Knappton Maritime Corp.

National Labor Relations Board - Board Decisions

Dec 30, 1988

292 N.L.R.B. 236 (N.L.R.B. 1988)

236 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Knappton Maritime Corporation and Inlandboat-
men's Union of the Pacific , Marine Division,
International Longshoremen 's and Warehouse
men's Union Case 19-CA-19090
December 30, 1988
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND HIGGINS
On a charge filed by the Inlandboatmen's Union
of the Pacific, Marine Division, International
Longshoremen's and Warehousemen's Union (the
Union) on April 28, 1987,1 the General Counsel of
the National Labor Relations Board, by the Re
gional Director for Region 19, issued a complaint
on June 11, against the Respondent, Knappton
Maritime Corporation, alleging that it violated Sec
tion 8(a)(5) and (1) of the National Labor Relations
Act 2 The Respondent filed a timely answer admit
ting in part and denying in part the allegations of
the complaint
On April 14, 1988, the Respondent, the Union,
and counsel for the General Counsel filed with the
Board a stipulation for transfer and of facts, with
attachments The parties agreed that the stipulation
of facts with attachments constitutes the entire
record in this case The parties waived a hearing
and the issuance of a decision by an administrative
law judge and stated their desire to submit the case
directly to the Board for findings of fact, conclu-
sions of law, and a decision and order On July 15,
1988, the Board issued an order granting the
motion, approving the stipulation, and transferring
the proceeding to the Board Thereafter, the Gen
eral Counsel and the Respondent filed briefs
The National Labor Relations Board has delegat
ed its authority in this proceeding to a three
member panel
i All dates are 1987 unless otherwise noted
2 On July 28 the Union filed a second charge against the Respondent
(Case 19-CA-19267) alleging that the Respondent had illegally subcon
tracted unit work to two other companies Washington Marine Services
and Sea Coast Towing who were alter egos of the Respondent On Sep
tember 4 1987 the Regional Director after conducting an investigation
dismissed the portion of Case 19-CA-19267 which dealt with the alter
ego allegation finding no evidence of alter ego status with regard to
either Washington Marine or Sea Coast Towing On September 9 the
Union informed the Regional Director that it had previously withdrawn
the alter ego allegation The Regional Director accepted the withdrawal
and revoked the dismissal On September 16 the Regional Director
issued an order consolidating cases and a consolidated complaint and
notice of hearing for the present case and the remaining subcontracting
allegation of Case 19-CA-19267 The Respondent filed an answer to the
consolidated complaint On October 14 the Regional Director finding
that there was no evidence of an unlawful subcontract issued an order
severing case withdrawing complaint and notice of hearing and dismiss
mg charge in Case 19-CA-19267 On May 2 1988 the Union refiled its
alter ego allegation against Washington Marine (Case 19-CA-19782) The
Regional Director also dismissed this charge for lack of evidence
On the entire record in this proceeding, the
Board makes the following
FINDINGS OF FACT
I JURISDICTION
Knappton Maritime Corporation, a Washington
corporation, has, at all times material, engaged in
the business of providing tug and barge transporta-
tion along the Pacific Coast and North America,
with an office and place of business in Seattle,
Washington During the 12 months preceding the
issuance of the complaint, the Respondent had
gross sales of goods and services valued in excess
of $500,000 During the same period, the Respond-
ent sold and shipped goods or provided services
from its facilities within the State of Washington,
to customers outside the State of Washington, or
sold and shipped goods or provided services to
customers within the State of Washington, which
customers were themselves engaged in interstate
commerce by other than indirect means, of a total
value in excess of $50,000 Also, during the same
period, the Respondent purchased and caused to be
transferred and delivered to its facilities within the
State of Washington goods and materials valued in
excess of $50,000 directly from sources outside the
State or from suppliers within the State which, in
turn, obtained goods and materials from sources
outside the State Accordingly, in agreement with
the stipulation of the parties, we find that the Re-
spondent is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of
the Act and that the Union is a labor organization
within the meaning of Section 2(5) of the Act
II THE ALLEGED UNFAIR LABOR PRACTICES
A The Facts
Since at least February 1, 1981, the Union has
been the exclusive collective-bargaining representa-
tive for the unit of the Respondent's Seattle em-
ployees3 and has been recognized as such by the
Respondent Recognition has been embodied in
successive collective-bargaining agreements, the
most recent of which was effective from February
s The following unit of the Respondent s employees constitutes an ap
propriate unit for the purpose of collective bargaining within the meaning
of Sec 9(b) of the Act
All employees employed by the Respondent out of its Seattle Wash
