Lexington Oil Corp.

National Labor Relations Board - Board Decisions

Mar 19, 1987

283 N.L.R.B. 293 (N.L.R.B. 1987)

AMERICAN STEEL WAREHOUSING
American Steel Warehousing, Inc., a subsidiary of
Lexington Oil Corporation i and United Steel-
workers of America, AFL-CIO-CLC. Case 14-
CA-18332
19 March 1987
DECISION AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
JOHANSEN AND BABSON
On 29 September 1986 Administrative Law
Judge Burton S. Kolko issued the attached deci-
sion. The General Counsel filed exceptions and a
supporting brief.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the decision and the
record in light of the exceptions and brief and has
decided to affirm the judge's rulings, fmdings,2 and
conclusions and to adopt the recommended Order
as modified, 3
ORDER
The National Labor Relations Board adopts the
recommended Order of, the administrative law
judge as modified below and orders that the Re-
spondent, American Steel Warehousing, Inc., a
subsidiary of Lexington Oil Corporation, Granite
City, Illinois, its officers, agents, successors , and as-
signs , shall take the action set forth in the Order as
modified.
1. Substitute the following for paragraph 2(b).
"(b) Offer in writing immediate employment,
without prejudice to any seniority or any other
rights and privileges, to each of the former em-
ployees of Steel Warehousing of Illinois who, had
been laid off in November 1985 for whom the Re-
spondent had vacancies after 27 January 1986 and
whom it could have ' employed but declined to
employ, if necessary replacing employees who had
not been employed by Steel Warehousing of Illi-
nois on 27 January 1986 but who were hired by the
Respondent after that date, such employment to be
offered for the classifications at the rates and under
the conditions pertaining to the replaced employ-
ees; and place on a preferential hiring list all re-
maining, former employees of Steel Warehousing of
I The Respondent's name appears as amended at the hearing.
2 No exceptions have been filed to the judge's finding that American
Steel Warehousing is a successor employer.
a The General Counsel excepted to the judge's recommended Order to
the extent that it limits the remedy to require the Respondent to replace
only those employees who had been hired by the Respondent "before I
June 1986" We agree that the remedy should not be so limited and have
modified the recommended Order and notice accordingly The General
Counsel also excepted to the lack of a "make-whole" paragraph in the
notice. We agree, and have so modified the notice
293
Illinois who would have been hired but for the
lack of available jobs."
2. Substitute the attached notice for that of the
administrative law judge.
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
the United Steelworkers of America, AF]L-CIO-
CLC as exclusive representative of the following
unit:
All production, maintenance, shipping and _ re-
ceiving employees employed at our Granite
City, Illinois facility, excluding office employ-
ees, plant clerical employees, guards, watch-
men, professional employees, foremen, assistant
foremen and all other supervisors as defined in
the Act.
WE WILL NOT discourage membership in the
Union or in any other labor organization by dis-
criminating against any employee or job applicant
regarding hire, tenure of employment, or condition
of employment.
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, bargain with the Union
with respect to rates of pay, wages, hours, and
other terms and conditions of employment and, if
an agreement is reached, embody such agreement
in a signed contract.
WE WILL offer employment to Steel Warehous-
ing of Illinois employees who were laid off in No-
vember 1985 for whom we had vacancies after 27
January 1986 and whom we could have employed
but declined to employ, if necessary replacing em-
ployees who had not been employed by Steel` War-
ehousing on 27 January 1986, but who were hired
by us after that date, such employment to be of-
fered for the classifications at the rates and under
the conditions pertaining to the replaced employ-
ees; and place on a preferential hiring list all re-
nnaining former employees of Steel Warehousing of
Illinois who would have been hired but for the
lack of available jobs.
283 NLRB No. 45
294 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
WE WILL make whole the employees of Steel
Warehousing of Illinois to whom we will offer em-
ployment as set forth above for any losses they
may have suffered from our discrimination against
them, plus interest.
AMERICAN STEEL WAREHOUSING,
INC.
