. Thus, instead o;' board approval, Muller was required
to seek the approval of IH's regional DealCor management.
found upport i a re)oluliou adopted by Muller International's board of
direclor, which I hae quoted above.
795
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
IH also reviewed and approved secretary-treasurer Cook's
salary.
IH also prescribed Muller International's accounting. In
the September 6 letter confirming approval of Bernard N.
Muller's DealCor application, Regional DealCor Manager
Warren stated that accounting forms and invoices to be used
by Muller International were to be ordered from Warren's
office. Warren also stated that Muller International would
be placed on an automatic accounting system referred to as
DADS and SPIN. Thus, unlike independent franchised
dealers who may use IH's DADS system, IH required
Muller International to use that system.
DealCor also governed Muller International's insurance
coverage. In the same letter referred to in the preceding
paragraph, Warren wrote:
Liberty Mutual's DealCor insurance coverages in-
clude liability and property damage, workman's com-
pensation, crime, dealer floater, and umbrella excess
liability. It is mandatory that the DealCor operation
subscribe to that program without deviation.
Warren's letter set forth the modifications and clarifica-
tions of terms and conditions of the sale of IH's Nashville
assets to Muller International. The letter goes on to set
limitations on the sale of IH's Nashville parts inventory and
on the total purchase price. He also set out the limit on
investment in IH's use of equipment at Nashville. Warren
declared: "At the time of our first board meeting, we will
resolve all inventory operating levels which will be consis-
tent with those presented in the application." At another
point in discussing fixed assets to be purchased by Muller
International, Warren declared as follows: "The appraisal of
all fixed assets to be purchased by the new corporation will
be completed within the next few weeks by DealCor
personnel." Warren's letter also declared: "All inventories
will be subject to review and acceptance by the regional
DealCor management team." (Emphasis supplied.) The
letter contained no reference to the participation by Bernard
Muller III in any appraisal or in the review and acceptance
procedures.
On October 31, with his board of directors' approval,
President Muller executed a lease between lessee Muller
International and lessor IH. The parties agreed that the
lessee would occupy the former IH Nashville premises for 4
years and 7 months beginning on November I with an
option to renew for a further term of 3 years. The lease in an
attachment designated as Exhibit A contained the following
provision:
It is understood and agreed to by [Muller International]
that if any of the dealer sales and service agreements
which are in effect between [IH] and [Muller Interna-
tional] are terminated or canceled at any time during
the term of this lease [IH] shall have the option to
terminate this lease effective immediately; if all of the
dealer sales and service agreements which are in effect
between [IH] and [Muller International] are terminated
or canceled at any time during the term of this lease,
this lease shall be automatically terminated and can-
celed without any notice from [IH].
In his letter of September 6, DealCor Regional Manager
Warren had explained the leasing arrangement between
Muller International and IH as follows:
The sublease arrangement between [Muller Internation-
al] and International Harvester Company should be
completed prior to the opening date of this dealership.
The term of the agreement will extend through May 31,
1983, at an annual rate of $55,800, including additional
sales lot. In the event of the failure of this Dealcor
operation, the responsibility and the accountability for
the unexpired term of the lease will rest with the
southeast truck sales region.
As manager of the Nashville branch from August 14 until
his resignation on October 31, Muller was responsible for the
day-to-day management of the branch's retail operation. His
guidance and direction came from H. V. Ruth, regional
manager of IH's southeast truck sales region, and Ruth's
staff. Muller was responsible for the branch's sales, parts,
and the service operations. He had authority to order new
trucks for sale within limits set by regional management. He
accepted employment applications, and sent them to region-
al headquarters in Atlanta for processing and disposition.
Muller had limited authority to discipline employees. His
authority extended to such infractions as fighting on the job
or intoxication. For the most part, however, the regional
office administered disciplinary action including dismissal of
branch employees.
As a DealCor dealer, Muller looks to his board of
directors and regional DealCor management for guidance.
He is free to order new trucks for sale and set the size of his
truck and spare parts inventories subject to such guidance.
