Jersey Juniors, Inc.

National Labor Relations Board - Board Decisions

Jun 20, 1977

230 N.L.R.B. 329 (N.L.R.B. 1977)

Jersey Juniors, Inc. and Retail Store Employees
Union, Local 1001, AFL-CIO. Case 19-CA-8730
June 20, 1977
DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS
PENELLO AND MURPHY
On March 22, 1977, Administrative Law Judge
William J. Pannier III issued the attached Decision
in this proceeding. Thereafter, the Respondent filed
exceptions and the General Counsel filed an answer
to the Respondent's exceptions.
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 brief
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 recommend-
ed Order of the Administrative Law Judge and
hereby orders that the Respondent, Jersey Juniors,
Inc., Everett, Washington, its officers, agents, succes-
sors, and assigns, shall take the action set forth in the
said recommended Order.
DECISION
STATEMENT OF THE CASE
WILLIAM J. PANNIER III, Administrative Law Judge: This
matter was heard by me in Seattle, Washington, on
January 13 and 14, 1977. On August 31, 1976, the Regional
Director for Region 19 of the National Labor Relations
Board issued a complaint and notice of hearing, based
upon an unfair labor practice charge filed on July 14, 1976,
alleging violations of Section 8(aXl) and (5) of the
National Labor Relations Act, as amended, 29 U.S.C.
§ 151, et seq., herein called the Act.
All parties have been afforded full opportunity to appear,
to introduce evidence, to examine and cross-examine
witnesses, and to file briefs. Based upon the entire record,
upon the arguments made on behalf of the parties, and
upon my observation of the demeanor of the witnesses, I
make the following:
I By letter of understanding executed on the same day, the parties agreed
that "the Contract shall be serviced and the employees shall be members of
230 NLRB No. 41
JERSEY JUNIORS, INC.
FINDINGS OF FACT
I. JURISDICTION
There is no dispute regarding the following facts: At all
times material, Jersey Juniors, Inc., herein called Respon-
dent, has been a Washington corporation, with headquar-
ters and corporate offices in Everett, Washington, engaging
in the retail clothing sales business at various locations in
western Washington; on or about April 29, 1976, Respon-
dent purchased the assets of a bankrupt company called
Roda Lee, Inc., herein called Roda Lee, which had ceased
doing business; and, during the 12-month period preceding
issuance of the complaint, which period is representative,
in the course and conduct of business operations, Respon-
dent and Roda Lee, collectively, derived gross revenues in
excess of $500,000 and purchased goods and materials
valued in excess of $50,000 which were received directly
from locations outside the State of Washington.
Therefore, I find, as admitted by the answer, that at all
times material, Respondent has been an employer engaged
in commerce within the meaning of Section 2(6) and (7) of
the Act.
11. THE LABOR ORGANIZATION INVOLVED
At all times material, Retail Store Employees Union,
Local 1001, AFL-CIO, herein called the Union, has been a
labor organization within the meaning of Section 2(5) of
the Act.
II. ISSUES
Whether Respondent has violated Section 8(aX5) and (1)
of the Act, following the purchase of Roda Lee assets by
unilaterally failing to make pension benefit contributions,
by failing and refusing to furnish the Union with requested
information regarding the work force, and by failing and
refusing to meet and confer with the Union, in response to
the latter's request, with regard to rates of pay, wages,
hours of employment, and other terms and conditions of
employment of employees.
IV. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
The dispute in this matter arises from the bankruptcy of
Roda Lee, which had operated a number of retail clothing
sales outlets in the Pacific Northwest prior to January 1975.
Most were located in Valu-Mart Discount Stores, but
several were located at separate and freestanding sites. In
the summer of 1974, Roda Lee voluntarily recognized the
Union as the representative of the employees at, in essence,
its independent stores in western Washington. On Septem-
ber 13, 1974, the parties entered into a collective-bargain-
ing agreement covering the Roda Lee employees at four
specific western Washington stores: Everett, Mt. Vernon,
Bremerton, and Tacoma.1 This agreement was to be
effective until July 31, 1976, with annual renewal "unless
written notice of desire to cancel or terminate the contract
the Retail Clerks Union having jurisdiction over the area where the store is
located." Thus, in effect, the Union would be the bargaining representative
(Continued)
329
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
is served by either party upon the other at least sixty (60)
days prior to the date of expiration." In addition, article 12
of the agreement provided: "Effective November 1, 1975,
based on October 1975 hours, the Employer shall pay into
the Retail Clerks Pension Trust account of each member of
the bargaining unit, ten cents (10¢) per compensable hour,
which payments are to be computed monthly."
In the fall of 1974, Roda Lee was evicted from the Valu-
Mart Discount Stores. It made an effort to sell the
merchandise from those locations at its existing freestand-
ing locations and, additionally, at newly opened freestand-
ing stores. This, however, proved unsuccessful, with the
result that on January 30, 1975, Roda Lee filed a "Petition
in Proceedings for an Arrangement - Chapter XI."
Though this action was taken pursuant to the Bankruptcy
Act, it was not Roda Lee's intent to be declared bankrupt.
