Paul A. Reichelt Co.

National Labor Relations Board - Board Decisions

Mar 7, 1940

21 N.L.R.B. 262 (N.L.R.B. 1940)

In the Matter of EDWARD F . REICHELT, ROBERT J. HILL AND RUSSEL J.
JENSEN, DOING BUSINESS AS A CO-PARTNERSHIP UNDER THE NA31E AND
STYLE OF PAUL A. REICHELT Co. and CHICAGO FUR WORKERS UNION,
LOCAL No. 45
Case No. C-1031-Decided March 7, 19440
Fur Garment Manufacturing Industry Interference , Restraint , and Coercion:
expressed determination not to deal with union ; replacing union employee with
a new employee shortly after his discharge ; shut-down ; closing of shop and
adopting indirect method of manufacture ; employing their own non-union em-
ployees and others under guise of a fictional "independent contractor" relation-
ship to conceal evasion of Act-Discrimination : lock-out and discharges pursuant
to-Reinstatement Ordered: locked -out employees ; respondents not ordered un-
conditionally to desist from system of contracting out work since respondents
may be able to make reinstatements without such desisting -Back Pay: awarded-
Employee Status: so called "independent contractor " and his employees whose
purported independent operations are subject to respondents ' direction and con-
trol are employees within the meaning of the Act ; contract purporting to estab-
lish status not controlling-Unit Appropriate for Col lective Bargaining: all the
respondents ' employees engaged in the manufacture of fur garments , excluding
supervisory and clerical employees ; no controversy as to-RepI esentatives:
proof of choice: union records and testimony by 12 employees that they were
members-Collective Bargaining : lock-out of employees in reply to union's at-
tempt to bargain held violation of Section 8 (5) ; respondents ordered to bargain
with union.
Mr. Stephen M. Reynolds, for the Board.
Rat/tje & Connor, by Mr. Fred A. Rathnje and Mr. Oliver B. Opsahl,
of Chicago, Ill., for the respondents.
Mr. Abe Feinglass and Mr. Lew Goldstein, of Chicago, Ill., for the
Union.
Elizabeth W. Weston, of counsel to the Board.
DECISION
AND
ORDER
STATEMENT OF THE CASE
Upon charges and amended charges duly filed by Chicago Fur
Workers Union, Local No. 45, herein called the Union, the National
Labor Relations Board, herein called the Board, by the Regional
Director for the Thirteenth Region (Chicago, Illinois), issued and
21 N. L. It B., No 29.
262
EDWARD F. REICHELT 263
duly served its complaint dated August 6, 1938, against Edward F.
Reichelt, Robert J. Hill,' and Russel J. Jensen, doing business as a
copartnership under the name and style of Paul A. Reichelt Company,
herein called the respondents, alleging that the respondents had en-
gaged in and were engaging in unfair labor practices affecting com-
merce within the meaning of Section 8 (1), (3), and (5) and Section
2 (6) and (7) of the National Labor Relations Act, 49 Stat. 449, herein
called the Act.
With respect to the unfair labor practices, the complaint alleged, in
substance, that: (1) although a majority of their employees in an
appropriate unit had designated the Union as their representative for
the purposes of collective bargaining, the respondents on or about
April 7, 1937, and at all tines thereafter had refused to bargain col-
lectively with the Union; (2) on or about April 8, 1937, the respondents
locked out and discharged and thereafter refused and failed to re-
employ 13 named employees because said employees joined and assisted
the Union and engaged in concerted activities for the purposes of col-
lective bargaining and other mutual aid and protection; (3) by the
foregoing acts, by questioning certain employees about their union
affiliation, by employing manufacturing concerns to manufacture some
of the finished products which the respondents sell and distribute,
and by carrying on a substantial part of their necessary manufacturing
operations through an agent or employee named Bernard Coy, the
respondents interfered with, restrained, and coerced their employees
in the exercise of the rights guaranteed to them by Section 7 of the Act.
On August 11, 1938, the respondents filed their answer to the com-
plaint, admitting certain allegations as to the nature of their business,
denying that they had engaged in or' were engaging in unfair labor
practices, and affirmatively alleging that on or about April 8, 1937,
they ceased to manufacture fur garments and to employ the persons
named in the complaint for the reason that the respondents were
unable to manufacture profitably and that since that date they had not
employed any employees or manufactured any garments.
Pursuant to notice served upon the parties, a hearing was held in
Chicago, Illinois, on August 15 and 16, 1938, before Tilford E. Dudley,
the Trial Examiner duly designated by the Board. The Board and
the respondents were represented by counsel. The Union was repre-
sented by its duly authorized representative. All participated in the
hearing. Full opportunity to be heard, to examine and cross-examine
witnesses, and to introduce evidence bearing on the issues was afforded
all parties. At the close of the Board's case, the Trial Examiner
.' Before they were amended at the hearing , the charge and complaint erroneously
named Paul A Reichelt as a partner in the respondents ' firm in place of Robert J Hill
Paul A Reichelt is not a respondent , having retired from the firm in 1924 . Edward F.
Reichelt , one of the respondents , is herein referred to as Reichelt
264 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
granted motions to conform the complaint and the answer to the proof
with respect to spelling; dates, and names. During the course of the
hearing, the Trial Examiner made a number of rulings on motions
and objections to the admission of evidence. The Board has reviewed
these rulings and finds that no prejudicial errors were committed. The
rulings are hereby affirmed.
On November 8, 1938, the Trial Examiner filed his Intermediate Re-
port in which he found that the respondents had engaged in unfair
labor practices affecting commerce within the meaning of Section 8
(1), (3), and (5) and Section 2 (6) and (7) of the Act and recom-
mended that the respondents cease and desist therefrom, reinstate the
13 named employees to their former or substantially equivalent posi-
tions with back pay and, upon request, bargain collectively with the
Union. Thereafter, the respondents filed exceptions to the Intermedi-
ate Report and submitted a brief in support of their exceptions. The
Board has considered the respondents' exceptions and, save as they are
consistent with the findings, conclusions, and order set forth below,
finds them to be without merit.
Upon the entire record in the case, the Board makes the following :
FINDINGS OF FACT
1. THE BUSINESS, OF THE RESPONDENTS
The respondents, Edward F. Reichelt, Robert J. Hill, and Russel J.
Jensen, are copartners doing business under the firm name and style
of Paul A. Reichelt Co., having their office and place of business at 19
South Wells Street, Chicago, Illinois. At this location the firm has
offices, a vault, a showroom, and shop space, under lease. Since 1924,
when Paul A. Reichelt retired, there has been no change in the mem-
bership of the firm.
The respondents' business consists, of purchasing skins and furs and
other raw materials; manufacturing these materials into fur garments,
or having them manufactured by outside furriers; and selling the
finished garments at wholesale. The respondents annually purchase
from $70,000 to $75,000 worth of raw materials, consisting principally
of furs and skins. Approximately 50 per cent of these materials are
purchased by the respondents outside the State of Illinois and trans-
ported to their place of business in Chicago ; the remaining furs and
skins, which are purchased by the respondents from Chicago dealers,
originate outside the State of Illinois and are shipped into Chicago
from the various points of origin. From 60 to 75 per cent of all the
furs purchased by the respondents originate outside the United States.
During the period from January 1, 1936, to April 1, 1937, the respond-
ents purchased raw materials having a total value of approximately
EDWARD F. REICHELT 265
$125,000; from April 1, 1937, to August 15, 1938, such purchases
amounted to approximately $100,000 in value. During the period
from January 1, 1936, to August 15, 1938, the respondents sold finished
garments having an approximate total value of $225,000, 80 to 90 per
cent in value of such sales being made to purchasers outside the State
of Illinois. The respondents advertise their products in a trade journal
of national circulation and their products are sold principally by two
of the partners who act as salesmen in a territory covering the Middle
West.