Keltner W. Locke, Esq., for the General Counsel.
Rayford T. Blankership, Labor Consultant, of Green-
wood, Illinois, for Respondent.
DECISION
STATEMENT OF THE CASE
BURTON S. KoLKo, Administrative Law Judge. The
Lexington Oil Corporation purchased certain assets from
Steel Warehousing of Illinois, Limited, an Iowa corpora-
tion (SWI), and it purchased the land and buildings used
by SWI from the persons who owned SWI. Thereafter,
the purchaser operated as American Steel Warehousing,
Inc. (ASW), the nominal Respondent in this case.' From
1973 the Union that is the Charging Party in this case
had a collective-bargaining agreement with SWI, and
after American Steel Warehousing began operating the
Union requested recognition by ASW. In effect that re-
quest was denied, and the Union's charge followed.2 As
a result of that charge the General Counsel complains
that ASW as a successor to SWI violated Section 8(a)(5)
of the Act, 29 U.S.C. § 158(a)(5), by failing to recognize
and bargain with the Union. Also, the complaint alleges
that ASW discriminated against former SWI employees
by hiring others in their stead who did not belong to the
Union, thus violating Section 8(a)(3)., The Respondent
denies the allegations.
FINDINGS OF FACT
The Lexington Oil Corporation negotiated with SWI
to_ purchase SWI on 8 January 1986. Before the closing
the sellers discovered that the transaction would cause
them a tax liability that was unacceptable. The transac-
tion was postponed and restructured. SWI's land and
buildings were sold by Mr. and Mrs. Blumenthal, their
owners. The remainder of the sale consisted of SWI's in-
ventories of raw materials and supplies, work in
progress, finished materials, machinery, equipment, furni-
ture, cash, accounts receivable, customer lists, telephone
listings, trade secrets, etc., which were conveyed on 27
January 1986.
1 The buyer chose to effect the purchase through a wholly owned sub-
sidiary, Steel Warehousing of Illinois, Inc, an Illinois corporation, which
bore no relationship to the seller, SWI, Steel Warehousing of Illinois,
Limited, an Iowa corporation Having mentioned the name of the actual
purchasing entity, we shall forget about it as that entity has no further
use in this discussion
2 The charge was filed on 26 February 1986, was amended on 8 April
1986, and was followed by the complaint on 16 April 1986 The heanng
was held on 19 May 1986 in St Louis Briefs were received on 23 June
1986
The purchaser immediately began operating as ASW,
like SWI distributing steel products. It immediately sent
this letter to the customer list that was stored on the
computer that SWI had used.
American Steel Warehousing, Inc. has purchased
the steel inventory of Steel Warehousing of Illinois,
Ltd. located in Granite City, Illinois. It has also ac-
quired the land and buildings on Route 11 where
the operation is located.
The new organization is headed by John P. Stahl-
man formerly of Dallas, Texas. Mr. Stahlman is the
President and CEO while Pam DeShasier, a long-
time employee of Steel Warehousing, will serve as
corporate Secretary. Pam will also be in charge of
inside sales.
This company has had a long history in the steel in-
dustry, having begun in 1950 as American Sheet &
Strip Steel Corp. Mr. Stahlman has been in the steel
industry for fifteen (15) years. He has served as a
salesman as well as a service center owner. The
company is greatly expanding its bar stock and
sheet inventory and it will still continue to provide
shearing services.
You are invited to visit Pam and John via telephone
or in person. Please put American Steel Warehous-
ing, Inc. on your list to call for all your steel needs.
American Steel Warehousing, Inc.
P.O. Box 460
Granite City, IL 62040
On the day after the sale the Union's subdistrict direc-
tor, Morgan, heard of it and called ASW. The next
morning Morgan met with Carman and Stahlman, ASW
coowners. Morgan told them about the collective-bar-
gaining agreement between the Union and SWI, that in
his view the contract remained in effect because neither
party to the contract had sent the required advance ter-
mination notice, and that he was interested in continuing
to represent the employees at the facility.3,
Carman and Stahlman replied that they did not know
about the continued viability of the collective-bargaining
agreement, that they would have to consult counsel, and
that they would get back to Morgan. They never did.