Rather, from January 30, 1975, until April 28, 1976, Roda
Lee was operated by a debtor in possession with the object
of attempting to reorganize to resume normal operations.
Ultimately, however, this proved unsuccessful also. Thus,
on April 28, 1976, Roda Lee was declared and adjudicated
bankrupt, the appointed trustee took over the assets,
already submitted sealed bids for those assets were opened,
and the trustee selected Respondent as the successful
bidder. On the following day, April 29, 1976, Respondent
commenced operating the same retail outlets which the
debtor in possession had been operating.
With respect to the ownership of the entities involved, 91
percent of the stock of Roda Lee is owned by Monte J.
Berman and the remaining 9 percent is held by his
stepfather, Leo Rosenblum, a New Jersey attorney. This
ownership has remained constant throughout these pro-
ceedings, although in April 1975 Leo Rosenblum made a
$50,000 loan to Roda Lee, secured by inventory, "prior and
superior to the rights and interest to all unsecured creditors
but subject to pertinent costs and expenses of administra-
tion .... " The object was to provide Roda Lee with
money to purchase merchandise for resale. Berman holds
no stock in Respondent. Leo Rosenblum owns over 70
percent of Respondent's stock and his nephew, Edward
Rosenblum, who is also an attorney in Leo's office, holds
the remaining stock, with the exception of 7 or 8 percent
held by Jerome Shulkin as payment for his services as an
attorney for Roda Lee during the bankruptcy proceedings.
The directors of Roda Lee were Berman and the two
Rosenblums, Leo and Edward. Respondent's directors are
the two Rosenblums plus Shulkin. However, while Berman
of all employees in the various stores, but the employees would be members
of the particular locals having jurisdiction over where they worked. There is
no contention that this arrangement tainted the bargaining relationship
between the Union and Roda Lee nor, for that matter, that it should have
any effect on resolution of the issues presented in this case.
2 At the hearing, Respondent contended that the employees at the West
Seattle store had also been a recognized part of the collective-bargaining
unit for which the Union served as the bargaining representative. This was
disputed by the Union and, other than Berman's assertions, Respondent
produced no evidence to support the contention that employees at the West
Seattle store had been added to the collective-bargaining unit. Indeed,
Berman acknowledged that, if the employees had been added to the unit,
there would undoubtedly have been an "appendix" to the collective-
bargaining agreement reflecting that fact, as is true of each of the four
outlets which all agree were included. Yet no such appendix was produced
by Respondent at the hearing, although Berman had ample time between
the first and second day of the hearing to secure such an appendix if, in fact,
is no longer a director, he has remained as the person in
charge of day-to-day operations throughout these proceed-
ings: as the person who served as president of Roda Lee, as
the person appointed debtor in possession by the bankrupt-
cy court, and as the vice president and general manager of
Respondent. Furthermore, there has been a considerable
overlap of the other corporate offices. Under Roda Lee the
four corporate officers were Berman, the two Rosenblums,
and Robert Galante, while for Respondent the four officers
are Berman, the two Rosenblums, and Shulkin. Conse-
quently, the only difference is that Galante has been
replaced by Shulkin and that there have been shifts in the
officers' positions occupied by Berman and the Rosen-
blums.
With respect to operations, Berman acknowledged that
on and after January 30, 1975, Roda Lee continued to
operate the same stores with the same fixtures, using the
same part-time and full-time sales employees and the same
corporate officers, selling the same merchandise, and
located at the same corporate headquarters as had been the
case prior to that date. The next 15 months, however, were
ones of significant change as Berman endeavored to
improve the financial status of the business. For example,
during the debtor-in-possession period, Roda Lee phased
out employees classified as buyers, paper distributors,
truckdrivers, warehouse employees, accounts payable
managers, keypunch operators, and data processors. Its
New York City purchasing office was closed in the summer
of 1975. Most of the stores were closed, including the
Bremerton store, which was one of the four stores for
which the Union was the employees' bargaining represen-
tative.2
All of these events, however, were part of Berman's
program to reduce overhead and generate sufficient cash to
purchase new merchandise so that Roda Lee's business
could be continued. Accordingly, the period was not one of
liquidation of the business, but rather was one of activities
designed to reorganize the business so that, once the
creditors were satisfied, Roda Lee's operations could be
continued. Moreover, there is no evidence that the closing
of the Bremerton store had any effect upon employees in
the other three stores in the bargaining unit who, so far as
the record discloses, simply continued their sales activities
in the same manner as prior to January 30, 1975, with the
only difference being that the merchandise which they were
selling was not newly purchased, but had been obtained
it existed. In fact, while at one point during the second day of the hearing
Berman said that he had had "some things to take care of at home" that
evening and had not searched for an appendix covering employees at the
West Seattle store, at another point on the same day he testified, "I read the
contract over several times last night just to clarify the material in my
mind." Moreover, while Evans testified that employees at West Seattle were
compensated on the basis of the Bremerton terms and conditions of
employment, she admitted that she had no idea of the reason. I find that the
evidence does not support the assertion that employees at West Seattle were
covered by the collective-bargaining agreement. Rather, I find that this
contention was advanced in an effort to fortify Respondent's subsidiary
claim that the Union had abandoned the employees, by showing that the
Union had failed to adequately represent employees at two stores when it
permitted both the West Seattle and Bremerton stores to be closed and the
employees working there terminated, without taking any action on behalf of
the employees. In fact, the only location where this did occur was at the
Bremerton store, which was closed in July 1975.