He may hire, promote, discipline, or terminate employees
without consulting IH or his board.
Comparing Muller International's operations with those
of 1H at Nashville, I find much similarity. I find that Muller
International, as did IH, operates a retail truck outlet which
includes sales and services facilities. Muller, as did IH,
employs salesmen to sell IH trucks and used trucks of
various makes. Muller International also provides the same
truck servicing as IH did at the same location. Since
November 1, Muller International has dealt with IH's
former customers along with several additions. Muller
International purchased its initial parts inventory from the
stock IH maintained at Nashville. Muller International
agreed to purchase "those parts with a history of three or
more bin trips in the prior 12 months and no more than a 90-
day supply by individual part number."
Muller International purchased much of the IH Nashville
branch's furniture, office equipment and supplies, service
shop equipment, and a quantity of the used and new truck
inventories. As did IH, Muller International employs a
service manager, an office manager, and a parts manager at
its Nashville facility. When Muller took control of the
facility he had replaced the IH managers with his own
appointees. President Muller established their salaries and
fringe benefits as well as the wages and fringe benefits of
Muller International's supervisors, leadmen, and rank-and-
file employees. Muller also has authority to hire and fire
employees without IH's approval.
When Muller International took over the Nashville
facility. it created new personnel files for its employees,
796
INTERNATIONAL. HARVESTER COMPANY
effective November 1, and required all of its employees to
execute new W-4 Internal Revenue forms to provide for the
withholding of Federal income tax from their wages.
Prior to November , IH's regional branch operations
group at Atlanta, Georgia, controlled the Nashville branch's
personnel policies. On and since November, President
Muller has controlled those policies for Muller Internation-
al.
Muller International has considerably more autonomy in
its conduct of day-to-day branch money transactions than
did President Muller when he was IH's branch manager. As
manager of IH's branch, Muller had no authority to write
checks or pay bills pertaining to the Nashville branch's
operations. Moreover, IH did not maintain a local payroll
account. IH maintained the Nashville branch's payroll at a
computer center which serviced all IH branches.
Under the DealCor arrangement, Muller International
maintains a payroll bank account at First American Bank of
Nashville. The same bank prepares Muller International's
payroll. Muller International also drafts checks and pays its
accounts payable from funds deposited in First American.
Under the IH administration, the branch could not issue
checks. IH issued checks on accounts payable at a higher
corporate level. Under IH's administration, a single corpo-
rate office issued bills to branch customers. The branch
deposited receipts from accounts receivable in IH's Nash-
ville depository account. The branch manager had no
authority to draw upon that account. Since November 1,
Muller International has issued its own bills and has
deposited receipts in its own local checking account from
which it makes disbursements.
DealCor requires Muller International to finance its own
inventory of trucks with IH. Under such an arrangement,
Muller International is financially indebted for the new
trucks it orders from IH. After a new truck arrives, Muller
International may keep that truck in stock without paying
any interest or penalty to IH for 90 days. After 90 days, the
debt to IH begans drawing interest. Muller International
then has 12 months from the date of the invoice to sell the
truck. If Muller International has not sold the truck at the
end of that period, IH requires payment of the full amount
of the invoice price. When Muller International orders a new
truck, Muller International becomes liable to IH for the cost
of the truck. As branch manager, Muller did not pay floor
plan interest to IH. Indeed, IH encouraged branch managers
to inflate their inventory somewhat to provide a pool of
trucks to which franchise dealers would have access to
satisfy customers' needs. As a branch manager, Muller had
no liability for the cost of spare parts. Muller International is
required to make an advance payment for the purchase of
spare parts from IH.
As a branch manager, Muller was responsible to IH's
branch operations group located at Tucker, Georgia. IH
required oral and written reports to the branch administra-
tion group on a daily, weekly, midmonth, or end-of-the-
month basis. Such reports related to inventory, overage
inventory, estimate of- the current month's business, the
' Muller conceded that. if he wished to make an addition to the building
housing Muller International. or to purchase capital equipment. the approval
of the board of directors would he necessar hefore undertaking such projects.
forecast for the coming months, and a business condition
report.