After unsuccessful attempts to make contact Morgan fi-
nally reached Stahlman, who told him that "my General
Counsel 'told me not to talk to you anymore." So that
was the end of it.
Subsequently ASW hired two additional employees,
Daniel Van Scoyk on 24 March 1986 and Mark Knight
on 6 May 1986. Neither of these employees was among
the 17 bargaining unit employees that had been laid off
by SWI the previous fall. One of the unit employees,
indeed the Union's shop steward, was Thomas Cottrell.
He had regularly been'talking with Plant Manager Ogle
S Coincidently, the date of the sale also was the last day of the collec-
tive-bargaining agreement that had been made between SWI and the
Union on 28 January 1983. By its terms it remained in effect for one
more year, until 28 January 1987, since the required 60-day notice for ter-
mination or change had not been given by either party to the other
AMERICAN STEEL WAREHOUSING
even while laid off, as part of his steward responsibilities.
On the day after the sale Cottrell went to the plant and
talked with Ogle. Cottrell asked if the place had been
sold, and Ogle said yes. Then Ogle was asked by Cottrell
... if he was going to call any of us back now that
it had been sold . . . thinking that they would have
mbre business . And he said no. He said that they
were going to be non-union plant from then on. For
me to start looking for a job. They wasn't going to
bring any of us back.
As Supervisor Ogle was not called to testify, Cottrell's
credible testimony stands without contradiction.
Discussion
The "successor employer" issue has been summarized
by the United States Court of Appeals for the Ninth Cir-
cuit in Premium Foods v. NLRB, 709 F.2d 623, 627
(1983):
A new employer who conducts essentially the
same business as the former employer, and who
hires former employees of his predecessor as a ma-
jority of his work force is considered a successor
employer.... Where a union has been recognized
... as the representative of the employees of the
predecessor, and his successor hires a majority of
his workers from those employees, a presumption
arises that the successor's employees also support
the union. . . . The basic rationale is that a mere
change in ownership, without an essential change in
working conditions, would not be likely to change
employee attitudes toward representation. See
NLRB v. Burns International Security Services, Inc.,
406 U.S. 272, 278-279, 92 S.Ct. 1571, 1577, 32
L.lid. 2d 61 (1972).
A similar approach has been taken by the Court of Ap-
peals for the Seventh Circuit, see Zim's Foodliner v.
NLRB, 495 F.2d 1131 (7th Cir. 1974); by the Court of
Appeals for the Sixth Circuit, see Service Employees Local
47 v. Cleveland Tower, 606 F.2d 684 (1979); by the Court
of Appeals for the First Circuit, see NLRB v. Fall River
Dyeing, '775 F.2d 425 (1985); and by the Board, see Bay
Breeze Industries, 280 NLRB 1216 (1986).4 What we
must do to deal with the issue of successorship raised by
ASW's denial is to ascertain whether (1) ASW is a new
employer, (2) it conducts essentially the same business as
SWI at Granite City, Illinois, (3) it has hired former SWI
employees as a majority of its work force, and (4) the
Union had been recognized as the representative of
SWI's employees. Questions (1) and (4) having already
answered, we turn to the heart of the successorship issue.
The record is thin but sufficient to make the following
findings.
SWI had been in the business of distributing steel and
steel products. That is the business that ASW was pur-
chasing and undertaking. Evidence of this is its initial
letter to SWI's customers, dated 27 January 1986, in
4 See also cases cited in fn 7, infra.
295
which it apprised'SWJ's customers of the purchase and
its intention to expand "its bar stock and sheet inventory
and it will still continue to provide shearing services."
The expansion envisioned by ASW was in contrast to
the contraction of operations by SWI in its final months.
