Penntech Papers, Inc.; T. P. Property Corporation and Kennebec River Pulp and Paper Company

National Labor Relations Board - Board Decisions

Aug 9, 1982

263 N.L.R.B. 264 (N.L.R.B. 1982)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Penntech Papers, Inc.; T. P. Property Corporation
and Kennebec River Pulp and Paper Company
and United Paperworkers International Union,
Locals 36 and 73; International Brotherhood of
Firemen & Oilers Local 270; International
Brotherhood of Machinists and Aerospace
Workers, Local 559, AFL-CIO and District
No. 99, International Association of Machinists
and Aerospace Workers, AFL-CIO. Cases 1-
CA-12975 and 1-CA-12978
August 9, 1982
DECISION AND ORDER
BY MEMBERS FANNING, JENKINS, AND
ZIMMERMAN
On January 21, 1981, Administrative Law Judge
Lowell Goerlich issued the attached Decision in
this proceeding. Thereafter, the General Counsel,
Respondents, and the Charging Parties filed excep-
tions, supporting briefs, and statements of position,'
and the Charging Parties filed an answering 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 au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and
briefs2 and has decided to affirm the rulings, find-
ings,3 and conclusions of the Administrative Law
Judge only to the extent consistent herewith.
In his Decision, the Administrative Law Judge
found that Respondents Penntech Papers, Inc., T.
P. Property Corporation, and Kennebec River
Pulp and Paper Company are a single employer
and that Respondents violated Section 8(a)(1) and
(5) by failing and refusing to bargain with the
l On September 4, 1981, the Board provided the parties an opportunity
to submit statements of position regarding the effect on the present pro-
ceeding of First .National Maintenance Corp v. N.L.R.., 452 U.S. 666
(1981), issued after the receipt of briefs herein
2 Respondents have requested oral arguiment. This request is hereby
denied as the record, the exceptions, and the briefs adequately present the
issues and the positions of the parties
I Respondents have excepted to certain credibility findings made by
the Administrative Law Judge It is the Board's established policy not to
overrule an administrative law judge's resolutions with respect to credi-
bility unless the clear preponderance of all of the relevant evidence con-
vinces us that the resolutions are incorrect. Standurd Dry Wall Products,
Inc., 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. !951) We have
carefully examined the record and find no basis for reversing his findings
As cited in Respondents' exceptions, the Adminiistrative Law Judge's
Decision contains a number of misstatements of fact, which we hereby
find to be inadvertent. Contrary to certain findings in the underlying De-
cision, the record shows that Kennebec River Pulp and Paper Company
at all times material herein has been a Maine corporation, all of whose
shares have been ownled solely by T. P. Property Corporation. 'F. P.
Property purchased Kennebec stock for $225,000), of which $100,000 was
in cash and the remainder of which was in notes of T. P Property. Final-
ly, the Unions herein infrmed the Regional Director for Region I that
they were no longer pursuing arbitration of a related grievance by letter
of November 15, 1978, and the Regional Director revoked deferral pro-
cedures by letter of December 4, 1978
263 NLRB No. 33
Charging Party Unions concerning the decision
and effects of closing the Kennebec paper mill in
Madison, Maine.
We agree with the Administrative Law Judge's
single-employer finding, based on the facts set forth
by him. In so finding we agree that this result is
not precluded by the principles of res judicata or
collateral estoppel, based on the outcome of a prior
court suit by the Unions herein to compel arbitra-
tion by Penntech, T. P. Property, and Kennebec
under the terms of a bargaining agreement execut-
ed by Kennebec. 4 In that suit, under Section 301 of
the Labor Management Relations Act, the district
court applied Federal common law and held that
the separate corporate existence of Penntech and
T. P. Property would not be ignored in order to
compel them to join Kennebec in the arbitration of
a dispute under a bargaining agreement to which
they were not signatories. In affirming this holding,
the circuit court stated:
We also agree that the real issue in this case is
. . . whether parent corporations should be
bound to the collective-bargaining agreements
of their subsidiaries. [583 F.2d at 35.]
However, the present proceeding, as noted by the
General Counsel, is based on allegations that Penn-
tech, T. P. Property Corporation, and Kennebec
are a single employer under the National Labor
Relations Act, and that they engaged in unfair
labor practices in violation of Section 8(a)(1) and
(5) of the Act. This proceeding, consequently, is
not controlled by Federal common law and the
issue is not the enforceability of the provisions of a
specific bargaining agreement. On the contrary, the
Board's test is, as stated with approval by the Su-
preme Court in Radio & Broadcast Technicians
Local Union 1264, International Brotherhood of Elec-
trical Workers, AFL-CIO v. Broadcast Service of
Mobile, Inc., 380 U.S. 255, 256 (1965):
[I]n determining the relevant employer, the
Board considers several nominally separate
business entities to be a single employer where
they comprise an integrated enterprise,
N.L.R.B. Twenty-first Ann. Rep. 14-15 (1956).
The controlling criteria, set out and elaborated
in Board Decisions, are interrelation of oper-
ations, common management, centralized con-
trol of labor relations and common owner-
ship.5
4United Paperworkers International Union v. T P. Property Corp., et al.,
583 F.2d 33 (Ist Cir. 1978), affg. 439 F.Supp 610 (1977).
5 See alse N.L.R.R. v. C. K. Smith & Co, Inc., 569 F.2d 162 (Ist Cir.
1977), cert. denied 436 U.S. 957 (1978); N.L.R.B. v. Pizza Pizzaz, Inc.
d/bia Jacob Wirth Restaurant, 646 F.2d 706 (Ist Cir. 1981).
264
PENNTECH PAPERS, INC., ET AL.
An examination of these criteria was not the basis
for the holdings in the aforementioned court pro-
ceedings. Accordingly, due to the lack of identity
in either the cause of action or the respective issues
involved, it is manifest that the principles of res ju-
dicata and collateral estoppel do not apply. The
criteria cited from Broadcast Service of Mobile,
supra, were those relied upon by the Administra-
tive Law Judge, they are the criteria distinctly ap-
plicable to Board proceedings on this issue, and the
conclusion that Respondents are a single employer
is fully supported by the record.
Regarding the disputed violations, we agree with
the Administrative Law Judge that Respondent
violated Section 8(a)(l) and (5) only to the extent
that they failed and refused to bargain about the ef-
fects of the decision to close the Kennebec plant.
In his complaint, the General Counsel did not
allege that Respondents engaged in unlawful con-
duct involving its actual decision to close the Ken-
nebec plant, and at the hearing he resisted the
Charging Parties' attempt to amend the complaint
to place into issue this allegation. Accordingly, he
expressly limited the violation alleged to involve
only Respondents' failure to bargain about the ef-
fects of the closing. In these circumstances we find
merit in the exceptions of the General Counsel and
Respondents and conclude that the legality of Re-
spondents' actual decision to close the plant was
not properly before the Administrative Law Judge
and that he should not have granted the Charging
Parties' motion to amend the complaint in this
regard.6
We also reject the Charging Parties' exception
that we find Respondents violated Section 8(aX)(5)
and (1) of the Act by unilaterally changing em-
ployment terms incident to their decision to close
the Kennebec plant. At the hearing the General
Counsel disavowed any intention to expand the
scope of the complaint to cover such an allegation.
* Member Jenkins concurs in the finding that Respondents have not
violated Sec. 8(aX5) and (1) by not bargaining about the decision to close
the Kennebec plant, but does so in light of the recent Supreme Court
opinion in First National Maintenance Corp. v. N.LR.B., 452 U.S. 666
(1981). In reaching this decision on the merits, he finds that the issue was
before the Administrative Law Judge. The evidence considered was nei-
ther objected to by the General Counsel nor introduced for a limited pur-
pose. In addition. Respondents received adequate notice during the
course of the hearing that the Charging Parties sought to litigate Re-
spondents' duty to bargain about the decision to close, a matter closely
connected to the charge and complaint herein regarding Respondents'
duty to bargain about the effects of that decision. Accordingly, as this
issue was fully litigated at the hearing, he would find the belated objec-
tion of the General Counsel regarding the scope of the instant proceeding
to be without merit. See M & J Trucking Ca. Inc., 214 NLRB 592, 597
(1974); Clinton Foods, Inc., d/b/a Morton's L.G.A. Foodliner, e atl., 240
NLRB 1246 (1979). In his view, the Decisions relied upon by the Gener-
al Counsel and Respondents are distinguishable in that the evidence
sought to be relied upon in those cases was objected to by the General
Counsel prior to its admission. See, for example, Winn-Dixie Stores, Inc.,
224 NLRB 1418, 1420 (1976).
Accordingly, this allegation may not be litigated in
this proceeding.7
The General Counsel and the Charging Parties
assert that the Administrative Law Judge's descrip-
tion of the appropriate bargaining units for which
the Unions herein are the employees' respective
bargaining representatives is inaccurate. The Gen-
eral Counsel notes that the Administrative Law
Judge's reliance on portions of the complaint, ad-
mitted by Respondents, is the source of this alleged
inaccuracy. The General Counsel and the Charging
Parties further point out that such unit descriptions
are not fully reflective of the various job classifica-
tions set forth in the joint bargaining agreement be-
tween Kennebec and the Unions herein and that
the unit description of the largest of the four units
is omitted entirely. Upon review of these conten-
tions in light of the applicable joint bargaining
agreement, it appears that the General Counsel's
and the Charging Parties' revised unit descriptions
are identical and consistent with the job classifica-
tions in that agreement. Noting that Respondents
have raised no objection to these revisions, we find
that the respective appropriate bargaining units
represented by the Unions herein are as stated in
these exceptions and are set forth below in our
Order.
THE REMEDY
Having found that Respondents have engaged in
an unfair labor practice within the meaning of Sec-
tion 8(a)(5) and (1) of the Act, we shall order that
they cease and desist therefrom, and take certain
affirmative action designed to effectuate the poli-
cies of the Act.
As a result of Respondents' unlawful failure to
bargain about the effects of their partial cessation
of operations, the terminated employees have been
denied an opportunity to bargain through their col-
lective-bargaining representatives at a time when
Respondents might still have been in need of their
services, and a measure of balanced bargaining
power existed. Meaningful bargaining cannot be as-
sured until some measure of economic strength is
restored to the Unions. A bargaining order alone,
therefore, cannot serve as an adequate remedy for
the unfair labor practice committed.
Accordingly, we deem it necessary, in order to
effectuate the purposes of the Act, to require Re-
spondents to bargain with the Unions concerning
I Member Jenkins concurs in finding no merit to this exception. At no
time during the hearing did the Charging Parties put Respondents on
notice that this issue was being litigated. In the absence of adequate
notice and opportunity to litigate fully the issue, he finds no merit in the
Charging Parties' contentions with respect to this issue See The Nestle
Company, 248 NLRB 732. fn 3 (1980).
265
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the effects on their employees, of the closing of
their operations, and shall include in our Order a
limited backpay requirement s designed both to
make whole the employees for losses suffered as a
result of the violation and to recreate in some prac-
ticable manner a situation in which the parties' bar-
gaining is not entirely devoid of economic conse-
quences for Respondents. We shall do so in this
case by requiring Respondents to pay backpay to
their employees in a manner similar to that re-
quired in Transmarine.9 Thus, Respondents shall
pay employees backpay at the rate of their normal
wages when last in Respondents' employ from 5
days after the date of this Decision and Order until
the occurrence of the earliest of the following con-
ditions-(I) the date Respondents bargain to agree-
ment with the Unions on those subjects pertaining
to the effects of the closing of Respondents' oper-
ations on their employees; (2) a bona fide impasse
in bargaining; (3) the failure of the Unions to re-
quest bargaining within 5 days of this Decision and
Order, or to commence negotiations within 5 days
of Respondents' notice of their desire to bargain
with the Union; or (4) the subsequent failure of the
Unions to bargain in good faith; but in no event
shall the sum to any of these employees exceed the
amount he or she would have earned as wages
from March 29, 1977, the date on which Respond-
ents terminated the Madison, Maine, operations, to
the time he or she secured equivalent employment
elsewhere, or the date on which Respondents shall
have offered to bargain, whichever occurs sooner;
provided, however, that in no event shall this sum
be less than these employees would have earned
for a 2-week period at the normal rate of their
normal wages when last in Respondents' employ.' 0
R We hase indicated that b.ackpay orders are appropriate means of re-
medying 8(a)(5) violations of the type involved herein, even where such
violations are unaccompanied by a discriminatory shutdown of oper-
ations. Cf Royal Plating and Polishing Co., Inc., 148 NLRB 545, 548
(1964), and cases cited therein.
9 Transmarine Navigation Corporation and its Subsidiary. International
Terminals, Inc., 170 NLRB 389 (1968).
10 Transmarine Nasvigation Corporation, supra. In the absence of allega-
tions and a finding that Respondents unlawfully rescinded contractual
provisions covering the permanent layoff of Kennebec employees, we
find no basis for modifying this traditional remedy in order to award ad-
ditional sums which might have been due under the terms of that bar-
gaining agreement.
In remedying Respondents' failure to bargain over the effects of the
decision to close the Kennebec plant, Member Jenkits joins the majority
in its stated purpose of providing the, employees' collective-bargaining
representative with a measure of economic strength which would have
existed had bargaining occurred when Respondents still were in need of
the employees' services. Accordingly, he agrees with the majority's for-
mulation of a traditional limited backpay requirement. However, where
the parties' relevant bargaining agreement, negotiated when the employ-
ees' services were in fact needed, provides additional provisions for back-
pay in the present circumstance, he would find that the traditional
remedy should be modified to take these additional provisions into ac-
count. He notes that even in the absence of a finding that these benefits
were unilaterally withdrawn, it is within the scope of our remedial
Interest on all such sums shall be paid in the
manner prescribed in Florida Steel Corporation, 231
NLRB 651 (1977). See, generally, Isis Plumbing &
Heating Co., 138 NLRB 716 (1962).''