Since November I, President Muller has reported to his
board of directors. Muller International also submits a
monthly financial and operating statement to IH.
C. Analysis and Conclusions
The General Counsel and the Union contend that Muller
is the alter ego of IH and that the Act required Muller
International and IH to honor the 1978 collective-bargaining
agreement. Muller International and IH urged rejection of
that contention on the ground that the evidence shows that
President Muller operated Muller International free of IH's
control. I find merit in the General Counsel and the Union's
contention.
It is well settled that an employer cannot avoid his
obligation under the Act through mere formation of a new
corporate entity to replace the old where the newly formed
entity is in reality only a "disguised continuance" or alter
ego of the old employer. Southport Petroleum Co. v.
N.L.R.B., 315 U.S. 100, 106 (1942); Howard Johnson
Company, Inc. v. Detroit Local Executive Board Hotel &
Restaurant Employees & Bartenders International Union,
AFL-CIO. 417 U.S. 249, 259, fn. 5 (1974). Such changes in
corporate forms, involving no more than "a mere technical
chance in the structure or identity of the employing entity,
frequently to avoid the affect of the labor laws, without any
substantial change in its ownership or management," are
properly disregarded, and such an alter ego successor is
accordingly "subject to all the legal and contractual obliga-
tions of the predecessor." Ibid. The continued operation of
the business with substantially the same employees and
under the same management control as the predecessor firm
suggests such an alter ego relationship.
There is ample evidence to support the contention that
Muller International is an alter ego of IH established to
carry out IH's DealCor objectives. One of those objectives is
to train "motivated people to progress rapidly to indepen-
dent IH retail ownership." Thus does IH itself recognize
that a DealCor dealer during the formative period of his
business is under IH's firm control. As shown above, IH
established Muller International, provided it with its corpo-
rate birth, and thereafter has exercised decisive control over
its existence. IH owns the only voting stock, and maintains a
3 to 1 majority on Muller International's board of directors.
The record also shows that, through its control of the board
of directors and the voting stock, IH may terminate Bernard
Muller as president of Muller International and liquidate
Muller International. Though Muller has authority to hire
and terminate employees, operate the business, and exercise
decretion in purchasing trucks and spare parts, all major
decisions including execution of a collective-bargaining
agreement are subject to the approval of Muller's board of
directors., In sum, International Harvester continues to
control its former Nashville factory branch notwithstanding
that it passed title to the assets and leased the premises to
Muller International.
He obtained such approval fr the purchase of a Xerox copier costing about
$6,000 and for a financing agreement with two other firms involving "several
hundred thousand dollars in trucks."
797
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Further factors support the alter ego status of Muller
International. Muller International is situated in the very
same facilities formerly occupied by IH when it operated the
Nashville factory branch. Muller's initial inventory of spare
parts and new and used trucks, its office equipment, and its
service shop equipment originated from IH's Nashville
operation. Although Muller appointed his own office man-
ager, sales manager, and parts manager, Muller himself
continued in the role of the overall immediate supervisor of
the Nashville employees. Muller International is engaged in
the same sales and service business as was IH and is
operating in the same market. In sum, I find that Muller
International is essentially a disguished continuation of IH
at the Nashville sales and service facilities.
It appears that the purpose of this arrangement is not to
avoid dealing with the Union, but to safeguard IH's
considerable investment in Bernard Muller's firm. IH has
4,300 class A shares which amount to 63 percent of the
outstanding shares of Muller International. The price per
share is $100.
I find that Muller International Trucks was, as of
November 1, and continues to be, the alter ego of IH. I also
find that Muller International, as the alter ego of IH, was
under the same duties as IH was to recognize and bargain
collectively with the Union representing the service employ-
ee unit described above. See Butler Chemical Company,
successor to Gulf Chemical Company, 116 NLRB 1041, 1050
(1956). See also Howard Johnson Company v. Detroit Local
Executive Board, supra. I further find that by refusing to give
effect to the 1978 collective-bargaining agreement, by
unilaterally granting wage increases to the unit employees
and instituting a new insurance policy, and by refusing to
recognize the Union as the collective-bargaining representa-
tive of the bargaining unit of service employees, IH and its
alter ego. Muller International, violated Section 8(a)(5) and
(I) of the Act.'