ington facility who fall within the job classifications set out in the
last collective bargaining agreement in effect between the parties
which was effective by its terms for the period from February 1
1984 to January 31 1987 and which had been extended by the
mutual agreement of the parties until August 6 1987 but excluding
all office clerical employees guards and supervisors as defined in the
Act
292 NLRB No 34
KNAPPTON MARITIME CORP 237
1, 1984, to January 31, 1987, and was extended by
agreement until August 6, 1987 4
On or about February 28, the Respondent dis-
continued the part of its business which involved
the transportation of clean petroleum products by
the leased barge Pacific and entered into a sales
agreement with Washington Marine Services, Inc
(WMSI) covering the goodwill and going concern
value of the discontinued business Lee Freeman,
an ex-manager of the Respondent who was respon
sible for the discontinued work, became the prince
pal manager for WMSI and hired some employees
who had worked for the Respondent
The sale occurred without the Respondent pro-
viding the Union with an opportunity to negotiate
and bargain, and without reaching an agreement 5
The Union, after being informed of the sale, did
not accept the Respondent's verbal assertions that
the work in question was being sold to a bona fide
purchaser The Union's position was that the work
was discontinued in violation of rule 9 of the col
lective bargaining agreement by subcontracting it
out or that WMSI was an illegal alter ego of the
Respondent and that the work was still bargaining
unit work being performed by WMSI in violation
of Section 8(a)(5) and (1) of the Act 6
In March 1987, the parties began negotiations for
a successor agreement
On March 23, Respondent's manager, Bruce A
Reed Jr,8 informed the Union that there would be
no need for a Tankermen Supplement to the
Master Agreement since the Respondent would no
longer be performing work with the barge, Pacific
The Pacific work amounted to approximately 80
percent of the work covered by the Tankermen
Supplement Agreement The Union's representa
4 This agreement contained the following clause as rule 9 of the Master
Agreement
The Employer agrees that it will discuss with the Union and reach
agreement on any plan for subcontracting towing work normally
performed by its vessels provided however this rule shall not apply
to a subcontract with an employer who entered into or is complying
with a collective bargaining agreement with the Union
5 WMSI was not a party to the collective bargaining agreement nor
did it comply with or enter into a collective bargaining agreement with
the Union
6 Prior to September 1986 the Respondent had leased the tug Washing
ton to Sea Coast Towing Inc (Sea Coast) a newly formed corporation
which operated the tug on a nonunion basis On September 26 1986 an
arbitrator ruled that the Respondent had violated the collective bargain
mg agreement when it did not hire union members covered by the con
tract to operate the tug and did not apply the terms of the contract to the
employees operating the tug The arbitrator found that Sea Coast was a
related entity controlled by the Respondent and a part of the Respond
ent s corporate structure Following the arbitrators decision the Re
spondent sold its interest in Sea Coast
I This included both a new Master Agreement and accompanying sup
plements The Tankermen Supplement covered the discontinued work in
question
8 The parties stipulated that Reed Jr is an agent of the Respondent
within the meaning of Sec 2(13) the Act and a supervisor within the
meaning of Sec 2(l1) of the Act
tive, James Eversol, then asked to see a copy of
the sales agreement between the Respondent and
WMSI concerning the discontinued work The
Union requested the sales agreement in order to de
termine if the Respondent had subcontracted the
work in violation of rule 9 of the contract, if the
work was transferred to an illegal alter ego in vio-
lation of Section 8(a)(5) and (1) of the Act, if it
should file a grievance under the existing contract,
and what its position should be in the current nego
tiations concerning the Respondent's positions of
fecting the tankermen Reed, Jr refused Eversol's
request, stating that the Respondent had no obliga
Lion to provide a copy to the Union After some
discussion both Reed, Jr and Union Field Repre-
sentative Perryman agreed that there was still a
need to have a Tankermen Supplement to cover
the remaining 20 percent of the tankermen work
that was still being performed by the Respondent 9
The Union repeated its request for the sales agree
ment either orally or in writing, on April 10 and
29, and on May 28 The Respondent refused to
provide the information
During the period of the Union's requests for the
sales agreement, negotiations continued, but the
parties could not reach agreement on either a new
master or supplemental contract At midnight
Thanksgiving Day, the Respondent implemented
its last and final offer 10
On June 10, in an attempt to reach a non Board
settlement of this case, Union Representative Per-
ryman visited the Respondent's Seattle office He
was provided with the original sales agreement,
which consisted of about eight pages, and was in
formed that he could have an excised copy of the
agreement Perryman asked for the excised copy so
he could compare it with the original Reed Jr re