To effectuate further the policies of the Act, Re-
spondents shall be required to establish a preferen-
tial hiring list of all terminated unit employees fol-
lowing the system of seniority provided for in the
collective-bargaining agreement and, if Respond-
ents ever resume operations anywhere in the Madi-
son, Maine, area, they shall be required to offer
these employees reinstatement. If, however, Re-
spondents were to resume their Madison operation,
Respondents shall be required to offer unit employ-
ees reinstatement to their former or substantially
equivalent positions. 2
Furthermore, in view of the fact that Respond-
ents' Kennebec facility is no longer in operation
and their former employees may be in different lo-
cations, we shall order Respondents to mail each of
their employees employed on the date they ceased
operations copies of the attached notice signed by
Respondents.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board hereby orders that the Respondents,
Penntech Papers, Inc.; T. P. Property Corporation
and Kennebec River Pulp and Paper Company,
Madison, Maine, their officers, agents, successors,
and assigns, shall:
1. Cease and desist from:
(a) Failing and refusing to bargain with United
Paperworkers International Union, Locals 36 and
73; International Brotherhood of Firemen & Oilers
Local 270; and International Brotherhood of Ma-
chinists and Aerospace Workers, Local 559, AFL-
CIO, herein called the Unions, as the exclusive rep-
resentatives of employees in the appropriate units
set forth herein below with respect to the effect on
their represented employees of the decision to close
the Kennebec facility.
The appropriate unit represented by United Pa-
perworkers International Union, Local 36, is:
All bleach plant operators, panel board opera-
tors, chemical makeup men no. 1, chemical
make up men no. 2, floor men, brake beater-
powers to provide for backpay in part based on the terms negotiated by
the parties.
i In accordance with his dissent in Olympic Medical Corporation, 250
NLRB 146 (1980), Member Jenkins would award interest on the backpay
due based on the formula set forth therein.
L2 Drapery Manufacturing Co.. Inc., and American White Goods Compa.
ny, 170 NLRB 1706 (1968); Burgmeyer Bros., Inc.. 254 NLRB 1027
(1981).
266
PENNTECH PAPERS, INC.. ET AL.
men, hydra-pulper operators, head grinder
men, magazine men, screen men, lead men
(lower grinder room), grinder men, woodmen,
lead men (wet room), Kamyr operators, ship-
pers, fork lift truck operators (wet room),
Kamyr operators' helpers, oilers-cleaners, lead
men (wood room), operators, sorters, feeders,
bark truck employees, truck drivers, crane op-
erators, rackmen, rakemen, turbine operators,
station operators, station operators' helpers,
switchboard operator (power station), weigh-
ers, fork lift truck operators (finishing and
shipping), car men, finishers, finisher helpers,
core and wrapper men, label and sample em-
ployees, laborers, cleaners and spare pool em-
ployees employed by Respondents at the
Madison, Maine, locations, excluding manage-
ment employees, superintendents, foremen, as-
sistant foremen, laboratory employees, office
forces, scalers, storekeepers, watchmen, guards
and supervisors as defined in Section 2(11) of
the Act.
The appropriate unit represented by United Pa-
perworkers International Union, Local 73, is:
All machine tenders, back tenders, third hands,
fourth hands, fifth hands, coater tenders,
beater engineers and utility men employed by
Respondents at the Madison, Maine, location,
excluding management employees, superinten-
dents, foremen, assistant foremen, laboratory
employees, office forces, scalers, storekeepers,
watchmen, guards and supervisors as defined
in Section 2(11) of the Act.
The appropriate unit represented by Internation-
al Brotherhood of Firemen & Oilers Local 270 is:
All head firemen, head oilers and oilers em-
ployed by Respondents at the Madison, Maine,
location, excluding management employees,
office forces, scalers, storekeepers, watchmen,
guards and supervisors as defined in Section
2(11) of the Act.
The appropriate unit represented by Internation-
al Brotherhood of Machinists and Aerospace
Workers, Local 559, AFL-CIO, is:
All chief electricians, fire chiefs, shift motor-
men, head journeymen, and journeymen AAA,
AA, A, B and C and journeymen helpers A,
B, C and D in the following crafts: machinists,
millwrights, pipers, masons, blacksmiths, paint-
ers, electricians, welders, tinsmiths, instrument
men, roll grinders and knife grinders employed
by Respondents at the Madison, Maine, loca-
tion, excluding management employees, super-
intendents, foremen, assistant foremen, labora-
tory employees, office forces, scalers, store-
keepers, watchmen, guards and supervisors as
defined in Section 2(11) of the Act.
(b) In any like or related manner interfering
with, restraining, or coercing employees in the ex-
ercise of the rights guaranteed them by Section 7
of the Act.
2. Take the following affirmative action which
will effectuate the policies of the Act:
(a) Upon request, bargain in good faith with the
Unions as the exclusive bargaining representatives
of all employees in the aforesaid appropriate units
with respect to the effect on their employees of the
decision to terminate their operations in Madison,
Maine, and, if any understanding is reached,
embody it in a signed agreement.
(b) Pay the terminated employees their normal
wages for the period set forth in the remedy sec-
tion of this Decision.
(c) Establish a preferential hiring list of all em-
ployees in the appropriate units, following the
system of seniority provided for under the collec-
tive-bargaining contract with the Unions and, if op-
erations are ever resumed anywhere in the Madi-
son, Maine, area, offer reinstatement to those em-
ployees. If, however, Respondents were to resume
their operations at the Madison, Maine, facility,
they shall offer all those in the appropriate units re-
instatement to their former or substantially equiva-
lent positions.
(d) Preserve and, upon request, make available to
the Board or its agents, for examination and copy-
ing, all payroll records, social security payment
records, timecards, personnel records and reports,
and all other records necessary to analyze the
amount of backpay due under the terms of this
Order.
(e) Mail an exact copy of the attached notice
marked "Appendix""' to the Unions herein and to
all employees employed by Respondents in the
above-described appropriate units at the Madison,
Maine, facility. Copies of said notice, on forms pro-
vided by the Regional Director for Region 1, after
being duly signed by their authorized representa-
tive, shall be mailed immediately upon receipt
thereof, as herein directed.
(f) Notify the Regional Director for Region I, in
writing, within 20 days from the date of this Order,
what steps have been taken to comply herewith.
:J In the event that this Order is enforced by a Judgment of a United
States Court of Appeals, the words in the notice reading "Posted bh
Order of the National Labor Relations Board" shall read "Posted Pursu-
ant to a Judgment of the United States Court of Appeals Enforcing an
Order of the National Labor Relations Board"
267
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
After a hearing at which all sides had an opportu-
nity to present evidence and state their positions,
the National Labor Relations Board found that we
have violated the National Labor Relations Act, as
amended, and has ordered us to post this notice.
WE WILL NOT fail and refuse to bargain
with United Paperworkers International
Union, Locals 36 and 73; International Broth-
erhood of Firemen & Oilers Local 270; Inter-
national Brotherhood of Machinists and Aero-
space Workers, Local 559, AFL-CIO, con-
cerning the effects of our decision to close our
Madison, Maine, facility on the employees in
the bargaining units described below.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce our employ-
ees in the exercise of the rights guaranteed
them under Section 7 of the Act.
WE WILL, upon request, bargain collectively
with United Paperworkers International
Union, Locals 36 and 73; International Broth-
erhood of Firemen & Oilers Local 270; and In-
ternational Brotherhood of Machinists and
Aerospace Workers, Local 559, AFL-CIO, as
the exclusive representatives of the employees
in the respective bargaining units described
below, concerning the effects of our decision
on unit employees, to close our Madison,
Maine, facility and reduce in writing any
agreement reached as a result of such bargain-
ing.
WE WILL pay the employees who were em-
ployed at the above facility their normal
wages for a period specified by the National
Labor Relations Board, plus interest.
The bargaining unit represented by United Pa-
perworkers International Union, Local 36, is:
All bleach plant operators, panel board op-
erators, chemical makeup men no. 1, chemi-
cal makeup men no. 2, floor men, brake
beatermen, hydra-pulper operators, head
grinder men, magazine men, screen men,
lead men (lower grinder room), grinder
men, woodmen, lead men (wet room),
Kamyr operators, shippers, fork lift truck
operators (wet room), Kamyr operators'
helpers, oilers-cleaners, lead men (wood
room), operators, sorters, feeders, bark truck
employees, truck drivers, crane operators,
rackmen, rakemen, turbine operators, station
operators, station operators' helpers, switch-
board operator (power station), weighers,
fork lift truck operators (finishing and ship-
ping), car men, finishers, finisher helpers,
core and wrapper men, label and samples
employees, laborers, cleaners and spare pool
employees employed by us at the Madison,
Maine, location, excluding management em-
ployees, superintendents, foremen, assistant
foremen, laboratory employees, office
forces, scalers, storekeepers, watchmen,
guards and supervisors as defined in Section
2(11) of the Act.
The bargaining unit represented by United Pa-
perworkers International Union, Local 73, is:
All machine tenders, back tenders, third
hands, fourth hands, fifth hands, coater
tenders, beater engineers and utility men em-
ployed by us at the Madison, Maine, loca-
tion, excluding management employees, su-
perintendents, foremen, assistant foremen,
laboratory employees, office forces, scalers,
storekeepers, watchmen, guards and supervi-
sors as defined in Section 2(11) of the Act.
The bargaining unit represented by Interna-
tional Brotherhood of Firemen & Oilers Local
270 is:
All head firemen, head oilers and oilers em-
ployed by us at the Madison, Maine, loca-
tion, excluding management employees,
office forces, scalers, storekeepers, watch-
men, guards and supervisors as defined in
Section 2(11) of the Act.
The bargaining unit represented by Interna-
tional Brotherhood of Machinists and Aero-
space Workers, Local 559, AFL-CIO, is:
All chief electricians, fire chiefs, and shift
motormen, head journeymen, and journey-
men AAA, AA, A, B and C and journey-
men helpers A, B, C, and D in the following
crafts: machinists, millwrights, pipers,
masons, blacksmiths, painters, electricians,
welders, tinsmiths, instrument men, roll
grinders and knife grinders employed by us
at the Madison, Maine, location, excluding
management employees, superintendents,
foremen, assistant foremen, laboratory em-
ployees, office forces, scalers, storekeepers,
watchmen, guards and supervisors as de-
fined in Section 2(11) of the Act.
WE WILL establish a preferential hiring list
of all terminated employees in the above bar-
268
PENNTECH PAPERS, INC., ET AL.
gaining units, following the seniority system
provided for in the collective-bargaining
agreement with the Unions and, if we resume
operations anywhere in the Madison area, we
shall offer these employees reinstatement. If,
however, we resume our operations at the
Madison facility, said unit employees shall be
offered reinstatement to their former or sub-
stantially equivalent positions.
PENNTECH PAPERS, INC.; T. P. PROP-
ERTY CORPORATION; KENNEBEC
RIVER PULP AND PAPER COMPANY
DECISION
STATEMENT OF THE CASE
LOWELL GOERLICH, Administrative Law Judge: The
charge filed in Case l-CA-12975 on April 11, 1977, by
United Paperworkers International Union, Locals 36 and
73 (herein referred to as Locals 36 and 73), and Interna-
tional Brotherhood of Firemen & Oilers Local 270
(herein referred to as Local 270) was served on Kenne-
bec River Pulp and Paper Company, herein referred to
as Kennebec, a Respondent herein, on April 11, 1977.
The charge in Case i-CA-12978 filed by District 99, In-
ternational Association of Machinists and Aerospace
Workers, AFL-CIO,' on April 11, 1977, was served on
Kennebec on April 11, 1977. An amended charge in Case
1-CA-12975, filed on November 7, 1977, was served on
Kennebec, Penntech Papers, Inc., herein referred to as
Penntech, and T. P. Property Corporation, herein re-
ferred to as T. P. Property, the Respondents herein, on
November 8, 1977. On January 23, 1979, an order con-
solidating cases, complaint and notice of hearing was
issued. In the complaint it was alleged among other
things that the Respondents were a single employer and
that since March 26, 1977, the Respondents have refused
to bargain in good faith over the effects of the close-
down of their Madison, Maine, facility in violation of the
National Labor Relations Act, as amended, herein re-
ferred to as the Act.
The Respondents Penntech and T. P. Property filed a
timely joint answer; Kennebec answered separately. In
these answers certain admissions were made and affirma-
tive defenses pled which have been duly considered in
this Decision. The consolidated cases came on for hear-
ing on August 29, 30, and 31, September 4, 5, and 6, Oc-
tober 30, 1979,2 and July 29 and 30, 1980, at Waterville,
Maine. Each party was afforded a full opportunity to be
heard, to call, examine, and cross-examine witnesses, to
argue orally on the record,3 to submit proposed findings
I The Local involved was Local 559.
2 On this date the Charging Parties moved for a continuance in order
to "file an amended charge with the Regional Office.. . making it crys-
tal clear that one of the elements in the case is the issue of refusal to
bargain over the decision to close the plant." All parties bejig in agree-
ment, the cases were continued. An amended charge was filed which was
dismissed by the Regional Director. His dismissal was affirmed on appeal.
The hearing was reconvened on July 29, 1980.
s There being no opposition thereto, the General Counsel's motion to
correct transcript is granted. The transcript is corrected accordingly.
of fact and conclusions of law, and to file briefs. All
briefs4 have been carefully considered.5
FINDINGS OF FACT, CONCI USIONS, AND REASONS
THEREFOR
. rTHE BUSINESS OF THF RESPONDENTS
Penntech and T. P. Property are and have been at all
times material herein corporations duly organized under
and existing by virtue of the laws of the State of Dela-
ware. Kennebec is and has been at all times material
herein a corporation duly organized under and existing
by virtue of the laws of the State of New York.
Penntech and T. P. Property maintain an office in
New York City and Penntech is engaged in the oper-
ation of a mill located in Johnsonburg, Pennsylvania.
Kennebec maintained its principal office and place of
business in Madison, Maine, where it operated a paper-
mill at various times until March 26, 1977. Pcnntech in
the course and conduct of its business has caused quanti-
ties of materials used by it in the operation of its mill to
be purchased and transported in interstate commerce and
has caused paper products to be sold and transported
from its Johnsonburg mill in interstate commerce.
Kennebec in the course and conduct of its business has
caused at all times herein material large quantities of ma-
terials used by it in the operation of its mills to be pur-
chased and transported in interstate commerce from and
through various States of the United States other than
the State of Maine and has caused at all times herein
mentioned substantial quantities of paper products to be
sold and transported from its Madison facility in inter-
state commerce to States of the United States other than
the State of Maine.