H. THE ORGANIZATION INVOLVED
Chicago Fur Workers Union, Local No. 45, is a labor organization
chartered by International Fur Workers' Union of United States
and Canada, which is affiliated with the Committee for Industrial
Organization.2 The Union admits to its membership fur workers in
the following crafts: cutters, operators, nailers, finishers, cleaners,
ironers, and apprentices and errand boys.
III. THE UNFAIR LABOR PRACTICES
A. The chronology of events
Immediately prior to April 8, 1937, the respondents, as they had for
many years previously, manufactured in their shop all the fur gar-
ments sold by them. They had 17 employees engaged in manufactur-
ing operations, 3 of whom had been hired on and after March 29, 1937.
On or about April 1, nearly all these employees received small increases
in pay.- Late in March 1937, the Union had begun to solicit members
among the employees, and -by April 6, all 17 except Bernard Coy,
Marie Decaster, and Josephine Vetterick 4 had joined. On or about
April 7 most of the employees wore union buttons in the respondents'
shop. On April 7 Abe Feinglass, an organizer for the Union, called
upon the respondents at their place of business, and informed them
that a majority of their employees had joined the Union and desired
to bargain collectively with the firm respecting hours, wages, and other
working conditions. He proposed that the respondents arrange to
negotiate with the Union respecting these subjects. The respondents
did not reply directly to his proposal either that day, or the next,
when Feinglass telephoned to inquire what decision they had reached.
At 8:30 in the evening of April 8, however, the respondents sent
2 Now the Congress of Industrial Organizations
8 Reichelt testified that weekly increases of about $2 00 each were granted to "most
everybody that was working . . . for us," about 10 days before April 8, 1937 Four of
the employees testified that they had received increases of from $1 50 to $2.50 commencing
on or about April 1.
, Feinglass , the union organizer , who mistakenly believed that there were 18 employees,
testified that 15 of them had joined the Union He identified the three non-members as
Coy, Decaster, and Vetterick. There is no other evidence to indicate that one other
employee , Marcia Tripoti , was a union member
266 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
telegrams to the 13 employees named in the complaint, at their homes,
reading : YOUR SERVICES NO LONGER REQUIRED MAIL-
ING YOUR CHECK.6 On April 9 the shop was closed, and the re-
spondents' premises were guarded by the police, called by one H. F.
Maloy, executive secretary of the Associated Fur Industries of Chi-
cago and actuary of the Chicago Fur Manufacturers' Association,
whom the respondents had consulted regarding the Union's proposal
on the preceding day.
None of the 13 union members was ever reemployed by the
respondents. On or about April 15, 1937, however, the respondents
hired a new errand boy,' and at about the same time they arranged to
have their fur garments manufactured by three outside concerns. Cer-
tain unfinished work which remained in the shop on April 8 was sent
to these outside furriers for completion. From April 1937 until Feb-
ruary 1938, the respondents' shop was idle. In February 1938, Bernard
Coy, assisted by Vetterick and Decaster, and by two other fur workers
not formerly employed by the respondents, began performing manu-
facturing and repair work for the respondents, in the respondents'
shop, using the respondents' equipment and office facilities. Coy's re-
lations with the respondents will be more fully described below. At
the time of the hearing, Coy and the employees working under his
supervision, and the same three outside concerns with which the re-
spondents had commenced dealing in April 1937, were performing all
the respondents' manufacturing and repair work, using patterns and
materials furnished by the respondents.
The respondents do not deny the occurrences above described. Their
contentions concern the interpretation of these events under the Act.
The issues relate to: (1) the respondents' motive for discharging
their employees and thereafter employing contract manufacturers;
(2) whether or not the respondents have in fact discontinued the manu-
facture of furs and the employment of workers in connection there-
with; and (3) whether or not the respondents' conduct constituted a
refusal to bargain with the Union. In their answer, exceptions, and
brief the respondents contend, with respect to these issues: (1) that
they discharged their employees on April 8, 1937, for the sole reason
that the respondents were unable to manufacture profitably and con-
cluded that they could reduce their operating expenses by employing
outside concerns to manufacture their products for them; (2) that they
are not engaged in any manufacturing operations, and that since April
8, 1937, "they have not employed any help"; and (3) that they nego-
5 Dave Wickstrom , Sam Schaps , Biuno Lorkiewicz , Charles Gilbert, Edith Westerlund,
George Lechner, Anna Chaber , Matthew Wray, Harry Miller , Edward Pietrusiak , Evelyn
Velvel, Edward Mrock, Leon Archer.
0 The telegram sent to Sam Schaps read : YOUR SERVICES NO LONGER REQUIRED
MAILING STATEMENT OF YOUR ACCOUNT
' Two of the 13 discharged employees worked as errand boys or apprentices.
EDWARD F. REICHELT 267
tiated with the Union up to the time when they decided to discontinue
manufacturing and discharged all their employees.
B. The lock-out and discharges: interference, restraint, and coercion
1. The shut-down and the respondents' motive therefor
It is undisputed that on April 8, 1937, the respondents discharged,
by telegram, the 13 union members named in the complaint; and that
for several months thereafter they had no employees performing man-
ufacturing operations in their shop at 19 South Wells Street. While
it is not clear whether or not the remaining 4 employees were dis-
charged with the 13 union members,8 it is implicit in the respondents'
contention that the employment of these 4 was also terminated upon
April 8, 1937. The Trial Examiner found that the reason for the
shut-down was the respondents' desire to discourage membership in the
Union, and to frustrate their employees' efforts toward self-organiza-
tion and collective bargaining. This conclusion is substantiated by
the evidence.
It is significant that prior to the first week in, April 1937, none of
the respondents' employees, with one exception,9 was a member of the
Union in good standing. Nor were the respondents unaware of this
fact. Coy, one of the oldest employees in term of service, was hostile
to the Union, and testified without contradiction that Hill, the partner
who appears to have been in charge of personnel, had long known
that Coy was not a member.1° When Hill hired employee Sam Schaps,
in February 1929, he inquired whether Schaps was a union member
and Schaps replied that his membership had lapsed. Subsequently
Schaps was instrumental in getting the respondents to hire Leon
Archer and Dave Wickstrom. When Schaps recommended these
workers to Hill, Hill asked Schaps about their union affiliation, and
was informed that Archer was not a union member and was not "in-
clined to want to belong to a union," and that Wickstrom was a former
member who had allowed his membership to lapse. It is also clear
that the respondents first learned, immediately prior to April 8, 1937,
9 Coy testified that he was discharged by telegram on April 8, 1937 , but in view of the
general unreliability of his testimony and the facts stated in Section III , B, 2, tinfra, we
cannot base a finding of discharge , as to him, upon his uncorroborated statement As to
employees Vetterick , Decaster , and Tripoti , there is no evidence that they received tele-
grams or other specific notifications of dismissal
9 Gilbert , a fur cutter , who had worked for the respondents during the 1936 season and
was rehired in February or March 1937, testified that he had joined the Union about 1900,
and that lie regularly attended meetings both before and after the time when he was
hired by the respondents . Gilbert testified that he wore a union button on his coat
but did not wear it openly while working in the respondents ' shop Of the remaining
employees , Schaps and Wickstiom had formerly belonged to the Union but had allowed
their memberships to lapse , and were reinstated in the Union on or about April 6, 1937.
None of the others had ever belonged to the Union before that date
10 Respondents Hill and Jensen iNeie absent on vacation at the time of the hearing
The respondents did not request a postponement of the hearing in order that Hill and
Jensen might testify.
268 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
that a majority of their employees had joined the Union. Eleven of
the 12 employees who testified at the hearing said that they wore
their union buttons in the shop for the first time on April 6 or 7.
Reichelt, the only respondent who attended the hearing, denied that
he saw them wearing buttons, but he was contradicted by employee
Edward Pietrusiak, who testified that on April 7, when he entered the
shop, he overheard Hill and Reichelt remarking to each other that
certain employees were wearing buttons, and that he noticed the re-
spondents watching their employees carefully that day. Reichelt did
not deny having had the conversation with Hill to which Pietrusiak
testified. However, regardless whether Reichelt observed the sudden
appearance of the buttons on April 6 or 7, he admitted that on or
about April 7 he learned for the first time, by questioning employee
Archer, that some of the employees were members of the Union.