330
JERSEY JUNIORS, INC.
from the Valu-Mart Discount Store outlets or, as time
passed, from other, now closed, freestanding facilities.
With regard to Respondent's acquisitions of Roda Lee
assets and commencement of operations, there was no
hiatus in operations following the purchase of the assets on
April 28, 1976. Respondent commenced operations on the
same day at the same seven stores, with the same fixtures,
employing the same managers and sales personnel, and
selling the same merchandise. Since the summer of 1976
Respondent has made an effort to concentrate its sales
efforts on high school and college clientele, who purchase
primarily junior size apparel obtained from West Coast
vendors. However, this same type of merchandise was sold
by Roda Lee and there is no evidence that this change has
resulted in any difference in the manner in which sales
personnel perform their duties.
With respect to the bargaining history, it is clear that,
after the period of debtor-in-possession status commenced,
Roda Lee continued to observe the terms and conditions of
its collective-bargaining agreement with the Union. Thus it
continued to make payments on behalf of the employees to
the health and welfare fund and to the dental fund,
continued to observe the contractual wage rates, and
resolved at least two disputes, informally, concerning the
payment of proper wages to employees (one of which
involved the payment of vacation pay upon termination of
an employee). Moreover, while Roda Lee did file a list of
executory contracts with its petition under chapter XI, no
mention of the collective-bargaining agreement with the
Union was made in that document. To the contrary, in an
affidavit which accompanied the petition, Berman listed
"employee benefits" among the expenses which it was
anticipated that Roda Lee would incur.3
As set forth above, under the collective-bargaining
agreement pension benefit payments were to commence on
November 1, 1975. However, no such payments were
forthcoming from the debtor in possession. The trust fund
notified Edgar T. Hardy, the Union's secretary-treasurer,
of that fact in January 1976. Thereafter, Hardy attempted
to contact both Berman and Dan Northfield, who normally
dealt with the Union regarding labor relations matters, by
telephone. Neither individual returned Hardy's calls, with
the result that he then discussed the matter with Roda
Lee's office manager, Judith Evans. Between January and
April 8, 1976, Hardy had a total of four telephone
conversations with Evans. In each of these conversations it
is undisputed that Evans pleaded press of conflicting
business as the reason for the failure to make the payments,
asserted that Roda Lee was working on the matter, and
promised that the payments would be forthcoming. At no
point did Evans mention to Hardy that the chapter XI
proceedings were in progress. Meanwhile, on February 23,
1976, the trust filed a complaint for breach of collective-
bargaining agreement against Roda Lee in the superior
court of Washington for King County. An audit was
subsequently conducted of Roda Lee's payroll records, and
it was determined that $498.05 was owing for pension
payments. By letter dated April 2, 1976, the trust fund's
attorney notified Roda Lee of the results of the audit. On
3 Asked about this item, Shulkin, who prepared the affidavit, testified
that "employee benefits would normally mean the health and welfare
April 5, 1976, a default judgment was entered against Roda
Lee for this amount plus liquidated damages and costs. So
far as the record discloses, none of this has yet been paid.
The final facet of this matter occurred after Respondent
began operating the stores. It continued making the dental
and the health and welfare contributions to the appropriate
trust funds. It continued paying the contractually specified
wage rates to the employees. However, it did not make
pension contributions. On May 24, 1976, the Union
notified Berman, by letter, of its desire to "open the present
labor agreement between Jersey Jrs. and [the Union] to
discuss wages, hours and working conditions." By separate
letter of that same date the Union requested, so that it
could be better prepared for negotiations, that Berman
supply for each employee in the unit the name, classifica-
tion, date of hire, pay rate, date and amount of last wage
increase, average weekly hours worked during the preced-
ing 4-week period, and amounts of commissions earned or
incentive paid during the prior 12-month period.
On June 9, 1976, Hardy wrote a letter suggesting June 21,
1976, as the date upon which to commence negotiations.
On the following day a lawyer in the firm of Casey, Pruzan,
Kovarik & Schulkin wrote a letter to Hardy asserting that
Respondent was not a successor to Roda Lee and that any
collective-bargaining agreement with Roda Lee terminated
when the latter was adjudicated "as a straight bankrupt"
and its assets sold. On June 17, 1976, the Union's attorney
responded to this letter, disputing its assertion that
Respondent was not a successor to Roda Lee and renewing
the request for the information sought in Hardy's May 24,
1976, letter.
B. Analysis
At root, this is a dispute concerning the number of
entities involved and the precise operations which should
be taken into account in measuring whether or not
successor or alter ego status exists. The General Counsel
contends that the operations of Roda Lee by the debtor in
possession were a simple continuum of the operations of
Roda Lee prior to January 30, 1975. Accordingly, the
General Counsel argues that there are only two operative
entities: Roda Lee and Respondent. Moreover, the Gener-
al Counsel contends that the latter is at least a successor
and at best an alter ego of the former. Respondent,
however, argues that there are three distinct entities: Roda
Lee, the debtor in possession, and Respondent. Moreover,
Respondent asserts that the period in which Roda Lee was
operated by the debtor in possession should not be taken
into account in determining whether an alter ego or
successor relationship exists. Rather, urges Respondent,
the status of Respondent as successor or alter ego should be
measured against the operations of Roda Lee prior to
January 30, 1975.