Penntech and T. P. Property annually purchase goods
and services valued in excess of $50,000 directly from
points outside the Commonwealth of Pennsylvania. Ken-
nebec prior to March 29, 1977, annually purchased goods
and materials valued in excess of $50,000 directly from
points outside the State of Maine. Penntech and T. P.
Property annually ship goods and materials valued in
excess of $50,000 directly to points located outside the
Commonwealth of Pennsylvania. Kennebec, up until
March 29, 1977, annually shipped goods and services
valued in excess of $50,000 directly to points located out-
side the State of Maine.
The Respondents are now and have been at all times
material herein employers within the meaning of Section
2(6) and (7) of the Act.
4 The General Counsel and the Respondents were given all opportuni-
ty to reply to the following issues raised in the Charging Parties' brief:
"The Charging Party can properly move to conform the pleadings to the
Proof," "..he failure of the company to bargain over its decision to close
Kennebec violates [Sec.] 8(aHX ) and (5) of the Act," and "Unilateral
changes in working conditions by the Cornpanr violates the Act " Briefs
were filed bh the General Counsel and .he Respondents which have been
carefully considered
s The foregoing Unions art referred to collectively as the Unions.
269
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
11. THE LABOR ORGANIZATIONS INVOLVED
The Unions are and have been at all times material
herein labor organizations within the meaning of Section
2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
First: Kennebec acquired the Madison Mills, herein re-
ferred to as the Kennebec Mills, in 1959. As of 1971 all
of the outstanding stock of Kennebec was owned by 10
educational and charitable institutions. In 1971, in order
to finance the rebuilding of its No. One Paper Machine,
Kennebec effected a $4,953,900 sale and lease-back fi-
nancing which in essence conveyed all of Kennebec's
assets to the Kennebec Development Corporation, here-
inafter referred to as KDC. KDC obtained the funds for
this project through the issuance of bonds which were
secured by a real estate mortgage. Kennebec's lease pay-
ments were to be used to retire the bonds. Under the
terms of the lease, if Kennebec fulfilled its obligation in
respect thereto, it could buy back the premises for KDC
for a nominal sum. KDC assigned its interest in the lease
to Merrill Trust Company, the mortgagee and trustee of
the bonds. Kennebec personally guaranteed the payment
of the bonds, as did the State of Maine through the
Maine Industrial Building Authority, which later became
the Maine Guarantee Authority, hereinafter referred to
as MGA.
The Unions had been Kennebec's employees' bargain-
ing representatives since the mill commenced operations
in Madison.
In 1971 and 1972 Kennebec experienced losses of
$2,157,907 and $3,247,234, respectively. In 1973 South-
eastern Capital Corporation, herein called SCC, acquired
the stock of Kennebec from the charitable institutions
and provided additional financing for continued oper-
ation. Kennebec lost $3,725,374 in 1975. On December
20, 1976, while still under the ownership of Southeastern
Capital Corporation, Kennebec discontinued its oper-
ations and laid off all its employees other than a skeleton
force. Thereafter T. P. Property, a wholly owned subsid-
iary of Penntech, acquired all the outstanding stock of
Kennebec on March 3, 1976. T. P. Property, a Delaware
corporation, was organized by Penntech and incorporat-
ed on May 12, 1975. T. P. Property was initially incor-
porated to purchase a real estate parcel, containing a su-
permarket, which was adjacent to Penntech's papermill
in Johnsonburg, Pennsylvania. The purchase was not ef-
fected. T. P. Property had no other corporate function
until its purchase of the Kennebec capital stock.
During the negotiations for the acquisition of the Ken-
nebec stock, Penntech and SCC opened a joint bank ac-
count to which they contributed equal amounts to fi-
nance the employment by Kennebec of individuals on
the mill premises to maintain the premises and the boil-
ers.
Prior to acquisition in March 1976 Kennebec effected
a write-down of its debt with four major secured credi-
tors. T. P. Property and Penntech participated in the ne-
gotiations. Penntech guaranteed approximately 25 per-
cent on a nonaccelerated basis of such debt as written
down. Otherwise, Kennebec's financial structure re-
mained the same.
Prior to the acquisition, T. P. Property's immediate
liquid assets consisted of several hundred thousand dol-
lars, derived from an advance from Penntech with the
acknowledged purpose that the advance was to accom-
plish the Kennebec stock acquisition. The purchase price
paid for the Kennebec stock was $225,000, $10,000 of
which was cash and $215,000 of which were notes of T.
P. Property.
Around March 3, 1976, T. P. Property made advances
to Kennebec in the amount of $101,000 for which Ken-
nebec executed two demand notes dated March 3, 1976,
in principal amounts of $1,000 and $100,000. Additional-
ly, Kennebec granted T. P. Property security interest in
certain property and after acquired property such as in-
ventory, equipment, accounts, etc.
Shortly after March 3, 1976, the operations of Kenne-
bec mill were resumed. Laid-off employees covered by
the labor agreement were recalled. Most of the salaried
employees also continued in the employment of Kenne-
bec, including William Anderson, marketing manager;
Kenneth Smith, director of scheduling; Arthur Leho,
manager of engineering and maintenance; Robert
Rowell, accountant; and John McLeod, industrial rela-
tions manager. Donald Martin, president, was replaced
by Allen Nadeau, a vice president of Penntech.
Penntech, a Delaware corporation, incorporated in
1920, owned and operated a papermill located in John-
sonburg, Pennsylvania, and maintained a corporate office
in New York.
According to William B. Ford, vice president of fi-
nance and security of Penntech, a loss had been expected
in Kennebec's operation for 4 or 5 months after startup;
a profitable operation was anticipated in late 1976. Profit-
able operations were not achieved as anticipated and
Kennebec was faced with the prospect of defaulting in
its obligations to make certain lease and tax payments
due and owing on November 15, 1976. Minutes of the
meeting of Penntech's board of directors on October 18,
1976, disclose:
The Chairman stated that progress to date in the
effort to improve productivity at the Company's
Kennebec River Pulp & Paper Co., Inc. subsidiary
was less than had been anticipated at the time the
subsidiary was acquired. A detailed review of oper-
ational and financial problems encountered at the
Kennebec mill was then presented to the Board by
the Chairman, Mr. Dodge, Mr. Nadeau and Mr.
Ford. The Chairman indicated that certain propos-
als to the Maine Guarantee Authority for deferral
of Kennebec debt and tax obligations were being
developed which, if accepted by the Authority,
would make it possible to continue operations at the
Kennebec mill for several more months during
which time solutions to the operational problems
could be developed. These matters were then fully
discussed, and it was agreed that the negotiations
with the Maine Guarantee Authority should pro-
ceed and that the Company should continue oper-
270
PENNTECH PAPERS, INC., ET AL.
ations at Kennebec pending the conclusion of the
negotiations. [Jt. Exh. 4, p. 797.]
At this time a decision had also been made for Penn-
tech "not to advance the funds that would avoid de-
fault."
The minutes of the November 17, 1976, meeting of the
Maine Guarantee Authority reveal:
Mr. Ford and Mr. Weinroth reviewed the prog-
ress at Kennebec River Pulp & Paper Company,
Inc. since Penntech Papers, Inc. had purchased it in
March 1976. A lengthy discussion took place rela-
tive to the financial investment already made by
Penntech, the fine market acceptance of Kennebec's
products, the production and engineering problems
which had been overcome, those that still needed to
be overcome, the financial situation facing Kenne-
bec and the various alternatives open to the Author-
ity.
Thereafter the MGA adopted a motion accepting in prin-
ciple the provisions of the letter agreement dated No-
vember 22, 1976.
The "Letter Agreement" dated November 22, 1976,
was executed between MGA, Merrill, KDC, T. P. Prop-
erty, and American General Bond Fund, Inc., as a means
of channeling additional funds into Kennebec's oper-
ations. The agreement provided a device by which cer-
tain payments due on KDC bonds and tax obligations
would be met by MGA's purchase of certain timberlands
from KDC which Kennebec had originally owned. Upon
the purchase of such timberlands, T. P. Property was re-
quired to make available $500,000 for Kennebec in addi-
tion to funds which had been made available prior to
November 22, 1976 ($2,832,000). Additionally, T. P.
Property was allowed an option to purchase certain tim-
berlands owned by KDC, the purchase price of which
would consist of advances over $3,332,000 to Kennebec.
Attached to the agreement was a paragraph in which
Penntech agreed to provide the above-mentioned
$500,000 to T. P. Property.
The letter agreement further provided that "Kennebec
shall furnish to MGA, within 20 days after the end of
each operating month of Kennebec, a copy of Kenne-
bec's confidential, internal management report ...
which shall include an income statement for the year to
date and a balance sheet as of the last day of such oper-
ation month." (Jt. Exh. 4, p. 595.) As recited in the letter
agreement, its purpose was to "provide incentives for
continuing the operations of Kennebec (including specifi-
cally its papermill in Madison, Maine) and in order to
induce Kennebec and the other parties to participate
herein."
While Penntech's commitment bears the date of No-
vember 22, 1976, acknowledgements attached to the
letter agreement for Kennebec, MGA, Merrill, KDC, T.
P. Property, and American General Bond Fund, Inc., are
dated respectively, February 10, February 15, February
15, February 15, February 15, and February 9, 1977. The
minutes of the meeting of Penntech's board of directors
dated March 9, 1977, reveal:
The Chairman advised the meeting that the ar-
rangements negotiated with the Maine Guarantee
Authority whereby the Corporation's subsidiary T.
P. Property Corp. would purchase timberland
owned by its subsidiary Kennebec River Pulp &
Paper Company, Inc. in order to provide operating
funds to the latter had been concluded on February
28, 1977. These arrangements, and the Corpora-
tion's agreement to guarantee certain obligations of,
and to advance funds to, T. P. Property Corp.,
were summarized. On motion, duly seconded, all
actions taken by the Corporation's officers in con-
nection with these agreements were ratified and ap-
proved.
Mr. Ford then presented a brief review of oper-
ations for the month of January 1977 at the Corpo-
ration's two papermills, and a summary of the Cor-
poration's financial statements for the year 1976,
noting that they were before final audit adjustments
which had not yet been made by the Corporation's
outside auditors. [Jt. Exh. 4, pp. 802, 803.]
Pursuant to the letter agreement T. P. Property in
February 1977 obtained title to certain timberlands. Ac-
cording to Ford, the consideration was around $800,000.
However, because of the credit T. P. Property had re-
ceived for previous advances to Kennebec, "the land
transaction was primarily a cancellation of indebtedness."
The purchase money constituted T. P. Property's ad-
vancements to Kennebec. Thus, under the letter agree-
ment T. P. Property obtained timberlands for money ad-
vanced and paid to Kennebec.
On November 19, 1976, union representatives and de-
partment heads were assembled at the "company house"
in Madison. John Leslie, director of Kennebec, president
and chairman of the board of Penntech, and president
and director of T. P. Property, told the assemblage that
unless production immediately increased to specified
levels the Kennebec mill would not be viable for contin-
ued operations. As related by Bruce St. Ledger, the then
manager of Kennebec mill, Leslie told the audience that
"the production over a relatively short period of time
had to be increased to the rate of 120 saleable tons per
day. And, that after that was accomplished, at some
period of time not specified following that it had to be
raised to 140 to 150 tons per day or the mill was not
viable for continued operation." Douglas E. Murray,
president of Local 36, remembered Leslie to have said
that "if these things didn't happen that we're going
down. They're not putting any money in it. And Kenne-
bec River would be down and they are not taking Penn-
tech with them." Or as Blanchard Hupper, secretary and
treasurer of Local 270, testified, "Kennebec . . . was not
going to drag Penntech with it." Clifford Miller, presi-
dent of Local 73, also testified that Leslie said that "he
was not going to drag Penntech down with us." Accord-
ing to St. Ledger the union representatives present at the
meeting were "not given an opportunity at that time to
respond-to Mr. Leslie directly."
After the meeting production improved for 3 or 4
weeks and then fell off. At no time thereafter did pro-
duction reach the standards mentioned by Leslie in the
271
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
November 19 meeting. Such lack of achievement was at-
tributed by St. Ledger to "excessive number of breaks on
the paper machine, [and] the addition of the size presses
in September had, in fact, reduced the speed at which
the paper machine could be operated on particular
grades. There were considerable maintenance difficulties
or maintenance breakdowns." Other witnesses added that
the use of sludge and the lack of preventive maintenance
also attributed to the inability to reach the goals set by
Leslie. According to St. Ledger the failure to reach
these goals was not due in any part to the "lack of coop-
eration of the employees."
"[B]etween December '76 until the mill shut down
[Leslie] was very much hands on during that period." He
was on the Kennebec premises "over fifty percent of the
time."
On March 17, T. P. Property addressed a letter, signed
by Leslie as president, to Kennebec as follows:
Reference is made to the promissory note of Kenne-
bec River Pulp & Paper Company, Inc. (Kennebec)
dated March 3, 1976 payable on demand to the
order of T. P. Property Corp. (TP) in the original
principal amount of $100,000 and the promissory
note of Kennebec dated December 31, 1976 payable
on demand to the order of TP in the original princi-
pal amount of $2,700,000. Such notes are collective-
ly herein referred to as the Notes. No payments
have been made by Kennebec under the Notes.
This is to confirm that on March 16, 1977 TP de-
manded payment of $2,500,000 loaned to Kennebec
and evidenced by the Notes. TP hereby repeats said
demand for payment.
TP reserves the right to demand payment of the ad-
ditional principal evidenced by the Notes and pay-
ment of the other amounts required to be paid
under the Notes. TP further reserves the right to
demand payment of other amounts loaned to Ken-
nebec.
According to Ford this letter was tendered "in anticipa-
tion of a possible shutdown. Better our position properly
for exercising the lien." Kennebec had no means of meet-
ing the demand.
Twelve days after the date of the letter, on March 29,
1977, St. Ledger assembled the union representatives
around 1:30 p.m. and advised the employees that the mill
would be shut down and the employees should have that
accomplished by 3 o'clock. The "maintenance people
were to move their tools from the property" and "per-
sonnel" were given 3 days "to get their clothing and
stuff out of their lockers."
