Mcallister Brothers Inc. And Outreach Marine Corp., Alter Egos

National Labor Relations Board - Board Decisions

Feb 18, 1986

278 N.L.R.B. 601 (N.L.R.B. 1986)

MCALLISTER BROS. 601
McAllister Brothers Inc. and Outreach Marine Cor-
poration , Alter Egos and Seafarers Internation-
al Union of North America, Atlantic, Gulf,
Lakes and Inland Waters District; Seafarers
International Union of North America, AFL-
CIO. Case 5-CA-16495 '
18 February 1986
DECISION AND ORDER
By CHAIRMAN DOTSON AND MEMBERS
JOHANSEN AND BABSON
On 22 April 1985 Administrative Law Judge
Marvin Roth issued the attached decision . All par-
ties filed exceptions and supporting ' briefs. Re-
spondent Outreach Marine Corporation , the Gener-
al Counsel , and the Charging Party also filed an-
swering briefs.
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 briefs 1 and
has decided to affirm the judge 's rulings, findings,2
1 The Respondents have requested oral argument The requests are
denied as the record, exceptions, and briefs adequately present the issues
and the positions of the parties
Respondent Outreach Marine has also filed a motion to reopen the
record for newly discovered evidence That motion is denied as the evi-
dence proffered by Outreach, even if adduced and credited, would not
require a different result in this case See Sec. 102.48(d) of the Board's
Rules and Regulations
8 The Respondents have excepted to some of the judge's credibility
findings The Board's established policy is not to overrule an administra-
tive law judge's credibility resolutions unless the clear preponderance of
all the relevant evidence convinces us that they are incorrect Standard
Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Cir
1951) We have carefully examined the record and find no basis for re-
versing the findings
The judge states in fn 3 of his decision that the Board has historically
taken a dim view of personnel who tape-record meetings with their em-
ployer, citing Swinick (W T Grant Co.) v NLRB, 528 F.2d 796 fn. 13
(3d Cir 1975) We do not adopt the judge's comments in this regard, be-
cause the Board has sometimes found tape recordings of employee meet-
ings to be the best evidence of what was said See, e.g., Algreco Sports-
wear Co, 271 NLRB 499, 505 (1984); East Belden Corp, 239 NLRB 776,
782 (1978) In this case, Anthony McAllister himself suggested that the
tape recording of a meeting about which- he was testifying be played in
order to ascertain exactly what he had said, and the parties stipulated to
the authenticity of that portion of the tape introduced into the record
The judge found that the loan transaction, in which McAllister sold its
four tugboats to Outreach but remained liable to the National Westmins-
ter Bank-for the repayment of a $1 4 million loan to Outreach secured by
a first preferred fleet mortgage on the vessels, was nothing but a paper-
shuffling device, that for all practical purposes Westminster substituted
one mortgage guaranteed by McAllister for another mortgage guaranteed
by McAllister We agree The judge, however, further found that West-
minister actually loaned nothing and McAllister received nothing, at least
not from the transaction Whether viewed as a part of this' transaction or
as a separate transaction, we note that, simultaneous with the loan to
Outreach, Westminster required that McAllister substitute other collater-
al obtained from the proceeds of that loan to secure a separate loan, or
letter of credit agreement, to a McAllister subsidiary company which had
previously been secured by a mortgage on the tugboats. Thus, Westminis-
ter Bank may have loaned additional money as the overall result of these
related transactions. The fact remains, however, that before the transac-
tion McAllister was liable for $1.4 million secured by the tugboats and
and conclusions3 as modified and to adopt the rec-
ommended Order.
The judge properly found McAllister and Out-
reach to be alter egos and a single employer.4 Thus
he concluded, and we agree, that the Respondents
violated Section 8(a)(5) and (1) of the Act by fail-
ing to abide by the terms and conditions of em-
ployment established by the collective-bargaining
contracts between McAllister and the Union. In
setting forth his Conclusions of Law, however, the
judge found as the appropriate bargaining units the
units unlawfully altered by Respondent Outreach
rather than the units described in the contracts. We
disagree with that finding, and find instead that the
appropriate units should be those set forth in
McAllister's contracts with the Union. Therefore,
we shall amend the judge's Conclusions of Law.
Amended Conclusions of Law
Substitute the following for Conclusion of Law
3.-
"3. The following units constitute units appropri-
ate for the purposes of collective bargaining within
the meaning of Section 9(b) of the Act:
Unit I
All tugboat Captains , Mates and Engineers
employed by Respondents in connection
with towing in and from the Baltimore
Harbor, including inland waters.
Unit II
All unlicensed tugboat personnel employed
by Respondents in connection with towing
in and from the Baltimore Harbor, including
inland waters."
after the transaction McAllister remained liable for $1 4 million secured
by the tugboats.
The judge at one point in his decision states that McAllister deliberate-
ly concealed the existence of Outreach, and steadfastly represented to the
public and its customers that McAllister was continuing to provide tug-
boat services in Baltimore Harbor throughout 1983, whereas it is appar-
ent from the record and other parts of his decision that the judge meant
throughout 1984.
8 In adopting the judge's conclusion that McAllister's captains are em-
ployees within the meaning of Sec 2(3) of the Act, we note that over 90
percent of McAllister's work was performed within Baltimore Harbor
where the captains maintain constant radio contact with McAllister's
shore-based supervisors
We do not find the record evidence sufficient to establish whether or,
not Mark Garayoa continued to be a McAllister employee as of 13 April`
1984 Accordingly, we do not adopt the judge's conclusion that Garayoa
was not an employee of McAllister on the relevant date, but shall defer
the issue of Garayoa's status to the compliance stage of this proceeding.
4 Since we agree with the judge's conclusion that McAllister and Out-
reach are alter egos, we find it unnecessary to pass on his alternative
finding that Outreach would be McAllister's successor if it were not its
alter ego, or on issues related to that finding.
278 NLRB No. 91
602 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge and orders that the Respondents , McAllister
Brothers , Inc. and Outreach Marine Corporation,
alter egos, Baltimore, Maryland, their officers,
agents , successors , and assigns , shall take the action
set forth in the Order, except that the attached
notice is substituted 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 discourage membership in Seafar-
ers International Union of North America, Atlan-
tic, Gulf, Lakes and Inland Waters District ; Seafar-
ers International Union of North America, AFL-
CIO (SIU), or any other labor organization , by dis-
charging employees in order to avoid our collec-
tive-bargaining obligations , failing or refusing to re-
instate or recall employees to work in accordance
with their contractual seniority rights , failing to
maintain terms and conditions of employment as
provided in our collective-bargaining contracts, or
in any other manner discriminating against you
with regard to your hire or tenure of employment
or any term or condition of employment.
WE WILL NOT fail or refuse to recognize and
bargain collectively and in good faith with SIU as
the exclusive representative of our employees in
the following appropriate units:
Unit I
All tugboat Captains, Mates and Engineers
employed by us in connection with towing in
and from the Baltimore Harbor, including
inland waters.
Unit II
All unlicensed tugboat personnel employed by
us in connection with towing in and from the
Baltimore Harbor, including inland waters.
WE WILL NOT fail or refuse to honor collective-
bargaining agreements applicable to the unit em-
ployees.
WE WILL NOT unilaterally change the wages,
hours, and other terms and conditions of employ-
ment of the unit employees without prior notice to
SIU and without affording SIU an opportunity to
meet and bargain concerning such matters as such
representative, or bypass SIU and deal directly
with unit employees concerning changes in wages
or other terms and conditions of employment.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce you in the exer-
cise of your right to engage in union or concerted
activities, or to refrain therefrom.
WE WILL offer Ralph Kirchner , Charles Rogers,
Louis Canavino, Jerome Lukowski, Leon Mach
Sr., Peter Messina, Alvin Hirsch, Manuel Alvarez,
Joseph Zorbach Jr., Joseph Rakowski, Paul Puslos-
kie, Robert Machlinski , Ronald Neibert, and
Robert Henninger immediate and full reinstatement
to their former jobs or if, for lawful reasons, such
jobs no longer exist, to substantially equivalent po-
sitions, without prejudice to their seniority or other
rights, privileges , and benefits previously enjoyed.
WE WILL offer Steven Hardin, Charles Dougher-
ty, Robert Schwatka, James Perry, George Le-
maire, William Miller, William Bobac, Karl Dla-
bich, Raymond Kuta, Steve August , Larry Neibert,
and Norman Gifford employment in accordance
with their seniority rights, without prejudice to
their seniority or other rights , privileges, and bene-
fits previously enjoyed, displacing , if necessary,
employees hired by us with less or no seniority
rights.
WE WILL make whole the above-pamed employ-
ees for losses they suffered by reason of our unlaw-
ful failure and refusal to employ them in accord-
ance with their seniority and other rights under the
SIU contracts , including loss of docking pilot fees,
all with interest.
WE WILL make whole former McAllister em-
ployees employed at Outreach Marine Corporation
for the difference between the contract terms and
what they were actually paid, to the extent that
they had sufficient seniority to be employed if the
seniority provisions of the McAllister contracts had
been followed, with interest.
WE WILL maintain and give full effect to the col-
lective-bargaining contracts covering the unit em-
ployees which were effective by their terms
through September 30, 1984, and from year ' to year
thereafter until terminated upon proper notice,
unless and until we and SIU negotiate a new agree-
ment or agreements or we bargain in good faith to
an impasse in accordance with the Act; including
but not limited to the following:
Paying wages and overtime pay and main-
taining crew sizes as required by the contracts.
Making the contractually established pay-
ments to the various trust funds established by
MCALLISTER BROS. 603
the contracts on behalf of all employees who
were entitled to employment.
Reimbursing those employees for any ex-
penses ensuing from our failure to make such
contributions, specifically: any medical or
dental bills they have paid to health care pro-
viders that the contractual policies would have
covered; any premiums they may have paid to
third party insurance companies to continue
medical and dental coverage in the absence of
our required contributions; and contributions
they may have made for the maintenance of
the contractual trust funds after we unlawfully
discontinued or failed to make contributions to
those funds, all with interest, and
Reimbursing SIU for any loss of dues
caused by our failure to deduct dues pursuant
to checkoff authorizations and remitting same
to SIU as required by contract, with interest.
MCALLISTER BROTHERS INC. AND
OUTREACH MARINE CORPORATION,
ALTER EGOS
Mark Carissimi, Esq., for the General Counsel.
Henry P. Baer, Esq., of New York, New York, for Re-
spondent McAllister Brothers, Inc.
Jerald J. Oppel, Esq., and Roeann Nichols, Esq., of Balti-
more , Maryland, for Respondent Outreach Marine
Corporation.
James M. Altman, Esq., of New York, New York, for the
Charging Party.
DECISION
STATEMENT OF THE CASE
MARVIN ROTH, Administrative Law Judge. This case
was heard at Baltimore, Maryland, on November 8, 9,
14, 15, and 16, 1984.11 The charge was filed by Seafarers
International Union of North America, Atlantic, Gulf,
Lakes and Inland Waters District; Seafarers International
Union of North America, AFL-CIO (the Union) on
June 25. The complaint, which issued on August 15 and
was amended on August 31, September 12, and October
2 and at the hearing, alleges that McAllister Brothers,
Inc. and Outreach Marine Corporation (respectively
McAllister and Outreach and collectively Respondents)
are alter egos and a single employer within the meaning
of the National Labor Relations Act or, in the alterna-
tive, that Outreach is a successor to McAllister, and Re-
spondents' have violated and are violating Section 8(a)(1),
(3), and (5) of the Act. The gravamen of the complaint is
that Respondents unlawfully withdrew recognition of the
Union as bargaining representative of their employees in
two appropriate units, bypassed the Union and dealt di-
rectly with their employees, unilaterally reduced employ-
ees' wages, crew sizes , vacation benefits, eliminated over-
i All dates herein are for the period from September 1, 1983, through
August 30, 1984, unless otherwise indicated
time pay, and failed to recall employees in accordance
with seniority, all in violation of McAllister's contracts
with the Union and refused to abide by those contracts,
that Outreach refused to recognize and bargain with the
Union as the representative of its employees in the ap-
propriate unit, and that McAllister discriminatorily re-
fused to rehire 27 of those employeees. Respondents' by
their respective answers deny the commission of the al-
leged unfair labor practices.
All parties were afforded full opportunity to partici-
pate, to present relevant evidence, to examine and cross-
examine witnesses, to argue orally, and to file briefs. On
the entire record in this case,2 Sand from my observation
of the demeanor of the witnesses and having considered
the briefs submitted by the parties, I make the following
FINDINGS OF FACT
1. THE BUSINESS OF RESPONDENTS
McAllister, a ,Maryland corporation with an office lo-
cated in Baltimore, Maryland, was engaged at least until
April 13, 1984, in the provision of tugboat services in the
Baltimore Harbor and surrounding area. In the course of
its business McAllister annually performs services valued
in excess of $50,000 directly to customers located outside
of Maryland. Since April 14, 1984, Outreach, a Maryland
corporation with its principal office located in Baltimore,
has been engaged in the provision of tugboat services in
the Baltimore Habor and surrounding area. During the
first year of its operations, Outreach performed services
valued in excess of $50,000 to customers engaged in
commerce. Without reaching the question of their rela-
tionship to each other, I find as admitted by the respec-
tive Respondents that McAllister and Outreach are em-
ployers engaged in commerce within the meaning of
Section 2(6) and (7) of the Act, and that it would effec-
tuate the purposes of the Act for the Board to assert its
jurisdiction in this case.
II. THE LABOR ORGANIZATION AND BARGAINING
UNITS INVOLVED
The Union is a labor organization within the meaning
of Section 2(5) of the Act. It is undisputed that from Jan-
uary 1980, until April 14, 1984, the Union was the recog-
nized exclusive collective-bargaining representative of
McAllister's tugboat personnel in the following units:
Unit I
All tugboat Captains, Mates and Engineers em-
ployed by McAllister in connection with towing in
and from the Baltimore Harbor, including inland
waters.
2 Certain errors in the official transcript of proceedings is noted and
corrected, two of which (Tr. 679 and 725) affect the substance of evi-
dence. Respondent Outreach has requested that I make the correction at
p. 725 of the record (Br fn - 7). In the context of Mart's testimony, the
correction is warranted. My notes are also consistent with the proposed
correction With regard to my correction, Tr 679, my notes indicate that
the parties stipulated that the first five persons on G C. Exh 29 did not
work for McAllister in 1983 or 1984. They do not appear on McAllister's
seniority lists. It is evident that the period on L. 3 was misplaced. '
604 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Unit II
All unlicensed tugboat personnel employed by
McAllister in connection with towing in and from
the Baltimore Harbor, including inland waters.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background
1. The operations of McAllister prior to April 14,
1984
McAllister is a wholly owned subsidiary of McAllister
Towing and Transportation Company, Inc. (McAllister
Transportation) a long-established firm which has been
engaged, directly or through its corporate subsidiaries, in
various business operations in or related to the maritime
industry, including the operation of tugboats. Anthony
McAllister , Brian McAllister, and William Kallop are the
sole shareholders of McAllister Transportation. McAllis-
ter Transportation's principal competitor is Moran
Towing and Transportation (Moran), also an old estab-
lished firm, which operates tugboats in Baltimore Harbor
through its corporate subsidiary, Curtis Bay Towing.