A review of the cases in this area leads me to conclude
that the General Counsel has the better of this argument. A
trustee in bankruptcy is an alter ego of the bankrupt
employer. Cagle's, Inc., 218 NLRB 603, 604 (1975); Marion
Simcox, Trustee of Wagner Shipyard and Marina, Inc., and
benefits, it might mean pension benefits, it might mean dental care, what
have you."
331
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Stateside Service, Inc. d/b/a Stateside Shipyard and Marina,
Inc., 178 NLRB 516, 518 (1969). As Roda Lee's attorney,
Shulkin, testified, a debtor in possession is empowered
"with the right, title and power of a trustee in bankruptcy."
Thus, for purposes of the Board's doctrine there is no
distinction between the two and, indeed, at least one court
has lumped debtor in possession under chapter XI or
chapter X, trustee under chapter X, or trustee in a straight
bankruptcy proceeding together for purposes of ascertain-
ing the effect of the relationship to the debtor company.
Shopmen's Local Union No. 455, International Association of
Bridge, Structural and Ornamental Iron Workers, A.F.L-
C.I.O. v. Kevin Steel Products, Inc., 519 F.2d 698, 704 (C.A.
2, 1975).
Respondent points to Kevin Steel in arguing that a debtor
in possession or trustee is not the same entity as the debtor.
Indeed, the court did make such a statement. However, the
distinction that was drawn by the court pertained only to
that of a "juridical entity." Truck Drivers Local Union No.
807, International Brotherhood of Teamsters v. The Bohack
Corporation, 541 F.2d 312, 320 (C.A. 2, 1976); In re
Mammoth Mart, Inc., 536 F.2d 950, 954 (C.A. 1, 1976). In
so doing, the court was resolving conflicts between section
313(1) of the Bankruptcy Act, permitting rejection of
executory contracts, and Section 8(d) of the Act, prohibit-
ing a "party" from terminating or modifying a collective-
bargaining agreement without adhering to the require-
ments set forth in that section. Bohack, supra at 320. Thus,
in Kevin Steel the court held only that the bankruptcy laws
authorized rejection of collective-bargaining agreements,
like any other executory contracts, notwithstanding the
provisions of Section 8(d) of the Act. Id. at 704. Nonethe-
less, the court made clear that its holding was not to be
construed as a nullification of collective-bargaining agree-
ments upon commencement of bankruptcy. "Of course, the
statement that the debtor is not a 'party' . . . cannot be
taken literally, since neither affirmance nor rejection of the
collective bargaining agreement would be possible by one
not a party to it." Bohack, supra at 320. In fact, a debtor in
possession is obliged not "to ignore its obligations under
the labor act." Kevin Steel, supra at 706.
Accordingly, collective-bargaining agreements remain in
effect until such time as rejected by a bankruptcy court. In
the instant case, Shulkin admitted that no motion or
petition had been filed with the bankruptcy court to reject
Roda Lee's collective-bargaining agreement with the
Union. Therefore, after January 30, 1975, the debtor in
possession, Berman, was the alter ego of Roda Lee and the
collective-bargaining agreement remained in effect during
the time that Berman operated Roda Lee as debtor in
possession. Consistent with this finding, I reject Respon-
dent's argument that its alleged successorship status should
be measured against the operations of Roda Lee as
conducted prior to January 30, 1975, before the filing
under chapter XI. Rather, I find that the status of
Respondent should be measured against the operations of
the employing entity prior to assumption by Respondent.
In this regard, while the debtor in possession made a
number of changes which resulted in a reduction in the
magnitude of Roda Lee's business, it concededly had not
been Berman's intent in doing so to liquidate Roda Lee. To
the contrary, he admitted that his efforts had been directed
to reestablishing the credits and viability of Roda Lee so
that the business could be continued. Moreover, notwith-
standing the closure of the Bremerton store, where the
employees had been represented by the Union, Respon-
dent has failed to show that either the closure or the other
changes effected by Berman during this period altered the
working conditions of the employees at the three remaining
stores in the bargaining unit. So far as the record discloses,
these employees continued to perform their duties without
change and without effect from the closure of the
Bremerton store.
With regard to the operations of the stores after April 28,
1976, there were, as Respondent points out, several
changes. Thus, Berman ceased to possess an ownership
interest. Respondent adjusted its sales policy to attempt to
attract primarily high school and college students as
customers, concentrating its advertising in school newspa-
pers and adjusting its merchandising policy so that
principally junior sizes of apparel were offered for sale. In
addition, Respondent upgraded the quality of merchandise
offered for sale to a significantly higher price range than
had been the case with Roda Lee. Yet, while these factors
do provide some indication of a change in the nature of the
employing entity, see, e.g., Radiant Fashions, Inc., 202
NLRB 938 (1973), there are a number of other factors
which, on balance, serve to establish that Respondent did
perpetuate the continuity of the employing enterprise.