According to Ford, Kennebec had lost "about
$750,000" in January and February 1977 and "it was
very obvious from the production levels that were being
achieved in March that March was going to be a very
sizeable loss also." After the operations report in Febru-
ary 1977 Ford concluded that Kennebec would not prof-
itably operate in the future; "it became obvious from the
analysis of that report that a number of the steps we had
taken were not being successful." Ford "transmitted [his]
ideas on this subject to everyone in management in both
companies."
Between November 19, 1976, and March 29, 1977, the
Respondents had not engaged the Union in any discus-
sions in regard to the prospects of the Kennebec mill's
termination of operations. Ford testified that there had
been "some discussion" about whether to talk with the
Unions in reference to reducing wages or "something of
that character," but, "We felt, basically, that any amount
involved in doing so or what could be reasonably be bar-
gained would not be even helpful to reducing losses of
this magnitude." Thus it would appear that the Unions
were bypassed and that it was with deliberate iilnlct that
they were not informed of the impending termination of
Kennebec mill's operations.
St. Ledger, whom I do not consider to be a credible
witness on the whole, testified that the termination of
Kennebec mill's operations occurred without any specific
discussions on the subject prior to March 29, 1977. St.
Ledger first testified that on that date he informed Leslie
by phone that he did not "feel that it was going to be a
viable operation in view of the present condition of
funds being short and it was going to take a great deal
more money and it was [his] recommendation to shut the
mill down." Later Leslie denied that "shortage of funds"
had been mentioned. St. Ledger testified, ". . . we had a
discussion involving consideration of the production at
the level which it was at, and he asked for my recom-
mendation and I said that I recommended that we shut
the mill down. .... [T]he reason was that we obviously
were not meeting the production required in order to
make it a viable, profitable operation." While St. Ledger
insisted that it was his decision to close the mill he ad-
mitted that Leslie had the power to veto the decision.
On the same date Leslie decided that Penntech "would
no longer cover the losses of Kennebec." In this regard
St. Ledger claimed that the decision to close the mill on
March 29 had been made prior to Leslie's decision.
However, in any event the "cut off" of funds meant that
"Kennebec probably would have no choice but to [shut]
down."
Although St. Ledger testified that he had made the
final decision to close the mill, his testimony in this re-
spect is not credited. Not only is it unrealistic for Leslie
to have allowed St. Ledger to have made such an impor-
tant decision, but St. Ledger told the union representa-
tives at the April 4, 1977, meeting (see infra) that he had
received a call and was told to shut down the mill. 6
The decision to close the mill was not discussed with
any other officers of Kennebec. Ford, the other director,
learned of the closing after the fact.
After the decision to close the mill was communicated,
St. Ledger and Leslie discussed the procedure to be fol-
lowed in shutting down the mill "as far as cleanup and
maintenance and maintaining whatever operations [the
6 It is also significant that the record does not disclose that St. Ledger
was privy to the letter agreement. Had Kennebec mill been closed prior
to the consummation of the real estate deal, T. P. Property's chance to
recoup around $800,000 would have probably been imperiled. Thus it
seems reasonable to conclude that Leslie chose the shutdown date so as
not to interfere with such an important and financially rewarding deal.
272
PENNTECH PAPERS, INC., ET AL.
mill] was going to maintain." The Respondents acted "so
expeditiously" in closing the mill because, according to
St. Ledger, "there was no reason for prolonging it. The
decision had been made, and there was no point in
having rumors circulated."
On March 30, 1977, John E. McLeod, manager of in-
dustrial relations, addressed a letter to George Lambert-
son, International representative of United Paperworkers
International Union,7 advising of the closing of the mill
on March 29, 1977, and observing, "This would immedi-
ately result in an indefinite layoff of virtually all of the
mill employees, salaried as well as hourly and total layoff
within the near future." The final paragraph read, "Al-
though we cannot see any possibility of Penntech resum-
ing operation nor can we see the purchase or operation of
the Company by any otherfirm, we shall treat the layoff
of personnel as indefinite so that full recall rights will be
afforded all concerned." (C.P. Exh. 1, emphasis sup-
plied.)
Lambertson first heard of the mill's closing on March
29, 1977, over the radio while driving his car on the
same date. He contacted Manager of Industrial Relations
McLeod and a meeting was set for April 4, 1977.
Prior to this meeting and by letter dated March 20,
1977, Kennebec acknowledged that T. P. Property "has
taken possession of the property upon which it has a first
security interest." (Jt. Exh. 4, p. 480.) This included all
supplies, materials, spare parts, finished goods, four
trucks, a front-end loader, two mobile cranes, waste
paper, and softwood pulp. Immediately after the shut-
down, salaried employees were instructed to make sten-
cils which read "subject to the first security interest of
T. P. Properties" and to stencil a "great deal of equip-
ment" and the "store room door." The storeroom was
"cleaned out, loaded into a moving van, moved away."
Other items were also being removed. These facts were
known to the union representatives prior to the April 4,
1977, meeting.
Second: St. Ledger and McLeod appeared at the April
4 meeting. St. Ledger indicated that he was also repre-
senting Penntech. Representatives of all the contracting
unions were also present. Lambertson acted as spokes-
man for the Unions.
I The current labor agreement provides:
C. Indefinite Layoff
Indefinite layoff procedures shall be implemented for layoffs of un-
known duration which extend beyond the maximum allowable time
period stipulated for short-term layoffs and they shall remain in
effect until the earlier of
I. The resumption of the operation(s).
2. The expiration of six (6) continuous months of layoffs including
cut-back, short-term and indefinite layoff periods. The six (6) months
period may, by mutual agreement of all parties, be extended.
3. The decision of management to permanently shut down a por-
tion or portions of its operations.
D. Reduction in work force
Reduction in work force procedures shall be implemented upon:
I. The expiration of the maximum allowable duration for an indefi-
nite layoff
2. The decision of Management to permanently shut down a por-
tion of its operations
According to St. Ledger the union representatives
were "requesting answers regarding the length of the
time of the layoff . . . how benefits, vacations, early re-
tirements and how things of that nature would be han-
dled." According to Lambertson, St. Ledger advised the
Unions that "it was not a permanent shutdown . . . it
was what they call an extended layoff which was in
accord with the contract. He said that was what they
were calling it and that a section of the contract covered
it." St. Ledger testified that the closing was an "indefi-
nite layoff" being taken "to secure or interest another
purchaser that would come in and operate the plant or
supply funds to operate the plant." "By indefinite layoff,
I meant it was not known the duration of the layoff be-
cause we did not know what was going to be the out-
come of seeking these other operators or other suppliers
of funds. " s
On the question of insurance, St. Ledger said an an-
nouncement would appear in the newspaper. On the
question of severance pay, St. Ledger responded that
"severance pay is not paid in an indefinite layoff until
after a certain period of time." On the question of con-
tinuing pension payments, St. Ledger answered, "I don't
know." Ont the question of vacations, St. Ledger said, "It
is an indefinite layoff and they cannot take their vaca-
tions at this time."
During the meeting St. Ledger was asked with whom
the Unions could talk who exercised some authority. The
answer was, "[T]he best thing you can do is talk to the
On this same subject St. Ledger testified:
THE WITNESS: I told them that an indefinite layoff as defined in
their contract for up to a period of six months and that what I was
terming as an indefinite layoff is one in that we did not know what
the future of the mill would be up to the end of that period.
JUDGE GOERLICH: When you say you didn't know what the future
would be, did you elaborate on that?
THE WITNESS: Only in the respect that we did not-or I did not
know of personal knowledge whom we had for prospective purchas-
ers or anyone that might be willing to supply funds.
JUDGE GOERLICH: Well, in your discussion with them did you in-
dicate to them that the present management of Penntech would not
continue to operate, but that if some other individuals came in that
they would be the operators? Is that what you told them, or some-
thing along that line?
THE WITNESS: No, I don't think I stated it in that manner.
JUDGE GOERLICH: How did you state it to them?
THE WITNESS: Just that if Penntech-if someone would come in
and supply funds, even through Penntech, that Penntech could possi-
bly once again consider operating the mill.
JUDGE GOERLICH: In other words, if someone came in and un-
derwrote, so to speak. Kennebec that it might continue to operate, is
that what you told them?
THE WITNESS: Yes, sir.
JUDGE IOERLICH: Did you indicate to them that Penntech had de-
cided not to further supply monies for Kennebec?
THE WITNESS: I can't recall the exact terminology, but I think
that was clear to them.
JUDGE GOERI.ICH: That that was the situation?
THE WITNESS: That that was the situation.
Q. (Mr. Ohlweiler, resuming) Did you also state that efforts were
being made or were going to be made to try to find a new buyer
who might infuse funds into the company?
A. I did.
273
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
attorneys of Penntech." The Unions were given their
names and telephone numbers.
In respect to the mill closing, St. Ledger informed the
Unions that "[a]ll he knew was that he got a call and he
was told to bring in people and tell them that the mill
was to be down in an orderly-hopefully, an orderly
shutdown by three o'clock on the 29th."
On April 10, 1977, Local 559 filed a grievance which
cited contract violations involving vacations, pensions,
and severance pay. In the statement of facts appears:
At a meeting on April 4, 1977 with Mill Manager,
Bruce St. Ledger and John McLeod and representa-
tives of Local #559 the above-named management
would not furnish the union with any information in
respect to the company's contractual obligation for
payment of earned wages and other benefits.
Richard McQuarrie, president of Local 559, explained
that he had tried to obtain information from McLeod by
phone as to the matters raised in the April 4 meeting for
about 3 or 4 days thereafter without success, whereupon
McQuarrie prepared the grievance.
After the mill closed the boiler and powerhouse re-
mained in operation. In the meantime trucks continued
moving certain materials and items from the mill prem-
ises.9 Certain leased property was also removed.
As noted above unfair labor practice charges were
filed on April 11, 1977. On April 21, 1977, the District
Judge for the United States District Court for the Distrct
of Maine, Northern Division, granted a temporary re-
straining order enjoining the removal of certain property
from the mill premises.
On April 22, 1977, St. Ledger and McLeod met again
with the Unions' representatives. Lambertson was again
the Unions' spokesman. Minutes were taken at this meet-
ing by both the parties. This meeting followed a letter
dated April 19, 1977, in which St. Ledger wrote:
If you would like to meet and discuss with us this
matter [request for arbitration], or the effects of any
future decision to permanently close the plant, or
any other related matter, please so advise us and we
shall be pleased to meet and confer with you. [G.C.
Exh. 2.]
At the meeting the Unions asked for information on
the status of vacation pay, severance pay, 10 and pen-
9 At the time MGA held a first mortgage but it did not include "cur-
rent assets or inventory or accounts receivable or motorized vehicles."
'o The contract provision for severance pay is as follows:
5. SEVERANCE PAY
Employees who are permanently laid off by Company action due
to a relocation of all, or substantially all of the Company's operations
to a new location one hundred or more miles from the present loca-
tion, or, as a result of substantial cessation of the company's oper-
ation, shall receive severance pay as follows: One day of straight
time pay for each year of continuous service after three years of con-
tinuous service.
Severance pay shall not be paid under the following circum-
stances:
I When relocation or termination is necessitated by a physical ca-
lamity such as fire, flood or other natural disasters.
sions. St. Ledger stated that no vacation or severance
pay would be allowed during the indefinite layoff. St.
Ledger also stated that early retirement would not be al-
lowed. St. Ledger was not sure on the subject of pen-
sions but said that they expected to pay pensions the next
month as it had paid the last and that insurance for the
retirees was being carried by the mill.
St. Ledger was asked whether the mill was going
down. He answered that Penntech was in touch with
"people in the hope to start up." (G.C. Exh. 7.) The
Unions' minutes reveal:
Boiler house and power house will be down at 3
a.m. today. People were working in the plant for
removal of equipment and Broke. Injunction halted
that. The plant could start in less than a month.
Penntech still holds the lease. The decision to close
the boilers and powerhouse made by me. Also said
several times, "I have no new information." [G.C.
Exh. 5.]
During the meeting St. Ledger reiterated that the clos-
ing was an indefinite layoff. Union representatives quer-
ied how this could be when "they were moving stuff
out." According to the Unions' minutes St. Ledger said,
"I am still working for Penntech. I have no answers. I
take my orders from Penntech." (G.C. Exh. 5.)
St. Ledger was also asked whether he had an answer
to Local 559's grievance. He stated that he had no
answer at the present time but would let Local 559 know
at the time limit for answering the grievance. After the
meeting adjourned, the Unions' representatives returned
and asked St. Ledger and McLeod whether the Local
559 grievance could be expanded to include the other
locals. They agreed to accept a combined submission of
the grievance. Thereafter the Unions' attorneys handled
the grievance. On December 4, 1978, the Unions advised
the National Labor Relations Board that it was no longer
pursuing arbitration of the grievance. Withdrawal of the
arbitration was accomplished in June 1979. 1
According to Lambertson the last information the
Unions received on the subject of plant closure was in
the April 22 meeting; to wit: "We don't know at this
time. All we can tell you is for all intents and purposes it
is an indefinite layoff." The parties never met again after
April 22. Thereafter Lambertson phoned St, Ledger two
or three times as to the "status of everything." St. Led-
ger's response was "I don't know." Lambertson testified
that "there was no necessity to meet. This is what we
were told by Mr. St. Ledger. ... He said that he didn't
have anything new." St. Ledger resigned in August
1977.
2. In compliance with the final order of any federal, state, or local
government agency, including an adjudicated bankruptcy.
3. When the employee accepts employment at the new location.
4 When the employee has been employed by the company for less
than three years.
"l By a letter dated May 27, 1977, the Regional Director administra-
tively deferred proceedings on the Unions' charges pursuant to Dubo
Manufacturing Corporation, 142 NLRB 431 (1963). The Regional Director
revoked his deferral letter on December 4, 1978.
274
PENNTECH PAPERS. INC. ET AL
St. Ledger testified that by the "end of July. first of
July" 1977 it was "obvious then that the mill could not
be restarted within that period of time [6 months]." At
this point of time St. Ledger said that he did not contact
the Unions. He explained. "When the union left me they
said that they did not X ant any further meetings; that
they were not satisfied with the answers I was giving
them and they were going to pursue it in another
manner." "And I did not contact the union."' 2
The Madison Paper Company is presently operating
the mill. A substantial number of Kennebec employees
were hired by this company.