Moran operates tugboats in four major ports of Eastern
United States: New York, Philadelphia, Baltimore, and
Norfolk. Prior to 1960 McAllister Transportation operat-
ed in only three of these ports: New York, Philadelphia,
and Norfolk. This fact placed McAllister Transportation
at a competitive disadvantage, because its customers
(shipowners and their agents) preferred to have a single
towing contract which would cover all four ports.
Therefore, in 1960 McAllister Transportation negotiated
an arrangement with Baker-Whitely Towing Company
(Baker-Whitely), which operated tugboats in Baltimore
Harbor, whereby McAllister Transportation referred its
Baltimore business to Baker-Whitely and Baker-Whitely
referred other business to McAllister firms. Since 1957
Baker-Whitely's tugboat personnel were represented by
the Union and covered by a series of contracts covering
the licensed and unlicensed personnel. McAllister's tug-
boat personnel in New York, Philadelphia, and Norfolk
were and still are also represented by the Union.
2. McAllister's economic problems, and its efforts to
solve those problems within the framework of its
existing collective-bargaining contracts
In 1979 Baker-Whitely decided to sell its Baltimore
operation. In January 1980, McAllister reluctantly pur-
chased the business in order to protect its competitive
position vis-a-vis Moran, and thereupon directly engaged
in the business of operating tugboats in Baltimore
Harbor. McAllister substantially retained Baker-White-
ly's personnel complement (with subsequent changes at
the executive level), recognized the Union as bargaining
representative, voluntarily assumed Baker-Whitely's col-
lective-bargaining contracts, and in 1981 negotiated and
executed new contracts with the Union covering the li-
censed and unlicensed units respectively, effective by
their terms from October 1, 1981, through September 30,
1984. McAllister conducted the negotiations jointly with
Curtis Bay Towing (similar joint negotiations were con-
ducted with Moran or its subsidiaries in other ports).
The resulting contracts in Baltimore were similar and
substantially equal with regard to economic matters, al-
though they differed in some respects. When McAllister
commenced its Baltimore operation, Curtis Bay Towing
controlled about 80 percent of the tugboat business in
Baltimore Harbor, and McAllister assumed the remaining
20 percent which had been performed by Baker-Whitely
(substantially for McAllister's customers). McAllister
hoped to increase its share of the Harbor business to 45
percent, but this hope proved to be overly optimistic.
McAllister increased its share to 30 percent, but was
unable to progress beyond that point. McAllister never
seriously expected Baltimore to be a profitable operation.
Rather, as indicated McAllister sought to maintain a
presence in Baltimore , breaking even or sustaining a tol-
erable loss, in order to offer 4-port service to its custom-
ers and thereby generally advance the business interests
of McAllister Transportation and its subsidiaries. How-
ever, in 1981 McAllister lost $250,000 from its Baltimore
operation and its losses increased in 1982 and 1983. By
the fall of 1983 McAllister projected an annual loss of
$750,000. In the meantime McAllister embarked on a
threefold effort to reduce its annual deficit to a tolerable
level of $250,000 or less. McAllister sought to attain this
goal by (1) cutting expenses, (2) increasing revenue, and
(3) increasing rates . McAllister Transportation and its
subsidiaries, including McAllister, economized by freez-
ing wages and salaries not governed by union contract,
reducing its office staff and otherwise reducing office ex-
penses, and refraining from hiring new nonessential per-
sonnel. However, McAllister was limited in the extent to
which it could economize by laying off or limiting utili-
zation of unit personnel , because crew sizes and working
hours (including a guaranteed workweek) were governed
by the union contracts. Consequently McAllister could
not economize in this manner without reducing its oper-
ations, which would be self-defeating. McAllister' s Balti-
more operation substantially consisted of the docking
and undocking of ships. McAllister considered expanding
its operations into other work, such as towing of barges,
but concluded that its costs and expense structure pre-
cluded any possibility that it could successfully compete
for such work. Labor costs accounted for about 5 per-
cent of those costs. As Anthony McAllister admitted in
his testimony, the tugboat business is "labor intensive."
Other possibilities such as dredging or salvage work pro-
vided few opportunities. McAllister made a strong sales
effort, but was unable to increase the volume of its dock-
ing and undocking work to a desirable level. As for in-
creasing rates, McAllister's one effort in this direction
proved nearly disastrous . Curtis Bay Towing, as the big
operator in Baltimore, normally set the pattern for
towing rates . Prior to October 1 of each year, i.e., with
the effective date of new labor contracs or annual wage
increases under the contracts, Curtis Bay Towing would
publish its tariff, i.e., schedule of rates and terms for the
Port of Baltimore. McAllister then published its tariff,
which normally approximated the rates offered by Curtis
Bay. In 1983 McAllister attempted to set the pattern. On
August 29 McAllister published a tariff which utilized a
MCALLISTER BROS. 605
net tonnage rate rather than the "surcharge rate" previ-
ously used, and which would have substantially in-
creased the charges to McAllister 's customers . McAllis-
ter explained to its customers that this increase was pri-
marily needed to cover the cost of wage and fringe bene-
fits in the third year ' of its labor contracts . Curtis Bay
failed to follow suit . Because of its larger volume of busi-
ness, Curtis Bay was in a better position than McAllister
to absorb the costs of its labor contracts . Curtis Bay pub-
lished a tariff which increased rates by only 6 percent.
Confronted with the spectre of losing its customers,
McAllister rescinded its prior action and published a re-
vised tariff which approximated that of Curtis Bay.
B. McAllister 's Efforts to Obtain Relief From the
Union and the Unit Employees
In August 1983 Company President Anthony McAllis-
ter and Vice President Donald Stephens , who was gener-
al manager for Philadelphia and Baltimore , met with
Union Official John Fay for the purpose of fording a
"joint solution to the financial problem in Baltimore."
Fay suggested that they meet with unit personnel. On
October 3 McAllister conducted a meeting of all unit
personnel , whether active or on layoff status. McAllister
presented an explanation of his Company 's financial
problem and its unsuccessful efforts to deal with that
problem . McAllister distributed a written proposal which
provided for a 15-percent wage reduction and waiver of
scheduled wage increases , subject to reimbursement and
a bonus if and to the extent the Company made a profit
by July 31, 1984 , and certain changes in work rules.
After some argument McAllister told the employees to
forget about the work rule changes and just consider the
wage concessions . McAllister proposed that the Union
could examine the Company 's books . He asserted: "I
know where to attack the problem . I know where to go
for assistance , and that's why I'm here today ."3 McAllis-
ter added that the Company needed "relief" in the area
of wages, and could not afford to pay as much as Curtis
Bay Towing . In McAllister's words:
Curtis Bay has been hit harder than we have, but
that's probably just due to traffic. But if they are
getting down to a level where they are probably-I
mean they are doing 2000 ships a year versus our
900. When you have that disparity, there is no way
we can pay our rates and your rates to us are 50-
percent of our costs-it is actually 52 point some-
thing . There is just no way that we can sustain that,
in the long run , unless there is something happening
in the port that we are totally unaware of.4
The Union's accountants subsequently examined
McAllister 's books, and certified that the figures were
compiled in a proper manner. On October 17 McAllister
again met with employees , at which time the employees
were given an opportunity to ask questions , McAllister
subsequently learned that the employees would not agree
to the October 3 proposal, but instead intended to pro-
pose to make a loan to the Company. On November 21
General Manager , Stephens , acting as a spokesman for
McAllister , met with the employees . Stephens rejected
the loan proposal , saying that it would be like "prolong-
ing the agony ." Instead the Company proposed an em-
ployee stock option plan whereby the employees would
purchase the Baltimore operation . Specifically, the Com-
pany proposed to sell the tugboats which it contemplated
would be used in the Baltimore operation (America, Brit-
tania , Holland, and Resolute) for their aggregate market
value of $1 .9 million, that McAllister would act as sales
representative for the employees , who would pay a fee
for its services, and McAllister would use its best efforts
to retain a $3-million annual volume of business. As will
be discussed , McAllister's proposal was substantially
similar to the transaction which McAllister eventually
made , with Outreach , although the employees were of-
fered slightly more favorable terms.5 Stephens told the
employees that the Company needed an answer by Janu-
ary 15, and that if the employees did not buy , the Com-
pany would look for another buyer.
The next and final meeting between the Company and
its "tugboat personnel took place on January 16 . In the in-
terim the Company learned that the employees could not
agree on buying the business . Stephens, acting as Compa-
ny spokesman, told the employees that McAllister
wanted to remain in business in Baltimore, but was still
operating at a deficit, and therefore would go into the
market and make the same offer as McAllister had made
to the employees. Stephens added that if the Company
found a purchaser , he would talk to the employees. In
fact, as Stephens knew, McAllister had already found a
purchaser.
C. McAllister's Negotiations with Alcide Mann, and
the Sale of Tugboats to Outreach
Alcide Mann was a former McAllister employee who
progressed through the ranks to become general manager
at Philadelphia-until 1977 , when he left to work for an-
other firm in the maritime industry . Mann had extensive
managerial experience in various facets of the maritime
' My findings concerning McAllister 's statements at the October 3
meeting are based on a tape recording of the meeting by Robert
Schwatka , one of the unit employees Prior to my receipt of the tape re-
cording in evidence, Anthony McAllister's testimony was evasive as to
whether he made the above-quoted statement . The General Counsel
argues (Br. fn. 7) that this testimony reflects adversely on McAllister's
credibility . Schwatka recorded the meeting with McAllister's knowledge
and consent . However, the Board has historically taken a dim view of
personnel who tape-record meetings with their employer . See, e.g, Swin-
ick (W. T. Grant Ca) Y. NLRB, 528 F 2d 796 fn 13 (3d Cit. 1975). In
deference to this policy consideration , I have not drawn any adverse in-
ferences from conflicts if any between the testimony of McAllister offi-
cials and employee recordings of their meetings.
4 Anthony McAllister testified that at the October 3 meeting employ-
ees suggested that they purchase the tugboats Schwatka testified that no
employee said anything about buying the boats, although they suggested
that they could buy stock in the Company. In view of the employees'
subsequent rejection of McAllister 's proposal that they buy the boats, I
find it unnecessary to resolve what the employees proposed at the Octo-
ber 3 meeting.
5 McAllister's largest tugboat, the Grace McAllister, was not included
in the proposed sale The Company concluded that the Grace McAllister
was too expensive to use in the Baltimore operation , and so informed the
employees . McAllister subsequently transferred the Grace McAllister to
Norfolk and it was not included in the sale to Outreach.
606 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
industry, including sales promotion; was familiar with
tugboat operations and the operations of McAllister; and
was well qualified by reason of his training, experience,
and knowledge to manage a business such as McAllister's
Baltimore operation. He had never been an owner of a
business , however, and, as will be discussed, he lacked
either the resources or the inclination to invest his own
money in a business. In 1983 Mann was employed by a
maritime firm in Florida. In October Mann, on behalf of
his employer, contacted Anthony McAllister concerning
a business matter. McAllister asked Mann if he knew of a
buyer for the Baltimore tugboats. Mann initially
"shrugged off" the inquiry. However about November 1
McAllister again contacted Mann, this time suggesting
Mann as the purchaser. McAllister complained that his
labor costs were high,-and he could not get concessions
from the employees. Mann was initially reluctant, but re-
quested financial information, including actual and pro-
jected income and expense figures. On November 14
McAllister forwarded the requested information to
Mann . McAllister did not send copies of the union con-
tracts to Mann. Mann already had copies of those con-
tracts, and by reason of his current job responsibilities
was required to be familiar with union contracts in the
maritime industry. On the Sunday following Thanksgiv-
ing, Anthony McAllister and Mann had their "first seri-
ous discussions" (Mann 's words) concerning the pro-
posed sale.6
Alcide Mann testified that after receiving the financial
information he analyzed that information and made pro-
jections as to how he could run the Baltimore operation
at a profit. In mid-December, McAllister forwarded ad-
ditional information consisting of engine reports and dis-
patchers' schedule sheets. In late December Mann met in
New York City with three McAllister officials (Anthony
McAllister, Vice President Stephens, and Vice President
for Sales Jack McCormick) to discuss the proposed sale.
The meeting lasted 4 to 6 hours. Mann testified that they
discussed their specific interests and concerns at this
meeting , but that no agreement was reached at this time.