On April 29, 1976, Respondent commenced operations
which had been conducted on the immediately preceding
day by the debtor in possession, without any hiatus in
operations. So far as the record discloses, no mention of the
change was made to either the employees in the retail
stores or to the managers of those stores, all of whom
apparently continued working in the same manner and
fashion as when the stores were operated by the debtor in
possession. These operations, moreover, were conducted
by Respondent at the same stores, using the same fixtures
and selling the same merchandise. Berman continued
managing the day-to-day operations of Respondent,
performing the same types of functions that he had been
performing as debtor in possession, with the only change
being that he ceased to be responsible to the bankruptcy
court and became responsible instead to Leo Rosenblum,
who, along with his nephew Edward, continued to serve
both as officer and director of the business.
Roda Lee's sole business had been the sale of apparel at
the retail outlets. That is also the sole business of
Respondent. One of the principal assets which Respondent
purchased was the trade name of Roda Lee. Respondent
has conducted its operations exclusively under that name
and, in fact, has erected signs bearing that name outside
stores which did not have such signs when operated under
chapter XI. The headquarters office remained in the same
location and Judith Evans continued to perform all office
work at that location, albeit under a different title. While
there was a change in clientele, this would not, of itself,
serve to preclude a successorship finding. Randolph Rubber
Company, Inc., 152 NLRB 496, 499 (1965). Further, Roda
Lee apparently did carry junior sizes among its merchan-
dise and, in any event, notwithstanding the age ranges of
332
JERSEY JUNIORS, INC.
its customers, the simple fact is that, like Roda Lee,
Respondent has continued to engage in the sale of apparel
at retail. It has not changed the nature of its business to
wholesaler or manufacturer, nor has it branched out into
the sale of other items in addition to apparel.
Therefore, I find that Respondent is a successor and, as
such, was obliged to continue recognizing the Union as the
representative of the employees at the Everett, Mt. Vernon,
and Tacoma, Washington, retail clothing stores. By failing
to do so and by rejecting the Union's request for
information relating to the employees at those stores and
for negotiations concerning the terms and conditions of
employment of the employees at those stores, Respondent
has violated Section 8(aX5) and (1) of the Act.
The situation with regard to the payments to the pension
trust fund requires a somewhat greater analysis. Since
November 1975, Roda Lee had been obligated to make
payments to the pension trust fund. However, the debtor in
possession never did so. Thus, there is some basis for
Respondent to argue that at the time that it assumed the
operations formerly conducted by the debtor in possession
it was not obliged to make such payments as they had
never been made by the predecessor and, accordingly, had
never become a term or condition of employment which
may not be unilaterally altered under the doctrine of
N.L R.B. v. Burns International Security Service, Inc., et al.,
406 U.S. 272 (1972). In reply, the General Counsel argues
that Respondent is the alter ego of Roda Lee and,
consequently, is bound to the latter's contractual commit-
ments. "A company which has not agreed to be bound by
the collective-bargaining contract of another company may
nevertheless be held to that contract if it is an alter ego of
the signing company .... " Peter Kiewit Sons' Co. and
South Prairie Construction Co., 206 NLRB 562 (1973),
vacated on other grounds 518 F.2d 1040 (C.A.D.C., 1975),
affd. in part, vacated in part, and remanded 425 U.S. 800
(1976).
While many of the same factors are invoked to support
findings of successor and of alter ego status, the simple fact
is that the terms denote two quite separate doctrines. For
example, the fact that a firm is not a successor does not
preclude a finding that it is an alter ego. See Edward E.
Schultz d/b/a Schultz Painting & Decorating Co., 202
NLRB 111, 115 (1973). Recently, the Supreme Court
delineated what it meant by an alter ego in Howard Johnson
Co., Inc. v. Detroit Local Joint Executive Boarde Hotel &
Restaurant, etc., 417 U.S. 249, 259, fn. 5 (1974):
It is important to emphasize that this is not a case
where the successor corporation is the "alter ego" of the
predecessor, where it is "merely a disguised contin-
uance of the old employer." Southport Petroleum Co. v.
NLRB, 315 U.S. 100, 106 (1942). Such cases involve a
mere technical change in the structure or identity of the
employing entity, frequently to avoid the effect of the
labor laws, without any substantial change in its
ownership or management.
Comparison of this doctrine with the facts of the instant
case discloses several factors which militate against finding
Respondent to be the alter ego of Roda Lee. First, Roda
Lee's assets were not transferred to Respondent through
the voluntary action of Berman. It is undisputed that he
made every effort possible to attempt to salvage Roda Lee
as a viable operating entity and only his inability to achieve
that end led to his surrender to the inevitable. In these
circumstances, the evidence will not support any conclu-
sion other than that there was a "bona discontinuance" of
Roda Lee's business. Southport Petroleum, supra. Second,
there is neither a contention nor evidence to support a
contention that Berman's conduct as owner of Roda Lee
and as debtor in possession was motivated by any
nefarious purpose. Cf. Oilfield Maintenance Co., Inc., and
Oilfield Maintenance & Engineering Co., Inc., 142 NLRB
1384 (1963); Intergraphic Corporation of America, 160
NLRB 1284 (1966). Rather, Berman was the victim of a
series of events over which he had no control - eviction
from the Valu-Mart Discount Stores, inability to generate
sufficient sales of merchandise, inability to generate
sufficient liquidity to purchase new merchandise, inability
to generate sufficient profits to obtain the required
indemnity bond. Consequently, Berman can hardly be cast
in the role of an employer resorting to "deceit and
subterfuges" to eliminate the Union's representation of its
employees. Cf. Jack Lewis and Joe Levitan d/b/a California
Footwear Company, 114 NLRB 765, 767 (1955), enfd. as
modified 246 F.2d 886 (C.A. 9, 1957).