Third: The litigation in the district court which was
commenced by the Unions in April 1977 against the Re-
spondents after trial came on for decision by the United
States District Court of Maine, Northern Division. on
October 21, 1977. The defendants in such action were
Kennebec, Penntech, T. 1'. Property, and MGA The
plaintiffs were the Unions herein. Tht court defined the
issue as "whether Penntech Papers, Inc., which was not
a signatory. can be ordered to arbitrate certain provisions
of a collective bargaining agreement entered into be-
tween the plaintiff unions and the defendant Kennebec."
(Jt. Exh. I(v).) The action was brought pursuant to Sec-
tion 301 of the Labor Management Relations Act, 1947,
as amended, 29 U.S.C. § 165. The court found against
the plaintiff unions on the issue. United Papetworksers In-
ternational LUnionm tal a. v. Pcnntech Papers, Inc., 439
F.Supp. 610. The Unions appealed to the United States
Court of Appeals for the First Circuit. The court of ap-
peals affirmed the district court. The Unions did not
appeal the court of appeals' decision. A stipulation of dis-
missal was filed in the district court oil or about July 3,
1979, in which the pal ties pursuant to Fed. R. Civ. P.
41(a)(i)(ii) dismissed "the instant actions with prejudice."
(Jt. Exh. 2(p).) As noted above the Unions withdrew
their demand for arbitration and the Regional Director
issued the within complaint on January 23, 1979.
The claims under the contract which were the subject
of the arbitration demand remain unsettled and unpaid.
Fourth: The General Counsel and the Charging Parties
contend that the Respondents failed and refused to bar-
gain in good faith with the Unions concerning the effects
upon employees of the decision to terminate operations
of the Kennebec mill in Madison, Maine. The Respond-
ents insist that tile General Counsel has failed to prove a
violation of Section 8(a)(5) of the Act "since the ei-
dence demonstrates that the Unions failed to request ne-
gotiations as such, and the Respondent Kennebec, in full
satisfaction of its responsibilities, met with the Unions
when requested and answered all questions asked by the
Unions regarding contract benefits and all other matters
raised by the Unions." (Resp. br., p. 25.)
From the record evidence it is clear that the termina-
tion of Kennehec's operations on March 29, 1977, and
the separation of its employees from employment oc-
12 On April 25, 1977, an unfair labor practice charge was filed for the
refusal by Kennehec It provicia information in respect io the pending ar-
bitration proceedings A comnplainl was issued The matter as continueid
sine die pending compliancie i Kennebec with an agrecneenl It produce
the informalion On December 15, i1'77. the complaini was dismidssed on
the Unions' requeqi of wsithdrais' it of the unfair labor practice charge
curred 'without notice to or affording the Unions an op-
portunity to bargain in regard to the effects upon the ern-
ployees of the Respondents' decision under such circum-
stances as would have allowed the Unions a reasonable
time in w hich to bargain prior to closing. In failing in
this respect, the Respondents violated Section 8(a)(5) of
the Act even though the tUnions made no request to bar-
gain about the closing prior to March 29, 1977 O.zar
Trailers, Incorporated und/or Ilutco Equipment Cornpany
and/or .Motilefreeze Comnpauyi. Inc., 161 NL RB 561
(1h66). As in such casc, "the Union, during the most
critical period. at the ver\ time when bargaining would
have been the most productive, was completely unassare
of Respondents' intention to close the Ozark plant per-
manently.' 161 NLRB at 564. Indeed, as of the present
time there is no credible evidence that the Respondents
have ever informed the Unions that the Kennebec mill is
actually closed. Nevertheless, the Respondents contend
that they fulfilled their duty by responding to the
Unions' questions regarding certain claims raised at thie
April 4 and 22, 1977. meetings In other words, the Re-
spondents rely upon their conduct at those two meetings
as absols mtg them from a refusal to bargain in good faith
about the effects of the mill's closing.
On the other hand, the General Counsel asserts that
the Respondents' good faith was wanting in that the
notice of closing was withheld from the Unions in order
to deprive them of "an opportunity to bargain over the
effects of the decision while they maintained a semblannce
of an equality of bargaining power." In any event, this
obviously was the effect of closing the mill without noti-
fying the Unions. Such inference also obtains since the
credited record discloses no emergency circumstances
which would have justified the Respondents' precipitant
action. Indeed. the Respondents considered and rejected
the idea of contacting the Unions in regard to the clo,-
ing.
The General Counsel also maintains that the Respond-
ents acted in bad faith when "no responsible officials of
Petnntech were present during the April 4 atnd 22 meet-
ings." In this respect St. (Iedger disclosed his very limit-
ed authori.: when he referred the union representatives
to Penntech's attorneys in New York. His bargaining au-
thority was insufficient to satisfy the requirements of bar-
gaining in good faith. Cf. Pepper & Tanner, Inc., 197
NLRB 109 (1972).
Fhe General Counsel next contends that the Respond-
ems "denied the Unions an opportunity to engage in
meaningful bargaining by making false and misleading
statements concerning the future of continued operations
of Kennebec." I his point seems to be well taken. St.
Ledger claimed the closing was an "indefinite layofF'
and that the possibility was that Kennebec would resume
operations by the infusion of new money or through a
purchaser. McLeod's letter of March 30, 1977, asserts the
opposite; to wit, "... we cannot see any possibility of
Pcnntech resuming operations nor can we see the pur-
chase or operation of the company by any other
firm...." (C.P. Exh. 1.) Moreover, the records of
MGA reveal that at a special meeting on April 11. 1977,
it was voted:
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
(1) That the Manager is authorized to seek an
agreement relative to the surrender of the premises
by the present tenant, Kennebec River Pulp &
Paper Company, Inc., and the assumption of lawful
possession by the Maine Guarantee Authority
and/or the Trustee, and, (2) That the Manager is di-
rected to request the Trustee, Merrill Trust Compa-
ny, to declare a default under the bond indenture
and to initiate foreclosure proceedings. [G.C. Exh.
25.1
Additionally, it was noted:
That the Manager is authorized to enter into an
agreement for a period not to exceed 60 days with
William Anderson, former production manager of
Kennebec River Pulp & Paper Company, Inc. and
Arthur Lehto, former plant engineer for Kennebec
River Pulp & Paper Company, Inc. for the purpose
of maintaining the Kennebec mill. It is understood
that the roles of Mr. Anderson and Mr. Lehto will
be those of technical advisors, maintenance supervi-
sors and directors of plant security. [G.C. Exh. 25.1
With the occurrence of these events the Respondents
must have known that Kennebec, having been deprived
of Penntech's resources, had no chance of resuming the
operation of the mill. Ford testified that one might draw
the conclusion that Kennebec, "as a corporation, to a
stock purchaser was virtually unmarketable because of
the long term debt situation the corporation faced and its
other obligations."' s Ford observed "what happened
was is that the MGA foreclosed, took possession of the
asset involved-that is the mill, and sold that to some-
body else. And, Kennebec is still sitting there with its in-
debtedness." According to Ford the buyer from MGA
declined the opportunity to purchase Kennebec stock.
Under these circumstances it is clear that the Respond-
ents, as reasonable and knowledgeable members of the
business community, on April 24, 1977, when St. Ledger
was insisting that the mill closing was an indefinite
layoff, knew that there was no chance of Kennebec re-
opening the mill or disposing of Kennebec stock as a
going concern. Kennebec was a corporate shell full of li-
abilities and few assets. Indeed, Penntech immediately
commenced removing the assets (which St. Ledger told
the union representatives belonged to Penntech) from the
shell when the mill was closed. St. Ledger's statement
that the closing was an "indefinite layoff" was a gross
misrepresentation and constituted bad-faith bargaining.
St. Ledger's responses to the union representatives and
his take-it-or-leave-it attitude 1 4 were the antithesis of
good-faith bargaining. Because the Respondents failed to
notify the Unions of the closing, failed to cloak their ne-
gotiator, St. Ledger, with sufficient authority, misrepre-
sented the nature of the closing, and adopted a take-it-or-
leave-it attitude which foreclosed a good-faith exchange
of ideas, the Respondents did not bargain in good faith
over the effects of the closing of Kennebec and are
a Kennebec owed Penntech S3 million.
"4 St. Ledger was quoted as saying, " ... this is the way it is and this
is the way it is going to continue until further notice."
guilty of a violation of Section 8(a)(5) and (1) of the Act.
The Respondents failed and refused to bargain in good
faith concerning such bargainable matters as severance
pay, pension, and vacation benefits, among others, which
was their duty.' The Unions were given a brushoff.
Indeed, the Unions were never informed by the Re-
spondents that Kennebec mill was ever closed.
Fifth: The Charging Parties contend that by failing to
bargain over their decision to close Kennebec the Re-
spondents violated Section 8(a)(1) and (5) of the Act.' 6
The credited facts in this case disclose that the Re-
spondents experienced production problems and losses
throughout their entire operation of the Kennebec mill.
While Penntech had sought and obtained modification of
Kennebec's labor agreement satisfactory for its assump-
tion of the operation of the mill, the Respondents did not
again approach the Unions for either assistance or sug-
gestions in regard to their operation of the mill except
for Leslie's blast in November 1976 which, of course,
was not a notice to close the mill. On this occasion the
Unions were given no opportunity to respond. Although
between November 1976 and March 1977 Leslie's goals
set for the mill were not reached, the Respondents nei-
ther advised the Unions during these 4 months of a likely
mill closure nor suggested that the Unions bargain in re-
spect to such a prospect. Moreover, the Respondents had
ample time to notify the Unions of the shutdown prior to
their unilateral announcement of the closing. The closing
was not based on some sudden or unanticipated situation
which required immediate action. Why the Respondents
avoided raising the problem with the Unions finds no
valid explanation in the record unless the date was
chosen to accommodate the completion of the above-
mentioned real estate deal. St. Ledger's weak retort as to
why March 29, 1977, was the date chosen for the shut-
down day manifests a certain callousness and a disregard
of the Respondents' employees' interests; i.e., "there was
no reason for prolonging it. The decision had been made,
and there was no point in having rumors circulated." By
presenting the Unions with a fait accompli the Respond-
ents foreclosed and prevented them from suggesting a
possible remedy for the Respondents' predicament or
from participating in the implementation of the timing of
the closing so that the impact would not have fallen so
harshly on the employees. The problems on March 29
were no different and were of the same kind which had
existed for several months. If there were an urgency for
action it did not first emerge on March 29. Indeed, had
the Respondents chosen to bargain with the Unions prior
to March 29, they would have been in no way hampered
in exercising their decisional prerogatives nor would
their entrepreneurial control have been surrendered for,
having bargained in good faith with the Unions, they
could have taken such action as they deemed provi-
dent. 7 The economic factors existing prior to the Re-
Is The facts in the instant case distinguish it from cases cited by the
Respondents.
"6 Whether a violation on this issue should be charged against the Re-
spondents will be considered infmr
17 The Board said in Brockway Motor Trucks; Division of Mack Trucks
Inc., 251 NLRB 29 (1980):
Continued
276
PENNTECH PAPERS, INC., ET AL.
spondents' closure of their Kennebec mill were not of
such urgent moment as to overcome the presumption in
favor of the duty to bargain. Collective bargaining in ad-
vance of the closure might well have produced a union
offer which would have persuaded the Respondents to
continue to operate the mill. As was stated in Fibreboard
Paper Products Corp. v. N.L.R.B., 379 U.S. 203, 213
(1964), "to require the employer to bargain about the
matter would not significantly abridge his freedom to
manage the business." The Court further said:
[A]lthough it is not possible to say whether a satis-
factory solution could be reached, national labor
policy is founded upon the congressional determina-
tion that the chances are good enough to warrant
subjecting such issues to the process of collective
negotiation.
Thus, the Respondents clearly frustrated the congres-
sional purpose by unilaterally closing their Kennebec
mill and foreclosing a chance to modify the decision to
close which not only may have preserved jobs for the
employees but also might have continued a payroll in the
community. Sound public policy cannot look askance at
such a salutary effect.
In the case of Brooks-Scanlon. Inc., 246 NLRB 476
(1979), the Board said:
We recognize that in past cases the Board has
consistently found that an employer has an obliga-
tion to bargain about decisions involving subcon-
tracting, plant removal, and partial closure. The
purpose of this requirement is to afford the union an
opportunity to propose alternative measures which
might alleviate the need for the elimination of unit
jobs.
The record, which contains a full treatment of the clo-
sure issue, presents no valid reason why the Respondents
should be excepted from the obligation to bargain in re-
spect to the closing of the Kennebec mill. The situation
is no different in effect from the case of Royal Typewriter
Company, a Division of Litton Business Systems, Inc., a
Subsidiary of Litton Industries, Inc., and Litton Industries,
Inc., 209 NLRB 1006 (1974), in which the Board found a
duty to bargain in respect to the closing of one of the
respondent's subsidiaries. In that case, referring to Board
precedent, the Board stated that the Board has held that
"an employer operating two or more plants was obligat-
ed to bargain with respect to a decision to close one of
those plants." 209 NLRB at 1012. Here the Respondents
operated mills at Johnsonburg and Madison. According-
ly, it appears that the Respondents by failing and refus-
ing to bargain in respect to the closing of Kennebec mill
were in violation of Section 8(a)(l) and (5) of the Act.
See, also, National Car Rental System, Inc., 252 NLRB
we must not lose sight of the minimal burden that a duty to bar-
gain places on jn employer Rather than impinge on an employer's
freedom to manage its business, bargaining over a partial closing
simply requires the employer to discuss the matter at the bargaining
table, and may even benefit the employer by obviating the need to
close. Should the parties fail to roach agreement the employer is free
to implement its plan to close the plant.
159 (1980), and Brockway Motor Trucks, Division of Mack
Trucks, Inc.. supra.
Additionally, through St. Ledger the Respondents ad-
mitted that the alleged indefinite layoffs ripened into a
permanent closing by the end of July 1977. If the perma-
nent closing occurred at this time the Respondents again
avoided their bargaining duty. Thus, whatever date is re-
solved as the permanent closing date it is clear that the
Respondents have refused to bargain not only in respect
to the effects of the closing but also in respect to the de-
cision to close.
What was stated by the Board in Brockway Motor
Trucks, Division of Mack Trucks, Inc., supra at 31, is ap-
posite here, ". . . we conclude that the evidence here
shows that Respondent's freedom to manage its business
and determine the direction of its enterprise would not
have been impaired had it bargained with the Union over
the decision to close ... ."