jected his request Perryman then asked Reed to
point out the parts that were being excised as he
reviewed the original contract Reed, Jr again re
faked to do so After Perryman reviewed the origi-
nal for about 20 minutes, Reed, Jr took away the
original from Perryman and gave him the excised
copy Perryman asked for the original back so he
could compare the two to see what was excised I1
Reed, Jr again refused Perryman's request Perry-
man told Reed, Jr that this was not acceptable and
9 After the sale of the business Respondent employed one full time and
two part time tankermen Before the sale it had employed five full time
tankermen and one part time tankerman
10 The Respondent had proposed to eliminate the guaranteed work
week for the tankermen which amounted to 30 days of work for each 2
calendar months under the then existing contract and had substituted a
provision that tankermen would be paid for days actually worked
ii The provisions concerning the moneys paid and clause concerning
the method of payment and other related provisions were excised from
the original This amounted to about 20 percent of the original document
238 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
that he would inform the NLRB of what had hap-
pened Reed, Jr then took back the excised copy
from Perryman
Sometime later, the Respondent's attorney, after
having been informed by the Regional Office of
what had taken place, offered to allow Perryman
to see the original and excised copy together and
to keep an excised copy Perryman stated that the
Union wanted its attorney to review the documents
as the attorney had the legal knowledge to deter
mine if a subcontract or a bona fide sale had oc
curred The Respondent rejected this request
B Contentions of the Parties
The General Counsel contends that the informa
tion sought by the Union is presumptively relevant
because it concerns terms and conditions of em
ployment of the bargaining unit employees, and
that the Respondent is therefore required to
produce it In this regard, the General Counsel
argues that contents of the sales agreement concern
terms and conditions of employment of the tanker
men (the bargaining unit employees) because the
sale and discontinuance of the work performed
with the leased barge Pacific resulted in a drastic
reduction of the number of tankermen employed
by the Respondent
The General Counsel further argues that the in-
formation was, at a minimum, relevant and neces
sary for the Union to carry out its statutory duties
The then existing contract had a provision requir
ing the Respondent to discuss and reach agreement
with the Union on any plan for subcontracting unit
work to an employer like WMSI It was necessary
for the Union to see the sales agreement in order to
determine if there was a bona fide sale or a subcon-
tracting of work in violation of rule 9 of the
Master Agreement The Union also had bona fide
concerns as to whether the sale was made to an it
legal alter ego, based on the Respondent's earlier
conduct involving Sea Coast and the fact that Re-
spondent's ex-manager , Lee Freeman, was now the
principal manager of WMSI
Finally, the General Counsel contends that the
Respondent's June 10 disclosure of the sales agree-
ment to Union Representative Perryman does not
negate the violation Perryman's request that the
Union's attorney be allowed to see the unexcised
agreement is analogous to a request to have an
auditor review an employer's financial records be
cause of their complexity Furthermore, assuming
arguendo that the June 10 disclosure satisfied the
Union's request, such belated compliance did not
cure the earlier violation
The Respondent argues that it had no duty to
bargain over the decision to discontinue and sell
part of its business and thus it had no duty to pro
vide information concerning the sale
The Respondent further argues that the Union is
not entitled to the sales agreement merely to allow
it to more effectively represent its members Thus,
the Respondent asserts that cases in which the
Board has required the employer to provide a sales
agreement are inapposite here Cases such as Wash
ington Star Co, 273 NLRB 391 (1984), and St
Mary's Foundry Co, 284 NLRB 221 (1987), in-
volved collective-bargaining agreements containing
"job guarantee" provisions, or "successor and as
signs' clauses, which are not present here Nor, as-
serts the Respondent, has it by its conduct made
the terms of the sales agreement relevant as did the
employer in RBH Dispersions, 286 NLRB 1185
(1987)
The Respondent also argues that the Union is
not entitled to the sales agreement in order to de
termine whether there is a violation of the subcon-
tracting provision in rule 9 of the collective bar-
gaining agreement because that provision violates
Section 8(e) of the Act and therefore cannot form
a legitimate basis for a request for information
Finally, the Respondent argues that the reasons
given by the Union for requiring the information
have been rendered moot because the charges filed
by the Union regarding subcontracting and alter
ego have been dismissed as having no basis in fact
C Discussion
For the reasons set forth below, we find that the
Respondent violated Section 8(a)(5) and (1) of the
Act by refusing to provide the Union with the
sales agreement