However in light of the sequence of events described
above, events subsequent to the December meeting, and
admissions by McAllister and Mann in their testimony, it
is evident that McAllister and Mann reached at least sub-
stantial agreement on the terms of a sale; that such terms
were substantially as contemplated and proposed by
McAllister; and that the parties thereafter proceeded in
accordance with the premise that Mann would soon be
taking over the Baltimore operation.' There was never
6 As an adverse witness for the General Counsel, McAllister testified
that after the November 21 meeting he considered selling the tugboats to
an outsider, contacted a broker, who failed to produce a prospective pur-
chaser, and about December 1 contacted Mann According to McAllister
they "got specific" before Christmas However, McAllister's testimony
concerning the dates of their contacts was contradicted by Mann, who
testified concerning the sequence of events as described above McAllis-
ter's testimony was also contradicted by his November 14 letter forward-
ing financial information to Mann. It is evident that McAllister was nego-
tiating with Mann during the same period that he was attempting to
obtain concessions from the employees
7 Because of illness, Anthony McAllister was not recalled as a Re-
spondent witness With the agreement of the parties I received his inves-
tigatory affidavit in lieu of oral testimony In that affidavit, McAllister
stated that between November 21 and January 16 he discussed the sale of
any question that McAllister would sell the America,
Brittania, Holland, and Resolute for their aggregate
market value of $1.9 million, of which $1.4 million
would be financed by a bank loan and the balance by
McAllister, and that the purchaser would enter into a
sales and service agreement with McAllister . Mann can-
didly admitted that he would not have purchased the
tugs without a sales and service contract because the
tugs were usable only for harbor work, principally the
docking and undocking of ships, for which he neded cus-
tomers, i.e., McAllister's customers. By letter dated Janu-
ary 2 to. Anthony McAllister, Mann outlined in detail the
provisions of a proposed " sales . . . and consulting
agreement." Mann added that "my notes on the labor
agreement . . . will follow in a day or two." He pro-
posed "Outreach Marine Corporation" as the name of
the business. Mann testified that by January 2 the "major
outlines were in place" and that his letter was the "first
written expression of a possible agreement." It is evident
from these admissions that the January 2 letter did not
represent an original proposal by Mann. Rather the letter
was a fleshed out draft of Mann's understanding of the
sales and service arrangement agreed on at his meeting
with McAllister in December. On January 13 Mann in-
corporated Outreach. By letter dated January 17, Mann
informed Nicholas Gumbrecht of the National Westmin-
ister Bank (Westminister) that he had formed Outreach
to purchase and operate the tugs, and "will obtain a five
year renewable agency contract with McAllister to per-
form work for their contracted customers." Mann stated
that "we have reached an agreement with McAllister,
and do not anticipate any serious difficulties," and that
he anticipated starting operations by March 1. Mann
added that he was looking forward to applying for loans
to Westminister. McAllister had a continuing business re-
lationship with Westminister, and Anthony McAllister
referred Mann to Gumbrecht about the time of their De-
cember meeting. Mann replied to Westminster for the
loan and Westminster issued a loan commitment letter
on March 1.11 On February 7 McAllister loaned Mann
the tugboats with his competitor Moran and with a Florida broker. Ac-
cording to McAllister, Moran said there might be antitrust problems (as
sale to Moran would result in a monoply on tugboat service in Baltimore
Harbor), and other prospective buyers were either not interested or
lacked the requisite experience. As an adverse witness, McAllister admit-
ted that he was not even contacted by a prospective buyer. It is evident
from McAllister's own repeated statements, which have been and will be
discussed, that McAllister had no intention of abandoning its status as a
four-port operator, and consequently determined to sell its boats only to
a purchaser over whom it could exercise continuing economic control,
and on terms which would first and foremost protect its interests as a
four-port operator. The evidence indicates that McAllister never consid-
ered any prospective purchaser other than its own employees or Alcide
Mann.
a Anthony McAllister testified that he did not know how Mann got in
touch with Westmmister In his investigatory affidavit, McAllister stated
that McAllister Transportation Official Larry Chan put Mann in touch
with Westminister. In fact, as testified by Mann, Anthony McAllister re-
ferred him to Gumbrecht, and by late December Mann was already in
touch with Gumbrecht and discussing the manner in which the sale could
be financed Mann testified that he also discussed financing with another
bank, Union Trust. In fact, although Mann was interested in and subse-
quently established a business relationship with Union Trust after Out-
reach commenced operations, there was never any question that the sale
Continued
MCALLISTER BROS. 607
$20,000. McAllister loaned Mann an additional $2500 on
March 27 and $20,000 on April 6, totaling $42,500, all
before Outreach commenced operations and all without
interest. On March 1 Mann hired his first employee (Ray
Jankowiak) and placed him on Outreach's payroll. These
actions would not have taken place in early 1984 if Mann
and McAllister did not already know by the beginning of
1984 that Mann would be taking over the Baltimore op-
eration. The loans totaling $42,500 from McAllister to
Mann were designed to provide Outreach with $32,500
in startup funds, and to compensate Mann for his initial
capitalization of Outreach in the amount of $10,000 on
January 24. As a result of these loans, coupled with 100-
percent financing of the sale by Westminister and Out-
reach and a credit agreement between McAllister and
Outreach (which will be discussed), Mann never had to
invest 1 cent of his money in the Baltimore operation.
The sale and concurent financing were consummated
on April 13, and Outreach commenced operating the
tugboats in Baltimore Harbor the next day, without any
break in service. According to Mann, the original target
date was March 1, but the closing date was continually
delayed because of protracted negotiations between the
parties and their attorneys, centering on the service and
sales agreement , which at times threatened to wreck the
entire transaction. Mann testified that there were 13 or
14 drafts of that agreement, that he and McAllister
reached general agreement after the first 4 or 5, but then
the lawyers got involved. In fact, although there was a
profusion of paperwork befitting a transaction of this size
(principally for the benefit of Westminister), and nitpick-
ing (Mann's description) over minor matters such as
whether New York or Maryland law should govern, the
end result substantially reflected McAllister's concept as
originated in the fall of 1983 and proposed to the em-
ployees and Mann. Some changes were imposed by
Westminister, e.g., that the bank wanted the initial term
of the sales and service agreement to be 7 instead of 5
years, in order to be concurrent with the duration of its
loan. At the present hearing, Outreach counsel went
through a section-by-section review of the agreement
with Mann in order to determine which matters were the
subject of significant negotiation or disagreement be-
tween Mann and McAllister. In light of Mann's testimo-
ny, it is evident that there were few areas of disagree-
ment and no area in which McAllister made any signifi-
cant concession. Mann's testimony concerning one such
alleged area of disagreement was demonstrably false. Ac-
cording to Mann, paragraph 2:4 of the agreement, pro-
viding for the use of a tugboat of the Grace McAllister,
class by Outreach for the benefit of McAllister's custom-
ers, was a "major item" because Mann did not want to
buy the Grace McAllister, as it was too expensive to
would be financed, if at all by Westmmister Not only did Westminister
have expertise in the maritime industry, a continuing relationship with
McAllister, and a knowledge of its boats, but most significantly, West-
minster held a mortgage on McAllister's boats by reason of a loan to the
Bridgeport and Port Jefferson Steamboat Company, another McAllister
Transportation subsidiary. Therefore it would have been impossible to fi-
nance the sale without Westmmister. Indeed, Mann initially talked with
Gumbrecht about assuming this mortgage. As will be discussed, West-
minister preferred that the sale not be financed in this manner
maintain , whereas McAllister feared that it would lose
substantial business if that type of boat was not in the
harbor. In fact, McAllister had already reached the same
conclusion as Mann, and did not contemplate selling the
Grace McAllister for use in Baltimore Harbor. (McAllis-
ter so informed the employees in November.) The
market value of the Grace McAllister was $1.8 million,
almost as much as the total value of the four tugboats
which were sold. McAllister Vice President Stephens
testified that McAllister did not offer to sell the Grace
McAllister to Mann because business in Baltimore did not
justify the expense of maintaining it, and therefore
McAllister transferred that boat to Norfolk. As a result
of McAllister's decision, McAllister, and consequently
Outreach, lost its biggest customer (Atlantic Container
Line) which was not satisfied with the power of the
other boats.
As indicated, McAllister sold the America, Brittania,
Holland, and Resolute for $1.9 million to Outreach: $1.4
million of the purchase price was financed by a loan
from Westminister, repayment of which was secured by
a promissory note and first preferred fleet mortgage. As
required by Westminister, repayment was also guaran-
teed by McAllister, McAllister Transportation, and the
three individual principals of McAllister Transportation,
as well as Mann and his wife Audrey, the sole sharehold-
ers of Outreach. The note was payable in monthly in-
stallments of $25,468.75 over a 7-year period. The re-
maining $500,000 was financed by a loan from McAllis-
ter to Outreach, secured by a promissory note and
second preferred fleet mortgage. The note provided for
repayment in semiannual installments of $50,000 each
plus 10-percent interest over a 5-year period, commenc-
ing on April 15, 1986, i.e., 2 years after the sale. In fact,
McAllister received none of the money which ostensibly
changed hands on April 13. As a condition of releasing
the boats from the existing mortgage, Westminister re-
quired that the proceeds of its loan be assigned to it as
security for repayment of the loan. In, sum, notwithstand-
ing its elaborate verbosity, the loan transaction amounted
to a paper shuffling device whereby for all practical pur-
poses Westminister substituted one mortgage guaranteed
by McAllister for another mortgage guaranteed by
McAllister. Westminister actually loaned nothing and
McAllister received nothing, at least not from, the trans-
action.
At the time of the sale and loan transactions, McAllis-
ter and Outreach executed two documents which basical-
ly defined their operational relationship; specifically, a
"Tug Service and Sales Representation Agreement, and
a Credit Agreement." The service and sales agreement
provided in sum as follows: Outreach agree (par.
1:1(A)(B), and (C)) to provide certain tugboat services
(assistance to ships, towing of barges, and towing of
LASH barges) in the Baltimore Harbor area forcAllis-
ter's customers on a "first priority" basis. Outreach fur-
ther agreed (par. 1:1(D)) to provide such additional tug
services "as required by McAllister that are most effi-
ciently served from the port of Baltimore," without geo-
graphical limitation, also on a "first priority" basis. Spe-
cifically, the agreement required Outreach to provide
608 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
such services with the America , Brittania , Holland, and
Resolute, to operate at least two tugs, fully manned, on a
24-hour basis, and to assign its tugs to work booked by
McAllister before any other work . However , McAllister
cannot unreasonably demand service on short notice
when Outreach has given McAllister notice of prior
commitments . The agreement (par. 1 :2) ostensibly per-
mitted Outreach to independently solicit towing or barge
work in six specifically defined categories which did not
include docking or undocking of ships in the Baltimore
Harbor area . Three of these categories involved work
exclusively outside of the Baltimore Harbor area, two
(including towing of oil barges ) required prior authoriza-
tion by McAllister if it involved work in the Hampton
Roads area, and one (interport towing between Philadel-
phia and Norfolk) entitled McAllister to a 10-percent
commission on any such work performed for customers
with whom McAllister has an established relationship or
is even soliciting business, regardless of whether McAl-
lister has ever done work for that customer. However,
other provisions of the agreement virtually nullified even
this limited ostensible autonomy. Specifically , paragraph
3:1 provided that "McAllister should be the exclusive
sales agent for Outreach for all Shipwork, Bargework,
and LASH Bargework performed pursuant to para-
graphs 1:1:(A), (B) and (C),": and that "McAllister is au-
thorized to solicit , on behalf of Outreach, other harbor
work as per paragraph hl(D)." Paragraph 5:1 further
provided that: "Outreach shall not solicit any business
covered by paragraphs 1:1:(A), (B) (C) and (D) above
without McAllister's prior approval. All business cov-
ered by these paragraphs shall be protected to McAllis-
ter for a 10% commission on the net amount of invoices
to the customer ." The agreement (par. 5 :2) further pro-
hibited Outreach from performing tug or towing services
within a 50-mile radius of other ports in which McAllis-
ter Transportation or its subsidiaries performed oper-
ations (New York, Philadelphia, Norfolk, and San Juan),
"without prior written agreement of McAllister and then
only upon such terms as may be set by McAllister." In
view of the broad language of paragraph 1:1(D), cover-
ing additional services which McAllister could require
Outreach to perform , McAllister could reasonably inter-
pret these provisions as prohibiting Outreach from per-
forming any tugboat service, i .e., any business whatso-
ever,9 without McAllister 's prior approval and without
allowing McAllister the same 10-percent commission
which it received for work performed by Outreach for
McAllister 's customers. Moreover, the agreement prohib-
ited Outreach from replacing or adding tugboats without
McAllister's approval , but permitted McAllister to re-
quire Outreach to use a tugboat of the Grace McAllister
class as needed to service McAllister 's customers . There-
fore, Outreach was effectively precluded from obtaining
any significant anount of work in addition to that per-
formed for McAllister 's customers , as its limited fleet
(smaller than that used by McAllister ) had to be avail-
able to service McAllister 's customers on first priority
9 The loan agreement prohibits Outreach from engaging in any busi-
ness except the operation of vessels, declaring dividends, or incurring
liens (with limited exceptions)
basis. As will be discussed, this was in fact the result
after Outreach commenced operations.
The agreement further required Outreach to provide
its services "in a workmanlike manner and of a standard
acceptable to McAllister," including timely service, reli-
able equipment, and trained crews, and performance
standards as spelled out in an appendix to the agreement.
These performance standards required Outreach among
other things to maintain around-the-clock communication
with McAllister's local manager, provide McAllister
with the home phone numbers of all operating prsonnel
and docking pilots, immediately notify McAllister of any
incident of damage or tardiness, and to coordinate with
McAllister the fulfillment of Outreach's responsibility to
"properly oversee their licensed personnel in order to
eliminate repeated incidents" of pilot error. Standard was
defined as one error per month." ° The standard on tardi-
ness was defined as not exceeding one-half hour. In sum,
McAllister reserved to itself the right and obligation to
monitor and control not only the end result of Ou-
treach's operations, but also the manner in which Ou-
treach's licensed personnel carried out those operations.
The service and sales agreement further gave McAllister
the right to require Outreach to improve its performance
to meet the criteria established by their agreement. In the
event of a dispute over Outreach's performance, either
party could submit the matter to an impartial arbitrator
selected by McAllister. If in McAllister's opinion Out-
reach failed to perform pursuant to the arbitrator's deci-
sion, McAllister could terminate the agreement."' In
such event, Outreach is required to resell the tugs to
McAllister without profit or loss to Outreach, i.e., in ac
cordance with a formula under which McAllister would
not pay more than the original sale price or less that Ou-
treach's outstanding mortgage obligations.
The agreement further provided that: "In providing
services hereunder, McAllister undertakes to offer the
services of Outreach's tugs pursuant to the terms of
McAllister's tariff." McAllister thereby excluded Out-
reach from any role in setting rates for work performed
for McAllister's customers, which work constituted vir-
tually all of Outreach's business . Thus, Outreach could
not increase those rates, nor could it take advantage of
its lower labor costs by charging less that Curtis Bay
Towing, unless McAllister decided to reduce those rates
or refrain from matching Curtis Bay's increases.' 2 Con-
10 The appendix stated that this objective was necessary "as, regardless
of the fact that these licensed personnel are servants of the owner, it will
have a bearing on McAllister 's customer relations " (Emphasis added) In
addition to the issue of alter ego status, these provisions are also eviden-
tiary with respect to Outreach 's contention that its docking pilots are in-
dependent contractors
' According to Mann, this provision reflected a compromise, because
McAllister wanted the right to terminate the agreement upon obtaining a
favorable decision from the arbitrator . The distinction is illusory rather
than substantive , because Outreach would have no recourse if McAllister,
for whatever reason, decided that Outreach was failing to perform pursu-
ant to the arbitrator's decision
12 This arrangement was plainly designed to benefit McAllister, at the
expense 'of Outreach For example, if Outreach could establish rates in
Baltimore, and decided to undercut Curtis Bay , such'action might trigger
a price war which would place ' McAllister at a disadvantage in other
ports where it directly operated tugboats.
MCALLISTER BROS.
sequently, except to the very limited extent that it could
obtain new business, Outreach had no way of increasing
its profits or even making a profit, other than by reduc-
ing its operating costs and expenses . As previously dis-
cussed, McAllister endeavored to reduce its costs and ex-
penses and did so, except with respect to those costs and
expenses which were governed by its collective-bargain-
ing contracts. Consequently, unless Alcide Mann had
greater expertise in tugboat management than McAllis-
ter, which is unlikely, Outreach could only make a profit
or enhance its profit by reducing or eliminating labor
costs and expenses.