It thus appears that for several years prior to April 1937, the re-
spondents had concerned themselves about the union affiliation of
persons they employed; that in fact there was only one union member
working in their shop until a date immediately prior to April 8, 1937,
when they dismissed their employees; and that within 48 hours before
they took this action the respondents first learned that a majority of
their employees had joined the Union.
That the respondents were opposed to their employees' organiza-
tional efforts, and that this opposition was the true motive for their
closing the plant, is evidenced by statements made by the respondents
to certain discharged employees on and after April 8, 1937. On
April 8, Reichelt told employee Archer that under no circumstances
would the respondents recognize the Union, but that Archer might
work for the respondents "under open shop conditions" if he so de-
sired. Reichelt did not deny making these statements. In August
1937 employee Schaps went to the respondents' premises to get. his
tools, and on that occasion asked respondent Hill whether there would
be any "settlement" of the lock-out. Hill replied that there would be
no settlement with the Union, but that he and Reichelt would have
no objection to rehiring Schaps himself. Hill further asked Schaps
why Schaps had not told him that the employees were organizing;
and Jensen remarked that the firm had made a mistake in retaining
its employees for any length of time because it gave them an oppor-
tunity "to get together." Again, when employee Matthew Wray
went to the respondents' premises in September or October 1937 to
get his tools, respondent Jensen told him, in Hill's hearing, that he
"would have had a nice job if the union didn't butt in." The respond-
ents neither denied the testimony of these witnesses nor attempted
to impeach their credibility. We find that the statements attributed
by them to the various respondents were made as described in their
testimony.
EDWARD F. REICHELT 269
The respondents' employment of a new errand boy to replace one
of the two they discharged on April 8, 1937, affords further evidence
that the shut-down was directed against their employees' union affilia-
tions and activities. Reichelt admitted on the stand that one of the
discharged errand boys was replaced by a new employee. He testified
initially that the new errand boy was not hired until approximately
2 months after the shut-down, but upon being referred to the respond-
ents' pay-roll records, he admitted that the new employee was actually
hired on April 15, 1937, just a week after two admittedly competent
errand boys were discharged. Both the discharged errand boys, Bruno
Lorkiewicz and Edward Mrock, had worked for the respondents for a
substantial period; both had joined the Union on or about April 6,
1937; and both had worn union buttons in the plant on the day before
that on which they were discharged. Interrogated as to why these
employees were replaced, Reichelt testified that the firm replaced
them at a lower wage than they had been receiving; that they had each
been earning approximately $17.50 a week-Moo much money to run
errands," whereas the new employee was hired at $12.50. He testi-
fied, however, that the $12.50 job was not offered to either of the dis-
charged errand boys, and, upon being referred to documentary
evidence, he finally admitted that Bruno Lorkiewicz was actually earn-
ing only $12.00 a week at the time of his discharge." Upon being asked
again why Lorkiewicz was replaced, Reichelt replied :
Bruno was discharged with the rest of them at the time we
decided to quit manufacturing. After we decided we needed an
errand boy, the thought never came into our minds to rehire Bruno.
The respondents' decision "to quit manufacturing" does not explain
their failure to rehire the one employee whose job remained. We find
that Lorkiewicz was discharged, and was not rehired, because he had
joined and assisted the Union.
Finally, Reichelt virtually admitted that the respondents in closing
their shop were motivated by antagonism toward their employees
arising out of the fact that the Union had successfully organized them.
Asked why they dismissed all their employees at once, leaving semi-
finished work in the shop, instead of laying off the employees gradually
as the work was completed, Reichelt said : "We decided definitely to
quit manufacturing, and made a clean break." The record continues :
Q. Why did you fire the errand boy also?
A. Because we decided to get rid of everybody that had been
working for us. [Italics added.]
Again, immediately following testimony by him that the respondents
discontinued manufacturing because of excessive operating expenses,
u Mrock was earning $16 00 a week when be was discharged.
270 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the dissatisfaction of their employees, and a desire to reduce labor
costs,12 Reichelt was asked by the respondent's attorney whether he
could recall any other reasons for sending out the telegrams on April
8, 1937, and he replied; "I just don't know what you are driving at."
The record continues :
Q. Was there anything in connection with any information
that you received from the Union on that date which caused you to
send those telegrams * * *
A. Just that Mr. Feinglass had informed us that he was organ-
izing the shop. [Italics added.]
From the foregoing evidence we conclude that the union activity
of the respondents' employees, made known to the respondents on or
about April, 7, 1937, induced their decision to close the plant. That
this union activity was the only factor motivating the respondents'
conduct on and after April 8, is demonstrated by an analysis of the
evidence which the respondents offered to support their explanation
that they acted for business reasons. The respondents attempted to
prove by the testimony of Edward Reichelt that they decided to dis-
continue manufacturing because: (1) the respondents were unable to
earn profits because of high production costs, and could have their
manufacturing performed more cheaply by outside contractors than
in their own shop, and (2) the respondents were "informed" that their
employees were dissatisfied and wanted higher wages and shorter
hours, and the respondents could not afford to meet this prospective
increase in the cost of production. The evidence offered by the re-
spondents discredits these assertions.
As to the respondents' contention that they had been losing money
on their manufacturing operations and that they reduced expenses by
having their manufacturing performed by outside contractors, we
find Reichelt's testimony 13 wholly unconvincing. Reichelt was unable
to particularize regarding the manufacturing losses which, he testified,
the partners had suffered for 18 months prior to the shut-do«n. The
existence of these losses, he asserted, was ascertained by the use of time
studies, made annually about the first of February when the manu-
facturing season began. The respondents introduced no documentary
evidence of these cost studies.14 Reichelt described the studies as
12 This testimony is discussed infra
13 The respondents offered no other evidence to support this contention.
' On p 273 of the record, Reichelt testified :
Q * * * you state that you made the computation of the loss from the work
records that the workers made when they made on [sic] the coats Do you have
those records here?
A. No, I never keep them
Q. You throw them away?
A. Yes
Elsewhere he testified that he thought that all the respondents' time cards had been
destroyed and that all the studies made in February or March 1937 were discarded
EDWARD F. REICHELT 271
computations of the total number of hours spent by the several em-
ployees in performing their respective shares of the work on each
sample coat produced. Though the witness professed personal famil-
iarity with the cost studies, and testified at one point that those made
in February or March 1937 were "as accurate as I knew how to make
them," he confessed complete inability to determine why or wherein
the respondents' labor costs were "too high." He denied that the
reason for the losses could have been that the respondents had too
many employees or insufficient work; and when asked whether the
employees were inefficient, he replied : "I have, never really been able
to determine the reason for the shop losing money. I still don't know."
With respect to the savings allegedly achieved by manufacturing
through outside contractors, Reichelt testified that before April 8,
1937, the respondents incurred a cost of $37.50 for manufacturing a
Hudson seal coat,15 while at the time of the hearing they were paying
their contract manufacturers approximately $32.50 to make such
coats. But the testimony of the firm's former employees, who stated
on the stand the number of hours each of them had required to
complete his share of the work on a Hudson seal coat, indicated that,
at the wages which the respondents had been paying before the shut-
down, their actual labor cost to produce a coat of this type was only
slightly over $18.00.16 Reichelt denied that his employees had
15Reichelt stated that a Hudson seal coat "would be a good coat to take as an example."