Third, since Roda Lee continues as an undissolved
business entity, since there was a formal declaration of
bankruptcy with sealed bids accepted for the purchase of
its assets and since neither Berman nor other officials of
Roda Lee influenced the selection of the successful bidder,
so far as the record discloses, it can hardly be concluded
that the sale of assets to Respondent was a mere "paper
arrangement." N.LR.B. v. Deena Artware, Inc., et al., 361
U.S. 398, 403 (1960). In other words, the transaction has
not been shown to have been simply a change effected
under the control and guidance of the owners of Roda Lee.
Finally, while Berman owned virtually all of the stock of
Roda Lee, he has no shareholder interest in Respondent.
Of course, the Rosenblums, one of whom held a distinctly
minority interest in Roda Lee, do hold almost all of
Respondent's stock and are related to Berman. Yet, there is
no evidence that Respondent is being operated as a front
for Berman's interests, cf. American Trailer & Equipment
Corp. and its Brunswick Body Works Division, 151 NLRB
867 (1965), nor is there any evidence that the Rosenblums
are merely holding the stock of Respondent for ultimate
purchase by Berman. Indeed, the latter is a somewhat
unlikely prospect given the virtually penniless condition to
which Berman has been rendered as a result of Roda Lee's
bankruptcy. Of course, Berman may ultimately receive
some money, which could be used to purchase Respon-
dent's stock, should the suit against Valu-Mart Discount
Stores be successful. However, that is a somewhat thin reed
on which to predicate alter ego status.
Therefore, I find that the evidence is not sufficient to
establish that Respondent resulted from "a mere technical
change in the structure or identity of' Roda Lee or that
Respondent is "merely a disguised continuance of" Roda
Lee. See International Offset Corporation, et al., 210 NLRB
854, 865-867 (1974).
333
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
This, then, leaves the question of whether, under
successorship principles, Respondent should have bar-
gained with the Union before continuing the nonpayment
of contributions to the pension fund. "Although a succes-
sor employer is ordinarily free to set initial terms on which
it will hire the employees of a predecessor, there will be
instances in which it is perfectly clear that the new
employer plans to retain all of the employees in the unit
and in which it will be appropriate to have him initially
consult with the employees' bargaining representative
before he fixes terms." N.L.R.B. v. Burns International
Security Services, Inc., 406 U.S. at 294-295 (1972). The
pension contributions were, of course, one of the terms of
Roda Lee's employees' employment. Although they were
never implemented, this appears not to have resulted from
a dispute over the basic obligation, but rather arose from
financial inability. Nonetheless, Evans did acknowledge
Roda Lee's obligation to make those payments during her
telephone conversations with Hardy.4 These conversations
also demonstrate that the Union was making efforts to
collect the money owing and that it had not abandoned the
employees' rights to have the contributions made on their
behalf. Finally, Respondent had knowledge of the Union's
efforts to secure payment of the promised contributions.
Evans became Respondent's controller. Berman, who
acknowledged that he had been aware of the audit
conducted to ascertain the amount of contributions owing,
continued as the operating officer of Respondent, as he
had been when the stores were owned by Roda Lee.
Further, I find it most unlikely that Shulkin would not have
been aware of the trust fund's lawsuit in the King County
superior court, given the fact that its institution was
arguably contrary to the bankruptcy court's order staying
all proceedings against the debtor. Accordingly, at least
one and probably three of Respondent's officials had
knowledge of the Union's efforts to compel Roda Lee to
observe the term of its employees' employment as em-
bodied in the agreement which it made with the Union.
In sum, the instant case presents a situation where the
predecessor agreed upon a term of employment but, due to
abnormal circumstances, did not observe it during the
period immediately prior to the successor's continuation of
the employing entity. The Union made efforts to achieve
compliance and the successor was aware of those efforts, as
well as of the claim upon which those efforts to achieve
compliance were based. At no point did the predecessor
disavow the basis of that claim. To permit a successor to
unilaterally disavow observance of such a term of employ-
ment would be to permit the normal successorship
obligation to be disrupted by an event (financial inability)
over which no party - union, predecessor, successor,
employees - had control. In the process this would
4 I reject Respondent's contention that Evans' conduct cannot be
construed as binding upon Roda Lee because she had no specific authority
to act in the area of labor relations. It is abundantly clear that, as the period
of debtor-in-possession status progressed, Evans became charged with
greater and greater responsibility for the conduct of office operations.