The service and sales agreement , coupled with the
credit agreement, effectively relieved Outreach of any
risk of nonpayment, and further provided Outreach with
what amounted to a $500,000 line of credit. Under the
service and sales agreement , McAllister agreed to pay
Outreach for all work solicited by McAllister and per-
formed by Outreach, and to accept the credit risk for
failure of any customer to ' pay for such work. Specifical-
ly, McAllister agreed that after deducting its 10-percent
commission , discounts, and commissions to foreign sales
agents, it would, pay 90 percent of the amounts due Out-
reach within 45 days and the balance within 120 days of
presentation of invoice. Although not specified in any
written agreement , McAllister also deducted 5 percent
toward repayment of the sum of $42,500 previously
loaned to Alcide Mann, except on some jobs where the
profit margin was low, until August 23, 1984, when
those notes were paid in full. However in the credit
agreement , which was effective for 2 years and subject
to renewal by McAllister, McAllister agreed to pay Out-
reach all amounts due Outreach immediately upon pres-
entation of invoice and assignment of the respective ac-
count receivable, up to a total maximum of $500,000
owed by McAllister's customers at such time. In practice
McAllister deposits all moneys due Outreach into Ou-
treach's bank account. The sales and service agreement
provided that "McAllister will use its best efforts to
secure a minimum of $3,000,000 net revenue to Outreach
per calendar year." Although this provision might seem
on its face to be designed for Outreach's benefit, the
figure at least coincided with McAllister's interests in the
arrangement . McAllister Vice, President Stephens testi-
fied in sum that McAllister projected an annual volume
of business of $3 million, and also projected that it would
need $300,000 per year to compensate for the cost of its
sales and accounting services, i.e., 10 percent of $3 mil-
lion. As discussed, McAllister never viewed Baltimore as
a profit-making operation. Rather McAllister wanted a
Baltimore operation in order to offer 4-port service to its
customers and thereby enhance its business elsewhere,
without suffering unacceptable losses. Therefore, by
maintaining its presence in Baltimore through Outreach
and attaining or maintaining a $3 million volume of busi-
ness, McAllister would break, even and thereby achieve
its goal . Stephens testified that in fact, by the time of the
present hearing, McAllister was close to breaking even
through the Outreach operation.
The sales and service agreement further required Out-
reach to maintain at its own cost, insurance in form and
amounts and under conditions set forth in the, agreement,
609
with underwriters approved by McAllister, and with
McAllister named as an additional insured under the li-
ability policies. The agreement was effective by its terms
for 7 years, subject to McAllister's option to renew the
agreement for up to 3 additional 5-year periods. (The
parties originally contemplated an initial 5-year period,
but Westminister requested that the period be coexten-
sive with the duration of its loan agreement.) The agree-
ment provided in sum that in the event Outreach wished
to sell its business, and obtained a prospective purchaser,
McAllister would have the right of first refusal or could
purchase the business at the amount of the third party
offer or in accordance with a formula set forth in the
agreement.
D. Operations Before and After the Sale, and
Concluding Findings with Respect to the Appropriate
Unit or Units as of April 13, 1984
As of April 13, 1984, President Anthony McAllister
was McAllister's highest ranking official. However, he
had far flung responsibilities for the operations of McAl-
lister Transportation and its subsidiaries, he was not
based in Baltimore, and he was not normally involved in
day-to-day operations in Baltimore . Vice President Ste-
phens who was based in Philadelphia, functioned as gen-
eral manager for Philadelphia and Baltimore, and was in
overall charge of operations at both ports. Assistant Gen-
eral Manager Rollins Bishop was based in Baltimore and
was in charge of day-to-day operations in that port. Op-
erations Manager Richard Gross was Bishop' s immediate
subordinate. Gross functioned as chief dispatcher, and
was assisted by dispatchers John Franey and Edward Jo-
hansen, (A third dispatcher, retired in the fall of 1983 and
was never replaced.) The remainder of McAllister's
shore personnel in Baltimore consisted of accountant-
bookkeeper Philip Goldrick, port engineer William
Davis, assistant port engineer Richard Efford, and cleri-
cal employees Mary Geeson and Shirley St. John. Gross'
role in the managerial hierarchy was the subject of much
testimony by both sides. Gross was one ' of two vice
presidents for Baker-Whitely. After taking over the oper-
ation, McAllister brought in Bishop, demoted Gross, and
terminated the other vice president. However, Gross
continued to exercise supervisory authority with respect
to the boat personnel, and he was the highest ranking
person with whom they normally' dealt. Vice President
Stephens testified that Gross and the dispatchers had au-
thority to fire, lay off, and discipline personnel.;' Ste-
phens further testified that he and Bishop would decide
on layoffs, although Gross would advise them as to an-
ticipated personnel needs. (Selection of employees for
layoff, like promotions and transfers, was governed by
provisions of the union contracts, and consequently in-
volved minimal employer discretion except with respect
to the selection of captains. McAllister hired new person-
nel through the Union's referral system, and consequent-
13 Stephens subsequently attempted to back away from this admission,
asserting that the boat captains, but not Gross, had the authority to disci-
pline employees. In view of the fact that the captains took their orders
from Gross and the dispatchers , this assertion was demonstrably incredi-
ble
610 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ly the selection of new boat personnel also involved
minimal employer discretion.) Boat personnel in all cate-
gories testified, in sum that Gross and the dispatchers
made crew assignments and authorized time off, and that
Gross represented the Company at monthly grievance
meetings, and he sometimes resolved work-related prob-
lems which boat personnel submitted to him or the dis-
patchers. Sometimes the dispatcher on duty would refer
requests for time off to Gross. Gross or the dispatcher on
duty would resolve conflicts in work assignments, e.g., if
one ship was late and the captain had to know whether
his boat should assist that ship or the next scheduled as-
signment. Vice President Stephens, in his testimony,
tended to be evasive concerning Gross' authority, but in-
ferentially corroborated the testimony of the boat per-
sonnel. Stephens testified that the captain would make a
recommendation when there was conflict in work assign-
ments, but that the dispatcher was the person who knew
what jobs had to be performed that day. Stephens admit-
ted that Gross "stayed on top of scheduling crews" and
that "it would get back to [Gross]" if an employee
wanted time off for personal reasons. Gross, together
with Stephens and Anthony represented McAllister in
the 1981 contract negotiations, although only McAllister
and Stephens had authority to make commitments on
behalf of the Employer. I find that Gross and the dis-
patchers had authority, in the interest of the Employer,
to responsibly assign and direct employees in their work
and to grant time off, and that Gross further had author-
ity on behalf of the Employer to discipline or discharge
employees and adjust employee grievances and effective-
ly recommend layoffs. Therefore, Gross and the dis-
patchers were supervisors of McAllister within the
meaning of the Act. I further find that Gross was McAl-
lister's 75 principal and highest ranking supervisor who
dealt with the boat personnel on a day-to-day basis. With
regard to the port engineer and assistant port engineer,
Gerard Freburger, who worked as an engineer on McAl-
lister's boats, testified that William Davis was his imme-
diate supervisor, that if he had a problem with the
engine , he would notify the captain (who would notify
the office if the boat had to go out of service) but would
contact Davis'with regard to normal maintenance. How-
ever Freburger testified, as did other personnel, that Op-
erations Manager Gross handled hiring, firing, transfers,
layoffs, and adjustment of grievances, and that if he had
a grievance he would take it to Gross. Davis and Efford,
like other shore personnel, were not included in either
bargaining unit. I find that the evidence is insufficient to
establish that Davis or Efford had or exercised authority
of a suprvisory nature, as distinguished from directing
the technical aspects of maintenance work.
The makeup of McAllister's boatcrews was governed
by its union contracts, which provided that singly boat-
crews (normally used by McAllister) would be manned
by a crew consisting of at least one captain, one mate,
and one engineer (licensed personnel), and two deck-
hands (unlicensed personnel). The captain was nominally
in charge of the tugboat, although in practice he had' lim-
ited authority and little need to exercise control over the
crew. The captains, like other personnel, were normally
assigned to one boat on a regular basis. About 6 p.m.
each day, the boat personnel including the captains
would call McAllister's office for their next work assign-
ment, if any. The captain would do paperwork, plan the
operation, and observe conditions while the boat, navi-
gated by the mate, was proceeding to an assignment.
When the boat reached the assigned ship, the captain
would board the ship and replace its pilot in order to
direct the docking or undocking operation. The captain
would maintain radio contact with the mate, who was
responsible for navigating the tugboat, in order to co-
ordinate the operation. The captain would exchange in-
formation with the mate, and sometimes with a deck-
hand, and would give such directions as were necessary
to carry out the operation, principally concerning the
placement of lines. The pattern of handling normally de-
pended on the class of ship involved, e.g., container,
tanker, bulk carrier, or auto carrier. As the tugboats reg-
ularly serviced the same ships or classes of ships for
McAllister's customers, the patterns were usually familiar
to the tugboat crews. The pilotage clause of McAllister's
contract (tariff) provided that the captain was the "bor-
rowed servant" of the shipowner or operator while di-
recting the ship during the docking or undocking oper-
ation. The deckhands were primarily responsible for
cleaning and maintaining he tugboat and handling lines.
The engineer was responsible for maintaining watch and
maintaining or repairing machinery as necessary. The
captain, by virtue of his Coast Guard license, was re-
sponsible for the welfare of the personnel and the equip-
ment on the tugboat. For example, in the event of a col-
lision or other mishap the Coast Guard might well deter-
mine that the captain was responsible if the mishap was
caused by improper action or failure to act by another
member of the crew. In practice the captains had only
limited authority to exercise control over their crews on
behalf of McAllister. The captains neither had nor exer-
cised authority to hire, fire, lay off, recall, assign crews,
grant time off, adjust grievances, or to effectively recom-
mend such action, or to exercise any discipline beyond
occasionally "chewing out" a crewmember for not doing
his job properly. Vice President Stephens testified that to
his knowledge no McAllister captain in Baltimore ever
imposed discipline. The tugboats maintaind radio contact
with McAllister's office and kept the office informed of
developments. As indicated, personnel problems, e.g.,
actual or potential conflicts in assignments , were referred
to Operations Manager Gross or the dispatcher on duty.
There were additional factors which rendered it un-
necessary or unlikely for boat captains to exercise super-
visory functions. At least in part because of the contrac-
tual seniority system, coupled with layoffs and a declin-
ing work force in recent years, most of the boat person-
nel, including deckhands, had worked for McAllister for
many years and were experienced and well qualified to
perform their jobs without on-the-spot supervision.
Through their long and close association, the crews
were, as testified by two witnesses, like one family.
Indeed they constituted a family in more than one sense,
as many were related to one another. Consequently, the
captains were not inclined to act as management repre-
sentatives in dealing with their fellow crewmembers.
MCALLISTER BROS. 611
Moreover, unlike the shore-based personnel, they lacked
a sufficient overview of McAllister's operations, even on
a day-to-day basis, to enable them to effectively exercise
or recommend discretionary action with regard to per-
sonnel matters . Therefore the crews, including both the
licensed and unlicensed personnel, preferred to resolve
routine problems among themselves, and to refer to the
shore based personnel problems which required the exer-
cise of supervisory discretion. The crews' feelings of soli-
darity were reinforced by the fact that they were all rep-
resented by the Union. Some captains served as union
stewards. For its part, McAllister recognized that the
captains were not a part of management. Consequently,
McAllister never told its captains that they were supervi-
sors or management representatives, and they were nor-
mally not requested to attend supervisory or manage-
ment meetings.
The captains, like other boat personnel, were paid in
accordance with hourly pay scales established in the
union contracts , and they received the same fringe bene-
fits as the other boat personnel . However, the captains
did have an income in addition to their 'hourly wages
from McAllister. The captains who worked for McAllis-
ter and Curtis Bay Towing belonged to a group known
as the Baltimore Docking Pilot Association which estab-
lished a schedule of fees to be charged to the shipowners
or operators for whom they performed docking services.
Each month McAllister's bookkeeper would bill the cus-
tomer, and would disburse the proceeds to McAllister's
captains in accordance with their respective services.
Each captain would give his mate a 20-percent share of
the proceeds. These fees usually comprised from 20 to 33
percent of the captain's total income. McAllister deduct-
ed Federal and state income and Social Security taxes
from the captains' wages, but not from fees, except inso-
far as a captain might request a higher deduction in
order to avoid underpayment of taxes at the end of the
year. Only licensed personnel employed by a tugboat
firm doing business in Baltimore Harbor, i,e., McAllister
or Curtis Bay Towing, could perform the docking serv-
ices which entitled them to these fees. McAllister never
informed its captains that they were independent con-
tractors by reason of this arrangement or for any other
reason. Rather, as indicated, McAllister and its customers
contractually agreed that they were borrowed servants
when performing a docking operation.
In Feruary 1984, Alcide Mann met with Carl Cud-
worth and Ray Jankowiak, offered them positions as
"docking pilot," and explained the terms under which
they would perform such work for Outreach. Cudworth
was not a McAllister captain. Jankowiak, a McAllister
captain, was low man on McAllister's seniority roster of
captains and mates .14 In late 1983 and early 1984 he was
working as a relief man. Cudworth declined the offer,
but Jankowiak accepted. He went onto Outreach's pay-
roll as 'of March 1, at $2300 pr month although Outreach
did not begin operations until April 14. Therefore it is
evident that Jankowiak was paid with money borrowed
from McAllister. Mann testified that he offered them em-
ployment in order to establish a nucleus of operating per-
sonnel . As will be discussed, Jankowiak subsequently
made recommendations to Mann concerning the hiring
of boat personnel.
Anthony McAllister testified that in March he dis-
cussed retention of shore-based personnel with Mann,
and specifically recommended that Mann hire Richard
Gross and dispatchers Franey and Johansen. Some time
prior to April 13 Mann informed Gross that he would
have a position with Outreach if he wanted it. (There-
fore it is evident that Gross had advance notice of the
sale.) On April 13 McAllister informed Gross, Franey,
Johansen, Davis, and Efford that they were terminated
as of that date, and suggested that they see Mann. At 5
p.m. that day Mann met with the five shore personnel
for about 1 hour, and offered them employment on the
spot, although he personally knew only Gross and Davis.