1e The operations comprising the process of manufactui ing a fur coat , after the furs are
tanned , are cutting the skins and nailing them to a board on which the pattern has been
drawn, performed by cutters and nailers ; joining and sewing the skins, performed by
operators ; and inserting linings and stays, performed by finishers . Bernard Coy, who
had worked in the fur trade performing all operations for 25 years , estimated on the
stand the number of hours required by each craftsman to complete his job on a single
coat as tollows : cutter and nailer , 8 hours ; operator , 7 hours ; finisher , 6 to 8 hours ('A
hour for staying ) Coy stated that the glazing process would require an additional 15
minutes The respondents ' discharged employees also testified as to the amount of time
each of them had required to complete his task on a single Hudson seal coat Gilbert
cut and squared a coat in 8 hours ; Wray required h/2 to 2 hours to do the nailing
Archer did the operating and joining in 51/2 to 61/2 hours Velvel finished and lined a
coat in 8 hours Goldstein , the Union ' s representative at the healing , who has worked
in the industry as cutter , operator , nailer, squarer , and, glazer for 20 years, also testified
as to the time required for each of these operations , corroborating the statements of Coy
and the respondents ' other employees On the basis of the highest estimates given by
any of these witnesses , at the highest wage for the particular type of work being paid
by the respondents on April 8 , 1937 , the respondents ' labor costs appear to have been
those shown in the following tabulation Costs for each operation at the union « age
scale, as stated by Goldstein, are shown in parallel columns
Operation Total hours
Respond-
ents' wage Union wage(35-hour Respond - Cost atrequired (40-hour week) ents' cost union scaleweek)
Cutting_____________________________ 8 $40 00 $57 00 $8 00 $13 04
Nailing______________________________ 2 18 50 43 00 925 2 40
Operating___________________________ 7 30 00 50 00 5 25 10 01
Finishing____________________________ 8 20 00 37 00 4 00 8 48
Total costs -------------------- ------------ ------------ ------------ 18 175 33 93
272 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
worked as rapidly as they claimed in their testimony and reiterated
that, although the time studies showed that the cost of producing
such a coat should have been only $32.50, respondents' actual labor-
cost to produce a Hudson seal coat had been $37.50. However, the
respondents adduced no evidence tending to corroborate this state-
ment, and Reichelt's unsupported testimony on the subject is un-
convincing. Inconsistent with Reichelt's professed knowledge of the
exact cost incurred by the respondents in producing a single Hudson
seal coat in the shop are his statements : "I never figured it down to,
one particular coat. I figured it over a period of a week or 2 weeks,
computed on the entire pay roll for the time"; and "the computations
have been made over a period of weeks, not on one particular coat."'
Furthermore, Reichelt admitted that the respondents' employees,
prior to the shut-down, customarily spent part of their time on repair
work, for which no time studies were made, and that the cost of such
repair work was included in the $37.50 figure 17 which, he claimed, is
comparable to the contract cost figure of $32.50. Since the $32.50'
figure represents only labor expended in the manufacture of a single
Hudson seal coat, the comparison, claimed to prove a savings of $5.00
per coat is obviously fallacious. Finally, Reichelt was unable to
enumerate the component elements entering into the respondents'
alleged production cost of $37.50. He denied that his former cutter,
Gilbert, had ever cut the furs for a Hudson seal coat in 1 day, as-
Gilbert testified he had done, but Reichelt admitted that he did not
know the labor cost of the cutting operation on a Hudson seal coat,
and offered no production records which might have contradicted
Gilbert's estimate 18
In the absence of more detailed, consistent, and coherent testimony
regarding the respondents' time studies and costs, we disregard
Reichelt's testimony concerning them as a basis for testing the-
veracity of the respondents' claim that their manufacturing costs
were so excessive as to compel them to discontinue operating their
shop. Nor can we credit Reichelt's statement that by changing its
17 At p. 289 of the record, Reichelt 's testimony on cross-examination was as follows
Q. Did your employees do some repair work at the same time they were doing
some of this manufacturing work'+
A. Yes
Q How (lid you make allowances for the repair work that was done?
A It was all figured in what was turned out of the shop.
Q Then you figured in the repair items along with the costs on the actual
manufacture of the coat?
A 'rhat's right , the entire production of the whole shop was figured.
Q How can you say that part of the labor cost that went Into repair work was
reflected in the manufacture of the Hudson seal coat?
A Well, it was a figure that was arrived at, that is how it was arrived at I
couldn't tell you today. I don ' t know.
L1 In another connection Reichelt testified that the respondents never kept daily produc-
hon records
EDWARD F. REICHELT 273
mode of operation the firm saved $5.00 on the manufacture of the
single coat which he mentioned as typical. If the costs of producing
a Hudson seal coat are in fact typical, we must infer that the re-
spondents have increased rather than decreased their labor costs by
having their manufacturing performed by others. Reichelt denied,
but did not refute, the showing that the labor on such a coat actually
cost the respondents approximately $18.00 before April 8, 1937, as
compared with the $32.50 which the respondents were paying their
contract manufacturers at the time of the hearing. The Trial Ex-
aminer concluded that the respondents had increased their manuf_c-
turing costs by adopting an indirect method of manufacture, and we
agree with this conclusion.
In their exceptions to the Trial Examiner's report, the respondents
complain that this finding ignores savings they have achieved in
rental, light, power, interest on equipment investment, depreciation,
up-keep, and other incidentals, by discontinuing the operation of their
shop. But the respondents offered no evidence to support this argu-
ment, raised for the first time after the close of the hearing. Reich-
elt, in his testimony, did not mention overhead expenses as a factor
contributing to the respondents' alleged operating losses. Nor does
the record reveal wherein the respondents, who still have their shop
space under lease and still own their equipment and furnish light and
power for Coy's operations 19 could have effected any substantial re-
duction in overhead costs to offset the demonstrated increase in labor
costs.
Reichelt's testimony was no more credible when he turned from a
discussion of specific manufacturing costs to the assertion that for
18 months prior to April 8, 1937, the respondents had considered dis-
continuing the manufacture of fur garments because they had been
losing money, on their operations.as a whole. In his testimony as to
this, too, Reichelt's particular statements contradict his general asser-
tions. After testifying that " * * * we have always considered
that we have lost money in our shop," he explained that, by this, he
meant that the respondents' income was insufficient to cover all ex-
penses. Although he claimed at first that these losses had been
suffered for 18 months prior to April 8, 1937, he later said that the
respondents had not realized any profits since 1931, that in the years
between 1931 and 1937 they "either lost money or broke even, or
something of that sort," and that he believed that they "broke even"
in 1936. That there was no sudden change for the worse in the
respondents' financial condition, in the early months of 1937, is evi-
denced by Reichelt's statement, on direct examination, that the pro-
duction losses shown by the firm's records had varied only slightly
19 Discussed in Section III, B, 2, infra
274 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
during the last several years. Evidently the respondents' claimed
losses were not so severe as to deplete substantially their cash reserves
or require them to reduce their drawing accounts. Reichelt testified
that in 1931 the respondents had a cash reserve of from $10,000 to
$20,000, and that in 1936 their cash reserve amounted to about $15,000.
In the intervening years each of the partners had twice contributed
about $500 to the business. Meanwhile, each partner had drawn a
salary of from $250, to $300 or more per month. Reichelt testified
that the respondents kept books and prepared financial statements as
of February 1 each year, but these statements, which, presumably,
would have reflected the claimed unprofitableness of the respondents'
operations, were not produced. Moreover, Reichelt admitted that for
5 years before the hearing the respondents had sold their goods at a
profit over and above labor, material, and overhead costs.20
Further belying Reichelt's claim that, owing to manufacturing
losses and the firm's bad financial condition, the respondents had long
considered closing their shop, are the facts, admitted by the respond-
ents, that within 10 days prior to April 8, 1937, and after time studies
had, according to Reichelt, been completed on samples of part of the
line of coats to be produced in 1937, the respondents hired three
additional employees and granted a general increase in wages. With
respect to the latter, Reichelt testified that the respondents thought
that their employees were dissatisfied and that it would be "good
business" to grant increases so that the employees would turn out
the work better and the respondents "would make more money."