It is well settled that an employer has a statutory
obligation to provide, on request, relevant informa
tion the union needs for the proper performance of
its duties as a collective-bargaining representative
NLRB v Truitt Mfg Co, 351 U S 149, 152 (1956),
NLRB v Acme Industrial Co, 385 US 432, 435-
436 (1967), Detroit Edison Co v NLRB, 440 U S
301 (1979)
Where the union's request is for information per-
taining to employees in the bargaining unit which
goes to the core of the employer employee rela
tionship, that information is presumptively relevant
However, where a union has requested information
with respect to matters occurring outside the bar-
gaining unit, the burden is on the union to demon
strate that the information is relevant Pfizer Inc,
268 NLRB 916 (1984), enfd 736 F 2d 887 (7th Cir
1985), Ohio Power Co, 216 NLRB 987 (1975), enfd
mem 531 F 2d 1381 (6th Cir 1976) In either situa
tion, the standard for relevancy is the same "a lib
KNAPPTON MARITIME CORP
eral discovery type standard " Acme Industrial, 385
US at 437
The Board has held that where, as here, the re-
quested information concerns the existence of an
alter ego operation, it is not presumptively relevant
and the Union has the burden of establishing its rel
evancy Proctor Mechanical Corp, 279 NLRB 201
(1986), Pence Construction Co, 281 NLRB 322
(1986) To satisfy this burden, the Union "must
show that it had a reasonable belief that enough
facts existed to give rise to a reasonable belief that
the two companies were in legal contemplation a
single employer " Walter N Yoder & Sons Inc v
NLRB, 754 F 2d 531, 536 (4th Cir 1985), enfg 270
NLRB 652 (1984) For the reasons stated below we
find that the Union has established a reasonable
basis for requesting the sales agreement and that
the information in the agreement is relevant to the
Union's determination of whether to file a griev
ance or take other action to assure the contractual
rights of the employees
It is well settled that two nominally separate
business entities may be regarded as the same em
ployer if one is the alter ego or "disguised continu-
ance" of the other Southport Petroleum Co v
NLRB, 315 U S 100, 106 (1942) The test for de-
termining whether two companies should be treat-
ed as one includes such factors as interrelation of
business operations, common management, and
common ownership Leslie Oldsmobile, 276 NLRB
1314, 1315-1317 (1985) If an alter ego relationship
exists, a collective bargaining agreement signed by
one entity will bind its nonsignatory alter ego
Walter N Yoder & Sons, 270 NLRB 652 fn 2
(1984) Information concerning the existence of an
alter ego may, therefore, be relevant and useful to
the union in negotiating terms and conditions of
employment with the employer or administering
and enforcing the collective-bargaining agreement
To establish the relevancy of such information, the
union must, as stated above, show that it had a rea
sonable belief that enough facts existed to give rise
to a reasonable belief that one entity was the alter
ego of another
In this case, the Union asked to see the complete
sales agreement between the Respondent and
WMSI The information contained in the agree-
ment could give some indication of common own-
ership, financial control, common management, or
interrelation of business operation between the two
companies It, therefore, is a request for informa
tion concerning a possible alter ego relationship
The Union had objective facts to support its belief
that WMSI may have been an alter ego and that
WMSI's transportation of clean petroleum products
was unit work which was covered by the collec-
239
tive-bargaining agreement between the Respondent
and the Union Six months prior to the start of ne
gotiations, an arbitrator had ruled that the Re-
spondent had violated the same contract at issue
here by leasing a tug to a newly formed corpora
tion which operated the tug on a nonunion basis
The arbitrator found that the newly formed corpo
ration was controlled by the Respondent and that
the Respondent therefore violated the collective-
bargaining agreement by not applying the agree-
ment to the employees operating the tug This
recent incident formed a reasonable basis for the
Union to scrutinize other efforts by the Respondent
to divest itself of unit work such as the alleged sale
to WMSI That the manager of WMSI was the
former manager of the Respondent's barge division
and had hired some of the Respondent's former
barge employees provided additional objective
grounds for the Union to reasonably believe that
the Respondent's involvement with WMSI might
be unlawful and in violation of the collective-bar
gaining agreement In these circumstances, we find
that the Union has established the relevancy of the
sales agreement between the Respondent and
WMSI and that the Respondent violated Section
8(a)(5) and (1) of the Act by refusing to provide
the agreement 12
The dismissal of unfair labor practice charges al-
leging WMSI as an alter ego of the Respondent
does not require a different result The Regional
Director's action went to the merits of the charges,
i e, whether there was sufficient evidence to estab-
lish that the Respondent violated the Act by trans-
ferring unit work to a nonunion entity which was
an alter ego In cases involving information re
quests, however, the Board does not consider the