IV. THE CHARGING PARTIES' MOTION TO AMEND THE
COMPLAINT TO COMFORM WITH THE PROOF
At the conclusion of the General Counsel's case, coun-
sel for the Charging Party stated:
Well, it was my conclusion as a result of the
completion of the General Counsel's case, the
charging party's case, back in September of 79, that
the record demonstrated that this company had not
only failed and refused to bargain over the impact
of the closing of the plant, but they had in fact also
failed and refused to bargain over the decision to
close and I ask that the amend-the complaint be
amended to embrace the evidence in the case to the
extent that it also establish that the company failed
to bargain over the decision to close.
I move that the complaint be amended to em-
brace the evidence in the case to that affect [sic],
and I believe that your Honor has the authority to
grant the motion. In any Court of Law it's custom-
ary to move that the complaint be enlarged to em-
brace the evidence, but General Counsel did not
join me in that application but felt that it should go
through the bureaucratic process of the Board
which I did, without any success, but my position is
still the same and that is that the complaint should
be amended to embrace all the evidence before this
Court-before this Board.
The motion of the Charging Parties was not ruled
upon during the hearing. In GTE Automatic Electric,
Inc., 196 NLRB 902 (1972), the Board said:
The authority of the Trial Examiner to amend the
complaint under Section 10(b) of the Act is clearly
limited to those instances where the amendment is
sought or consented to by the General Counsel, or
where evidence has been received into the record with-
out objection. [Emphasis supplied.]
277
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In the instant case the evidence which supports a finding
that the Respondents refused to bargain over the deci-
sion to close Kennebec mill was offered by the General
Counsel, obviously without his objection. Much of it was
introduced as joint exhibits and enough evidence is un-
controverted to support a finding that the Respondents
refused to bargain with respect to the decision to close
Kennebec mill. Thus, it would appear under these cir-
cumstances that an administrative law judge may exer-
cise jurisdiction to grant or deny an amendment to the
complaint to conform the complaint to the proof even
though the General Counsel is construed to control the
complaint. In this respect an administrative law judge ex-
ercises a judicial function which does not obtain to the
General Counsel as the prosecutor. As was said in The
Frito Company, Western Division v. N.L.R.B., 330 F.2d
458, 465 (9th Cir. 1964):
Once having elected to prosecute a complaint
before the Board, the General Counsel is cast in the
role of prosecutor in a judicial proceeding. His au-
thority as a prosecutor is not reviewable by the
Board, but this authority does not extend to control
of the proceeding itself. He cannot limit the scope of
the decision which may be rendered upon the evidence
adduced. It is a judicial function to permit an amend-
ment of the complaint to conform to proof admitted
without objection. The matter of allowance of such
an amendment is addressed to the discretion of the
court.
The proof having been admitted without objection,
what is to be done with it is no longer a part of the
prosecution of the cause. A ruling by the Board ad-
verse to the wishes of the General Counsel is not a
review of a decision of the General Counsel. In the
prosecution of the complaint he could have objected to
the introduction of the evidence. He did not do so and
he thereby consented to the introduction of the issue to
which the evidence was addressed. The trial examiner
and the Board were then free to consider the evi-
dence and to exercise judicial discretion as to
whether to permit amendment to conform to proof.
On the matter of amendment to conform to proof
admitted in the record, especially if amendment
may be necessary to enable the Board to effectively
discharge its duty to declare policy, we hold that
the Board does have the authority to allow an
amendment over the objection of the General
Counsel and that this is a judicial function rather
than a review of a decision of the General Counsel
in the course of the discharge of the duties of a
prosecutor over which he has final authority.
The Board could adopt the view of its trial exam-
iner, it could dismiss the case for public policy rea-
sons, or it could render a decision based upon the
issues actually tried without ordering amendment,
or it could order amendment to conform to proof
or conduct further hearings in the premises. [Em-
phasis supplied.]
The Charging Parties' motion to amend the complaint
to conform with the proof is granted.
Having offered evidence on the issue, it is not within
the province of the General Counsel's prosecutorial
power to foreclose the exercise of the Board's judicial
power to pass on the issue. There appears to be nothing
in the Act which reveals a congressional intent to lodge
power in the General Counsel to close the Board's eyes
to an unfair labor practice appropriately brought to its
attention in a record before it composed in conformity
with the statute's procedures. "The Board was created
. . . to advance the public interest in eliminating obstruc-
tions to interstate commerce .... " N.L.R.B. v. Fant
Milling Co., 360 U.S. 301, 307, 308 (1959).
Even though the charging party's motion was not
granted, the Board has said in the case of Monroe Feed
Store, 112 NLRB 1336, 1337 (1955):
It is well established that when an issue relating
to the subject matter of a complaint is fully litigated
at a hearing, the Trial Examiner and the Board are
expected to pass upon it even though it is not specifi-
cally alleged to be an unfair labor practice in the
complaint. (Emphasis supplied.]
See also Rochester Cadet Cleaners, Inc., 205 NLRB 773
(1973); Crown Zellerbach Corporation, 225 NLRB 911,
912 (1976); National Family Opinion, Inc., 246 NLRB
521, 528 (1979).
In the instant case the issue of the refusal to bargain
concerning the decision to close and the effects of the
closing on the employees is related both to the allega-
tions of the complaint and the charges.'
Each are 8(a)(5) violations which stem from the Re-
spondents' closing of Kennebec mill on March 29, 1977.
In the case M & J Trucking Co., Inc., 214 NLRB 592,
597 (1974), a finding of an unfair labor practice was en-
tered although the misconduct was not specifically al-
leged in the complaint and at the hearing the counsel for
the General Counsel acknowledged that he was not seek-
ing a finding of a violation. The respondent was found
not to be prejudiced by the counsel for the General
Counsel's disclaimer, that the matter was fully litigated,
and that misconduct directly related to other specifically
alleged unfair labor practices. The case of Moore Feed
Store, supra, was relied upon.
The Board has said in C & E Stores, Inc., C & E Super-
value Division, 221 NLRB 1321, fn. 3 (1976):
18 See .VL.R.B. v. Inland Empire Meat Company. 611 F.2d 1235 (9th
Cir. 1980), citing NL.R.B. v. Central Power & Light Companvy, 425 F.2d
1318, 1320 (5th Cir. 1970).
The court pointed out in Inland Empire Meat Company, supra, that the
violation alleged in the complaint which was not specifically contained in
the charge was "covered by the general language (i.e., 'other acts and
conducts') of [the] charge." The same is true in the instant case for the
charge contains this language:
By the acts set forth in the paragraph above, and by other acts and
conduct, it, by its officers, agents and representatives, interfered
with, restrained, and coerced, and continues to interfere with, re-
strain, and coerce its employees in the exercise of the rights guaran-
teed in Section 7 of the Act.
In Gulf States Manufacturer, Inc. v. NL.R.B., 579 F.2d 1298, 1302--03
(5th Cir. 1978). the court said that the "'catch-all' phrase 'by other acts
and conduct' in the charges was sufficient to include other acts and con-
duct if they are sufficiently related to the specific acts alleged."
278
PENNTECH PAPERS, INC., ET AL.
It is well established that where, as here, the facts
underlying the violation are fully developed at the
hearing, an unfair labor practice finding can be
based on the issues litigated as well as those specifi-
cally alleged in the complaint.
Relying on this decision, the Board has held that it is not
precluded from finding a violation under an alternative
theory although the complaint alleged a different theory
of the case. Illinois Bell Telephone Company, 251 NLRB
932 (1980).
Since the events surrounding the closure of the Kenne-
bec mill and the failure and refusal of the Respondents to
bargain over the decision to close were fully litigated
and the refusal to bargain over the decision to close was
intimately related to the subject matter of the complaint
and the charge, as noted in Monroe Feed Store, supra, an
administrative law judge and the Board are "expected to
pass upon it even if not specifically alleged to be an
unfair labor practice in the complaint." And this is true
even though the General Counsel is not pressing a find-
ing on the issue. M & J Trucking Co., Inc., supra.
The Board may properly find an unfair labor prac-
tice when the issue has been fully litigated even
though not specifically pleaded in the com-
plaint. . . The Board may either render a decision
upon the issues actually tried or order an amend-
ment to conform with the proof.
vN.L.R.B. v. International Association of Bridge, Structural
and Ornamental Iron Workers, Local 433 [Associated Gen-
eral Contractors], 600 F.2d 770, 775 (9th Cir. 1979). See
also Ackerman Manufacturing Company, 241 NLRB
(1979), in which the Board reversed the administrative
law judge, opining
. . .inasmuch as Atkins' testimony concerning this
incident was uncontroverted and fully credited, and
because the matter is closely related to the subject
[matter] of the complaint, we shall find the 8(a)(l)
violation and provide an appropriate remedy.
Hence it is incumbent for the Board to enter a finding
that the Respondents violated Section 8(a)(5) of the Act
by failing and refusing to bargain in respect to the deci-
sion to close the Kennebec mill. As said in The Frito
Company v. V.I..R.B., 330 F.2d at 463: "The Board
cannot fulfill its obligation to uphold the purposes of the
Act if it conceives itself powerless to exercise an inde-
pendent examination . . . of the case presented by the
General Counsel."
The Respondents having committed the unfair labor
practice ought not be held to complain because they do
not come off scotfree.
The credited record is void of any proof that the Re-
spondents either fulfilled their duty to bargain in respect
to the decision to close Kennebec mill or the effects of
said closing. Thus, unless it is found that Penntech, Ken-
nebec, and T. P. Property are not a single employer, a
finding must be entered against each that each was guilty
of violations of Section 8(a)(5) of the Act.
In its conclusion, the Charging Parties set this case in
its proper focus:
In a case as blatantly violative of the Act as this
one, the relief provided should be the maximum
permitted under the Act.
The Company unilaterally decided not to follow
the agreed-upon contract terms. There was nothing
the Union could do, since its leverage had been re-
moved when the mill was closed.
The closing of the mill was carefully orchestrat-
ed. First the Company negotiated favorable terms
with the MGA for $1,250,000; $750,000 of which
went directly to Penntech as Kennebec paid off its
obligations. As soon as the deal was final, T. P. re-
called Kennebec's notes in anticipation of a closing.
Twelve days later Penntech shut off funds-perma-
nently. That same day the Company shut down the
Kennebec mill. No notice was given to the employ-
ees so as to deprive the Union of bargaining power.
At the same time, the Company stripped the mill of
its assets. The closing was called a layoff to avoid
the severance payment and the other contractual
obligations of the Company in the event of shut-
down. In less than a month, there was no one
around for the Union to talk to.
The scenario went off like clockwork. And such
purposeful avoidance by the Company of its duties
under the Act cannot go unheeded. The employees
are entitled to complete, make-whole relief. [C.P.
br., p. 46.]
V. THE SINGLE -PLANT ISSUE
The General Counsel and the Charging Parties con-
tend that the Respondents, Kennebec, T. P. Property,
and Penntech, constitute a single employer. The Re-
spondents admit that Penntech is the sole stockholder of
T. P. Property and Kennebec. The parties agree that the
following facts are true.
Penntech and T. P. Property share the same corporate
headquarters, 600 Third Avenue, New York, New York,
on the 35th floor. The offices are not physically separate.
The title on the office door reads only "Penntech
Papers, Inc." No portion of the office contains separate
space for T. P. Property. T. P. Property has no separate
employees or furniture of its own. Penntech leases its
corporate headquarters in New York City. T. P. Proper-
ty is not a party to that or any other lease related to that
property. Neither Penntech nor T. P. Property pay taxes
in New York related to that facility. Both Penntech and
T. P. Property pay franchise taxes to the State of New
York. No T. P. Property officer is paid any salary by T.
P. Property.
T. P. Property does not employ legal counsel on a re-
tainer basis. T. P. Property engages legal counsel to the
extent it needs legal counsel and, in the past, such coun-
sel has been the same as engaged by Penntech.
T. P. Property has not conducted regularly scheduled
Board meetings. To date all of T. P. Property's corpo-
rate formal decisions have been recorded as unanimous
consents as permitted under Delaware law.
279
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
At the time of T. P. Property's acquisition of the Ken-
nebec stock John Leslie, the president, chairman of the
Board, and director of Penntech, was president and di-
rector of T. P. Property. William B. Ford, vice president
of finance and secretary of Penntech, was a vice presi-
dent and director of T. P. Property. According to Ford,
T. P. Property was used by Penntech as the purchaser
and holder of the Kennebec stock because Penntech was
subject to an indenture which "had a number of restric-
tions on operations . . . it was easier for [it] to incorpo-
rate a separate subsidiary to make the acquisition itself,
rather than to do it directly through Penntech."
Thus, T. P. Property was used as a funneling vehicle
through which Penntech money was channeled in to
Kennebec's operations. Accordingly, as claimed by the
General Counsel, T. P. Property was an alter ego of
Penntech.
After the Kennebec stock acquisition, the directors of
Kennebec became John Leslie, William B. Ford, and
Robert S. Malina, and Leslie (according to Ford) desig-
nated Allen J. Nadeau, as president; William B. Ford, as
vice president, secretary, and treasurer; Steven B. Bittel,
as corporate controller, and Fred C. Scribner, Jr., as
clerk. Except for the clerk attorney all of the above
were associated with Penntech.
After assuming their duties with Kennebec, Ford and
Bittel retained their positions with Penntech. Of Nadeau,
Ford testified, "Mr. Nadeau continued in the capacity at
Penntech as a director of the company and as a vice
president of Penntech. But the vast majority of his time,
his responsibilities, involved managing Kennebec River
Pulp and Paper Company." Bill Picard, who had been
mill manager at Penntech in Johnsonburg, Pennsylvania,
was asked to assume a similar position at Kennebec; he
ceased all his responsibilities with respect to Penntech
and spent full time with Kennebec. Picard was replaced
by St. Ledger in June 1976. In February 1977 St. Ledger
was named president of Kennebec. Although Nadeau re-
mained president of Kennebec until replaced by St.
Ledger and as such was the "chief operating officer" of
Kennebec, from mid-December until the end of his
tenure as Mill Manager St. Ledger reported directly to
Leslie per his instructions. Fred C. Scribner, Jr., was re-
placed by Robert E. Stevens and Stephen D. Weinroth
was added as a vice president. Weinroth was vice presi-
dent, secretary, and director of T. P. Property. Since
February 1977 directors have been Leslie and Ford.