In November 1985, SWI's reduced sales caused it to lay
off most of its unit employees, leaving only the two,
Gass and Miller, that ASW started up with.5 As ASW
expanded its sales it added employee Van Scoyk 2
months later, in March, and employee Knight 2 months
after that.
But, while expanding its customer base, ASW was still
relying on the former SWI customers as the mainstay of
its sales. Its initial revenues were totally from SWI's cus-
tomers, as it purchased SWI's accounts receivable for
sales that transpired after 1 January 1986, 4 weeks before
ASW began its own operation. Thereafter, ASW added
new customers so that by the end of February 1986 the
49 customers inherited from SWI were expanded to 103.
But as the General Counsel's brief shows, relying on the
sales figures in General Counsel's Exhibits ,9 and 12, out
of ASW's revenues of $180,858 for its first month of op-
erations, $101,801 came , from SWI's former customers,
56 percent.
This is almost all the data that we have, but it is
enough for our purposes, as the Union's demand for rec-
ognition was immediate. ASW does not argue that its
first month of operations is unrepresentative, nor does it
challenge the fact that in the first month, when the
Union made its demand, the employees of ASW were
working at the same plant and were using the same
equipment as they had, at the predecessor SWI.
ASW claims that it is a different operation from SWI.
Its evidence to support this consists solely of the testimo-
ny of its president, Stahlman:
Q. Can you tell the Court in what respect-since
you were-you have testified that you were present
at the facility for a couple of weeks before the
change in ownership,'Can you tell the Court please
in what respects the services provided changed
since the change in ownership?
A. Well, in many respects. The inventory at the
facility was way down because of the economic
conditions that Mr. O'Brien spoke about and we
have added-well we have doubled the inventory.
So we have many more services just due to the fact
that we have the inventory in stock. So we can
supply the customers. I don't know if it is the right
time to say the dollar figures, but my understanding
is that the people that were there before the De-
cember of 1985, that their gross sales were approxi-
mately $60,000 and in April of this year our's were
approximately $300,000. So the major difference is
in the,-is in the amount of inventory there and we
now carry more products. We carry stainless prod-
5 Also kept on the payroll were salarwd employees De Shashier, SWI's
sole salesperson , and Ogle, SWI's warehouse manager . In fact, I cannot
find from the record that ASW failed to take on any working ISWI em-
ployees
296 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ucts, aluminum products. I believe Steel Warehous-
ing is limited to carbon products only.
Q. So in other words there are more types of
metal that are sheared and distributed?
A. Well we do other things. We do other proc-
essing work also.
Q. When did you add the new processing?
A. When I got there.
Q. Before or after the change in ownership?
A. After.
Q. And how long after?
A. Immediately.
Q. What does the new processing consist of?
A. We do a great deal of slitting of coil and then
we also do leveling, but I believe they did that
before.
So the major differences are that ASW has-a larger in-
ventory of products from SWI and does slitting of coil.
These do not change the employees' working conditions
sufficiently to infer that their "attitudes toward represen-
tation" would be changed. Premium Foods, supra, 709
F.2d. at 627.
What would indicate such a change in employee atti-
tudes toward representation would be a change in the
structure of the bargaining unit, and this is the argument
that ASW presses the hardest.
What ASW argues, in effect , is that having started out
in January with a work force of two employees, both of
whom were former SWI unit members , by May it had
added three who were not former SWI unit members,
thereby destroying the basis for presuming the majority
status of the Union.6
The legal question thus posed is when did ASW have
a representative complement of employees-when it
started rebuilding from SWI 's deteriorated base in Janu-
ary or when it had reached its full complement of em-
ployees in May.
The court in Fall River Dyeing, supra, 775 F.2d at 431,
summarized this test in these words:
In determining whether a representative comple-
ment existed at a given date, the Board first looks to
see whether the job classifications for the operation
were "filled or substantially filled" and whether the
operation was in "normal or substantially normal
production." The Board also considers the size of
the complement on that date, the time expected to
elapse before a substantially larger complement
would be hired, and the relative certainty of the ex-
pected expansion.