Indeed. it is acknowledged that among her responsibilities was that of
ensuring that the appropriate payments under the collective-bargaining
agreement were forthcoming. In this capacity, Evans had dealt with the
Union's grievance director, Fred Rosenberry, in settling at least one dispute
in 1976. The subject of Hardy's call did not involve negotiating a new term
of employment, but rather pertained to implementation of an already
deprive the employees of a term of employment which no
one disputes their right to enjoy and which they would
enjoy but for the inability of the predecessor to perform -
an inability predicated upon circumstances that have not
been shown to plague the successor. Conversely, no great
burden is placed upon the successor for it is required only
that the successor negotiate about a proposed discontin-
uance with the Union and not that the latter's consent to
such a proposal be secured before implementation. As was
stated by the Board in Ozark Trailers, Incorporatec4 et al.,
161 NLRB 561, 568 (1966), where the subject matter at
issue was different but the governing principles the same:
[A]n employer's obligation to bargain does not include
the obligation to agree, but solely to engage in a full
and frank discussion with the collective-bargaining
representative in which a bona fide effort will be made
to explore possible alternatives, if any, that may achieve
a mutually satisfactory accommodation of the interests
of both the employer and the employees. If such efforts
fail, the employer is wholly free to make and effectuate
his decision. Hence, to compel an employer to bargain
is not to deprive him of the freedom to manage his
business.
Therefore, I find that Respondent did violate Section
8(a)(5) and (1) of the Act by failing and refusing to make
pension contributions without prior notification to and
bargaining with the Union.
V. THE EFFECT OF THE UNFAIR LABOR PRACTICES
UPON COMMERCE
The activities of Respondent set forth above, occurring
in connection with Respondent's operations described in
section I, above, have a close, intimate, and substantial
relationship to trade, traffic, and commerce among the
several States and tend to lead, and have led, to labor
disputes burdening and obstructing commerce and the free
flow of commerce.
CONCLUSIONS OF LAW
1. Jersey Juniors, Inc., is an employer within the
meaning of Section 2(2) of the Act, engaged in commerce
and in a business affecting commerce within the meaning
of Section 2(6) and (7) of the Act, and is the successor
employer to Roda Lee, Inc.
2. Retail Store Employees Union, Local 1001, AFL-
CIO, is a labor organization within the meaning of Section
2(5) of the Act.
3. A unit appropriate for collective bargaining is: All
employees employed by Jersey Juniors, Inc., at its retail
negotiated employment term and, accordingly, did not involve Evans in any
conduct dissimilar to that which she had been conducting: implementation
of the terms of employment as agreed upon between the Union and Roda
Lee. Therefore, the fact that Evans lacked authority to negotiate on behalf
of Roda Lee did not preclude her from acting as its agent in resolving
problems of implementation of the terms of employment agreed upon by
other officials. In these circumstances, and inasmuch as Berman did not
return Hardy's calls (a fact which clearly refutes any asserted doubt of the
Union's continued representative status), I find that Evans did speak on
behalf of Roda Lee.
334
JERSEY JUNIORS, INC.
clothing facilities located in Everett, Mt. Vernon, and
Tacoma, Washington; excluding guards and supervisors as
defined in the Act.
4. At all times material, Retail Store Employees Union,
Local 1001, AFL-CIO, has been the exclusive collective-
bargaining representative of the employees in the above-
described unit within the meaning of Section 9(a) of the
Act.
5. By unilaterally withholding pension benefit contri-
butions, by failing and refusing to furnish information
regarding unit employees, and by failing and refusing to
meet and confer with Retail Store Employees Union, Local
1001, AFL-CIO, with regard to rates of pay, wages, hours
of employment, and other terms and conditions of
employment of employees in the bargaining unit described
in Conclusion of Law 3, above, I find that Jersey Juniors,
Inc., violated Section 8(aX5) and (1) of the Act.
6. The aforesaid unfair labor practices affect commerce
within the meaning of Section 2(6) and (7) of the Act.
THE REMEDY
Having found that Jersey Juniors, Inc., engaged in
certain unfair labor practices, I shall recommend that it be
ordered to cease and desist therefrom and that it take
certain affirmative action to effectuate the policies of the
Act.
Having found that Jersey Juniors, Inc., unilaterally
withheld pension benefit contributions owing employees in
the appropriate unit described in Conclusion of Law 3,
above, I shall recommend that Jersey Juniors, Inc.,
reimburse employees for the loss of moneys withheld from
the fund by making the required contributions, with
interest at 6 percent per annum, until such time as Jersey
Juniors, Inc., negotiates in good faith with Retail Store
Employees Union, Local 1001, AFL-CIO, to a new
agreement or an impasse. Harold W. Hinson, d/b/a Hen
House Market No. 3, 175 NLRB 596 (1969).
Upon the foregoing findings of fact and conclusions of
law, and upon the entire record and pursuant to Section
10(c) of the Act, I hereby issue the following recommend-
ed:
ORDER 5
The Respondent, Jersey Juniors, Inc., Everett, Washing-
ton, its officers, agents, successors, and assigns, shall:
1. Cease and desist from:
(a) Withholding pension benefits owing to employees
represented by Retail Store Employees Union, Local 1001,
AFL-CIO, in the following bargaining unit: All employees
employed by Jersey Juniors, Inc., at its retail clothing sales
facilities located at Everett, Mt. Vernon, and Tacoma,
Washington; excluding guards and supervisors as defined
by Section 2(11) of the Act.