In light of the foregoing findings of fact and upon the
entire record in this case, I make the following:
CONCIUSIONS OF LAW
1. International Harvester Company and its alter ego.
Muller International Trucks, Inc., constitute a single em-
ployer engaged in commerce within the meaning of Section
2(6) and (7) of the Act.
2. Muller International Trucks, Inc., is the alter ego of
International Harvester Company in the operation of Inter-
national Harvester Company's Nashville, Tennessee, truck
branch.
3. Teamsters, Chauffeurs, Helpers & Taxicab Drivers
Local Union No. 327 is now, and has been at all times
Had I not found that Muller International was. and continues to he at all
times material since November I, the alter ego of IH, I would have found that
Muller International has been since November I a successor to IH at the
Nashville sales and service facility. I would therefore further find that as of
November I the Act required Muller International to recognize the Union as
the collective-bargaining representative orf the service employees unit.
I also find that, despite the petition presented on November 1, Muller
International's refusal to bargain with the Union was not based upon a good-
faith doubt that it lacked majority status on that date. For I have found that in
late September Bernard Muller Iii, in Duncan's presence, rejected the Union's
request for recognition and bargaining on behalf of the service employees. I
also find that Duncan in an effort to ingratiate himself with his new
material herein, a labor organization within the meaning of
Section 2(5) of the Act.
4. All mechanics, mechanics' apprentices, and mechanics'
helpers employed by Respondents International Harvester
Company and Muller International Trucks, Inc., at their
Nashville, Tennessee, motor truck service station, excluding
the service station foreman; service station assistant fore-
man; all parts department employees; all office and clerical
employees; all supervisory employees with the authority to
hire, promote, discharge, discipline, or otherwise affect
changes in the status of employees or effectively recommend
such action; and all other employees of Respondents'
Nashville, Tennessee, motor truck branch, constitute an
appropriate unit of Respondents' employees for the purpose
of collective bargaining within the meaning of Section 9(b) of
the Act.
5. Teamsters, Chauffeurs, Helpers & Taxicab Drivers
Local Union No. 327, at all times since August 22, 1975, has
been the exclusive representative of all employees in the
aforesaid appropriate unit for the purpose of collective
bargaining within the meaning of Section 9(a) of the Act.
6. Since on or about September 27, 1978, Teamsters,
Chauffeurs, Helpers & Taxicab Drivers Local Union No.
327 has requested and is now requesting Muller Internation-
al Trucks, Inc., to honor the collective-bargaining agreement
entered into by International Harvester Company on or
about August 18, 1978, and to bargain collectively with it
with respect to rates of pay, wages, hours of employment,
and other terms and conditions of employment, as the
exclusive collective-bargaining representative of all of Re-
spondents' employees employed in the unit described above.
7. Since on or about September 27, 1978, Respondents
International Harvester Company and Muller International
Trucks, Inc., have unilaterally changed the wages and
insurance coverage of the unit employees, have declined to
apply the collective-bargaining agreement with the Union to
such unit, and have refused to continue to recognize and to
bargain collectively with Teamsters, Chauffeurs, Helpers &
Taxicab Drivers Local Union No. 327, as the exclusive
collective-bargaining representative of the employees in the
unit described above. By this conduct, International Har-
vester Company and its alter ego, Muller International
Trucks, Inc., have engaged in and continue to engage in
unfair labor practices within the meaning of Section 8(a)(5)
and (1) of the Act.
8. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Section
2(6) and (7) of the Act.
employer, set about preparing and obtaining employee support for the
November I petition. I find therefore that the petition is fatally tainted.