merits of a union's claims Instead, the Board acts
only on "the probability that the desired informa-
tion was relevant, and that it would be of use to
the union in carrying out its statutory duties and
responsibilities' Acme Industrial Co, 385 U S at
437
Finally, we find that the Respondent, in allowing
the Union to keep an excised copy of the requested
agreement but prohibiting its attorney from seeing
the original, has not sufficiently met its obligation
to provide information When a union has met the
standards of relevancy in requesting the production
of financial records, its right to review such
records has long been recognized NLRB v Truitt
i 2 Inasmuch as the Union has established the relevancy of the request
ed information to a determination of whether WMSI was an alter ego of
Knappton we find it unnecessary to decide whether the Union would
have been entitled to the information had its request been based solely on
a belief that the Respondent violated rule 9 of the collective bargaining
agreement which limits subcontracting
240 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Mfg Co , 351 U S 149 ( 1956), Metlox Mfg Co , 153
NLRB 1388 , 1394-1396 ( 1965), enfd 378 F 2d 728
(9th Cir 1967), cert denied 389 U S 1037 ( 1968) 13
Here , we find the Union had a similar right to
have its attorney review the original sales agree-
ment Some 20 percent of the agreement was ex
cised from the copy offered by the Respondent
The excised provisions included moneys paid and
method of payment-both matters of significance
in determining whether an arm's length transaction
occurred In this context , we find that by refusing
to allow the Union 's attorney to review the origi
nal and excised copy together the Respondent has
failed to meet its obligation to provide the request
ed information
Therefore, based on the above , we will order
Respondent , on request , to furnish the Union with
the information it seeks
CONCLUSIONS OF LAW
1 The Respondent, Knappton Maritime Corp, is
an employer engaged in commerce with the mean-
ing of Section 2(6) and (7) of the Act
2 The Union is a labor organization within the
meaning of Section 2(5) of the Act
3 By refusing to provide the requested informa-
tion to the Union on and after March 23, 1987, the
Respondent has violated Section 8(a)(5) and (1) of
the Act
REMEDY
Having found that the Respondent has violated
Section 8 (a)(5) and ( 1) of the Act We shall order
that it cease and desist therefrom and take certain
affirmative actions designed to effectuate the pur-
pose of the Act This affirmative action will in-
clude the furnishing of the requested information
on request and the posting of the usual notice
ORDER
The National Labor Relations Board orders that
the Respondent, Knappton Maritime Corp, Seattle,
Washington, its officers, agents, successors, and as
signs, shall
I Cease and desist from
(a) Refusing to bargain collectively with Inland
boatmen's Union of the Pacific, Marine Division,
International Longshoremen's and Warehousemen's
Union by refusing to furnish it with the informa-
tion it requested on and after March 23, 1987, con
cerning the sales agreement between WMSI and
the Respondent
is There is no contention that the request here sought confidential
business information
(b) In any like or related manner interfering
with, restraining, or coercing employees in the ex-
ercise of rights guaranteed by Section 7 of the Act
2 Take the following affirmative action neces-
sary to effectuate the policies of the Act
(a) On request, bargain collectively with the
Union by furnishing to it the information it request-
ed on and after March 23, 1987
(b) Post at its Seattle, Washington facility copies
of the attached notice marked `Appendix "14
Copies of the notice, on forms provided by the Re
gional Director for Region 19, after being signed
by the Respondent's authorized representative,
shall be posted by the Respondent immediately
upon receipt and maintained for 60 consecutive
days in conspicuous places including all places
where notices to employees are customarily posted
Reasonable steps shall be taken by the Respondent
to ensure that the notices are not altered, defaced,
or covered by any other material
(c) Notify the Regional Director in writing
within 20 days from the date of this Order what
steps Respondent has taken to comply
14 If this Order is enforced by a judgment of a United States court of
appeals the words in the notice reading Posted by Order of the Nation
al Labor Relations Board shall read Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the 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 Board has found
that we violated the National Labor Relations Act
and has ordered us to post and abide by this notice
WE WILL NOT refuse to bargain collectively with
Inlandboatmen's Union of the Pacific, Marine Divi
Sion , International Longshoremen's and Warehou
semen's Union, by refusing to furnish the Union
with information it requested on and after March
23, 1987, concerning the sales agreement between
Washington Marine Services, Inc and us
WE WILL NOT in any like or related manner
interfere with, restrain , or coerce you in the exer-
cise of the rights guaranteed you by Section 7 of
the Act
WE WILL, on request, furnish the Union the in
formation it requested on and after March 23, 1987
KNAPPTON MARITIME CORPORATION