Northwest Galvanizing Co.

National Labor Relations Board - Board Decisions

Oct 31, 1967

168 N.L.R.B. 26 (N.L.R.B. 1967)

26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Northwest Galvanizing Co. and International
Brotherhood of Boilermakers , Iron Shipbuilders,
Blacksmiths , Forgers, Welders and Helpers of
America , Local 104. Case 19-CA-3585
October 31, 1967
DECISION AND ORDER
BY CHAIRMAN MCCULLOCH AND MEMBERS
FANNING AND BROWN
Upon charges filed on February 6, 1967, by
Local 104, International Brotherhood of Boiler-
makers, Iron Shipbuilders, Blacksmiths, Forgers,
Welders and Helpers of America, herein called the
Union, the General Counsel of the National Labor
Relations Board, by the Regional Director for Re-
gion 19, issued a complaint dated April 28, 1967,
against Northwest Galvanizing Co., herein called
the Respondent, alleging that the Respondent had
engaged in and was engaging in unfair labor prac-
tices within the meaning of Section 8(a)(5) and (1)
and Section 2(6) and (7) of the National Labor
Relations Act, as amended. An amendment to the
complaint was issued on June 5, 1967. Copies of
the charge, complaint, amendment to the complaint,
and notice of hearing before a Trial Examiner were
duly served upon the Respondent.
The complaint alleges in substance that the
Respondent is a successor to Isaacson Iron Works,
Inc., Young Iron Works Division (herein called
Isaacson), and that Respondent violated the Act in
that it unlawfully refused to recognize and bargain
with the Union which had been accorded recogni-
tion by Isaacson as the exclusive bargaining
representative in an appropriate unit. The com-
plaint further alleges that Respondent violated the
Act by refusing to assume and honor the collective-
bargaining agreement in effect between Isaacson
and the Union, by instituting unilateral changes in
wage rates and benefits, by negotiating directly with
employees, and by transferring unit employees to
another plant without sufficient notification to the
Union and without affording the Union an opportu-
nity to bargain over said move. On May 12, 1967,
Respondent filed an answer admitting certain al-
legations in the complaint, affirmatively pleading
certain facts and denying the commission of any un-
fair labor practices alleged in the complaint, as
amended.
On July 24, 1967, all parties to this proceeding
entered into a stipulation by which they waived a
hearing before a Trial Examiner and the issuance by
him of a Trial Examiner's Decision and Recom-
mended 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
charge, the complaint, the answer, the exhibits, and
the stipulation of facts. On August 7, 1967, the
Board approved the stipulation and ordered the
proceedings transferred to the Board. Thereafter,
the General Counsel, the Charging Party, and the
Respondent filed briefs, and the Charging Party
filed a reply brief.
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
powers in connection with this case 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. THE BUSINESS OF THE RESPONDENT
The Respondent, a Washington corporation,
maintains its principal place of business at 429
South 96th Street, Seattle, Washington, where it is
engaged in the galvanizing of metal. During the past
year, the Respondent, in the course and conduct of
its business operations, has purchased and caused
to be transported and delivered to its places of busi-
ness in Seattle, Washington, directly from points
outside the State of Washington, goods and materi-
als valued in excess of $50,000. We find that the
Respondent is engaged in commerce within the
meaning of Section 2(6) and (7) of the Act and that
it will effectuate the policies of the Act to assert ju-
risdiction herein.
II. THE LABOR ORGANIZATION INVOLVED
Local 104, International Brotherhood of Boiler-
makers, Iron Shipbuilders , Blacksmiths , Forgers,
Welders and Helpers of America, is a labor or-
ganization as defined in Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
In their stipulation, the parties stated that:
Respondent has operated a galvanizing plant at
429 South 96th Street, Seattle, Washington (herein
called the main plant), since 1964. In 1965, Respond-
ent began an expansion program which eventually
necessitated the construction of a new building at
the main plant and the acquisition of additional
equipment and employees. Prior to October 1966,
the main plant consisted of a building which housed
two assembly lines (utilizing six men each) and
Respondent's offices, and a separate building on the
premises where special sandblasting jobs were per-
formed. Respondent operated three shifts a day
with a foreman in charge of each. The main plant
had a total complement of approximately 35
production employees who were not and have
never been represented by any labor organization.
168 NLRB No. 6
NORTHWEST GALVANIZING CO. 27
The Isaacson Corporation has a plant at 8531
East Marginal Way South, Seattle, Washington,
consisting of a number of buildings where it is en-
gaged in the manufacture and fabrication of metal
objects. Since 1947, the Union has had collective-
bargaining agreements with Isaacson covering em-
ployees of Isaacson's galvanizing shop, fabrication
shop, and forge shop and melt shop, with a comple-
ment^of 150 employees. Several other labor or-
ganizations have collective-bargaining agreements
covering other units of Isaacson employees. Isaac-
son is a member of Washington Metal Trades, Inc.,
an employer association which represents Isaacson
in collective bargaining with the Union. The last
such collective-bargaining agreement ran from
April 1, 1965, to April 1, 1968. Respondent is not
a member of Washington Metal Trades, Inc.