And when asked to explain why the respondents had hired more
employees at a time when they purportedly planned to close their
shop, he replied : ". . . we probably did so because we intended to
continue manufacturing for the balance of 1937, . . . We didn't
know whether we were going through the whole year or what we were
going to do, but we were producing at that time, and could use more
help, and put them on." [Italics added.] The employee last hired
was Anna Chaber, a finisher, who testified that she began to work
on April 5. Faced with his own admission that the respondents
intended to continue operating their shop as late as that date, Reichelt
explained, on cross-examination, that the respondents began to change
their minds on April 6, when the dissatisfaction of their employees
was evidenced by an alleged sudden slow-down of work. But he
admitted that the respondents kept no production records which
might have proved this statement and that he had made no com-
plaint to the employees on account of the alleged slow-down in
production.
20 Asked to explain why the respondents thought that they were manufacturing at a
loss while selling at a profit, Reichelt testified , at p 330 of the record "we knew we were
losing money in our shop but figured we were making it upon our sales "
EDWARD F. REICHELT 275
In view of the showing that the respondents actually increased
their manufacturing costs by adopting an indirect method of manu-
facture, and in view of Reichelt's admissions and frequent self-con-
tradictions on the stand, we find it impossible to believe that the
respondents were induced to close their shop either because of busi-
ness losses due to excessive labor costs, or because of economies to be
effected by having outside contractors perform their manufacturing.
The additional explanation of the shut-down offered by Reichelt,
namely, that the demands of the respondents' employees entailed
an increase in operating expense which the respondents could not
afford to incur, is equally implausible. The respondents cannot have
been motivated solely by apprehension of increased production costs,
since, immediately following the shut-down, they initiated a mode
of operation which was more costly than their former manufacturing
system and which, in fact, entailed approximately the same increase
in labor costs as the respondents would have incurred by adopting
the standard union scale of wages and hours in their own shop.
In view of the uncontradicted evidence showing that the respond-
ents'first discovered their employees' union affiliation and activity on
or about April 7, 1937, that on that date the respondents were first
approached by a union organizer, that the respondents thereafter
expressed to Schaps and Archer their determination not to deal with
the Union, that shortly after discharging Lorkiewicz, a -union mem-
ber, the respondents hired a new employee to replace him, and that
the respondents indicated their willingness to reemploy Schaps and
Archer independently of any settlement with the Union, and in view
of the complete failure of the respondents' efforts to prove that
they changed their method of operation on April 8, 1937, for busi-
ness reasons, we conclude that the respondents closed their shop and
thereafter employed outside contractors to manufacture their prod-
ucts for the sole purpose of frustrating their employees' union
activities and discouraging membership in the Union.
2. The respondents' mode of operation subsequent to April 8, 1937:
Bernard Coy
The foregoing conclusion with respect to the respondents' change
of manufacturing methods is further substantiated by the evidence
relating to the respondents' conduct subsequent to April 8, 1937, par-
ticularly in relation to Bernard Coy and his "employees." As stated
above, the respondents contend that after April 8, 1937, they wholly
ceased to manufacture their own products and adopted a system of
employing independent contractors to perform this work for them.
However, it is clear that at least as to that portion of the manufac-
turing work which, at the time of the hearing, was being performed
276 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
by Coy and his "employees," the respondents' adoption of a coat ract-
manufacturing system was only colorable.
At the time of the hearing, Coy and his assistants were perforniilig
about 90 per cent of the respondents' repair work, and from 15 per
cent to 25 per cent of their manufacturing of new garments. The
remainder of the manufacturing and repair work was being per-
formed by three Chicago furriers referred to in Reichelt's testimony
as Sugarman Brothers, Miller Fur Company, and Haugen Furs. The
record contains virtually no evidence concerning these establishments.
Reichelt testified that the respondents' arrangements with them were
consummated entirely by telephone. There is no evidence indicating
whether or not these "arrangements" consisted of binding contracts
for services to be rendered to the respondents for any agreed period
of time. With respect to Coy and the four people working under his
supervision, the record is more informative.
Coy himself had worked for the respondents for approximately 25
years. prior to the hearing. He had once joined the Union, and had
participated in a strike against the respondents' firm in 1924, but at
that time he had become antagonistic toward the Union and since
1924, as the respondents knew, he had not been a member of the
organization. Coy testified that on April 8, 1937, he received a tele-
gram of dismissal, couched generally in the same terms as those sent
to the other employees, but he could not describe its language spe-
cifically. His conduct immediately following his alleged discharge
was not that which would normally be expected of an old employee,
discharged without fault of his own and without any previous notice,
after 25 years' service. Het left Chicago on April 9 and remained
away from the city for a week, on vacation. He then returned to
Chicago, and worked for several months for the Bishop Company, a
fur house. Coy testified that he had not the slightest idea why he
was discharged by the respondents; that he was "more than sur-
prised" to receive the telegram; but that, nevertheless, he did not
communicate with the respondents to ascertain the reason for his
discharge. He testified that he first returned to the respondents'
place of business in January 1938;91 at which time he called upon
respondent Hill and asked if he could obtain a sub-lease of the re-
spondents' factory space and do some of their work under contract.
When questioned as to why he did not, at that time or earlier, at-
tempt to obtain reinstatement to his old job, Coy testified that he
knew that there was "not a chance" of the respondents' reemploying
him because "What can one man do alone?" After his interview
21 Schaps testified that lie saw Coy and Vetterick in the respondents' premises on a Sat-
urday afternoon late in August 1937, and Reichelt testified that he "believed " that he had
seen Coy once or twice between April 1937 and January 1938 and that one or two of the
respondents had attended Coy's wedding in the summer of 1937.
EDWARD F. REICHELT 277
with Hill in January, further negotiations between Coy and the
respondents resulted in his beginning to work for them early in
February 1938.
Coy's relations with the respondents from that time until the time
of the hearing were purportedly governed by a sub-lease and contract
dated February 1, 1938, each signed by Coy and by Reichelt for the
respondents. The sub-lease granted to Coy the use of the respond-
ents' factory space, reserving to the respondents and their employees
the right to use this space for ordinary purposes not interfering with
Coy's use, with light and power to be furnished by the respondents,
at a rental of $65 per month. It also granted to Coy the privilege
of storing materials in the respondents' vault, respondents retaining
control thereof. The term of the sub-lease was for 12 months from
February 1, 1938, unless sooner terminated by the respondents upon
their giving Coy 5 days' written notice. The contract, to be in effect
for the same period as the sub-lease, provided that Coy should manu-
facture to the order of the respondents "any and all garments which
they desire," during the life of the contract, for a mutually satisfac-
tory price on each garment manufactured, remodeled, or repaired,
"to be determined in accordance with the usual terms for such work
in the trade." Ninety per cent of amounts thus falling due were to
be paid to Coy weekly, 10 per cent being retained by the respondents
until the termination of the contract "to cover any incidentals or
disputes that might arise between the parties." The respondents
agreed to furnish Coy with enough work to keep him "reasonably
busy" during the term of the contract. The operative provisions of
this instrument conclude with the following language : "Bernard
Coy shall be considered under this contract as an independent con-
tractor and carry his own insurance and other protections necessary
for himself and employees."
While Reichelt testified that these instruments expressed all the
relations existing between Coy and the respondents at the time of the
hearing, further evidence on this subject indicates the contrary.
Coy, according to his testimony and that of Edward Reichelt, en-
joyed the privilege of using the respondents' telephone; his calls were
taken and his books were kept by the respondents' stenographer.
Coy had no office equipment of his own except a single filing cabinet.
He did not reimburse the respondents for the use of their telephone,
office facilities, or stenographer's time. Questioned about his ar-
rangement regarding the stenographer's services, Coy testified that
there was no definite understanding respecting her compensation but
"that at the end of the year, I can pay her so-and-so."