Mann testified that he did not consider anyone else for
their positions. (Mann initially testified that he hired
Franey on McAllister's recommendation, but subsequent-
ly asserted that he could not recall whether McAllister
made any recommendations . As indicated,' McAllister ad-
mitted that he recommended at least three of the five
shore based personnel .) On and after April 14 the com-
bined shore-based personnel of McAllister and Outreach
consisted of and functioned as follows: McAllister Vice
President Stephens, still based in Philadelphia, remained
in overall charge of McAllister's Philadelphia and Balti-
more operations. Assistant General Manager Bishop, still
based in Baltimore, continued to function as McAllister's
manager in that port. Bishop received orders from
McAllister's customers, passed them on to Outreach, and
did some local selling in order to acquire more business
for Outreach. However, Bishop's involvement in day-to-
day operations was substantially diminished insofar as his
functions were taken over by Mann. Philip Goldrick, as-
sisted by Mary Geeson,, continued to function as McAl-
lister's accountant-bookkeeper, principally submitting, re-
ceiving, and recording invoices. However his functions
were substantially reduced insofar as he no longer per-
formed payroll or other personnel functions outside of
McAllister's own office staff. One office clerical was ter-
minated.15 As president of Outreach, Alcide Mann, as-
sisted by his wife, "executive vice president" Audrey
Mann, performed Outreach's administrative and financial
work. As Outreach did not have any clerical employees,
it is evident that Audrey Mann was performing payroll
and other clerical functions formerly performed by
McAllister's office staff. Mann retained authority over
hiring and firing, and Richard Gross, now Outreach's
"vice president of operations," carried out his orders.
Gross, assisted by dispatchers Franey and Johansen, con-
tinued to perform the same functions which they previ-
ously performed for McAllister as altered by the fact
that Outreach was not operating under union con-
14 Licensed personnel who have served as mate and captain, may accu-
mulate seniority in both categories. Mark Garayoa, who is listed at the
bottom of McAllister's seniority roster of mates, left McAllister in late
1983 in order to take other employment
is In his investigatory affidavit, Anthony McAllister stated that McAl-
lister terminated its entire office staff except Bishop and Geeson. Howev-
er, in his testimony McAllister admitted that Goldrick was still working
for McAllister
612 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tracts.16 Gross continued to function as the highest man-
agement representative who normally dealt with the boat
personnel on a day-to-day basis . Gross contacted the
boat personnel who Mann decided to hire, offered them
jobs, and explained the terms of their employment. Gross
and Ray Jankowiak made recommendations with regard
to hiring, at least some of which were followed by
Mann. Gross and the dispatchers gave out work sched-
ules, authorized time off, and adjusted employee griev-
ances. William Davis, now called "port superintendent,"
and Richard Efford, now called "port engineer" contin-
ued to perform the same functions which they had previ-
ously performed for McAllister. In sum, viewing McAl-
lister and Outreach as components of one coordinated
operation (which they were), McAllister 's shore-based
complement remained intact , from top to bottom, per-
forming substantially the same functions which they had
previously performed , except that Alcide Mann was in-
serted into the managerial hierarchy between Rollins
Bishop and Richard Gross, and his wife Audrey per-
formed clerical functions which enabled McAllister to
dispense with one clerical employee.
On the evening of Friday, April 13, when the boat
crews called in for their assignments , Rollins Bishop in-
formed them that "the Company has been sold and you
no longer have a job." This was the employees' first
notice that the boats had been sold . That weekend Gross
contacted those employees who Mann decided to hire.
In the meantime Outreach commenced operations with
the purchased tugs , without any interruption in service
to McAllister 's customers . Outreach made substantial
changes in staffing and other terms and conditions of em-
ployment, most of which were contrary to terms and
conditions established in the union contracts, and there-
fore invalid if Outreach was bound by those contracts.
Outreach hired boat personnel in four categories: dock-
ing pilot , captain, engineer-utility, and deckhand. The
first three categories were all licensed personnel. The
boat personnel were no longer regularly assigned to one
boat, but were assigned from day-to -day as directed by
Gross and the dispatchers. As of May 15 Outreach uti-
lized three docking pilots: Ray Jankowiak and Edward
Covacevich, who had been employed by McAllister, and
Richard Kestler, who had not. Covacevich, a McAllister
captain , was hired by Richard Gross on April 14, at a
flat rate of $175 per day, but only for days on which he
actually worked. Covacevich was not paid for days on
which he was required to be available on a standby basis
but was not called . 17 The pilots were not regularly as-
signed to a boat. Instead they boarded the boats for the
purpose of going to and from docking or undocking as-
signments . As had McAllister's captains , they prepared
for the job enroute, including paperwork, boarded the
ship for the purpose of directing the docking or undock-
ing operation, and returned to the tug when the job was
completed . However, instead of remaining with the tug,
they returned to port to await their next assignment,
16 Some time after May 15 Outreach hired a third dispatcher . As mdt-
cated, McAllister had not replaced a dispatcher who retired in 1983 On
May 14 Outreach also hired two watchmen.
17 Jankowiak, by virtue of his special status as a key person in Ou-
treach 's operation , may have had a different salary arrangement.
unless they were off duty . In sum, Outreach did not
regard the pilot as a member of the crew . Rather the
crew, now reduced in size, consisted of a captain, one
engineer-utility , and one deckhand . The captain, who
was now nominally at least in charge of the tugboat, per-
formed the same functions as had McAllister's mate
during the docking or undocking operation . By May 15
Outreach had five captains, three of whom (Leon Mach
Jr., Paul Straszynski , and Chester Vikell) had previously
been McAllister mates, one (Gregory Lukowiski) who
had worked for McAllister as a deckhand on an irregular
basis because of his low seniority , and one (Mark
Adams) who had not previously worked for McAllister.
As of May 15 Outreach had six employees in the catego-
ry of engineer-utility, of whom one (Gerard Freburger)
had been working as engineer for McAllister on a regu-
lar basis, two (Robert Zientak and Terry Pakula) had
been working as engineers for McAllister on an irregular
or relief basis, and three (Kevin Bailey, Jacob Bryan, and
Vincent Robinson) had not previously worked for McAl-
lister. Outreach's engineer-utility employees performed
the same functions as McAllister 's engineers , and in addi-
tion functioned as second deckhands . As of May 15 Out-
reach employed seven deckhands , of whom three (Mark
Jankowiak, James . Kabakovich , and Morris Superc-
zynski) had been working regularly for McAllister, one
(Thomas Lukowski) was low man on the deckhand se-
niority list, and worked only sporadically, one (Scott
Lee) had worked for McAllister , but not enough to
make the seniority list, and two (Mark Bull and Richard
Efford Jr.) who had not previously worked for McAllis-
ter. They performed the same work as McAllister 's deck-
hands. Outreach also did not hesitate to use shore-based
personnel on its boats, or to cut across job categories.
Thus , on April 14 Outreach commenced operations with
a boatcrew consisting of Ray Jankowiak , his brother
Mark , his brother-in-law Scott Lee, and port engineer
Richard Efford.
Outreach operated two tugs on a - 24-hour basis and
two on a dayboat basis . Wages, hours, and other work-
ing conditions were drastically altered from those under
McAllister 's union contracts . Crews on 24-hour boats
were paid a flat daily wage, and day boatcrews were
paid an hourly rate . Excluding pilots, the wage rates
were substantially lower than those paid under the union
contracts with increasing disparity as one went down the
occupational ladder . The hourly rate for Outreach cap-
tains was $10, compared to an $11 .91 basic rate for
McAllister mates, notwithstanding Outreach 's present
contention (which will be discussed) that its captains are
supervisors. Engineer-utility personnel were paid $8.60
per hour compared to $13 .20 for McAllister engineers.
Outreach deckhands were paid $6.10 per hour , compared
to a basic rate of $11 .01 under the union contract. All
forms of premium pay were eliminated except for time
and one-half over 40 hours per week for day boatcrews
only. The union contracts provided for various premium
hours or days ranging from time-and-a-half to triple time.
Monetary fringe benefits , including pension and welfare
funds, vacation plan, and paid holidays, were eliminat-
MCALLISTER BROS.
ed.18 On April 15 Outreach informed its personnel that
it had not yet established a policy concerning such mat-
ters . On May 27 Outreach informed the personnel that it
was establishing a temporary medical insurance plan at
the employees ' own expense.
Although Outreach 's docking pilots received pay
which was ostensibly equal to or greater than that paid
by McAllister to its captains , it is evident from Ou-
treach 's new system , including the fact that the docking
pilots, unlike McAllister 's captains , did not work on a
full-time basis, that Outreach was paying less to its pilots
than McAllister paid to its captains . In particular, Out-
reach deprived its pilots of the contractually guaranteed
workweek , which McAllister captains shared with other
personnel . Thus Edward Covacevich testified that pilot
fees now comprised about one -half of his earnings,
whereas they previously comprised about 20 percent.
This, notwithstanding that Outreach 's volume of business
remained substantially the same as that projected, by
McAllister under its own operation . Outreach contends
(Br. 36-38) that by reason of its new methods of oper-
ation , the docking pilots are independent contractors.
However, Outreach's position is inconsistent with its
own words , actions , and method of operation. Since
April 14, Outreach operated under a service and sales
agreement which specifically provided that licensed per-
sonnel were "servants of the owner," and imposed a
mutual obligation on McAllister and Outreach to super-
vise their performance . Outreach operated under McAl-
lister's tariff, which contractually provided that the pilots
were borrowed servants when directing a docking or un-
docking operation . Outreach paid its pilots their wages,
with appropriate deductions in the same manner as
McAllister paid its captains . Outreach never told its
pilots that they were independent contractors . As an ad-
verse witness for the General Counsel, Alcide Mann tes-
tified without explanation that he could not discipline his
pilots for objectionable conduct aboard a ship . However
as a witness for Outreach, Mann admitted , with respect
to three accidents in which pilot Covacevich was in-
volved , that he could have penalized Covacevich if he
determined that Covacevich was clearly at fault . Certain
evidence concerning Charles Rogers is also illuminating
on the status of Outreach 's pilots. Rogers had been em-
ployed by McAllister and its predecessor Baker-Whitely
for over 20 years, and he was second on the seniority list
of captains . When 'Mann met with Ray Jankowiak and
Carl Cudworth in February , Mann mentioned that
Rogers was highly recommended, but Jankowiak said
that he could not work with Rogers . Therefore Mann
did not offer Rogers a job . In mid-May, after the Union's
attorney had sent a letter to Mann asserting that McAl-
lister and Outreach were alter egos and a single employ-
er and therefore bound by the union contracts , Rogers
sent a letter to McAllister Vice President Stephens re-
questing his assistance in obtaining a docking position
with Outreach . Stephens sent a letter of recommendation
to Mann, together with a copy of Rogers ' letter, and also
is The union contracts also provided for payments to trust funds
which performed service functions , i.e., School of Seamanship, Transpor-
tation Institute, and hiring hail.
613
sent copies of the correspondence to McAllister's attor-
ney. In the meantime Outreach's attorney sent a letter to
the Union's attorney, denying that Outreach was obligat-
ed to recognize the Union or bound by the union con-
tracts. Mann did hire Rogers. In late May Rogers met
with Mann, and proposed that if Mann was unwilling to
hire the older McAllister pilots like himself, that Rogers
would supply their services without wages, with the
pilots retaining only their docking fees . Rogers testified
without contradiction that Mann rejected the proposal,
asserting that such an arrangement would deprive him of
control over the docking pilots. I find that Mann's expla-
nation constitutes an admission that he did in fact have
control over Outreach's docking pilots.19
Outreach further contends that its captains are supervi-
sors under the Act. If so, then Outreach would have
almost as many supervisors as rank -and-file boat person-
nel. Specifically, Mann, Gross, and the two (later three)
dispatchers all exercised supervisory authority. Together
with the five `captains, this would constitute a total of 9
or 10 supervisors over 13 boatcrew personnel (6 engi-
neer-utility and 7 deckhan1ss). This would be in addition
to Rollins Bishop, who exercised control over day-to-day
operations in Baltimore, the three docking pilots, who di-
rected the crews during the docking and undocking op-
erations , and the port superintendent and port engineer,
who directed maintenance and repair work. Mann made
statements which ostensibly , suggested that the captains
should exercise more authority. Thus, Mann told the
captains that they should make independent judgments,
tell the crews what to do, and tell the crews that there
should be no drinking aboard the boats, and that if they
failed to do these things the Coast Guard would go after
their licenses. However, Leon Mach Jr. and Chester
Vikell, both former McAllister mates who were now
Outreach captains, testified in sum that they continued to
perform the same functions which they had performed
for McAllister; that Gross and the dispatchers continued
to assign jobs, handle requests for time off, and resolve
other personnel problems; and that as captains they did
not hire, fire, suspend, lay off, promote , or discipline em-
ployees, or recommend such action, and that they were
not told that they were supervisors. The captains' testi-
mony was corroborated by Gerald Freburger, former
McAllister engineer and now Outreach engineer-utility.
I find that as of April 13 the recognized bargaining
units were units appropriate for the purpose of collective
bargaining within the meaning of Section 9(b) of the
Act, and I specifically find that McAllister' s captains
were employees within the meaning of Section 2(3) of
la I am not persuaded that the Rogers matter is particularly significant
with respect to the alter ego issue At the time Rogers pursued his quest
for employment , carefully recording the same, both sides anticipated the
present litigation , and it is evident that both were grandstanding Mann
had already decided not to hire Rogers, and Stephens and Mann were
obviously not inclined to engage in any action which might be construed
as evidence that McAllister controlled Outreach's hiring practices. In
fact, Outreach tended to hire personnel with relatively low seniority, i e,
employees who lacked job security and therefore might be more amena-
ble to working under nonunion conditions . However, as indicated I find
that the Rogers matter is evidentiary on the question of alleged mdepend-
ent contractor status
614 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the Act. I further find that even assuming the propriety
and legality of the operational changes introduced by
Outreach on and after April 14, that Outreach 's docking
pilots and captains were employees within the meaning
of Section 2(3) of the Act, and specifically that the dock-
ing pilots were not independent contractors and the cap-
tains were not supervisors . The fact that McAllister vol-
untarily recognized the Union as bargaining representa-
tive for units which included the captains , and negotiated
collective-bargaining contracts covering those units, may
properly be considered as demonstrating both the propri-
ety of the units and the status of the captains as employ-
ees under the Act . Tri-County Electric Cooperative, 237
NLRB 968 (1978 ). Outreach 's captains , like those of
McAllister, were responsible as a matter of law for the
safe and proper'operation of their boats by virtue of their
licenses. However such responsibility does not confer su-
pervisory status under the Act, where as here the cap-
tains do not exercise supervisory authority in the inter-
ests of the employer . Graham Transportation Co., 124
NLRB 960, 962 (1959). To the extent that captains did
and still do exercise control over other crewmembers
"the type of direction involved is not that of the supervi-
sor but that exercised by the more experienced employee
over one who is less skilled ," Southern Illinois Sand Co.,
137 NLRB 1490, 1492 (1962). Moreover , a finding that
the captains were or presently are supervisors would
result in a disproportionate and highly unlikely ratio of
supervisors to employees. Ross Porta-Plant, 166 NLRB
494, 496 (1967), enfd . 404 F.2d 1180 (5th Cir. 1968). As
for Outreach 's docking pilots, Outreach was contractual-
ly required to supervise the manner in which they per-
formed their duties, and was bound by contracts (the
service and sales agreement and the McAllister tariff),
which defined their status as that of servants, i.e., em-
ployees. The docking pilots derived all of their income,
including docking fees, by virtue of their jobs with
McAllister . Like other Outreach boat personnel , they re-
ceived their assignments from Gross and the dispatchers,
and they were subject to Mann 's disciplinary action.