(b) Failing and refusing to furnish the Retail Store
Employees Union, Local 1001, AFL-CIO, with requested
relevant information regarding employees in the above-
described unit.
(c) Failing and refusing to meet and confer with Retail
Store Employees Union, Local 1001, AFL-CIO, in re-
sponse to the latter's request, with regard to rates of pay,
hours of employment, and other terms and conditions of
employment of employees in the above-described bargain-
ing unit.
(d) In any manner interfering with, restraining, or
coercing employees in the exercise of any right guaranteed
them by Section 7 of the Act.
2. Take the following affirmative action which is
necessary to effectuate the purposes of the Act:
(a) Upon request, bargain collectively with Retail Store
Employees Union, Local 1001, AFL-CIO, as the exclusive
bargaining representative of all employees employed in the
bargaining unit heretofore found appropriate in Conclu-
sion of Law 3, above.
(b) Upon request, furnish Retail Store Employees Union,
Local 1001, AFL-CIO, with requested relevant informa-
tion pertaining to the employees employed in the bargain-
ing unit heretofore found appropriate in Conclusion of
Law 3, above.
(c) Make whole employees represented by Retail Store
Employees Union, Local 1001, AFL-CIO, in the appropri-
ate unit described above by paying all pension contribu-
tions which have not been paid and which would have been
paid absent the unlawful conduct of Jersey Juniors, Inc.,
found herein, and continue such payments until such time
as Jersey Juniors, Inc., negotiates in good faith with Retail
Store Employees Union, Local 1001, AFL-CIO, to a new
agreement or an impasse.
(d) Preserve and, upon request, make available to the
Board or its agents, for examination and copying, all
payroll and other records necessary to compute the
backpay as set forth in "The Remedy" section of this
Decision.
(e) Post at the Everett, Mt. Vernon, and Tacoma,
Washington, retail clothing stores copies of the attached
notice marked "Appendix." 6 Copies of said notice, on
forms provided by the Regional Director for Region 19,
after being duly signed by Respondent's authorized
representative, shall be posted by Respondent immediately
upon receipt thereof and be maintained by it for 60
consecutive days thereafter, in conspicuous places, includ-
ing all places where notices to employees are customarily
posted. Reasonable steps shall be taken by Respondent to
insure that said notices are not altered, defaced, or covered
by any other material.
(f) Notify the Regional Director for Region 19, in
writing, within 20 days from the date of this Order, what
steps Respondent has taken to comply herewith.
5 In the event no exceptions are filed as provided by Sec. 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, and recommended Order herein shall, as provided in Sec.
102.48 of the Rules and Regulations. be adopted by the Board and become
its findings, conclusions, and Order, and all objections thereto shall be
deemed waived for all purposes.
6 In the event that the Board's Order is enforced by a Judgment of a
United States Court of Appeals, the words in the notice reading "Posted 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."
335
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Act, as amended, gives
all employees the following rights:
To organize themselves
To form, join, or support unions
To bargain as a group through a representative
they choose
To act together for collective bargaining or
other mutual aid or protection
To refrain from any or all such activities
except to the extent that the employees' bargain-
ing representative and employer have a collective-
bargaining agreement which imposes a lawful
requirement that employees become union mem-
bers.
In recognition of these rights, we hereby notify our
employees that:
WE WILL NOT refuse to bargain with Retail Store
Employees Union, Local 1001, AFL-CIO, as the
collective-bargaining representative of the employees in
the appropriate unit: All employees employed by
Jersey Juniors, Inc., at its retail clothing stores at
Everett, Mt. Vernon, and Tacoma, Washington; ex-
cluding guards and supervisors as defined in the Act.
WE WILL NOT refuse to provide relevant information
to Retail Store Employees Union, Local 1001, AFL-
CIO, with respect to employees in the above-described
bargaining unit.
WE WILL NOT withhold payments from your pension
trust fund without contacting Retail Store Employees
Union, Local 1001, AFL-CIO, and bargaining about
withholding such payments.
WE WILL NOT in any manner interfere with, restrain,
or coerce you in the exercise of your rights under the
National Labor Relations Act as set forth above.
WE WILL recognize and bargain collectively with
Retail Store Employees Union, Local 1001, AFL-CIO,
as the exclusive collective-bargaining representative of
employees in the above-described bargaining unit.
WE WILL, upon request, furnish the Retail Store
Employees Union, Local 1001, AFL-CIO, with rele-
vant information regarding the employees in the above-
described bargaining unit.
WE WILL notify and bargain with Retail Store
Employees Union, Local 1001, AFL-CIO, before
withholding contributions from the pension trust fund.
WE WILL make whole all employees in the above-
described bargaining unit by payment of contributions
to the pension fund for the period on and after April 29,
1976, with interest at 6 percent per annum, which
would have been made absent our unilateral withhold-
ing of those amounts.
JERSEY JUNIORS, INC.
336