The Isaacson galvanizing shop, located in a
separate building within the Isaacson plant com-
plex, was comprised of one production line with 13
employees, including a foreman, whose duties were
approximately the same as those of Respondent's
foremen, and a superintendent.
On or about October 1, 1966, Respondent and
Isaacson entered into a sales agreement whereby
Respondent purchased Isaacson 's galvanizing
operation and equipment and Isaacson discon-
tinued its galvanizing division. Under the agree-
ment, Respondent, who had begun the construction
of a new building at its main plant for the utilization
of this equipment, was permitted to operate the
equipment in place until Respondent ' s new building
was completed but in any event was to vacate the
premises by September 1967, so that Isaacson
could use the area for expansion of its other depart-
ments. Respondent also agreed to perform Isaac-
son's galvanizing work for 5 years, to complete
Isaacson's pending orders, to employ Isaacson's
galvanizing division employees, and to retain, as
consultant, Isaacson's superintendent for 90 days
after the acquisition.
Upon taking over on October 1, 1966, Respond-
ent continued galvanizing operations at the Issac-
son site without cessation. It retained Isaacson's 13
employees including the foreman , Christensen. Im-
mediately upon takeover Respondent temporarily
closed down for repairs one of its production lines
at its main plant and transferred six of its main plant
employees to the Isaacson site, including a
foreman. Two new employees were hired. There-
upon, Respondent began a two-shift operation in-
stead of the one-shift formerly run by Isaacson.
One shift was headed by Christensen and one by
the foreman from Respondent's main plant.
Respondent, contrary to the provisions of the col-
lective-bargaining agreement between the Union
and Isaacson, made no pension and welfare pay-
ments for the former Isaacson employees, nor did
Respondent require its employees to be members
of the Union. The employees at the Isaacson gal-
vanizing site were all placed on the Respondent's
payroll and were paid according to Respondent's
wage scales which amounted to an increase over
their former contract wages. The Isaacson em-
ployees were also placed under Respondent's em-
ployee benefit program, which consisted of a King
County Medical Service contract paid by Respond-
ent with family benefits partially paid by em-
ployees. These changes in terms and conditions of
employment were made without prior consultation
with the Union.
When Respondent took over Isaacson's galvaniz-
ing operation, it completed Isaacson's work orders.
Further, it performed galvanizing for Isaacson on
a contract basis. Respondent and Isaacson used the
same type production line in the galvanizing
process, except that different type cleaning tanks
were used.
The Union was first informed of the sale of Isaac-
son's galvanizing operation in early October 1966,
when Union Business Agent Charleson visited the
galvanizing shop at the Isaacson site and was in-
formed by Foreman Christensen of Respondent's
purchase. Christensen also informed Charleson that
the galvanizing equipment would eventually be
moved to Respondent 's main plant when its new
building was completed. Other than requests by
Charleson directed to Christensen that a con-
ference be set up with Respondent's president,
Rouleau, no demands were made by the Union on
Respondent until January 16, 1967. On January 16
and 24, 1967, William Roberts, the attorney for the
Union, sent letters to Respondent and to Re-
spondent's attorney, respectively, demanding
acknowledgement from Respondent that it was
bound by the collective-bargaining agreement
covering the former Isaacson employees. The attor-
neys for the Union and for Respondent met on
January 31, 1967. Union Attorney Roberts again
asked Respondent "to acknowledge the agreement
in toto" and Respondent declined. Roberts refused
to discuss portions of the contract separate from the
contract as a whole.
About May 1, 1967, Respondent began to close
down its galvanizing operations at the Isaacson site
and merged it with that at the main plant. The em-
ployees from the Isaacson site were placed in vari-
ous shifts under the main plant foremen. Ten of
these employees were among the 13 employees for-
merly working for Isaacson. The interspersing of
these employees at the main plant raised the total'
production personnel there to 50. Foreman
Christensen, a shipping clerk, and two maintenance
men were left at the Isaacson to expedite the
dismantling of equipment to be sent to the main
plant , the cleaning and the shipping of remaining
stock to customers. Respondent will make use of
various equipment formerly used by Isaacson and
will hire about 15 additional employees.
The General Counsel contends that "Not-
28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
withstanding Northwest's intention ultimately to in-
tegrate the Isaacson operation with the existing
facilities at its main plant, it continued the Isaacson
operation upon its acquisition without hiatus, using
the same galvanizing process and the same equip-
ment with the same employees at the same location
for at least 7 months of the 12-month period pro-
vided in the purchase agreement. During that
period at least, the represented unit remained
clearly identifiable and not integrated with
Northwest's other operations ... therefore
Respondent must be viewed as a successor herein
obligated to bargain with the union within the pur-
view of Chemrock Corp., 151 NLRB 1074."
Moreover, General Counsel contends, "Respond-
ent is legally bound to the collective-bargaining
agreement between its predecessor and the
Union."' Finally, General Counsel urges that
Respondent's unilateral changes in wages and other
terms and conditions of employment, described
above, and Respondent's failure to notify and bar-
gain with the Union over the removal of the former
Isaacson operation to Respondent's main plant,
were violative of Section 8(a)(5) and (1) of the Act.