Therefore , they were employees within the meaning of
Section 2(3) of the Act.
On and after April 14 McAllister maintained its Balti-
more office, but reduced the amount of leased space. Ou-
treach 's dispatchers operated from their homes, using
radio equipment, until Outreach leased an office. Out-
reach continued to use McAllister 's docking facility at
the recreation pier until July 1 without paying any rent
to McAllister (McAllister leased the facility). As of July
1 Outreach leased 'a facility at a nearby pier . According
to Mann, Assistant General Manager Bishop agreed that
Outreach could use the recreation pier facility free of
charge for the remaining period of McAllister 's lease,
and could keep any and all equipment and material on
the pier (which Mann described as mostly "junk") with-
out paying McAllister, if Outreach cleaned the pier and
restored it to a satisfactory condition . If so, then Out-
reach received a windfall, at least if Outreach were re-
garded as a separate operation from McAllister . The pier
contained valuable machinery, spare parts , equipment,
and supplies for-the boats including a welding machine,
drill press, and hydraulic press which were needed for
maintenance and repair. Respondents argue (Outreach
Br. fn. 15) that all this equipment was included in the
sale of the boats to Outreach. However the boats were
each sold as individual units, whereas the machinery on
the pier was utilized in common for McAllister's entire
fleet. Therefore, it is evident that McAllister transferred
the machinery on the pier to Outreach without any cost
to Outreach.
Outreach continued to service McAllister's customers,
and until October, 1983, i.e., a period of about 6 months,
this work comprised all of Outreach's operations. McAl-
lister, and consequently Outreach, lost McAllister's big-
gest customer, Atlantic Container Line. However, this
loss came about as a result of McAllister 's decision to
remove the Grace McAllister from Baltimore, and not as
a result of any decision or action by Outreach. McAllis-
ter even reserved the right to decide which work Out-
reach would perform for its customers. Thus, Assistant
General Manager Bishop had authority to and sometimes
did refer, work to Curtis Bay Towing (usually in ex-
change for work for Curtis Bay's customers), without
consulting Outreach. In the fall of 1983 Outreach ob-
tained some additional work, including towing of coal
and oil barges and an ice breaking contract with the Bal-
timore Port Authority. However this work constituted
and continues to constitute only a minute portion of Ou-
treach's total operations. Alcide Mann admitted that he
could not have obtained the barge hauling work if he ad-
hered to McAllister's cost structure, i.e., cost structure
under the union contracts. (Indeed, McAllister did not
bid for such work for this very reason.) However Out-
reach made its own choice of suppliers and, specifically,
did not purchase supplies from a McAllister Transporta-
tion subsidiary which had been McAllister's principal
supplier.
Throughout 1983 McAllister deliberately concealed
the existence of Outreach, and steadfastly represented to
the public and its customers that McAllister was continu-
ing to provide tugboat services in Baltimore Harbor. By
telegram to foreign shipowner agents in March, McAllis-
ter told them that rumors circulated by Curtis Bay
Towing to the effect that McAllister was selling or ter-
minating its Baltimore operations were false, that "McAl-
lister remains in Baltimore , servicing our clients in the
usual professional manner," but that because of substan-
tial losses, McAllister would "initiate an unusual but ef-
fective operational change to insure McAllister service
and commitment to the Port in the future." William Lu-
kowski, general manager of an agency which arranged
dockings with tugboat companies, testified that in April,
when he heard about Outreach, he contacted Rollins
Bishop . Bishop told him: "[d]on't worry, its business as
usual, you call me and give me the order." Bishop told
Lukowski that he should not deal with Outreach, and
that if he needed any information he should call
Bishop.2° After April 14 McAllister continued to adver-
20 Respondents suggest (McAllister Br. 15, Outreach Br 24) that
McAllister's customers and their agents could not have been misled be-
cause McAllister's tariff provided that. "if at any time McAllister Broth-
ers, Inc tugs are not conveniently available for the required services, the
Continued
MCALLISTER BROS.
tise for business in maritime publications, including Port
of Baltimore magazine, representing that it offered four-
port service, including Baltimore , listing its own tele-
phone number, and neither expressly nor impliedly refer-
ring to Outreach. McAllister instructed Mann that
McAllister forms should be used for shifting reports (re-
ports filled out by the captain concerning towing of lash
barges). Copies of these reports were sent to McAllister's
cutomers. The most flagrant illustration of the lengths to
which McAllister would go in this regard occurred in
late August, shortly before the union contracts were
scheduled to expire in the four eastern ports . McAllister,
by Bishop, sent a letter to McAllister's customers, con-
cerning "Schedule of Rates and Terms-Port of Balti-
more," informing them that its union contracts for Balti-
more were scheduled to expire on September 30, that
"we are presently negotiating a new labor contract," and
"we will in the near future keep you apprised of the
progress of negotiations ." In fact, McAllister had no in-
tention of negotiating with the Union concerning its os-
tensibly nonexistent Baltimore operation . Vice President
Stephens testified that the letter was a mistake . However,
although by letter dated September 11 the Union protest-
ed and questioned McAllister's letter to its customers,
McAllister never retracted its letter . Stephens testified
that he took no further action because "it would do
more harm ." In sum, as far as customers and the general
public were concerned , McAllister wished to make clear
that nothing had changed, even to the point of pretend-
ing that McAllister was still running a union operation in
Baltimore. However as far as the Union and the employ-
ees were concerned, Baltimore was an Outreach non-
union operation for which McAllister bore no responsi-
bility.
E. Motivation for the Sale
McAllister sold its boats to Outreach in order to evade
its obligations under the union contracts , which McAllis-
ter regarded as an intolerable financial burden . McAllis-
ter wanted to maintain a four-port operation , including
Baltimore, without Baltimore being a financial drain on
its resources . McAllister concluded that this could only
be done under nonunion conditions . Therefore , McAllis-
ter sold its boats and transferred the Baltimore operation
to Outreach , with the understanding that Outreach
would run a nonunion operation . McAllister was perfect-
ly willing to let Alcide Mann enjoy the , profits of such
an operation , i.e., make as much as he could by lowering
wages and working conditions , so long as McAllister
could offer its customers a four-port operation and break
even (or at least suffer only a minimal loss) in Baltimore.
said agent , McAllister Brothers , Inc shall have the right to designate or
engage other tugs for such services ; and such other tugs, together with
any additional tugs hereafter added to the fleet, shall be covered by this
contract/schedule." However, the tariff language indicates that this
would be an exception rather than the usual situation . Respondents also
attach significance to the fact that Outreach eventually painted the tugs
with different colors and symbols than those utilized by McAllister
However, the foreign agents had little if any occasion to observe oper-
ations in Baltimore Harbor, and in view of McAllister's insistent repre-
sentations to the contrary, and the fact that they continued to deal only
with McAllister, they had no reason to believe that any firm other than
McAllister was operating the tugs.
615
This was the predictable result of the transfer, and this in
fact is what occurred . These findings are virtually a
matter of simple arithmetic . Compare Big Bear Supermar-
kets No. 3, 239 NLRB 179, 183 (1978), enfd. 640 F.2d
924 (9th Cir . 1980), cert. denied 449 U.S. 719 (1980).
McAllister suffered losses in Baltimore which steadily
rose from $250,000 to $750,000 annually, which McAllis-
ter regarded as intolerable . After exploring or attempting
various possibilities , McAllister was unsuccessful in re-
ducing its losses . McAllister then concluded that it could
not reduce its losses except -by reducing or eliminating its
obilgations under the union contracts. McAllister initially
sought to accomplish this result with the cooperation of
the Union and the employees , first by requesting substan-
tial wage concessions, and next by offering to sell the op-
eration to the employees . When the employees rejected
these proposals, Anthony McAllister persuaded Alcide
Mann to buy the boats and run the Baltimore operation.
Mann did not buy the boats in order to sustain an annual
loss of $750,000. In fact Mann, who had never been in
business for himself and had worked for a salary
throughout his career, could not afford to sustain any
loss even temporarily . Mann conceded that he had no
way of eliminating the loss , let alone of making a profit,
except by operating on a nonunion basis . Mann testified,
with respect to other cost factors, that he projected
higher maintenance and repair , fuel, and general and ad-
ministrative expense costs (but lower insurance costs)
than McAllister . As indicated , Mann anticipated bidding
for barge towing work, but he admitted that he could
not compete for such work under McAllister 's labor cost
structure . Mann admitted that he projected lower labor
costs than McAllister, that his projections were not
based on the union contracts , and that he intended to
take the position that if he purchased the tugs he would
have no obligation to honor the union contracts . Signifi-
cantly, although Anthony McAllister conceded that
labor costs accounted for about 50 percent of the cost of
the Baltimore operation , Mann testified that this was not
necessarily true. As labor costs were fixed by the union
contracts, Mann plainly contemplated operating without
the contracts . Mann testified in an evasive fashion that
he' did not think that he discussed labor costs with An-
thony McAllister. However , McAllister admitted that
they discussed the union contract and lowering costs
under the contract . Nevertheless McAllister asserted that
he did not think that they discussed whether Mann
would go along with the union contracts , and that he
could not remember whether he made any recommenda-
tions to Mann . McAllister's assertions are incredible. The
transaction between McAllister and Mann was totally
dependent on elimination of costs imposed by the' union
contracts . I find that Anthony McAllister and Mann un-
derstood at all times Mann would repudiate the union
contracts, and that such action was essential to the suc-
cess of their arrangement . In these circumstances, it
seems almost superfluous to look to express admissions as
to McAllister's motivation for the transaction . However
there is uncontroverted evidence concerning such an ad-
mission. Under the union contracts, tugs had to be tied
up by 8 p .m. on Christmas Eve. Prior to 8 p.m. on De-
616 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
cember 24, 1983, Captain Canavavino 's tug was assigned
to a job. However, the tug could not complete the job
before 8 p.m. because an injured crewmember had to be
taken ashore . Canavino so informed Operations Manager
Gross, and they expected McAllister to abide by the
contracts. As a result the job went to Curtis Bay
Towing. Gross, who was visibly angry, told Canavino
that "because of these union contracts, that's why we're
going out of business ." As discussed , Gross was the
highest ranking supervisor who normally dealt with the
employees on a day-to-day basis. He was obviously
knowledgeable concerning McAllister 's policies , particu-
larly as they affected the employees. I find that Gross'
statement may properly be considered as evidence of
McAllister 's motivation for transferring the operation to
Alcide Mann. In light of the evidence as a whole, I find
that McAllister sold the boats and transferred the oper-
ation to Outreach in order to evade its obligations under
the union contracts and thereby eliminate its financial
losses, and that this was the predictable result of the
transaction.
F. Concluding Findings with Respect to Alleged Status
of McAllister and Outreach as Alter Egos and Single
Employer
The Board and the courts have held that ostensibly
separate firms may be regarded as a single employer
under the Act where there is interrelation of operations,
together with centralized control of - labor relations,
common management , and common ownership or finan-
cial control. NLRB v. M P. Building Corp., 411 F.2d 567
(5th Cir . 1969). The alter ego doctrine is an extension of
the concept of single employer . Thus, two nominally
separate business entities may be regarded as a single em-
ployer if one is the alter ego or "disguised continuance"
of the other . Southport Petroleum Co. v. NLRB, 315 U.S.
100, 106 (1942). In-determining "whether two facially in-
dependent employers constitute alter egos" under the
Act, the Board has long held that "[a]lthough each case
must turn on its own facts, we generally have found alter
ego status where the two enterprises have `substantially
identical ' [ownership], management , business purpose,
operation, equipment, customers and supervision...."
Advance Electric, 268 NLRB 1001, 1002 ( 1984). However
actual common ownership is not an essential element of
an alter ego relationship . All Kind Quilting, 266 NLRB
1186 fn . 4 (1983). Nor is nominal, as distinguished from
real common management and supervision . American Pa-
cific Concrete Pipe Co., 262 NLRB 1223 , 1226 ( 1982),
enfd . 709 F .2d 1514 (9th Cir . 1983). Rather, "the crucial
element in a decision to apply the alter ego doctrine is a
finding that the older company continued to maintain a
substantial degree of control over the business claimed to
have been sold to the new entity ." NLRB v. Scott Print-
ing Corp., 612 F.2d 783, 786 (3d Cir. 1979).
In, Advance Electric , supra, the Board held that in de-
termining whether an alter ego status was present, it
would consider "whether the purpose behind the cre-
ation of the alleged alter ego was legitimate or whether,
instead , its purpose was to evade responsibilities under
the Act," but that such intent is not an essential element
of an alter ego relationship. See also Fugazy Continental
Corp., 265 NLRB 1301, 1302 (1982), enfd. 725 F.2d 1416
(D.C. Cir. 1983). However in Denzils Alkire v. NLRB,
716 F.2d 1014, 1020 (4th Cir. 1983), the court, Judge
Sprouse dissenting , held that in determining alter ego
status when business operations are transferred : "[T]he
initial question is whether substantially the same entity
controls both the old and new employer. If this control
exists, then the inquiry must turn to whether the transfer
resulted in an expected or reasonably foreseeable benefit
to the old employer related to the elimination of its labor
obligations." In Alkire, the court denied enforcement of
the Board 's order because the evidence failed to demon-
strate such benefit . The circuit courts are not in agree-
ment on this point . Recently the Second Circuit Court
held that the Board is not required to find antiunion
animus or intent to evade union obligations before it can
impose alter ego status . Goodman Piping Products v.
NLRB, 741 F.2d 10 (2d Cis. 1984). However in light of
Advance Electric, and the fact that the present case arises
within the geographical venue of the Fourth Circuit, I
have considered employer motivation in determining the
relationship between McAllister and Outreach.
For the reasons discussed above, I have found that
McAllister sold its boats and transferred its Baltimore
Harbor operation to Outreach in order to evade its col-
lective-bargaining obligations . Therefore, in determining
whether an alter ego relationship exists, the remaining
question is, with due consideration to the factors dis-
cussed in Advance Electric, supra, whether McAllister
maintains a substantial degree of control over the opea-
tions of Outreach. Upon consideration of the evidence,
and in light of pertinent Board and court authority, I
find that it does, and that McAllister and Outreach are
alter egos and a single employer under the Act.21 Out-
reach existed almost exclusively for the purpose of serv-
icing McAllister's customers in Baltimore Harbor. The
terms of the agreements between McAllister and Out-
reach , particularly the service and sales representation
agreement , effectively precluded Outreach from per-
forming more than a token amount of its own business.