The evidence further indicates that-the respondents retained con-
trol of Coy's books and decided for him what disbursements he
should make. Coy could not remember, when he testified, on Mon-
283032-41-vol 21--19
278 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
day, August 15, 1938, whether or not he had paid his rent for July
and August 1938, although the respondents subsequently introduced
in evidence Coy's cancelled check for $130, dated August 12. Reichelt
testified that this check was drawn by Coy in payment of his July
and August rent. Questioned as to whether or not he had paid his
rent for April, May, or "last month," Coy was uncertain, testified
that he would have to look at his books, and then said: "I don't think
I paid it last month, but I have a record of it. I don ' t get a chance,
hardly, to see my books." [Italics added.] A copy of the entries
in Coy's cash book for the period from February 23 through June 13,
1938, was introduced in evidence, and Coy testified to its accuracy.
However, it is evident that he had insufficient knowledge of his busi-
ness affairs to know whether or not the books were correct. He was
wholly unable to testify, by referring to his original books, as to
entries subsequent to June 13 , 1938. Stating that there was an entry
of $150.50 on June 20, 1938, he could not say what that figure repre-
sented, nor did he state whether it was a receipt or disbursement.
He was asked whether he ever checked the bookkeeper's entries, and
replied: "I think I just look them over, what little I know. I don't
know much about it. . . . I depend on her for e-verything." [Italics
added.]
Coy displayed similar ignorance with respect to other matters
affecting his business operations and his relationship with the
respondents. He testified that he had drafted the sub-lease and
the contract described above, but Reichelt testified that these instru-
ments had actually been drafted by two of the respondents, after
a conference between Coy and the respondents in which proposed
terms were discussed. Coy could not remember that anything was
said at this conference about such fundamental matters as the re-
spondents' cancellation privilege and the provision whereby the
respondents were empowered to retain 10 per cent of the amounts
due Coy. When asked whether he was aware that the contract con-
tained this latter provision, Coy testified : "Not that I know of."
Again, although Coy testified, with a positiveness born of his long
experience in the trade, as to the number of hours required to com-
plete each operation in the manufacture of a Hudson seal coat, he
was vague about the labor costs which he incurred in manufacturing
such a coat , and wholly unable to state how much profit he made on
each. He admitted that his personal income from his shop averaged
approximately $10 per week less than the wages he had been earning
in the respondents ' shop ; that he was "in a hole" at the time of the
hearing; and that he had had difficulty at one time in meeting his
pay roll, but had "got hold of" some money of his own on that
EDWARD F. REICHELT 279
occasion and paid his employees.22 Notwithstanding these unfavor-
able financial factors, concerning which an independent businessman,
newly embarked on a commercial venture of his own, would normally
be solicitous, Coy had no exact knowledge concerning his liabilities,
could only "guess" at the amount of his weekly pay roll, and, as
discussed below, did not know when a debt he had incurred for
working capital would mature.
It is evident that Coy's operations could not have been undertaken
and could not continue without the respondents' patronage and the
use of their resources. Coy does not own any manufacturing equip-
ment but uses the sewing machines, nailing boards, drum, and tables
belonging to the respondents, which are located in the factory space
where Coy's work is conducted.23 Coy admitted that he had insuf-
ficient capital with which to start his business in February 1938.
The respondents assisted him at that time by giving him a 2 months'
rent concession-to which there is no reference in the sub-lease-and.
Edward Reichelt lent him $300 on an unsecured note. Coy testified
that this note was clue "next year," but there is no evidence indicating
its exact maturity date. Coy testified that he performed "just a
little" work for customers other than the respondents, and that he
had "a lot in view," but when he was asked to name the "maybe one
or two persons" who, lie asserted, had given him orders since Febru-
ary 1938, he said that he could not remember their names and in-
quired whether this information Was not shown in his books. Told
that he could refer to his books to refresh his memory, Coy testified
again that he was not familiar with his books. The record of his
receipts through June 13, 1938, which is in evidence, contains no
memoranda of payments to Coy by any persons other than the re-
spondents. It is thus obvious that from February 1938 to the time
of the hearing, Coy had not had any outside customers, and that
he was entirely dependent upon the respondents' work for his income.
Coy's four employees, at the time of the hearing, were an operator
and an apprentice with whom lie had had no acquaintance before
they Went to work for him, and two finishers formerly employed by
the respondents. Coy testified that so far as lie knew, none of his
employees belonged to the Union, a fact which it is clear from other
u Compaie Coy's testimony, at p 114 of the iecoid. in connection with his approach to
the respondents in January 1938
Q Why did you think, if they let you out in April, they might be willing to give
you some work the following Janua,y, 1938?
A Well, tl•at is when I went after it I don't know what is next year going to
happen , so I went after it , after I got laid off I had to have some woik I was
down and out [Italics supplied ]
23 There is no reference to this equipment in either the sub-lease or the contract Coy
testified that the use of the equipment formed part of the consideration for his obligation
to pay $ 65 nent; and both Coy and lteiche ] t testified that Coy had undertaken to keep the
machinery in repair
280 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
evidence is true with respect to Decaster and Vetterick, the finishers,
since they, together with Coy, were the only employees of the
respondents, prior to April 8, 1937, who did not belong to the Union.
Coy testified that he had asked Decaster and Vetterick to work for
him because he had known them and worked with them a long time
and "they Were nice people." He did not, however, select his
operator on the same basis of long familiarity. His operator,
Zaffaras, was hired through Maloy, executive secretary of the As-
sociated Fur Industries of Chicago, and actuary of the Chicago Fur
Manufacturers' Association, an association of which the respondents'
firm is a member. Coy's explanation of why he called Maloy when
he needed an operator was obviously false. He testified that he
telephoned to Maloy because Maloy was a "friend" of his, but
admitted that he had not previously been acquainted with Maloy.=4
From the foregoing, it is clear that Coy's "independent" operations
are financed and supported by the respondents, are conducted on their
premises through the use of their tools of production, and are
necessarily subject to their direction and control. The work per-
formed by Coy and his assistants is an integral part of the
respondents' business enterprise. In view of these considerations, we
conclude that Coy and his employees are in reality employees of the
respondents within the meaning of the Act. The fact that the con-
tract between Coy and the respondents labels Coy an "independent
contractor" does not preclude this conclusion. As we had, occasion
to point out in Hatter of Seattle Post-Intelligencer Department of
Hearst Publications, Inc. and Seattle Newspaper Guild, Local No.
82,25 the definition of "employee" contained in Section 2 (3) of the
Act is not a technical one. In that case we said : "The matter is not
conclusively determined by a contract which adverts to and purports
to establish the status of such person other than as an employee.
Public interest in the administration of the Act permits an inquiry
into the material facts and substance of the relationship." We find
that the respondents have attempted to invest their relationship with
Coy with -indicia of the relation of "independent contractor" as a
device to evade their duties under the Act, and to conceal the fact
24 Coy's testimony as to this is typical of his general evasiveness and incoherence
Q * * • why did you say be [Maloy] was a friend of yours?
A. Well, he was, then he gave me the man
Q That is the reason you called, because he was a friend of yours after you got
the man , is that it?
A Yes.
259 N. L. R. B. 1262 See also Matter of The Connor Lumber & Land-Co and Interna-
tional Woodworkers of America , Local No 125 (C. I 0.), 11 N L R. B. 776; Matter of
Washsngton Branch of the Sun Life Insurance Company of America and Industrial and
Ordinary Insurance Agents Union No. 21354, Industrial and Ordinary Insurance Agents
Council, 15 N. L R. B 817
EDWARD F . REICHELT 281
that after locking out their employees they rehired those who were
not members of the Union and resumed manufacturing operations in
their shop on a reduced scale.
3. Conclusions with respect to the lock-out and discharges; the
closing of the plant; and the respondents' subsequent conduct
Upon the basis of the foregoing, we find:
(1) that the respondents, by locking out and discharging the 13
employees named in the complaint, discriminated in regard to the
hire and tenure of employment of said employees. and thereby dis-
couraged membership in the Union ;
(2) that by the foregoing acts of discrimination, by expressing to
Schaps and Archer their determination not to deal with the Union,
by replacing Lorkiewicz with a new employee shortly after dis-
charging him, by indicating their willingness to reemploy Schaps
and Archer independently of any settlement with the Union, by
closing their shop and adopting an indirect method of manufacture,
and by employing their own non-union employees and others under
the guise of a fictional "independent contractor" relationship, the
respondents interfered with, restrained, and coerced their employees
in the exercise of the rights guaranteed in Section 7 of the Act.
