MPE, Inc.

National Labor Relations Board - Board Decisions

Oct 19, 1976

226 N.L.R.B. 519 (N.L.R.B. 1976)

MPE, INCORPORATED
MPE, Incorporated and Teamsters Union Local No.
970 affiliated with International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Help-
ers of America. Cases 18-CA-4849-1 and -2
October 19, 1976
DECISION AND ORDER
By MEMBERS JENKINS, PENELLO, AND WALTHER
Upon a charge duly filed on January 19, 1976, by
Teamsters Local-No. 970, affiliated with Internation-
al Brotherhood of Teamsters, Chauffeurs, Ware-
housemen and Helpers of America, hereinafter called
the Union, the General Counsel of the National La-
bor Relations Board, by the Regional Director for
Region 18, issued a complaint and notice of hearing
against MPE, Incorporated, hereinafter called Re-
spondent. The complaint alleged that Respondent
had engaged in and was engaging in unfair labor
practices within the meaning of Section 8(a)(1) and
(5) of the National Labor Relations Act, as amended,
by refusing to bargain collectively and in good faith
with the Union as the exclusive bargaining represen-
tative of all employees. On May 26, 1976, Respon-
dent filed an answer denying the commission of any
unfair labor practices, and asserting that it was under
no duty to execute a written collective-bargaining
agreement which it had neither signed nor assumed.
On June 11, 1976, the parties executed a stipula-
tion of facts by which the parties waived hearing be-
fore an Administrative Law Judge and the issuance
of an Administrative Law Judge's Decision and rec-
ommended Order, and agreed to submit the case to
the Board for findings of fact, conclusions of law,
and an order, based upon a record consisting of the
stipulation of facts and exhibits, together with the
charge, the certification of service thereof, the com-
plaint and affidavit of service thereof, and the answer
and affidavit of service thereof.
On July 22, 1976, the Board approved the stipula-
tion of the parties and ordered the case transferred to
the Board granting permission for the filing of briefs.
Thereafter, both Respondent and the General Coun-
sel filed briefs in support of their respective positions.
Pursuant to the -provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
Upon the basis of the stipulation, the briefs, and
the entire record in this case, the Board makes the
following: -
FINDINGS OF FACT
1. JURISDICTION
519
MPE, Incorporated, is, and at all times material
has been, a Minnesota corporation with its sole place
of business in St. Paul, Minnesota, and is engaged in
the manufacture of industrial, office, and restaurant
equipment. During the past calendar year, a repre-
sentative period, Respondent sold and shipped goods
in excess of $50,000 from its facility in St. Paul, Min-
nesota, directly to points outside the State of Minne-
sota.
Respondent admitted, and we find, that MPE, In-
corporated, is, and at all times material herein has
been, an employer engaged in commerce and in op-
erations affecting commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
II. LABOR- ORGANIZATION
Respondent admitted, and we find, that Teamsters
Local No. 970, affiliated with International Brother-
hood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America, is a labor organization within
the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
Briefly stated, the stipulated facts indicate that the
Union at all times material herein acted as the exclu-
sive bargaining representative for the production and
-maintenance employees of Respondent MPE, Incor-
porated. Prior to the expiration of a collective-bar-
gaining agreement on June 7, 1975, KOL, Inc.,
merged with and became Respondent MPE, Incor-
porated. Respondent and the Union thereafter en-
tered into an interim agreement extending the provi-
sions of the expired contract for a period of 3
months. The parties subsequently entered into nego-
tiations for a new contract, but:were unable to reach
agreement prior to the expiration date of the interim
agreement on September 7, 1975. With the ' aid of a
Federal mediator, the parties continued their negoti-
ations until October 14, 1975, when Respondent, rep-
resented by its president, Zubik, and the Union, rep-
resented by Business Agent Reiss, reached agreement
and initialed a document containing the substantive
terms of the settlement, subject to ratification by the
union membership and formal execution by both
parties. Pursuant to the provisions of the agreement,
Respondent implemented the wage increases agreed
upon on October 17, 1975, retroactive to September
7, 1975.
226 NLRB No, 79
520 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
At all times material herein, the assets of Respon-
dent were used to secure a loan from the Small Busi-
ness Administration (SBA) under which the SBA was
a secured creditor and held the voting rights to 310,
000 shares of Respondent's 650,000 shares -of out-
standing stock. On or about October 24, 1975, the
SBA obtained the keys to Respondent's facility, os-
tensibly to conduct an inventory. Instead, the SBA
changed the locks on the premises, shut down Re-
spondent's operation, and established a sale date for
Respondent's assets due to'nonpayment of the SBA
loan. The facility remained closed until on or about
December 3, 1975.
As a_ result of these events, Respondent contem-
plated dissolution and receivership, but instead was
contacted by four individuals desirous of acquiring
ownership of the troubled enterprise. An assets pur-
chase was considered and rejected by the parties, pri-
marily because an assets purchase would result in the
cancellation of Respondent's long-term lease (with a
purchase option) with the St. Paul Port Authority,
and the forfeiture of a substantial amount of equity
toward the purchase price.
The parties settled upon a sale of stock rather than
a sale of assets in order to preserve the lease with the
St. Paul Port Authority and to allow the sellers to
realize a gain on the sale of their stock. At this point,
it is important to note that Respondent was repre-
sented in its negotiations with the Union by Zubik, a
director and president. McPeak, Respondent's chair-