Thus Outreach was required to give first priority to
McAllister 's customers , but could not add to its fleet
without the permission of McAllister. That fleet, with re-
moval of Grace McAllister, was smaller than the fleet
which' McAllister had been using prior to April' 14.
Moreover, by the terms of the service and sales agree-
ment, McAllister could claim the right to act 'as sales
agent for any other work which Outreach might wish to
obtain. Therefore it is not surprising that for the first 6
months of its existence , Outreach worked exclusively for
McAllister's customers . Outreach had no involvement in
setting the rates for its services in docking and undock-
ing ships, which comprised nearly all of its work. Rather
Outreach was required, in furtherance of McAllister's in-
terests, to provide services in accordance 'with McAllis-
ter's tariff. In sum, McAllister "controlled the workload
21 McAllister contends (Br. 18) with respect to the alter ego question
that the General Counsel must bear "a heavy burden of proof ", The Gen-
eral Counsel's burden with respect to this issue is the same as that in most
civil and administrative litigation, namely, to prove its case by a prepon-
derance of the credible evidence. See Sec. iq(c) of the Act
MCALLISTER BROS. 617
of [Outreach], thereby controlling the very existence of
the new company and income of its owners." NLRB v.
Scott Printing Co., supra, 612 F.2d at '786. Outreach was
created and existed for the purpose of furthering McA1-
lister's business purpose, namely, to offer four-port serv-
ice to McAllister's customers, but without Baltimore
being a financial drain on the overall operations of
McAllister Transportation and its subsidiaries. To this
end, McAllister represented to its customers and the gen-
eral public that Baltimore remained a McAllister oper-
ation, and the new customers were required to deal ex-
clusively with McAllister. As far as they were concerned
Outreach did not even exist. Outreach performed its
services with McAllister's equipment, i.e., with the four
boats which it purchased from McAllister, and shore-
based equipment which McAllister furnished without
charge, and could not add to or replace the boats in the
fleet without McAllister's approval. Outreach conducted
its operations in the same manner as McAllister, in ac-
cordance with McAllister's requirements , without any
break in service, except insofar as Outreach instituted
operational charges which could not have been made if
Outreach adhered to the union contracts. McAllister,
through its Assistant General Manager Rollins Bishop,
maintained tight control over Outreach's day-to-day op-
erations. Under the services and sales agreement, McAl-
lister jointly supervised'the performance of Outreach's li-
censed personnel. Bishop assigned jobs to Outreach, and
in performing that function, exercised discretion to trans-
fer or exchange work with Curtis Bay Towing without
prior consultation with Outreach. The shore-based staff,
including supervisors, remained virtually intact, with the
insertion of Alcide Mann into the management hierarchy.
Mann hired most of -his shore-based personnel on Antho-
ny McAllister's recommendation, without interviewing
other persons for their positions. In light of the service
and sales agreement, and Bishop's functions as described
above, it is evident that Alcide Mann functioned in a
subordinate capacity to Bishop. See Big Bear Supermar-
kets No. 3, supra, 239 NLRB at 184.
Alcide and Audrey Mann were the sole shareholders
of Outreach. However, they enjoyed few of the' benefits
and bore few of the risks of entreprenurial status. They
invested none of their own money in Outreach. Rather
McAllister and its bank provided all of the capital.
McAllister obtained and provided Outreach with its
work, at rates fixed by McAllister. By reason of its com-
mitments to Westminister, Outreach could not engage in
any business except the operation of vessels, declare divi-
dends, or incur any significant indebtedness. McAllister
assumed all credit risks. McAllister permitted Outreach
to retain the profits of the operation (after McAllister
collected its commissions), but Outreach could make a
profit, or enhance its profit, only to the extent that it
could reduce its labor costs. This was consistent with
McAllister's business purpose. McAllister was not con-
cerned with whether Baltimore operated at ai profit.
Rather, McAllister was concerned only that it could
offer, four-port service to its customers without signifi-
cant financial loss to itself in Baltimore. However, McAl-
lister did require Outreach to conform to its detailed
standards of operation. If McAllister determined that
Outreach was failing to measure up to those standards,
McAllister was empowered to take action to put Out-
reach out of business by forcing Outreach to resell the
boats to McAllister, without profit or loss to Outreach,
through a procedure which was stacked in favor of
McAllister. Thus Outreach "virtually exists at the suffer-
ance of' McAllister. Fugary Continental Corp., supra, 265
NLRB at 1302-1303.22 As for labor relations, ostensibly
handled in an autonomous fashion by Alcide Mann, but-
reach was in reality carrying out a joint understanding
that Outreach would operate nonunion, and thereby ef-
fectuate McAllister's goal of eliminating its losses in Bal-
timore. In sum, McAllister and Outreach have common
financial control, integrated management, and common
supervision, identity, business purpose, operation, equip-
ment, customers, and labor relations policy, and McAllis-
ter effectively controls the operations of Outreach.
Therefore, McAllister and Outreach are alter egos and a
single employer under the Act.
G. Alleged Violations of Section 8(a)(1), (3), and (5)
of the Act
As McAllister and Outreach were and are alter egos
and a single employer under the Act, it follows that Out-
reach was bound by McAllister's union contracts, and
that Respondents violated Section 8(a)(l) and (5) of the
Act by withdrawing recognition from the Union as rep-
resentative of the employees in the licensed and unli-
censed units, repudiating and failing to adhere to the
union contracts, unilaterally changing wages and other
terms and conditions of employment, and bypassing the
Union and dealing directly with employees concerning
wages and other terms, and conditions of employment. In
Walter N. Yoder & Sons, 270 NLRB 652 fn. 2 (1984), the
Board recently held:
"A double breasted" operation is one in which a
contractor operates two companies, one unionized
and the other nonunionized. Depending on how the
companies are structured and operated, each may
be a separate corporation or else both may be so
interrelated that they constitute a single employer
or one may be the alter ego of the other. A collec-
tive-bargaining contract signed by one of the com-
panies would not bind the other if each were a sep-
arate corporation, but would bind the other if both
constituted a single employer and the employees of
both compaines constituted a single appropriate bar-
gaining unit or the nonsignatory company is an alter
ego of the signatory company. [Citations omitted.]
22 Respondents attach significance to the allegedly prolonged negotia-
tions and the elaborate nature of the documents executed by the parties
involved in the April 13 transactions. Compare Fugazy Continental, supra,
265 NLRB at 1302. Their arguments might be persuasive if one did not
carefully examine those documents It is evident from those documents,
and testimony and evidence concerning the developments which led no
to the April 13 transactions (previously discussed) that the transaction
took place substantially on terms originally contemplated by McAllister,
subject to the requirements of Westmrmster, and that the agreements
were carefully crafted to assure that McAllister effectively controlled the
Baltimore Harbor operation.
618 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
See also Big Bear Supermarkets No. 3, supra, 239 NLRB
at 184; Advance Electric, supra, 268 NLRB at 1004. I do
not agree with McAllister's argument (Br. 39-43) to the
effect that the alter ego doctrine was nullified, sub silen-
tio, by the Board's recent decision in Milwaukee Spring
Division, 268 NLRB 601 (1984) (Milwaukee Spring II).
That decision, and the Board's earlier decision in the
same case, reported at 265 NLRB 206 (1982) (Milwaukee
Spring 1), dealt with the narrow question of whether an
employer, after engaging in decision bargaining and
while offering to engage in further effects bargaining,
may without union consent relocate bargaining unit
work during the term of an existing collective-bargaining
agreement from its unionized facility to its nonunionized
facility, and lay off employees, solely because of com-
paratively higher labor costs in the collective-bargaining
agreement at the unionized facility which the Union de-
clined to modify, where the contract does not expressly
prohibit the contracting out of such work. The Board in
Milwaukee Spring I held that it could not because the
employer thereby violated its contractual obligation to
provide the wages, benefits, and other terms and condi-
tions of employment set forth in the contract. The Board
in Milwaukee Spring II disagreed with this premise.
McAllister's reliance on Milwaukee Spring II in the
present case begs the question. If, as found, McAllister
and Outreach are alter egos, then the work was never
transferred out of the bargaining unit, and the union con-
tracts remain applicable to the Baltimore Harbor oper-
ation, whether nominally run by McAllister or Outreach.
See also Otis Elevator Co., 269 NLRB 891 (1984), in
which the Board indicated that an employer would be
prohibited even from contracting out work in further-
ance of a decision which "turned on a fundamental
change in the scope and direction of the enterprise" (a
situation not here present), if "alter ego or other sham
devices were employed to disguise a unilateral reduction
in labor costs in an operation over which the employer
maintained surreptitious control."23
The complaint alleges that on April 13 McAllister vio-
lated Section 8(a)(1) and (3) of the Act by discharging 38
employees who were actively employed and/or on
McAllister's seniority roster as of that date, and that Re-
spondents have violated and are violating Section 8(a)(1)
and (3), since April 14, by failing and refusing to rehire
27 of those employees as positions became available. The
27 employees so named are:
Ralph A. Kirchner
Charles H. Rogers
Leon J. Mach Sr.
Charles J. Dougherty
Mark Garayoa
Manuel R. Alvarez
Peter L. Messina
Alvin F. Hirsch
Robert Henniger
Ronald Neibert
Robert Machlinski
Paul Pusloskie
Joseph A. Rakowski
William H. Miller
William P. Bobac
Karl Dlabich
22 In his opening statement, union counsel made an argument based in
part on the asserted equities involved in this case In the present case, the
equities are by no means one-sided. The employees could have been more
understanding and cooperative when McAllister presented them with its
financial situation. However McAllister negotiated the union contracts,
and the employees were entitled to their rights under those contracts
Joseph L. Zorback Jr. Raymond Kura
Robert F. Schwatka Steven A. Hardin
James C. Perry Norman H. Gifford
George T. LaMaire Steve August
Louis A. Canavino Larry K. Neibert
Jerome J. Lukowski
As discussed, the union contracts spelled out job catego-
ries and minimum staffing requirements for boat person-
nel. The contracts further 'provided for job referrals,
layoff, recall for layoff, promotion, and transfer in ac-
cordance with McAllister's seniority roster. Therefore
Respondents violated their contracts, and consequently
violated the Act, by altering job categories, reducing
crew sizes, and failing to retain or reemploy employees
in accordance with the contract requirements. As of
April 13, Ralph Kirchner, Charles Rogers, and Louis
Canavino were regularly employed as captains, and were
first, second, and fourth, respectively, on McAllister's se-
niority list of captains. Therefore they are entitled to re-
instatement to their former positions as of April 13.
Steven Jardin, who was fifth on the seniority list of cap-
tains, was working as a relief man. He was entitled to
employment ahead of Ray Jankowiak, who was sixth on
the seniority list of captains, and Richard Kestler, who
was not on the seniority list, both of whom were hired
by Outreach as docking pilots, i.e., performing the work
of captains. Hardin was also entitled to employment as a
mate in accordance with his seniority rights. As of April
13, Jerome Lukowski and Leon Mach Sr. were fist and
second, respectively, on the seniority list of mates, and
were working regularly as mates. They are entitled to re-
instatement to their former positions. Charles Dougherty
was fourth on the seniority list of mates, and Mark Gar-
ayoa was seventh and last on the list. (In addition, Leon
Mach Jr., as shop steward for the mates, was entitled to
superseniority in this category. Bernard Freburger Jr.,
nominally on the list, retired before April 13.) Dougher-
ty worked infrequently. He had lower seniority than
Leon Mach Jr. and Chester Wikell, who were hired by
Outreach as "captains ." However he was entitled to em-
ployment ahead of Paul Straszynski, who was next in se-
niority, and Gregory Lukowski and Mark Adams, who
had no seniority as mates . Charles Rogers testified that in
1983 Garayoa took a job with the Maryland Pilot Asso-
ciation. However deckhand Robert Machlinski testified
that on May 21, 1984, he worked on an Outreach boat
when - Garayoa was "captain." Although Garayoa re-
tained his position on the seniority list and was entitled
to contract wages , benefits, and other conditions when
he worked for Outreach, I find that having obtained
other employment Garayoa was not an employee of
McAllister as of April 13, and therefore was not entitled
to reinstatement by reason of such status.
Peter Messina, Alvin Hirsch, and Manuel Alvarez
were first, second, and third, respectively, on the seniori-
ty list of engineers, and Joseph Zorbach Jr. was entitled
to supersemority by virtue of his status as engineer stew-
ard. They were working regularly as of April 13, and are
entitled to reinstatement to their former positions. Robert
Schwatka and James Perry were fifth and sixth on the
seniority roster of engineers. They did not work regular-
MCALLISTER BROS. 619
,1y, `but they .were entitled to employment ahead of all of
Outreach' s "engineer-utility"' :personnel 'exce'p't Gerard
Fieburger, who had higher seniority. Joseph Rakowski,
Paul Pusloskie, Robert` Machlinski, Ronald,,Neibert and
Robert Henniger Sr. were first, third fourth,' sixth, and
seventh respectively on the deckharid seniority list, and
were working regularly' as_ ,deckhands as of April 13.
They 'are entitled to- reinstatement to their` former posi-
tions. The remaining employees who were allegedly
denied reemployment (George L•eMaire, William Miller,
William Bobac, Karl'''Blabich, Ramond• Kuta, Steve
August, Larry' Neibert, and "Nbrrrian Gifford) were on
the seniority list of deckhands but did not work regular-
ly. However, ihey`were'entitled to employment ahead of
all of Outreach's deckhands except Mark Jankowiak,
James Kabakovich,r and Morris Superczynski, who had
high seniority which 'entitled ' them to regular employ-
ment.24
- 24 Assuming , arguendo , that McAllister and Outreach were not alter
egos, I would find that Outreach is-the successor to McAllister and obli-
gated to recognize and bargain with the Union in accordance with the
principles established ,'m NLRB Y Burns Security , Services, 406 U S 272
(1972), and that Outreach ,violated - Sec 8(a)(1) and (5) of the Act by fail-
ing to do so First "there is substantial continuity of the employing indus-
try," Saks Fifth Avenue, 247 NLRB 1047, 1050- 1051 (1980), enfd in perti-
nent part 634 F2d'681 (2d,Cir 1980) Specifically , Outreach performed
the same work as McAllisterQservicmg the same customers in the same
manner without any break in service , using the same equipment and oper-
ating initially at the same location and later at a nearby location More-
over, McAllister represented to its customers and the general public that
this was a McAllister operation Second, as of May 16, when the. Union
sent a letter to Outreach , asserting its status as representative of Ou-
treach's employees and demanding, recognition and bargaining , a majority
of Outreach 's' employees were former employees of McAllister . In this
regard, an appropriate unit would consist of all personnel employed in
connection with towing; including docking plots, captains , engineer-utili-
ty personnel , and deckhands , but excluding supervisors and shore-based
personnel See A J Mechl,ng Barge Lines, 192 NLRB 1118, 1120 (1971)
As previously discussed, I have found that the docking pilots and cap-
tains are employees under the Act Therefore they would be included in
the- unit The watchmen hired by Outreach would also be excluded as
guards under Sec 9 (b) of the Act In addition , Ray Jankowiak would be
excluded as a supervisor : by reason of his substantial involvement in
making effective - recommendations to Alcide Mann with regard to hiring
of personnel . Outreach 's, records indicate that as of May 16 , there are 20
employees in the appropriate unit Of these, eight (Edward Covacevich,
Gerard Frebuger, Mark Jankowiak , James Kabakovich , Leon Mach Jr,
Paul Straszynski , Morris Superczynski , and Chester Vikell) were regular-
ly employed by McAllister , and'four (Gregory Lukowski , Thomas Lu-
kowski, Jerry,Pakula , and Robert Zientak) had performed sufficient work
'for McAllister to obtain and maintain places on McAllister 's seniority
roster, 'and they worked oh-in irregular basis for McAllister in acordance
with-their seniority rights . Therefore they had a reasonable expectancy of
recall to work, and should be recognized as employees of McAllister for
successorship purposes Pacific Hide & -Fur Depot, 223 NLRB 1029, 1030
(1976), enfd . denied on other grounds 553 F 2d 609 (9th Cir 1977) "A
layoff; by.definition,' is not a termination of the employment relationship.