The Charging Party filed a brief which, in sub-
stance, supports the contentions of the General
Counsel.
Respondent argues that it is not a successor to
the Isaacson Corporation. Respondent contends
that:
The entire transaction between Respondent and
Isaacson contemplated that Isaacson was
selling equipment used in only a very minor
part of Isaacson's business affecting less than
10 percent of Isaacson's employees who were
covered by the labor contract and that it was
contemplated that the Respondent, as soon as
it was physically able, would remove the equip-
ment from the Isaacson property where Isaac-
son continues to engage in the major portion of
its business and employ the major number of its
employees. From the very beginning the
transaction was understood to contemplate a
total removal of the galvanizing equipment and
operation from the Isaacson plant to the exist-
ing plant of Respondent. When the Isaacson
equipment was removed to Respondent's plant
and 10 of Isaacson's former employees were
brought there to be integrated into Respond-
ent's operations, the former Isaacson em-
ployees represented only 20 percent of the
Respondent's employees engaged in the gal-
vanizing business. There is no identity of
ownership, management, supervision, key per-
sonnel, names, customers or public image of
the business. The buyer and the seller are as
they were prior to October 1, 1966, separate
independent organizations carrying on two un-
related businesses.
Respondent also regards as significant the fact that
the galvanizing operation taken over from Isaacson
employed only 13 of the 150 Isaacson employees
covered by the contract.2 It points out that the con-
tract in question was "negotiated in a multiem-
ployer contract negotiation conducted by an agency
to which the Respondent has never belonged."3
It is well settled that, where there is substantial
continuity in the identity of the employing enter-
prise, the purchasing employer is bound to recog-
nize and bargain with the incumbent union.4 We
have considered General Counsel's argument that
at least during the 7-month period, when Respond-
ent conducted galvanizing operations at the Isaac-
son plant, the factual setting was similar to those in
which the Board has found successorship. Indeed,
under other circumstances, these factors might well
be controlling. However, in view of the somewhat
unique circumstances of this case, we find that a
contention of successorship with bargaining liability
cannot be sustained.
We deem it highly significant that Respondent
here did not purchase a business, but purchased for
addition to its already existing business the equip-
ment utilized as a small part of the overall Isaacson
operation. This is not a case in which the buyer as-
sumes control of the seller's business and later de-
cides to move elsewhere. The equipment purchase
was part of a long term expansion program of
Respondent which temporarily utilized the
premises of the seller of that equipment until its
own facilities were sufficiently expanded to permit
consolidation thereof with its own identical opera-
tion. Moreover, the additional galvanizing em-
ployees of Isaacson represented a 25-percent incre-
ment to Respondent's employees engaged in the
same operation. While not determinative, we note
that the employees working in the galvanizing
operation purchased by Respondent constituted
less than 10 percent of the employees in the Isaac-
son bargaining unit which in turn was bargained for
I In support of this contention , the General Counsel relies on the
Supreme Court decision in John Wiley & Sons, Inc v David Livingston,
376 U S 543, and the decision of the Ninth Circuit Court of Appeals in
Wackenhut Corp v Plant Guards, 332 F 2d 954, both involving Section
301 actions. In view of our disposition of the case, we find it unnecessary
to pass on this contention
2 The Charging Party, in its reply brief, contends that the Stipulation of
Facts does not support the inference that the employees in the galvanizing
shop were part of a much larger unit We conclude that the stipulation
amply supports Respondent ' s contention in this regard
3 Respondent makes various other contentions to support its position
that its conduct does not fall within the proscriptions of Section 8(a)(5)
However, since we view the above-cited arguments as dispositive of the
case, we confine our discussion to these contentions
4 Randolph Rubber Company, Inc , 152 NLRB 496, and cases cited
therein
NORTHWEST GALVANIZING CO.
on a multiemployer basis.5 Under all the circum-
stances, we view the transaction as an addition to
Respondent's existing business rather than a con-
tinuation of the seller's operation. Accordingly, we
find that Respondent has not become the successor
to Isaacson, but rather has merely engaged in an ex-
pansion of its own business.
Our decision here is not to be construed as hold-
ing that the purchaser of a business can avoid his
legal duty to recognize and bargain with the union
that represented the employees of the seller by the
simple and expedient method of announcing in ad-
vance his intent to move.6 Nor do we hold that a
purchase must encompass the entire business of a
seller.' We do hold that, to find successorship sup-
' But cf Downtown Bakery Corporation, 139 NLRB 1352, enforce-
ment denied 330 F 2d 921 (C A 6)
29
porting a bargaining obligation, the totality of the
circumstances must warrant a finding that the
purchase-sale transaction was merely a change in
the ownership of an existing and continuing busi-
ness operation.
Since any violation of the Act by Respondent
rests upon a finding that Respondent is a successor
to Isaacson, and since the record herein establishes
that Respondent is not Isaacson's successor, we
shall dismiss the complaint in its entirety.
ORDER
IT IS ORDERED that the complaint herein be, and
it hereby is, dismissed.
' Cf Die Supply Corp , 160 NLRB 1326
7 Cf Royal Brand Cutlery Company, 122 N L R B 901