I find that ASW's bargaining obligation arose on 29
January 1986, Which is (1) the date that the Union
through Morgan made its demand on ASW, (2) the day
after ASW began its operations, and (3) 2 days after the
transfer. See Fall River Dyeing, supra, and NLRB v.
Hudson River Aggregates, 639 F.2d 865, 870 (2d Cir.
6 There were two new hires, Van Scoyk and Knight, and the elinuna-
tion of the truckdriving classification freed up former SWI employee
North, who as a truckdriver for SWI was not in the bargaining unit, to
do production work for ASW.
1981). On that date ASW employed three of the five
production employees it would be using by the time of
the hearing, and two of those three were from the SWI
unit represented by the Union-a clear majority. While
sales would continue to rise, presumably the reason for
the two later hires, the two former SWI employees,
Miller and Gass, represented the two classifications of
employees in the bargaining unit (Miller was a shear
operator/laborer, and Gass was a laborer or "shear
helper"). The third employee, North, had been a truck-
driver for SWI, and outside the unit. At ASW, North
Miller, and Gass-performed all duties, but I do not find
that the change in job classifications materially bears on
this case since the tasks performed did not change. The
essential structure of ASW's operations was set with the
initial hire of these three workers.
Finally, we come to Stahlman's testimony that 2 weeks
after the sale Gass told him that he did not want the
Union. I am not persuaded that this helps ASW's case.
First, Gass' statement and any doubt it caused ASW that
the Union no longer represented a majority of its former
SWI employees came after ASW's bargaining obligation
arose, too late for ASW to rely on. Fall River Dyeing,
supra, 775 F.2d at 433-434. Secondly, as I have no
reason to doubt Stahlman's credibility, that hearsay alone
is not "substantial evidence sufficient to support a finding
for the company." TRW-United Greenfield Division v.
NLRB, 716 F.2d 1391 (11th Cir. 1983). I reject any claim
of good-faith doubt about ASW's bargaining obligation.
In fact, not only was there no doubt, there was no
good faith. Plant Manager Ogle told Union Steward Cot-
trell on the day after the sale that "they were going to
be [a] non-union plant from then on." Clearly an antiun-
ion modus operandi had been established long before
Stahlman heard from Gass, and explains why when the
two new employees were later hired they were not from
the pool of laid-off SWI unit members. The lame excuse
that Cottrell was not hired because he -was a workers-
compensation risk has no support, and does not explain
why none of the other 17 laid-off bargaining unit mem-
bers was hired. Ogle's admission does explain it, and es-
tablishes a violation of Section ' 8(a)(3).' Peng Teng, 278
NLRB 350 (1986).
In sum, there is no good-faith doubt advanced by
ASW why the Union no longer represents these employ-
ees, and there is insufficient difference between SWI and
ASW7 to overcome the ,presumption that "the employ-
ees' desires concerning unionization" are unchanged.8 I
conclude that the Union, which has represented employ-
ees at this facility since 1973, is to be recognized as the
ongoing -representative.
7 In other words, the plant's "operations, as they impinge on union
members, remain essentially the same after the transfer of ownership "
Electrical Workers IUE v NLRB, 604 F 2d 689, 694 (D.C Cir. 1979). See
NLRB v. Hudson River Aggregates, 639 F.2d 865, 869 (2d Cu. 1981)
8 Ranch-Way, Inc., 183 NLRB 1168, 1169 (1970)
AMERICAN STEEL WAREHOUSING 297
CONCLUSIONS OF LAW
1. The Respondent, American Steel Warehousing, Inc,,
is an employer within meaning of Section 2(6) and (7) of
the Act.9
2. The Union, United Steelworkers of America, AFL-
CIO-CLC, constitutes a labor organization within the
meaning of Section 2(5) of the Act.
