Pepsi-Cola Bottling Co. Of Sacramento

National Labor Relations Board - Board Decisions

Jan 21, 1971

187 N.L.R.B. 1017 (N.L.R.B. 1971)

PEPSI-COLA BOTTLING CO. OF SACRAMENTO 1017
Golden State Bottling Company, Inc. d/b/a Pepsi-
Cola Bottling Company of Sacramento and All
American Beverages, Inc. d /b/a Pepsi -Cola Bot-
tling Co . of Sacramento' and Edward J. Farrell and
P.C.B.C.E., Inc., Party to the Contract. Case
20-CA-2656
January 21, 1971
SUPPLEMENTAL DECISION AND
ORDER
B,Y CHAIRMAN MILLER AND MEMBERS BROWN
AND JENKINS
On June 10, 1964, the National Labor Relations
Board issued its Decision and Order in the above-
entitled proceeding,2 finding that the Respondent,
Golden State Bottling Company, Inc. d/b/a Pepsi-
Cola Bottling Company of Sacramento, had discrimi-
natorily discharged Kenneth L. Baker in violation of
Section 8(a)(3) and (1) of the National Labor
Relations Act, as amended, and directing that Golden
State Bottling Company, Inc., offer to him immediate
and full reinstatement to his former or substantially
equivalent position and make him whole for any loss
of earnings suffered by reason of the discrimination
against him. On December 2, 1965, the United States
Court of Appeals for the Ninth Circuit issued its
decision 3 enforcing, inter alia, the Board's Order with
respect to Baker. Because of a request by the Board
for rehearing and other intervening factors, the court
issued its final decree enforcing in full the Board's
Order with respect to Baker on November 27, 1968.
A backpay specification and notice of hearing and a
supplemental backpay specification and notice of
hearing were issued by the Regional Director for
Region 20, and pursuant thereto a hearing was held
on February 3 and 4, 1970, before Trial Examiner
Robert L. Piper for a determination of the amounts of
backpay due the above-named discriminatee, and the
designation of liability for reinstatement and back-
pay.
On July 13, 1970, the Trial Examiner issued the
attached Supplemental Decision finding that the
discriminatee was entitled to reinstatement by the
successor-employer as indicated and to the amounts
of backpay therein set forth, and that the Respon-
dents are jointly and severally liable for said backpay.
Thereafter, each Respondent filed exceptions and a
supporting brief,4 and the General Counsel filed an
answering brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
powers in connection with this case to a three-member
panel.
The Board has reviewed the rulings of the Trial
Examiner made at the hearing and finds that no
prejudicial error was committed. The rulings are
hereby affirmed. The Board has considered the Trial
Examiner's Supplemental Decision, the exceptions
and briefs, and the entire record in the case, and
hereby adopts the findings,5 conclusions, and recom-
mendations of the Trial Examiner.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommend-
ed Order of the Trial Examiner and hereby orders that
Respondent Golden State Bottling Company, Inc.
d/b/a Pepsi-Cola Bottling Company of Sacramento,
and Respondent All American Beverages, Inc. d/b/a
Pepsi-Cola Bottling Co. of Sacramento, Sacramento,
California, their officers, agents, successors, and
assigns, shall take the action set forth in the Trial
Examiner's recommended Order.
At the opening of the hearing upon unopposed motion of the General
Counsel, the caption was amended to include All American Beverages, Inc
2147NLRB 410
3 N L R B v Golden State Bottling Company, Inc, 353 F 2d 667
4 Respondent, All American Beverages, Inc , filed a supplemental brief
which we have considered as part of its original brief
s These findings are based, in part, upon credibility determinations of
the Trial Examiner to which the Respondents have excepted After careful
review of the record, we conclude that these credibility findings are not
contrary to the clear preponderance of all relevant evidence Accordingly,
we find no basis for disturbing these findings . Standard Dry Wall Products,
Inc, 91 NLRB 544, enfd. 188 F.2d 362 (C A 3)
TRIAL EXAMINER'S SUPPLEMENTAL
DECISION
STATEMENT OF THE CASE
ROBERT L PIPER, Trial Examiner: On June 10, 1964, the
National Labor Relations Board issued its Decision and
Order,' finding that on August 16, 1963, Respondent
Golden State Bottling Company, Inc. d/b/a Pepsi-Cola
Bottling Company of Sacramento2 (hereinafter called
Golden State), had discriminatorily discharged Kenneth L.
Baker in violation of Section 8(a)(3) and (1) of the Act, and
ordering Golden State, its officers , agents , successors, and
assigns, to offer Baker immediate and full reinstatement to
his former or substantially equivalent position and make
him whole for any loss of earnings occasioned by such
discrimination by payment to him of a sum of money equal
to that which he would normally have earned from the date