C. The refusal to bargain collectively
1. The appropriate unit
The complaint alleges that the unit of the respondents' employees
appropriate for the purposes of collective bargaining, within the
meaning of Section 9 (b) of the Act, consists of all the respondents'
employees, excluding supervisory and clerical employees. All the
employees constituting the unit thus described are engaged in the
production of fur garments, and all are eligible to membership in
the Union. The respondents have no maintenance employees. At
the time of the alleged refusal to bargain, April 7, 1937, respondent
Hill supervised the work of the employees in the respondents' shop;
at the time of the hearing, Coy appeared to be acting in a supervisory
capacity. In addition to the employees engaged in fur production
in their shop, the respondents have only one other employee, an office
girl, whose exclusion from the unit is not disputed. The respondents
have raised no issue with respect to the appropriate unit.
We find that the employees of the respondents, exclusive of super-
visory and clerical employees, constitute a unit appropriate for the
purposes of collective bargaining and that said unit will insure to
employees of the respondents the full benefit of their right to self-
282 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
organization and to collective bargaining, and otherwise effectuate
the policies of the Act.
2. Representation by the Union of the majority in the appropriate
unit
At the time of the alleged refusal to bargain, there were 17 employees
in the appropriate unit. At the hearing, 12 of these employees testi-
fied that they were members of the Union and had joined the organ-
ization on or before April 6, 1937. Their membership, as well as that
of George Lecliner, an employee who did not testify, was further
evidenced by the testimony of Feinglass and by the records of the
Union.26 The respondents did not controvert this evidence.
We find that on April 6, 1937, and at all times thereafter, the Union
was and that it is the duly designated representative of the majority
of the respondents' employees in the appropriate unit. Pursuant to
Section 9 (a) of the Act it was and is, therefore, the exclusive repre-
sentative of all the employees in said unit for the purposes of col-
lective bargaining in respect to rates of pay, wages, hours of employ-
ment, and other conditions of employment.
3. The refusal to bargain collectively
The complaint alleges that on or about April 7, 1937, and at all
times thereafter, the respondents refused to bargain collectively with
the Union as the exclusive bargaining representative of all the re-
spondents' employees within the appropriate unit. It is undisputed
that on April 7, 1937, the Union, through Feinglass, attempted to
enter into negotiations for an agreement with the respondents respect-
ing their employees' wages, hours of work, and other conditions of
Employment. The respondents claim that prior to April 8, 1937, and
up to the time of the discontinuance of their manufacturing business,
they negotiated with the Union. However, as we have found, the
discontinuance of the respondents' manufacturing operations con-
stituted an unfair labor practice. Such discontinuance, therefore,
did not excuse the respondents from the performance of their duty
to bargain collectively. Moreover, the record shows that the re-
spondents did not, in fact, negotiate in good faith with the Union
prior to the lock-out.
Feinglass testified that when lie visited the respondents at their
place of business on April 7, 1937, he was introduced to Hill, who called
in Reichelt and Jensen. Feinglass informed the respondents that a
26 There was no evidence respecting the union affiliation of a fourteenth employee, one
Marcia Tripoti , except that Feinglass testified , without contradiction , that all the 17 ex-
cept Coy , Decaster , and Vetterick , had joined the Union
EDWARD F. REICHELT 283
majority of their employees had joined the Union and desired to bar-
gain collectively with them concerning wages, hours, and other working
conditions. He requested the respondents to arrange for a later con-
ference with himself and a committee of the employees to negotiate the
terms of an agreement covering these subjects. Reichelt denied that
the Union represented a majority of the employees, but upon Feinglass'
suggesting that the employees in the shop be questioned, this subject was
dropped. Hill then inquired what conditions the Union demanded, and
Feinglass replied that he would prefer not to formulate specific de-
mands until the respondents' "special problems" had been considered
in a subsequent conference. Thereupon, Hill asked to see the Union's
standard contract. Feinglass did not have a copy of the contract form
with him and objected to showing it to the respondents on the ground
that the contract was "a rigid document" and that the Union was will-
ing to negotiate with the firm. At Hill's insistence, however, Feinglass
agreed to mail a copy of the Union's contract to the respondents. Hil l
then said that he wanted time to think over the natter, and would like
to consult Paul Reichelt.27 Hill suggested that Feinglass call him the
following day, and the interview terminated.
Reichelt's testimony, in the main, corroborates Feinglass' account of
the April 7 interview .211 Although he first asserted that Feinglass de-
inanded a 35-hour week and increased wages, Reichelt admitted, in his
testimony, that no specific wage terms were discussed and that it was
one of the respondents who introduced the discussion of the Union's
standard contract.
On April 7, after leaving the respondents' office, Feinglass mailed to
them a mimeographed copy of the Union's standard contract form, in
which blanks for the date and names of the contracting parties were
not filled in, together with a letter reading as follows :
Pursuance to our conversation of April 7, I am hereby enclosing
a copy of our regular Union contract for your information.
[Italics added.]
The Union wishes to request of you an iii, , nediate conference
[italics added] for the purpose of bargaining collectively for the
people in your shop who are all members of the Chicago Fur
Workers' Union, Local No. 45, and who have asked us to act in their
behalf.
Expecting an immediate reply, we are . . .
The respondents did not reply to this letter except by closing their shop.
Although as stated above, Reichelt testified that the respondents closed
^ Paul Reichelt is not a respondent , having retired from the partnership in 1924.
21 Asked to recount what happened at that conference , Reichelt testified "Mr Feinglass
stated that he had organized our shop , wanted us to sign a union agreement, and we stated
that we wanted time to think it over . . I believe that takes care of practically the
entire conversation , as far ns I recall it"
284 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
their shop for the reason, among others, that they could not afford to
meet their employees' demands, it is clear that up to this point the
Union had not made any uncompromising demands, nor given the
respondents reason to believe that negotiation would be futile.
On April 8, about 6 p. in., Feinglass telephoned the respondents.
He spoke to Hill and asked what decision the respondents had
reached; and Hill, who acknowledged receipt of Feinglass' letter,
said that he had not yet contacted Paul Reichelt and would notify
Feinglass later of the respondents' decision. At the time of the
telephone conversation, according to Reichelt's testimony, the re-
spondents had already decided to discharge their employees that
night, although the telegrams effectuating this decision were not
dispatched until 8: 30 o'clock. On the following day the respondents'
plant was closed and Maloy had summoned a police guard- to- avert,
possible "labor difficulties."
On April 9 Feinglass, having been authorized by the union mem-
bers to collect their wages, went to the respondents' office accompanied
by another representative of the Union, with the object of terminat-
ing the lock-out if possible. His interview on that occasion, as he
described it, was brief : ". . . Mr. Robert Hill said he would mail
the wages to the workers at their homes, and he was very non-
comnmittal, so we walked out."
It thus appears that the respondents met the Union's attempt to
bargain collectively by a hastily planned lock-out and by subsequent
conduct evincing a determination on the part of the respondents to
avoid dealing with the Union at any cost.
We find that on April 7, 8, and 9, 1937, and at all times thereafter,
the respondents refused to bargain collectively with the Union as
the representatives of their employees in an appropriate unit in re-
spect to rates of pay, wages, hours of employment, and other condi-
tions of employment, and that by such refusal the respondents inter-
ferred with, restrained, and coerced their employees in the exercise
of the rights guaranteed in Section 7 of the Act.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
We find that the activities of the respondents set forth in Section
III above, occurring in connection with their operations described
in Section I above, have a close, intimate, and substantial relation to
trade, traffic, and commerce among the several States, and tend to
lead to labor disputes burdening and obstructing commerce and the
free flow of commerce.