3. The following employees constitute a unit that is ap-
propriate for collective bargaining within the meaning of
Section 9(b) of the Act:
All production, maintenance, shipping and receiving
employees employed by Respondent at its Granite
City, Illinois facility excluding office employees,
plant clerical employees , guards, watchmen, profes-
sional employees , foremen, assistant foremen and all
other supervisors as defined in the Act.
4, United Steelworkers of America , AFL-CIO-CLC
has been and is the exclusive representative of all em-
ployees in the above-described appropriate, unit for pur-
poses of collective bargaining within the meaning of Sec-
tion 9(a) of the Act.
5. By failing and refusing to recognize and bargain col-
lectively with the Union as the exclusive representative
of all of Respondent 's employees in the appropriate unit,
Respondent has engaged in and is engaging in unfair
labor practices within the meaning of Sections 8(a)(5)
and 8(a)(1) of the Act.
6. By discriminatorily refusing to hire laid-off members
of the Union Respondent has engaged in unfair labor
practices within the meaning of Sections 8(a)(3) and
8(a)(1) of the Act.
7. Respondent 's unfair labor practices affect commerce
within the meaning of Section 2(6) and (7) of the Act.
On these findings of fact and conclusions of law and
on the entire record , I issue the following recommend-
ed'°
ORDER
The Respondent, American Steel Warehousing, Inc.,
Granite City, Illinois, its officers, agents, successors, and
assigns, shall
1. Cease and desist from
(a) Refusing to bargain collectively with the United
Steelworkers of America , AFL-CIO-CLC as exclusive
representative of the following unit:
All production, maintenance , shipping and receiving
employees employed by Respondent at its Granite
9 During the calendar year ending December 31, 1985, Respondent
sold and shipped products valued in excess of $50,000 from its Granite
City, Illinois facility directly to places that are outside the State of Illi-
nois.
1° If no exceptions are filed as provided by Sec 102.46 of the Board's
Rules and Regulations , the findings , conclusions, and recommended
Order shall, as provided in Sec . 102.48 of the Rules, be adopted by the
Board and all'objections to them shall be deemed waived for all pur-
poses.
City, Illinois, facility excluding office employees,
plant clerical employees, guards, watchmen, profes-
sional employees, foremen, assistant foremen and all
other supervisors as defined in the Act.
(b) Refusing to hire employees because they had or
were believed to have joined, supported, or assisted the
Union.
(c) In any like or related manner interfering with, re-
straining , or coercing its employees in the exercise of
their rights under Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) On request, bargain with the Union with respect to
rates of pay, wages, hours, and other terms and condi-
tions of employment, and if an agreement is reached,
embody it in a signed contract.
(b) Offer in writing immediate employment to each of
the employees of SWI who had been laid off in Novem-
ber 1985 for whom Respondent had vacancies between
27 January through' 31 May 1986 and whom it could
have employed but declined to employ for discriminato-
ry reasons, if necessary replacing employees who had
not been employed by SWI on 27 January 1986 but who
were hired by Respondent after that date and before 1
June 1986, such employment to be offered for the classi-
fications, at the rates, and under the conditions pertaining
to the replaced employees.
(c) Make whole the employees offered employment
under subparagraph (b), above, for any loss they may
have suffered from the discrimination against them by
paying to each money that he would have been paid in
Respondent's employ from the putative date of hire to
the actual date of hire, less their respective net earnings
elsewhere during this period, computed as in F. W.
Woolworth Co., 90 NLRB 289 (1950), with interest as
stated in Isis Plumbing Co., 138 NLRB 716 (1962).
(d) Mail to the SWI employees laid off in November
1985, and post at its Granite City, Illinois plant copies' of
the attached notice marked "Appendix.""" Copies of the
notice, on forms provided by the Regional Director for
Region 14, after being signed by the Respondent's au-
thorized representative, shall be posted by the Respond-
ent immediately upon receipt and maintained for 60 con-
secutive days in conspicuous places including all places
where notices to employees ,are customarily posted. Rea-
sonable steps shall be taken by the Respondent to ensure
that the notices are not altered, defaced, or,covered by
any other material.
(e) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
11 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."