Furthermore Muller's September refusal predated that petition and was not
based upon a showing of the Union's loss of majority support. I find from his
testimony that some unit employees expressed a desire to remove the Union as
their bargaining representative. However, there was no showing how many
unit employees had expressed such sentiment. Accordingly, I would find that
Muller's refusal to recognize the Union in the face of the Union's continuing
demand, beginning in late September, constituted a violation of Sec. 8 (aX5)
and (I) of the Act. I would therefore recommend a bargaining order remedy
to remedy Muller's refusal to recognize the Union.
798
INTERNATIONAL HARVESTER COMPANY
THt RMEI)Y
Having found that Respondents have engaged in unfair
labor practices in violation of Section 8(a)(5) and (1) of the
Act, I shall order Respondents to cease and desist therefrom
and to take certain affirmative action designed to effectuate
the policies of the Act.
As I have found that Respondents have unlawfully
withdrawn recognition from and have refused to recognize
Teamsters, Chauffeurs, Helpers and Taxicab Drivers Local
Union No. 327, as the exclusive representative of the
Respondents' Nashville motor truck service station employ-
ees, I shall recommend that Respondents be ordered to
recognize and bargain with the said Union as the representa-
tive of the employees in that unit. Having also found that
Respondents unlawfully refused to apply the collective-
bargaining agreement with Local Union No. 327 to the unit
employees at the Nashville motor truck service station,
thereby unilaterally changing the terms and conditions of
employment specified in their collective-bargaining agree-
ment, I shall recommend that Respondents be ordered to
restore the status quo ante by applying the terms and
conditions of the collective-bargaining agreement with that
Union to their Nashville motor truck service station employ-
ees, retroactive to November 1, 1978, and to make their
Nashville motor truck service station employees whole for
any losses which they may have suffered as a result of the
Respondents' failure to apply the collective-bargaining
agreement to them, with interest to be computed in the
manner prescribed in Florida Steel Corporation. 231 NLRB
651 (1977).?
Upon the foregoing findings of fact, conclusions of law,
and the entire record, and pursuant to Section 10(c) of the
Act, I hereby issue the following recommended:
ORDER''
The Respondents, International Harvester Company and
its alter ego. Muller International Trucks, Inc., Nashville,
Tennessee, their officers, agents, successors, and assigns,
shall:
I. Cease and desist from:
(a) Refusing to bargain collectively with Teamsters,
Chauffeurs, Helpers & Taxicab Drivers Local Union No.
327, herein referred to as Local 327, by withdrawing
recognition from and refusing to recognize Local 327 as the
exclusive bargaining representative of the employees in the
following appropriate unit:
All mechanics, mechanics' apprentices, and mechanics'
helpers employed by Respondents' International Har-
vester Company and Muller International Trucks, Inc.,
at their Nashville, Tennessee, Motor Truck Service
Station, excluding the service station foreman, the
service station assistant foreman, all parts department
employees, all office and clerical employees, all supervi-
sory employees with the authority to hire, promote,
discharge, discipline, or otherwise affect changes in the
status of employees, or effectively recommend such
action, and all other employees of Respondents' Nash-
ville, Tennessee, Motor Truck Branch.
(b) Unilaterally changing the terms and conditions of
employment established by their collective-bargaining agree-
ment with Local 327 by refusing to apply the terms of the
collective-bargaining agreement covering the aforesaid bar-
gaining unit, and by unilaterally substituting wages, hours.
and conditions of employment for the bargaining unit
em ployees.
(c) In any like or related manner interfering with,
restraining, or coercing their employees in the exercise of
their rights guaranteed by Section 7 of the Act.
2. Take the following affirmative action which is necessary
to effectuate the policies of the Act:
(a) Recognize and bargain collectively with Local No.
327, as the exclusive representative of Respondents' employ-
ees in the unit of employees described above, and apply the
collective-bargaining agreement with Local No. 327 to the
unit employees at their Nashville, Tennessee, motor truck
service station retroactive to November 1, 1978.