Malina resigned. According to Ford the functions of the
board of directors were "strictly nominal."
Although Leslie filled no office with Kennebec other
than as a member of the board of directors it is clear that
he, in his capacity with Penntech, was the moving force
behind Kennebec. Leslie followed the affairs of Kenne-
bec "very closely" and actively engaged in its oper-
ations. He initiated the idea of using sludge in Kenne-
bec's papermaking process and insisted that the idea be
put into effect. He allowed or disapproved capital ex-
penditures. On November 19, 1976, he convened depart-
ment heads and union representatives in a group and
warned them that production must increase or the mill
would not be "viable for continued operation," and that
"Kennebec . . . was not going to drag Penntech with
it." (See supra.)
Leslie participated in discussions which "involved af-
fairs having to do with personnel relations at Kennebec
River Pulp and Paper Co." Ford and McLeod were
present in these discussions. One of these meetings, ac-
cording to Ford, concerned "developing means of im-
proving production in the mill."
Finally, Leslie cut off Kennebec's funding and closed
the mill.
Charles W. Anderson, who had been Kennebec's
"marketing manager," was contacted by Penntech per-
sonnel prior to the stock acquisition. Jack Dodge, vice
president of marketing sales of Penntech, invited Ander-
son to Penntech's New York office "to pass on to the
Penntech sales force the pertinent details about Kenne-
bec from a sales standpoint" and "to instruct or educate
. . .the Penntech salesmen in marketing and selling of
ground wood papers." In January 1977, Dodge "made it
very clear" to Anderson that if Penntech "purchased"
the Kennebec mill Anderson would be hired.
Anderson also visited the Johnsonburg mill with Dill
Paiste, the production manager of Kennebec, when the
mill closed and discussed scheduling mechanics of pro-
duction at Kennebec with Penntech personnel. Anderson
also met with Nadeau during which meeting the Kenne-
bec labor agreement was reviewed line by line. Com-
ments were made by Penntech representatives such as
"... we can live with this or we can't live with that."
Anderson testified that, when his employment ceased
with Kennebec mill in March 1977, after the mill's clo-
sure his settlement check was drawn on T. P. Property.
Kenneth Smith was employed by Kennebec mill in
charge of production scheduling before the 1975 shut-
down. Smith and Anderson, about the time of the Ken-
nebec stock acquisition, traveled to Johnsonburg mill and
met with Dodge and Jim Nestlerod, Penntech's market-
ing manager. Dodge offered Smith employment similar
to that which he had performed for Kennebec before the
mill was closed in 1975. Smith explained:
Jack Dodge had made up an extensive booklet on
what the chain of command would be. I was at the
bottom. I was the customer service man at Kenne-
bec in Madison. Louis [Wolf] was the customer
service manager for Kennebec and Johnsonburg.
Jim Nesselroll [sic] was the marketing manager who
was my boss. And then of course Jim answered to
Jack Dodge who was the vice president for market-
ing.
Also on that plan it told how the orders would
be made up. Louis had-took all the orders at John-
sonburg. The orders were typed and sent up to me,
and it was up to me to make distribution, figure
trims, keep track of production and shipping fig-
ures, and make sure those were sent out by teletype
to Johnsonburg.
Smith received his orders from Johnsonburg through
Louis Wolf. Each morning Smith gave Wolf "a report of
production and shipment." Wolf was the customer ser-
viceman at Penntech's Johnsonburg plant.
280
PENNTECH PAPERS, INC., ET AL.
Smith spoke to Wolf every morning, giving him a
report of production and equipment. Smith and Wolf
maintained identical running schedule boards so that pro-
duction could be coordinated over the telephone. Final
authority for scheduling matters was vested in Penntech
personnel in Johnsonburg.
Elmer C. Bragg, at the time of the acquisition, was a
purchasing agent of Kennebec. He was introduced by
Nadeau to Bill Detwiler, purchasing director of Penn-
tech, as his boss. Bragg took orders from Detwiler who
appeared at the Madison mill every other week for 3 or
4 days.
Purchase orders were "okayed" by Penntech. Pur-
chase orders carried printed thereon "Ship and Invoice
to Penntech Papers, Inc. c/o Kennebec River Pulp and
Paper Company, Madison, Maine." Penntech through its
advertisements offered "Penntech's Pennbrite Board"
and "Kennebec's DynaBond" bond papers. The contact
was C. J. Stone, business papers manager, Penntech
Papers, Inc., New York, New York.
Supervisory and rank-and-file employees from the
maintenance department at Penntech's Johnsonburg mill
were utilized in Kennebec maintenance and engineering
work both after the start of Kennebec mill in 1977 and
thereafter while the mill was in operation.
Computations for the wages and salaries for the hourly
bargaining unit employees were made by the main com-
puter in Johnsonburg based on information from the
timecards punched into the computer by Kennebec per-
sonnel. Continuation sheets were prepared by the main
computer in Johnsonburg. Kennebec's W-2 forms were
mailed to employees in Penntech Papers, Inc., envelopes
from Johnsonburg.
The collective-bargaining agreement effective by its
terms from November 1, 1976, to June 30, 1977, which
was in effect when the Kennebec mill was closed was
unacceptable to Penntech. Negotiations for modifications
were conducted between Martin and McLeod and repre-
sentatives of the Unions. Through the efforts of Martin,
who told union negotiators that he was negotiating for
Penntech,' 9 the labor agreement was modified to the
liking of Penntech. The Unions accepted the modifica-
tions because Martin asserted that Penntech would not
take over the operations of Kennebec mill unless they ac-
cepted the proposed modifications.20
The modified contract was executed on March 1,
1976. After the acquisition on March 3, 1976, Martin was
replaced as president and manager of Kennebec by Allen
J. Nadeau, a vice president of Penntech. While Nadeau's
name appeared typewritten on the contract he did not
sign the contract until later.2a In or about 3 weeks Ken-
nebec mill commenced operations under the conditions
of employment set by Penntech in the modified contract
executed March 1, 1976.
19 During the negotiating sessions Martin stated that "Penntech was in
a hotel room some place and he was more or less going back and forth
with them to decide on this agreement."
0O Martin was quoted as saying "that this is an agreement that Penn-
tech wants in order to start up the paper mill again. If we don't accept it
they would not further negotiate the sale of the State of Maine. MGA."
21 Upon inquiry by union representatives, they were told that Nadeau
was a vice president of Penntech.
In the letter dated July 29, 1977, from Provident Life
and Accident Insurance Company to Richard J.
McQuarrie it was stated, "Ms. Georgie Penrose, the
Treasurer of T. P. Property Corporation and T. P. Prop-
erty has agreed to extend the conversion period [for life
insurance for Kennebec employees] to August 20, 1977."
(G.C. Exh. 8.)
Manager of Industrial Relations McLeod in a letter
dated February 17, 1977, used the words "before" Penn-
tech purchased Kennebec. (G.C. Exh. 9.)
The Home Insurance Companies on a check dated Oc-
tober 6, 1977, to Francis J. Goodwin listed the insured as
"Penntech Paper Company (Kennebec River Pulp and
Paper Co.)." (G.C. Exh. 13.) The same was true on a
check to Leo P. Veilleux dated September 23, 1977.
A letter directed to retirees dated April 4, 1976, from
William A. Henry, controller, used the language, "Ken-
nebec has been purchased by Penntech Papers, and paper
production was resumed on March 27." (G.C. Exh. 15.)
In a letter dated March 30, 1977. addressed to George
W. Lambertson, International Representative, United Pa-
perworkers, Manager of Industrial Relations, McLeod
used language, "[W]e cannot see any possibility of Penn-
tech resuming operation." In the meetings between St.
Ledger and union representatives after the mill's closure
on March 29, 1977 (see infra), St. Ledger indicated that
he was in the employ of and was representing Penntech.
According to Ford, Penntech was "financing the on
going operation at Kennebec via advances." Penntech
did all of Kennebec's purchasing and paid the suppliers
directly when the credit terms were due. Penntech billed
Kennebec for such purchases at "the time Kennebec ac-
tually used the equipment itself or material or supply."
The changes were made at cost.
According to Ford, "all of the customers for paper
manufactured at Kennebec Pulp and Paper Company
were Penntech customers and were billed by Penntech
while Kennebec River Pulp and Paper Company had
only one customer, namely Penntech Papers . . . the
sales flow went through T. P. Property as the interven-
ing subsidiary for the reason I explained earlier. But it
was passed on up to Penntech." Penntech allowed Ken-
nebec immediate credit for products shipped. Penntech
carried the accounts receivable and sold the products.
Penntech covered Kennebec's losses by general advance.
Picard, who was employed as Kennebec's manager, re-
mained on the Penntech payroll in order to avail himself
of certain benefits. Picard's salary and benefits were
charged to Kennebec. St. Ledger was also carried on the
Penntech payroll; his salary was charged to Kennebec.
Ford and Weinroth were on the Penntech payroll, but
the work they performed for Kennebec was charged to
Kennebec. Apparently the work Leslie performed for
Kennebec was not charged to Kennebec. Ford testified
that Leslie had the authority to discharge him and while
working for Kennebec he considered Leslie his "boss."
In the case of Radio & Television Broadcast Technicians
Local Union 1264, International Brotherhood of Electrical
Workers, AFL-CIO, et al. v, Broadcast Service of Mobile,
Inc., 380 U.S. 255, 256 (1965), the Supreme Court in af-
firming a "single employer" holding said:
281
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The controlling criteria, set out and elaborated in
Board [D]ecisions, are interrelation of operations,
common management, centralized control of labor
relations and common ownership.
In reviewing the Supreme Court's decision and other
authorities, the United States Court of Appeals for the
District of Columbia said in Local No. 627, International
Union of Operating Engineers, AFL-CIO v. N.L.R.B., 518
F.2d 1040, 1045 (1975), affd. 425 U.S. 80 (1976):
From the foregoing, we conclude that "single
employer" status, for purposes of the National
Labor Relations Act, depends upon all the circum-
stances of the case, that not all of the "controlling
criteria" specified by the Supreme Court need be
present ....
In N.L.R.B. v. Big Bear Supermarkets #3, 640 F.2d
924, 930 (9th Cir. 1980), it was stated along the same
line:
The presence of all four criteria [interrelation of op-
erations, common managemrent, centralized control
of labor relations, and common ownership] of the
single-employer test is not necessary to a finding of
single-employer status; the ultimate question is
whether there is an absence of an arm's length rela-
tionship between the business entities in question. 22
While the facts above detailed satisfy the criteria for a
"single employer," a review of Leslie's activities provide
the clincher.
Leslie was not an officer of Kennebec; thus, he could
derive no power or authority from such source. His
duties as a director of Kennebec were "strictly nominal"
and obviously could not be exercised except in conjunc-
tion with other directors. Thus, Leslie derived no power
or authority from such office to personally administer
Kennebec's affairs as if he were the chief operating offi-
cer. Nor is there any credible evidence that any action
was ever taken by the board of directors of Kennebec
giving Leslie the powers he exercised in connection with
Kennebec's affairs. The board did not even approve or
confirm Kennebec mill's closure. Nevertheless, Leslie ex-
ercised plenary power and authority over the affairs and
operations of Kennebec.
St. Ledger, the president, and Ford, the treasurer and
secretary of Kennebec, considered Leslie their boss as
pertained to their duties for Kennebec. Leslie decided on
what capital expenditures could he made by Kennebec
and determined manufacturing procedures to be fol-
22 The Circuit Court of Appeals for the Ninth Circuit has also said in
N.L.R.B. v. Don Burgess Construction Corporation, d/hba Burgess Con-
struction, 596 F.2d 378, 384 (1979):
However, no one of the factors is controlling, NL.R.B. v. Welcome-
American Fertilizer Co.. 443 F.2d 19, 21 (9th Cir. 1971), nor need all
criteria be present. Single employer status ultimately depends on "all
the circumstances of the case" and is characterized as an absence of
an "arm's length relationship found among unintegrated companies."
Local 627. International Union of Operating Engineers v. NL.R.B.,
171 U.S.App D.C. 102, 107-108, 518 F 2d 1040, 1045-46 (1975), affd
on this issue sub nom. South Prairie Construction Co. v. Local 627. In-
ternational Union of Operating Engineers, 425 U.S. 800, 96 S.Ct. 1842,
48 L.Ed.2d 382 (1976).
lowed, such as the use of sludge. He visited the mill and
participated in meetings in which labor relations were
discussed. He caused representatives of the Unions to be
assembled, whom he warned to shape up or else. Finally.
it was his decision which closed the mill. The power and
authority which he exercised did not emanate from Ken-
nebec. It was derived from his office as president and
chairman of the board of Penntech. His intervention and
administration of the affairs of Kennebec were the acts
of Penntech through its agent, Leslie. Leslie provided
common management and, together with the labor agree-
ment insisted on by Penntech, supplied a centralized con-
trol of labor relations. Common ownership and interrela-
tion of operations are also apparent. The criteria being
satisfied, accordingly it is found that the Respondents are
a single employer or enterprise. See Royal Typewriter
Company, etc., 209 NLRB 1006 (1974).
VI. WHETHER THE UNITED STAlTES COURT OF
APPEAIS FINDING ON THE SINGI.E-I.MPI.OYER ISSUE
IS BINDING IN THIS ACTION
The Respondents claim that the single-employer issue
has been litigated and finally decided by the United
States District Court for the District of Maine and the
United States Court of Appeals for the First Circuit in
an action brought by the Unions against the Respondent
pursuant to the Labor Management Relations Act of
1947, as amended. The action in the district court was to
compel Penntech and T. P. Property to enter into arbi-
tration with the Unions concerning certain provisions of
a collective-bargaining agreements : between the Unions
and Kennebec. The collective-bargaining agreement was
the same as offered in this case, bearing the execution
date of March 1, 1976. The court of appeals defined the
issue involved as "whether parent corporations should be
bound to the collective bargaining agreements of their
subsidiaries." (583 F.2d 33, 35).