The employee retains his or her status as,an employee , but is placed in an
inactive' status for the period of the -layoff." Giddings & Lewis, Inc. v.
NLRB, 675 F 2d 926, 931 (7th Cir 1982) Moreover , McAllister regarded
all persons on its seniority roster as its employees , as demonstrated by the
fact that' McAllister invited all personnel on its seniority roster, whether
working or on layoff status , to the meetings in which it submitted pro-
posals to deal with its financial problems Additionally , it is significant
'that an employee established seniority under the union contracts by
working 30 days in a 60-day 'penod, "and thereafter retained seniority by
working at least I day in each 6-month period The union-security
clauses further . provided for union membership within 31 days of the ini-
tial-date of hire Therefore all employees on the seniority list were cov-
ered by the union-security clause, and were presumably union members
-For this additional reason, employees on the McAllister seniority list who
were hired by Outreach , should be regarded as union represented em-
CONCLUSIONS OF LAW
1 : McAllister and Outreach are alter egos and consti-
tute a single employer engaged in commerce within the
meaning of Section 2(2), (6), and (7) of the Act.
2. The Union is a labor organization within the mean-
ing of Section 2(5) of the Act. -
3. The following units constitute units appropriate for
the purposes of collective-bargaining within the meaning
of Section 9(b) of the Act:
Unit I ,
All licensed tugboat personnel, including docking
pilots, employed by Respondents in connection with
towing in and from the Baltimore Harbor, including
inland waters.
Unit 11
All unlicensed tugboat personnel -employed by Re-
spondent in connection with towing in and from the
Baltimore Harbor , including inland waters. -
4. At all material times, the Union . has been and is the
exclusive representative of the employees of Respondents
in the appropriate units .
5. By discriminatorily discharging its.unit employees in
order to avoid its collective -bargaining obligations, there-
by discouraging membership in the, Union, McAllister
violated and is violating Section 8 (a)(11, and (3) of,the
Act. . - . , . ,
6. By discriminatorily failing and refusing to reinstate
Ralph Kirchner , Charles Rogers, Louis ,Canavino,
Jerome Lukowski , Leon Mach Sr ., • Peter Messina ,, Alvin
Hirsch , Manuel Alvarez, Joseph Zorbach. Jr., sJoseph "Ra=
kowski , Paul Pusloskie , Robert Machlinski , Ronald Nei
bert, and Robert Henninger to their -former , positions, by
further failing and refusing to recall Steven Hardin,
Charles Doughert y ,- Robert Schwatka; James - Perry,
George LeMaire;. William Miller , William Bobac, ,'Karl
Dlabich, Raymond Kuta, Steve August, Larry.[Neibert,
and Norman Gifford for work rin..accordance with ,their
seniority rights , by failing to recall, employees in; accord-
ance with contractual, seniority, and by failing,to main-- -
tain terms and conditions of,employment as provided in
the collective-bargaining..contracts tbetween , McAllister
and the Union , [thereby 'discouraging membership in„ the
Union, Respondentshaveviolated , and are violating _Sec-
tion 8(a)(1) and (3),of the {Act: «.i.,
7. By withdrawing recognition of the Union ,. by deal-
ing directly with,unit , employees concerning wage,reduc;
tions and reduction of other, terms, benefits and condi-
tions of - employment , by unilaterally reducing or elimi-
nating employees ': wages, crew sizes, fringe benefits, and
premium pay,-and failing' to recall - employees in accord-
ance with contractual - seniority , arida by otherwise failing
to abide by . terms and' conditions - of employment as, set
forth in the collective -bargaining contracts 'between
McAllister and- the Union; Respondents ' have l ,violated
and are violating Section 8(a)(5) and:(l )'of the`Adt:,
r r 'v • , . ,
ployees Saks' & Co. Y. NLRB, 634 F 2d 681 , 686 (2d Cir 1980) Assuming
that separate licensed and unlicensed' -units', should be deemed as appropri-
ate, former McAllister employees would constitute a majority of both
units (8 of 13 licensed employees and 4 of 7 unlicensed employees).- , -
620 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
8. The aforesaid unfair labor practices are unfair labor
practices within the meaning of Section 2(6) and (7) of
the Act.
THE REMEDY
Having found that Respondents have committed viola-
tions of Section 8(a)(1), (3), and (5) of the Act, I shall
recommend that they be required to cease and desist
therefrom, and from like or related conduct, and to take
certain affirmative action designed to effectuate the poli-
cies of the Act. I shall recommend that Respondents be
ordered to maintain and give full effect to the collective-
bargaining contracts covering the unit employees which
were effective by their terms through September 30,
1984, and from year thereafter until terminated upon
proper notice; unless and until Respondents and the
Union negotiate a new agreement or agreements or bar-
gain to impasse after compliance with the requirements
of Section 8(d) of the Act. I shall recommend that Re-
sondents be ordered to offer Ralph Kirchner, Charles
Rogers, Louis Canavino, Jerome Lukowski, Leon Mach
Sr., Peter Messina, Alvin Hirsch, Manuel Alvarez,
Joseph Zorbach Jr., Joseph Rakowski, Paul Pusloskie,
Robert Machlinski, Ronald Neibert, and Robert Hen-
ninger immediate and full reinstatement to their former
positions, or if, for lawful reasons, such positions no
longer exist, to substantially equivalent positions in ac-
cordance with their seniority rights, without prejudice to
their seniority or other rights, privileges, and benefits
previously enjoyed, and to offer Steven Hardin, Charles
Dougherty, Robert Schwatka, James Perry, George Le-
Maire, William Miller, William Bobac, Karl Dlabich,
Raymond Kuta, Steven August, Larry Neibert, and
Norman Gifford employment in accordance with their
seniority rights, without prejudice to their seniority or
other rights, privileges, and benefits previously enjoyed,
displacing if necessary employees hired by Respondents
with less or no seniority rights. I shall further recom-
mend that Respondents be ordered to make whole all of
the above-named employees for any loss of earnings they
may have suffered from the time of their termination on
April 13, 1984, to the date of Respondents' offer of rein-
statement or appropriate employment, including loss of
docking pilot fees. See Dependable Truck Leasing, 190
NLRB 422, 424 (1971). Backpay for the above-named
employees shall be computed in accordance with the for-
mula approved in F. W. Woolworth Co., 90 NLRB 289
(1950), with interest computed in the manner and amount
prescribed in Florida Steel Corp., 231 NLRB 651
(1977).25 I shall further recommend that Respondents be
ordered to make whole former McAllister employees
employed at Outreach for the difference between the
contract terms and what they were actually paid, to the
extent that they had sufficient seniority to be employed if
the seniority provisions of the McAllister contracts had
been following. H. S. Brooks Electric, Inc., 233 NLRB
889 (1977). Such reimbursement, with interest, shall be
computed in the manner set forth in Ogle Protection Serv-
ice, 183 NLRB 682 (1970), and Florida Steel Corp., supra.
See European Parts Exchange, 270 NLRB 1244 fn. 2
25 See generally Isis Plumbing Co., 138 NLRB 716, 717-721 (1962)
(1984). For remedial purposes, the 22 unit employees
who were regularly employed by McAllister as of April
13 (8 of whom were hired by Outreach) shall be consid-
ered as entitled to regular employment on and after that
date by reason of their seniority status. I shall recom-
mend that Respondents be ordered to take such further
actions as are necessary to fulfill their contractual obliga-
tions, including but not limited to the following: Re-
spondents shall pay wages and overtime and other pre-
mium pay and maintain crew sizes as required by the
contracts. Respondents shall make the contractually es-
tablished payments to the various trust funds established
by the collective-bargaining agreements on behalf of all
employees who were entitled to employment. In accord-
ance with Board policy, the amount of interest if any due
on such payments shall be determined at the compliance
stage of this proceeding. Merryweather Optical Co., 240
NLRB 1213, 1216 fn. 7 (1979). Respondents shall reim-
burse those employees for any medical or dental bills
they have paid to health care providers that the contrac-
tual policies would have covered, for any premiums they
may have paid to third party insurance companies to
continue medical and dental coverage in the absence of
Respondent's required contributions, and for contribu-
tions they themselves may have made for the mainte-
nance of the contractual trust funds after Respondents'
unlawfull discontinued or failed to make contributions to
those funds. Kraft Plumbing Co., 252 NLRB 891 fn. 2
(1980), enfd. 661 F.2d 940 (9th Cir. 1981). Reimburse-
ment shall be with interest in the manner prescribed in
Florida Steel Corp., 231 NLRB 651 (1977). See generally
Isis Plumbing Co., supra. Respondents shall also be re-
quired to reimburse the Union for any dues which, pur-
suant to dues-checkoff authorizations, they failed to
deduct or would have been required to deduct from
those employees' paychecks and transmit to the Union as
required by contract, insofar as the Union has not ob-
tained such dues directly from employees, with interest.
On these findings of fact and conclusions of law and
on the entire record, I issue the following recommend-
ed26
ORDER
The Respondents, McAllister Brothers, Inc. and Out-
reach Marine Corporation, alter Egos, Baltimore, Mary-
land, their officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Discouraging membership in Seafarers Internation-
al Union of North America, Atlantic, Gulf, Lakes and
Inland Waters District; Seafarers International Union of
North America, AFL-CIO, or any other labor organizai-
ton, by discharging employees in orer to avoid their col-
lective-bargaining obligations, failing or refusing to rein-
state or recall employees to work in accordance with
their contractual seniority rights, failing to maintain
terms and conditions of employment as provided in Re-
26 If no exceptions are filed as provided by Sec. 102.46 of the Board's
Rules and Regulations , the fmdmgs, 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
MCALLISTER BROS.
spondents ' collective-bargaining contracts , or in any
other manner discriminating against employees with
regard to their hire or tenure of employment or any term
or condition of employment.
(b) Failing or refusing to recognize and bargain collec-
tively in good faith with the Union as the exclusive bar-
gaining representative of their employees in the appropri-
ate units , failing or refusing to honor collective -bargain-
ing agreements applicable to those employees , unilateral-
ly changing the wages , hours and other terms and condi-
tions of employment of the unit employees without prior
notice to the Union and without affording the Union an
opportunity to meet and bargain concerning such matters
as such representative , or bypassing the Union and deal-
ing directly with unit employees concerning changes in
wages or other terms and conditions of employment.
(c) In any like or related manner interfering with, re-
straining , or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Offer Ralph Kirchner , Charles Rogers, Louis Cana-
vino , Jerome Lukowski , Leon Mach Sr ., Peter Messina,
Alvin Hirsch, Manuel Alvarez , Joseph Zorbach Jr.,
Joseph Rakowski, Paul Pusloskie , Robert Machlinski,
Ronald Neibert, and Robert Henninger immediate and
full reinstatement to their former jobs, or if, for lawful
reasons, such jobs no longer exist , to substantially equiv-
alent positions, without prejudice to their seniority or
other rights, privileges , and benefits previously enjoyed.
(b) - Offer Steven Hardin , Charles Dougherty, Robert
Schwatka, James Perry, . George LeMaire , William
Miller, William Bobac, Karl Dlabich , Raymond Kuta,
Steve August , Larry Neibert , and Norman Gifford em-
ployment in accordance with their seniority rights, with-
out prejudice to their seniority or other rights , prvileges
and benefits previously enjoyed , displacing if necessary
employees hired by Respondents with less or no seniori-
ty rights.
(c) Make whole the above-named employees for losses
they suffered by reason of Respondents ' unlawful failure
and refusal to employ them in accordance with their se-
niority and other rights under the contracts between
McAllister and the Union, as set forth in the section of
this decision entitled "The Remedy."
(d) Make whole former McAllister employees em-
ployed at Outreach for the difference between the con-
tract terms and what they were actually paid, to the
extent that they had sufficient seniority to be employed if
621
the seniority provisions of the McAllister contracts had
been followed , as set forth in the remedy section of this
decision.
(e) Maintain and give full effect to the collective-bar-
gaining contracts covering the unit employees which
were effective by their terms through September 30,
1984, and from year to year thereafter until terminated
upon proper notice , unless and until Respondents and the
Union negotiate a new agreement or agreements or Re-
spondents bargain in good faith to an impasse in accord-
ance with the requirements of Section 8(d) of the Act,
including but not limited to: paying wages and overtime
pay, and maintaining crew sizes as required by the con-
tracts ; making the contractually established payments to
the various trust funds established by the contracts on
behalf of all employees who were entitled to employ-
ment, reimbursing those employees for any expenses en-
suing from Respondents' failure to make such contribu-
tions; and reimbursing the Union for any loss of dues
caused by Respondents ' failure to deduct dues pursuant
to checkoff anuthorizations and remiting same to the
Union as required by contrat ; all as set forth in the sec-
tion of this decision entitled "The Remedy."
(f) Preserve and, on request , make available to the
Board or its agents for examination and copying , all pay-
roll records, social security payment records , timecards,
personnel records and reports , and all other records nec-
essary to analyze the amount of backpay due under the
terms of this Order.
(g) Post at their Baltimore , Maryland offices and
places of business , the attached notice marked "Appen-
dix."27 Copies of said notice , on forms provided by the
Regional Director for Region 5, after being duly signed
by Respondents ' authorized representatives , shall be
posted by Respondents immediately upon receipt thereof,
and be maintained by them for 60 consecutive days
thereafter, in conspicuous places , including all places
where otices to employees are customarily posted. Rea-
sonable steps shall be taken by Respondents to ensure
that said notices are not altered, defaced , or covered by
any other material.
(h) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
27 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 "