(b) Make the unit employees at Respondents' Nashville,
Tennessee, motor truck service station whole for any losses
they may have suffered since November 1, 1978, as a result
of Respondents' failure to apply the collective-bargaining
agreement to them in the manner set forth in the section of
this Decision entitled "The Remedy."
(c) Preserve and, upon request, make available to the
Board or its agents, for examination or copying, all payroll
records, social security payment records, timecards, person-
nel records and reports, and all other records necessary to
analyze the backpay and fringe benefit payments which may
be due under the terms of this Order.
(d) Post at their motor truck branch in Nashville,
Tennessee, copies of the attached notice marked "Appen-
dix.""' Copies of said notice, on forms provided by the
Regional Director for Region 26, after being duly signed by
Respondents' authorized representatives, shall be posted by
Respondents immediately upon receipt thereof, and be
maintained by them for 60 consecutive days thereafter, in
conspicuous places, including all places where notices to
employees are customarily posted. Reasonable steps shall be
taken by Respondents to insure that said notices are not
altered, defaced, or covered by any other material.
(e) Notify the Regional Director for Region 26, in writing,
within 20 days from the date of this Order, what steps
Respondents have taken to comply herewith.
'See. generally. Isis Plumbing & Ieating Co.. 138 NLRB 716(1962)
'' In the event no exceptionm are filed as provided by Sec. 102.46 of the Rules
and Regulations of the National Labor Relations Board, the findings.
conclusions, and recommended Order herein shall. as provided in Sec 102.48
of the Rules and Regulations. he adopted by the Board and become its
findings, conclusions. and Order. and all objections thereto shall he deemed
waived for all purposes.
" In the event that this Order its enfirced by a Judgment of the United
States Court of Appeals, the words in the notice reading "Poted by Order of
the National Labor Relations Board" shall read "Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board."
799
DECISIONS OF NATIONAL LABOR RELATIONS HOARD
APPENDIX
NOTICE TO EMPIOYEES
POSTE.D BY ORDER 01; THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board having found, after a
hearing at which all parties were given an opportunity to
present evidence and arguments, that we violated the
National Labor Relations Act, as amended, we notify you
that:
Wli WI.. N refuse to bargain collectively with
Teamsters, Chauffeurs, Helpers & Taxicab Drivers,
Local Union No. 327, as the exclusive bargaining
representative of the following employees:
All mechanics, mechanics' apprentices, and mechan-
ics' helpers employed by International Harvester
Company and Muller International Trucks, Inc., at
their Nashville, Tennessee, Motor Truck Service
Station, excluding the service station foreman, service
station assistant foreman, all parts department em-
ployees, all office and clerical employees, all supervi-
sory employees with the authority to hire, promote,
discharge, discipline, or otherwise affect changes in
the status of employees or effectively recommend
such action, and all other employees of our Nashville,
Tennessee, Motor Truck Branch.
Wi W III NOt unilaterally change wages, working
conditions, or terms of employment established by our
collective-bargaining agreement with Local Union No.
327 by refusing to apply the terms of our collective-
bargaining agreement to the employees in the unit
described above or by unilaterally imposing changes in
wages, hours, or conditions of employment.
WI wit I. NOT in any like or related manner interfere
with, restrain, or coerce our employees in the exercise of
their rights guaranteed in Section 7 of the Act.
Wl Wit I recognize and bargain collectively with
Teamsters, Chauffeurs, Helpers & Taxicab Drivers
Local Union No. 327, as the exclusive representative of
the employees at our Nashville, Tennessee. motor truck
service station in the unit described above and wl wI.I
apply the collective-bargaining agreement with Local
Union No. 327 to the unit employees at the Nashville,
Tennessee, truck service station retroactive to Novem-
ber 1, 1978.
WI witi. make the employees at the Nashville,
Tennessee, truck service station in the aforesaid unit
whole for any losses they may have suffered since
November 1, 1978X, as a result of our not applying a
collective-bargaining agreement to them, with interest.
IN' IRNAT IONAI. HARVI:SI IR COMPANY
MUll IR INTI'RNAIIONAI. TRUCKS, INC.,
800