man of the board, conducted the negotiations for the
sale of stock to the new owners. Neither had been
involved at any time in both sets of negotiations.
During the negotiations for the sale of Respon-
dent's stock, the prospective purchasers inquired on
two occasions as to the labor situation at Respon-
dent's facility, and on both occasions were informed
that there was a union and that the old contract had
expired, but a new one had not been executed. The
agreement for the sale of stock, which resulted in a
complete stock transfer, was finalized on November
25, 1975, and Respondent, under new management
and ownership, resumed operations on December 3,
1975. The resumed operation employed substantially
the same production process to produce the same
goods at the same facility, and eventually employed
13 of the 22 former employees of Respondent.
On -or about mjd-December 1975, the Union
(Charging Party) learned that Respondent had re-
sumed operations, and thereupon presented a final-
ized copy of the October 14, 1975, agreement, which
had been ratified by the membership, to Respon-
dent's president, Halstensen, for signature. Halsten-
sen responded that he was unaware of the agreement
and would not sign it until it had been reviewed by
his attorney. Respondent continues to refuse to exe-
cute the October 14,, 1975, agreement.
On December '31,' 1975, an employee of Respon-
dent filed a decertification petition which was subse-
quently dismissed because the list of names submit-
ted in support of the petition was undated and
untitled.
A. Contentions of the Parties
The General Counsel contends that the facts dem-
onstrate the reason the transfer of ownership of the
business took the form of a sale of stock rather than
a sale of assets was the intention of both parties to
the transaction that Respondent continue, as an on-
going corporate entity. It is argued that, since the
sale of stock had no effect on Respondent's contrac-
tual obligations, and because Respondent's produc-
tion format and location remained the same, the lan-
guage of N.L.R.B. v. Burns International Security
Services, Inc.,' referring to: the limited obligations of a
successor employer, is inapposite here. It is therefore
the position of the General Counsel that Respondent,
as an ongoing corporate enterprise unaffected by the
sale of its stock, is bound by the terms of the October
14, 1975, agreement initialed by Zubik and Reiss.
Respondent, on the other hand, while acknowledg-
ing a duty to recognize and bargain with the Union,
denies it is under any obligation to sign or assume
the agreement of October 14, 1975. In support of this
position, Respondent contends that, under the prin-
ciples enunciated in Burns, its responsibilities are that
of a successor employer rather than an "alter ego" so
closely associated with the former entity that it is
deemed to have assumed the latter's labor obliga-
tions. Employing this analysis, Respondent argues
that, since the new ownership had no knowledge of
the October 14, 1975, 'agreement, since there was a
complete change in ownership and management, and
because it undertook a stock rather than an assets
purchase primarily as a matter of'business necessity,
the instant case is more akin to a, sale of assets situa-
tion, where only a duty to recognize and bargain has
been found.
B. Analysis and Conclusions
The undisputed issue in this case involves a deter-
mination as to whether a corporation which has un-
dergone a complete change of ownership and man-
agement, but which has retained essentially the same
employees, production process, and location, is
bound to assume a labor contract of which it was not
apprised at the time of the transfer of ownership.
' 406 U S 272 (1972)
MPE, INCORPORATED 521
The General Counsel, citing Western Boot and
Shoe, Inc.,2 contends that the result in that case com-
mands a conclusion that the sale of stock in the in-
stant case had no effect upon Respondent as a legal
entity and therefore it is obligated to sign or assume
the agreement of October 14, 1975. An examination
of Western Boot and Shoe, however, reveals substan-
tial factual differences from the instant situation.
Specifically, in Western Boot and Shoe, the Adminis-
trative Law Judge determined as a matter of fact that
the buyer of 100 percent of the stock of an ongoing
business had knowledge of the labor contract be-
tween the seller and the Union, and, more important-
ly, was found to have explicitly assumed the obhga-
tions of the contract that was then in effect.
Here, it is stipulated that the purchasers of Re-
spondent's stock, while aware of the existence of a
union, were informed that the old contract had ex-
pired and a new one had not yet been executed. Un-
der these circumstances, it cannot be said that the
stock purchasers and new managers had in any way
explicitly assumed the obligations of a contract of
which they were unaware.
While it is clear that there may be situations in-
2205!NLRB 999 (1973).
volving stock transfers in which the new ownership
may be found as a matter of fact to have assumed the
labor contract of the, prior owners,, the situation pre-
sented here is not of that variety. This case certainly
involves more than a cosmetic change in the struc-
ture of the enterprise, and thus precludes a finding
that the succeeding corporate entity is essentially but
a mirror image of the predecessor. Instead, the fac-
tors of a complete change in management and own-
ership, the limited business options available to the
parties to effectuate the transfer, and the absence of
any evidence that the transfer was in any way illuso-
ry or fraudulent militate against a finding that either
assent or even knowledge of the October 14, 1975,
agreement should be ascribed to the new ownership
and management. Accordingly, we find that Respon-
dent is under no duty to sign or assume the - agree-
ment of October 14, 1975, and therefore the com-
plaint herein is dismissed in its entirety.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board hereby orders that the complaint here-
in be, and it hereby is, dismissed in its entirety.