EDWARD F. REICHELT
V. THE REMEDY
285
We have found that the respondents have engaged in unfair labor
practices. We will order them to cease and desist therefrom. In
addition, we will order the respondents to take certain affirmative
action which we find necessary to effectuate the policies of the Act.
We have found that the respondents locked out and discharged the
13 employees named in the complaint, thus discriminating against
them with respect to hire and tenure of employment within the
meaning of Section 8 (3) of the Act and discouraging membership in
the Union. We shall, therefore, in order to effectuate the policies
of the Act, order the respondents to offer reinstatement to their
former or substantially equivalent positions to these employees.
We shall further order the respondents to make whole each of the
discharged employees for any loss of pay such employee may have
suffered by reason of his dischaige, by paying to him a sum equal
to the amount lie normally would have earned as wages, from April 8,
1937, to the date of the respondents' offer of reinstatement, minus
his net earnings 29 during said period.
Although we have found that the respondents' adoption of a sys-
tem of manufacturing through independent contractors constituted,
under the circumstances of this case, interference with and restraint
and coercion of their employees in the exercise of the rights guaran-
teed in Section 7 of the Act, we shall not order the respondents un-
conditionally to desist therefrom. This course of conduct constitutes
an unfair labor practice on the part of the respondents only in so
far as, and for the period that, it is used as a device to enable the
respondents to continue to discriminate against their 13 discharged
employees. The respondents may find it possible to reinstate all
those employees who still desire reinstatement, without disturbing
their relations with the independent contractors who now perform
work for them. It does not appear, however, that, even if compliance
with our order should require the respondents to interrupt their
course of dealing with these persons, any breach of contract will be
involved. There is no indication in the record that the respondents'
arrangements with the three outside manufacturers are embodied in
contracts effective for any agreed term. The respondents' contracts
29By "net earnings " is meant earnings less expenses such as for transportation, room,
and board incurred by an employee in connection with obtaining work and working else-
where than for the respondent, which would not have been incurred but for his unlawful
discharge and the consequent necessity of his seeking employment elsewhere. See matter
of Crossett Lumber Company and United Brotherhood of Carpenters and Joiners of Amer-
sea, Lumber and Sawmill Workers Union, Local 2590, 8 N L R. B 440 Monies received
for work performed upon Federal, State, county, municipal, or other work-relief projects
ale not considered as earnings , but as provided below in the Order, shall be deducted from
the sum due the employee, and the amount thereof shall be paid over to the appropriate
fiscal agency of the Federal, State, county, municipal, or other government or governments
which supplied the funds for said work-relief projects
286 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
with Coy were entered into in furtherance of their unfair labor
practices and have now expired. Any renewal thereof since the
date of the hearing would necessarily be subject to our determination
herein, since both Coy and the respondents had notice in these pro-
ceedings that the legality of their relationship, under the Act, was
in question.
Having found that the respondents on April 7, 8, and 9, and at
all times thereafter refused to bargain collectively with the Union
as the designated representative of their employees in the appro-
priate unit, we shall, in order to effectuate the policies of the Act,
order the respondents, upon request, to bargain collectively with
the Union as such representative.
Upon the basis of the foregoing findings of fact and upon the
entire record in the case, the Board makes the following :
CONCLUSIONS OF LAW
1. Chicago Fur Workers Union, Local No. 45, is a labor organiza-
tion, within the meaning of Section 2 (5) of the Act.
2. By interfering with, restraining, and coercing their employees
in the exercise of the rights guaranteed in Section 7 of the Act, the
respondents have engaged in and are engaging in unfair labor
practices, within the meaning of Section 8 (1) of the Act.
3. By discriminating in regard to the hire and tenure of employ-
ment of the 13 employees named in the complaint, thereby discourag-
ing membership in the Union, the respondents have engaged in and
are engaging in unfair labor practices, within the meaning of Section
8 (3) of the Act.
4. The employees of the respondents, exclusive of supervisory and
clerical employees, constitute a unit appropriate for the purposes of
collective bargaining, within the meaning of Section 9 (b) of the
Act.
5. Chicago Fur Workers Union, Local No. 45, was on April 6,
1937, and at all times thereafter has been, the exclusive representative
of all the employees in such unit for the purposes of collective bar-
gaining, within the meaning of Section 9 (a) of the Act.
6. The respondents, by refusing to bargain collectively with Chi-
cago Fur Workers Union, Local No. 45, as the exclusive represent-
ative of their employees in an appropriate unit, have engaged in and
are engaging in unfair labor practices, within the meaning of Sec-
tion 8 (5) of the Act.
7. The aforesaid unfair labor practices are unfair labor practices
affecting commerce within the meaning of Section 2 (6) and (7) of
the Act.
EDWARD F. REICHELT
ORDER
287
Upon the basis of the above findings of fact and conclusions of
law, and pursuant to Section 10 (c) of the National Labor Relations
At, the National Labor Relations Board hereby orders that the
respondents, Edward F. Reichelt, Robert J. Hill, and Russel J.
Jensen, individually and as copartners doing business under the name
and style of Paul A. Reichelt Company, Chicago, Illinois, their
agents, successors, and assigns shall:
1. Cease and desist from : _
(a) Discouraging membership in Chicago Fur Workers Union,
Local No. 45, or in any other labor organization of their employees,
by discharging, locking out, or refusing to reinstate any of their
employees because of their membership in or activities in behalf of
any such labor organization;
(b) Refusing to bargain collectively with Chicago Fur Workers
Union, Local No. 45, as the exclusive representative of their em-
ployees, exclusive of supervisory and clerical employees;
(c) In any other manner interfering with, restraining, or coercing
their employees in the exercise of their rights to self-organization,
to form, join, or assist labor organizations, to bargain collectively
through representatives of their own choosing, or to engage in con-
certed activities for the purpose of collective bargaining or other
mutual aid or protection as guaranteed in Section 7 of the National
Labor Relations Act.
2. Take the following affirmative action which the Board finds
will effectuate the policies of the Act :
(a) Offer to Dave Wickstrom, Edith Westerlund, Harry Miller,
Leon Archer, Sam Schaps, George Lechner, Edward Pietrusiak,
Bruno Lorkiewicz, Anna Chaber, Evelyn Velvel, Charles B. Gilbert,
Matthew Wray, and Edward Mrock immediate and full reinstate-
ment to their former or substantially equivalent positions, without
prejudice to their seniority and other rights and privileges;
(b) Make whole the said employees for any losses of pay they
may have suffered by reason of their respective discharges by pay-
ment to each of them of a sum of money equal to the amount said
employee normally would have earned as wages from April 8, 1937,
to the date of the respondents' offer of reinstatement, less his net
earnings 30 during said period; deducting, however, from the amount
otherwise due to each of the said employees, monies received by said
employee during said period for work performed upon Federal,
State, county, municipal, or other work-relief projects, and paying
over the amount so deducted to the appropriate fiscal agency of the
S0 See footnote 29, supra
288 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Federal, State, county, municipal, or other government or govern-
ments which supplied the funds for said work-relief projects;
(c) Upon request, bargain collectively with Chicago Fur Workers
Union, Local No. 45, as the exclusive representative of • their em-
ployees, exclusive of supervisory and clerical employees, in respect
to rates of pay, wages, hours of employment, or other conditions of
employment ;
(d) Post immediately in conspicuous places in and about their
shop at 19 South Wells Street, Chicago, Illinois, notices to their
employees, and maintain said notices for a period of at least sixty
(60) consecutive days from the date of posting, stating that the
respondents will cease and desist in the manner set forth in para-
graphs 1 (a), (b), and (c), and that they will take the affirmative
action set forth in paragraphs 2 (a), (b), and (c) of this Order, that
the respondents' employees are free to become or remain members of
Chicago Fur Workers Union, Local No. 45, and that the respondents
will not discriminate against any employee because of membership
or activity in that organization;
(e) Notify the Regional Director for the Thirteenth Region in
writing within ten (10) days from the date of this Order what steps
the respondents have taken to comply herewith.