The district court drew its findings of fact from stipu-
lated facts also a part of the instant record. The district
court found (which findings are the same as in the in-
stant case):
There can be no question but that Penntech, as
sole stockholder of Kennebec, controlled it com-
pletely. The collective bargaining agreement was
changed at Penntech's request. Penntech participat-
ed in the negotiations to write down Kennebec's
debt. Penntech's attorneys were used by both cor-
porations. The management of all three companies,
Penntech, T. P. Property, and Kennebec. were so
intertwined that the officers and directors of each
would scarcely know when they were acting for
23 The charge filed by the Machinists on April 11, 1977, charges that
Kennebec refused to bargain collectively with respect to "wages, sever-
ance pay, vacation pay, pension payments and sesting as well as other
contractual benefits." The issue which ¥was submitted to arbitration was
"Failure of employer to pay its employees the wages, vacation pay. pen-
sions, insurance and other entitlements due under the terms of the plan
and termination of employment of the affected employees."
282
PENNTECH PAPERS, INC., ET AL.
one corporation or the other. [439 F.Supp. at
621.]24
Nevertheless, the district court ruled that this integration
was insufficient to supply an affirmative answer to the
question: "Was Kennebec sufficiently integrated to satis-
fy the traditional test for determining when corporate en-
tities must be disregarded." On the same set of facts the
court of appeals found no basis to consider Penntech and
Kennebec to be other than separate legal entities. Thus,
the court of appeals failed to find that Penntech and
Kennebec constituted a single corporation. The conclu-
sion follows that the court of appeals also ruled that
Penntech and Kennebec did not constitute a single em-
ployer.
The General Counsel in the instant case has raised the
question (see discussion supra) whether Respondents
Kennebec, Penntech, and T. P Property do constitute a
single employer. The answer to this question must be in
the affirmative in order for Penntech and T. P. Property
to be found guilty of the unfair labor practices alleged.
Thus, for the General Counsel to prevail against T. P.
Property and Pennicch the ultimate finding must be that
Kennebec and Penittech constitute a single employer.
Since this claim was rejected on the same set of facts by
the court of appeals, consequently it follows that, if the
Board is bound by re¥ judicata or collateral cstoppel as
claimed by the Respondents, T. P. Property and Penn-
tech must be dismissed frn,) this action.
As pointed out by the Respondents a voluntary dis-
missal with prejudice effected following the decision of
the court of appeals "constitutes an adjudication of the
merits as fully and completely as if the order had been
entered after trial." Hloward Jamison v. Miracle Mile
Rambler. Inc., 536 F.2d 560, 564 (3d Cir. 1976). In
Lawlor et al., rading as Independent Poster Exchange v.
National Screen Service Co'p.. et al., 349 U.S. 322, 327
(1955), the Supreme Court said, "It is of course true that
the . . . judgment dismissing the previous suit 'with prej-
udice' bars a later suit on the same cause of action." Fur-
thermore, in the same case the Court comments on the
distinction between the doctrines of res judicata and col-
lateral estoppel. Speaks the Court (id. at 326):
Thus, under the doctrine of res judicata, a judgment
"on the merits" in a prior suit involving the same
parties or their privies bars a second suit based on
the same cause of action. Under the doctrine of col-
lateral estoppel, on the other hand, such a judgment
precludes relitigation of issues actually litigated and
determined in the prior suit, regardless of whether it
was based on the same cause of action as the second
suit.
It is the issue as to whether Penntech, T. P. Property,
and Kennebec constitute a single employer which the
Respondents maintained was litigated in the district court
case and which the Charging Parties and the General
Counsel seek to relitigate here. That issue obviously was
litigated in the district court.
24 The facts appear to meet the criteria for a single employer as set
forth by the Supreme Court In Radio & lelevision Broadcast Technicians
Local Lnion 1264 .Br,adoast Servire of Mobile, supra.
The Respondents rely on N.L.R.B. v. Walter E.
Heyman, d/b/a Stanwood Thriftmart, 541 F.2d 796 (9th
Cir. 1976). In this case the Board sought enforcement of
an order based on a finding that Thrifimart violated Sec-
tion 8(a)(5) of the Act. The issue before the court of ap-
peals was what effect the Board must give to a United
States district court judgment which is antithetical to the
Board's subsequent determination regarding the validity
of a collective-bargaining agreement. As stated by the
court, "The continued existence of a contract previously
rescinded by the court was a premise of the Board's find-
ings." (Id. at 797.) The question posed by the court was
"What consideration must the Board give the judgment
of rescission."25
The court further commented:
In finding unfair [labor] practices, the Board de-
clared that a contract, lawful on its face, raises a
presumption that the contracting Union was the ma-
jority representative at the time the contract was
executed. [Id. at 798.]
In establishing a duty on behalf of T. P. Property and
Penntech to bargain in respect to the effects of the clos-
ing of Kennehec mill the General Counsel must likewise
rely for the presumption of majority status on the con-
tract between Kennebec and the Unions for no other
proof of majority status was offered. The General Coun-
sel alleges in his complaint: "Kennebec and the Unions
executed final collective bargaining agreements on
March 1, 1976." The Respondents admitted that Kenne-
bec and the Unions have been parties to successive col-
lective-hargaining agreements since 1970, the most recent
one having been executed on March 1, 1976. The Re-
spondents do not admit that T. P. Property or Penntech
is bound by the contracts
Obviously a finding of majority status must be estab-
lished before the duty to bargain in respect to the effects
of closing Kennebec mill will attach. As in the Heyman
case, supra, if there be no contract, the duty to bargain
cannot be established. As to Kennebec there is no diffi-
culty in charging it with the duty to bargain for Kenne-
bec executed the contract. On the other hand Penntech
and T. P. Property were not signatories to the contract
and as found by the district court were discrete corpora-
tions and not bound by the contract Thus, as in Heyman,
there are no grounds for holding them to a duty to bar-
gain with the Unions for a presumption of majority did
not obtain in the absence of a valid and subsisting con-
tract binding them. As to Penntech and T. P. Property,
there was no contract. Accordingly, if Heyman is ap-
plied, T. P. Property and Penntech must be dismissed
from this action.
On the other side of the coin it has been held that cer-
tain Agency action is binding on the courts. In United
States v. Utah Construction & Mining Co., 384 U.S. 394,
422 (1966). the Court said:
2s The Board in Sierra Development Company dh/bha Club Cal- Neva,
231 NLRB 22, 23, fn. 4 (1977), cited the issue as: "The issue was what
effect the district court's rescission of a contract has on the Board's find-
ing a presumption of majority representation based on that contract."
283
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
When an administrative agency is acting in a judi-
cial capacity and resolves disputed issues of fact
properly before it which the parties have had an
adequate opportunity to litigate, the courts have not
hesitated to apply resjudicata to enforce repose.
In Sylvester Tipler v. E. I. DuPont de Nemours and Co.,
Inc., 443 F.2d 125, 128 (6th Cir. 1971), the court said, "It
is now accepted that both res judicata and collateral es-
toppel can be applicable to decisions of administrative
agencies acting in judicial capacity."
In Painters District Council No. 38, Brotherhood of
Painters, Decorators and Paperhangers of America, AFL-
CIO v. Edgewood Contracting Company, 416 F.2d 1081,
1084 (5th Cir. 1969), the court opined:
The policy considerations which underlie resjudi-
cata-finality to litigation, prevention of needless
litigation, avoidance of unnecessary burdens of time
and expense-are as relevant to the administrative
process as to the judicial. Old Dutch Farms, Inc. v.
Milk Drivers and Dairy Employees Local Union No.
584, 281 F.Supp. 971, 974 (E.D.N.Y. 1968). Nor is
there any difference in the underlying principles be-
cause the administrative decision is sought to be
given effect in a judicial proceeding.
In this case, the court found that the National Labor
Relations Board's determination that a local union was
guilty of secondary boycott was resjudicata on the ques-
tion of liability in a subsequent damage suit brought
under Section 303 of the Labor Management Relations
Act, as amended. Cf. United Brick & Clay Workers of
America et al. v. Deena Artware, Inc., 198 F.2d 637 (6th
Cir. 1952).
The foregoing cases, although they may point the di-
rection, do not answer whether a determination by a
court of competent jurisdiction may constitute res judi-
cata in a proceeding before the National Labor Relations
Board. This is the question which is before me. Although
Heyman would seem to impose an affirmative answer
and command the dismissal of Penntech and T.P. Prop-
erty from these proceedings, I am bound by the Board's
ruling in Walter E. Heyman d/b/a Stanwood Thriftmart,
216 NLRB 852 (1975), since such case seems to be the
applicable law to which I must adhere. Insurance Agents'
International Union, AFL-CIO (The Prudential Insurance
Company of America), 119 NLRB 768, 772-773 (1957).
". .. [No] inference can be drawn that the Board has ac-
cepted an adverse court decision from the mere failure to
petition for certiorari in the case." Novak Logging Com-
pany, 119 NLRB 1573, 1575, 1576 (1958). Thus, the Re-
spondents' arguments are misdirected to me and must be
overruled.
vii. THE RESPONDENTS' CLAIM THAT SECTION 10(B)
OF THE ACT BARS CHARGING PARTIES FROM
SEEKING ANY REMEDY AGAINST PENNTECH AND T.
P. PROPERTY
The Respondents contend that Section 10(b) of the
Act is applicable because Penntech and T. P. Property
were not named in or served with the amended charge
until November 7, 1977, 7 months after the alleged refus-
al to bargain. This argument is without merit since it has
been found that Kennebec, T. P. Property, and Penntech
constitute a single employer. Key Coal Company, 240
NLRB 1013 (1979); Royal Typewriter Company, etc. v.
N.L.R.B., 533 F.2d 1030, 1041-44.
CONCLUSIONS OF LAW
1. The Respondents are engaged in commerce within
the meaning of Section 2(6) and (7) of the Act, and it
will effectuate the purposes of the Act for jurisdiction to
be exercised here.
2. The Respondents constitute a single employer
within the meaning of the Act.
3. The Unions are labor organizations within the
meaning of Section 2(5) of the Act.
4. (a) All boss machine tenders, machine tenders, back
tenders, third hand, fourth hand, fifth hand and beater
engineers employed by Respondents at the Madison,
Maine, location excluding guards and supervisors as de-
fined in the Act, constitute a unit appropriate for pur-
poses of collective bargaining within the meaning of Sec-
tion 9(b) of the Act.
(b) All head firemen and waste firemen and oilers em-
ployed by the Respondents at the Madison, Maine, loca-
tion excluding guards and supervisors as defined in the
Act, constitute a unit appropriate for purposes of collec-
tive bargaining within the meaning of Section 9(b) of the
Act.
(c) All head machinists, millwright and electricians
and all journeymen machinists, millwright, piper, mason,
blacksmith, painter, electrician welder, tinsmith, roll
grinder, knife grinder, bolt men and helpers employed by
the Respondents at their Madison, Maine, location ex-
cluding guards and supervisors as defined in Section
2(11) of the Act, constitute a unit appropriate for the
purposes of collective bargaining within the meaning of
Section 9(b) of the Act.26
5. At all times material herein the labor organizations
have been and now are the exclusive representatives of
all employees in the aforesaid appropriate units for the
purpose of collective bargaining within the meaning of
Section 9(a) of the Act.
6. By failing and refusing to bargain collectively in
good faith with the labor organizations in respect to the
closing of the Kennebec mill on March 29, 1977, and as
to the effects of said closedown, the Respondents have
engaged in and are engaging in unfair labor practices
within the meaning of Section 8(a)(1) and (5) of the Act.
7. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
THE REMEDY
It having been found that the Respondents have en-
gaged in certain unfair labor practices, it is recommend-
ed that they cease and desist therefrom and take certain
affirmative action designed to effectuate the policies of
26 The Respondents have admitted that the foregoing units are appro-
priate for the purpose of collective bargaining,
284
PENNTECH PAPERS, INC., ET AL.
the Act. The remedy pronounced by the Board in the
case of The Ohio Brake & Clutch Corporation, 244 NLRB
35 (1979), is adopted as the appropriate remedy in this
case.
Accordingly, to effectuate the purposes of the Act, I
will provide a bargaining order with a backpay require-
ment designed to make whole the employees for losses
suffered as a result of the violation, in the manner estab-
lished by the Board in F W. Woolworth Company, 90
NLRB 289 (1950), with interest to be computed in the
manner set forth in Florida Steel Corporation, 231 NLRB
651 (1977).27 Thus, the Respondents shall pay their dis-
placed employees backpay at the rate of their normal
wages when last in the Respondents' employ from on or
about March 29, 1977, the date that the Respondents
closed the Madison, Maine, facility and terminated the
employees until the occurrence of the earliest of the fol-
lowing conditions: (1) the date that the Respondents bar-
gain to agreement with the Unions on those subjects per-
taining to the decision to close the Madison facility and
the effects of the closing on unit employees; (2) the par-
ties reach a bona fide impasse in bargaining; (3) the fail-
ure of the Unions to request bargaining within 5 days of
issuance of this Decision and Order or to commence ne-
gotiations within 5 days of the Respondents' notice of
27 See, generally, his Plumbing & Heaing Co., 138 NLRB 716 (1962).
their desire to bargain with the Union; or (4) the subs-
quent failure of the Unions to bargain in good faith.
Additionally, the Charging Parties request a make-
whole remedy which compensates employees for losses
involving severance pay, vacation pay, insurance benefits
and premiums, and pensions, all such losses resulting
from the Respondents' failure and refusal to honor the
labor agreement. The uncontroverted evidence in this
case establishes that the Respondents by refusing to abide
by the terms of the labor agreement have altered its
terms in violation of Section 8(d) of the Act. It is well
established that "[a]n employer cannot alter mandatory
contractual terms during the effective period of the
agreement without the consent of the union." Los Ange-
les Marine Hardware Co. v. N.L.R.B., 602 F.2d 1302,
1307 (9th Cir. 1979). Such a repudiation of the contract
as here amounts to a violation of Sections 8(d), 8(a)(1),
and 8(a)(5) of the Act. Ibid. Thus, it is recommended
that the Respondents, as a part of the remedy herein, and
because of their flagrant disregard of their employees'
rights protected by the Act and their unwarranted refus-
al to conform with the plain commands of the Act, be
required to comply with those provisions of the labor
agreement which concern severance pay, vacation pay,
insurance benefits and premiums, and pensions. See, also,
The Nestle Company, Inc., 251 NLRB 1023 (1980).
[Recommended Order omitted from publication.]
285