of such discrimination until the date of reinstatement, less
his net earnings during that period. On December 2, 1965,
147NLRB410(1964)
2 At the opening of the hearing upon unopposed motion of the General
Counsel the caption was amended to include All American Beverages, Inc
d/b/a Pepsi-Cola Bottling Co of Sacramento
187 NLRB No. 142
1018 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the United States Court of Appeals for the Ninth Circuit
issued its decision3 affirming and enforcing, inter a/a, the
Board 's Order with respect to Baker . Because of a request
by the Board for rehearing and other intervening factors,
the court issued its final decree enforcing in full the Board's
Order with respect to Baker on November 27, 1968.
A controversy having arisen over the amount of backpay
due under the terms of the Board Order and court decree,
on September 30, 1969, the Board's Regional Director for
Region 20 , issued a backpay specification and notice of
hearing alleging , inter alia, that Golden State had not
offered Baker reinstatement as required, that accordingly
backpay continued to run, and calculating backpay for an
interim period ending June 30, 1969. On November 25,
1969, Golden State filed its answer alleging , inter alia, that
on December 11, 1968, Golden State had offered Baker
reinstatement to employment substantially equivalent to
that which he would have had if he had not been
terminated. On December 19, 1969, the Regional Director,
having during November 1969 ascertained for the first time
that on or about January 31, 1968, Golden State had sold its
bottling business to All American Beverages, Inc. (formerly
known as Sam Snead All American Golf, Inc .), thereafter
d/b/a Pepsi Cola Bottling Company of Sacramento,
withdrew his previously issued backpay specification and
issued a supplemental backpay specification and notice of
hearing.
Said supplemental backpay specification alleged, inter
alia, that All American Beverages , Inc. (hereinafter called
All American), constituted a successor to Golden State
within the meaning of the Board's Order and accordingly
was also liable for Baker's reinstatement and backpay, that
Baker had not been offered reinstatement to his former or
substantially equivalent position by either Golden State or
All American, and contained a corresponding interim
calculation of backpay from the date of discrimination
through June 30, 1969. The answer dated January 16, 1970,
of Golden State and All American (hereinafter collectively
called Respondents), verified for Golden State by the same
officer as its previous answer, admitted the sale of the
bottling business by Golden State to All American on
January 31, 1968, denied that All American was a
"successor" to Golden State in any manner liable for
Baker's reinstatement or backpay, and, contrary to Golden
State's original answer, denied any liability for backpay or
reinstatement after January 31, 1968, because of the sale on
that date to All American. Respondents' answer did not
allege, alternatively or otherwise , that either Respondent
had offered Baker reinstatement on December 11, 1968, or
at any other time . Respondents' answer also denied that
Baker would have been offered a distributorship or
compensated as such on a commission basis , as alleged in
the supplemental backpay specification. Both answers
challenged the method of backpay computation employed
by the General Counsel in the specifications.
Hearings were held on February 3 and 4, 1970. At the
opening of the hearing the General Counsel 's unopposed
motion to amend the supplemental backpay specification
by substituting the Exhibit A attached to Respondents'
answer for Appendix A of the specification through the
third quarter of 1964, and substituting General Counsel's
proffered Exhibits 2, 3, 4, 24, and 25 for Appendixes B, C-1,
E-1, C-2, and E-2 of the specification, respectively, with
corresponding corrections in the monetary totals set forth
in the specification , was granted . All parties were
represented by counsel and afforded all rights of due
process. The General Counsel and Respondents filed briefs.
The motions of the General Counsel and Respondents to
correct the official transcript of the proceeding are granted.
Upon the entire record in the case and from my observation
of the witnesses, I make the following findings , conclusions,
and recommendations:
A. The Issues
The issues as framed by the supplemental backpay
specification and Respondents ' answer thereto are whether
(1) All American is a successor to Golden State, with prior
knowledge of the pendency of this unfair labor practice
proceeding, liable for Baker 's reinstatement and jointly and
severally liable with Golden State for Baker 's backpay; (2)
on or about October 1, 1964, Golden State would have
offered, and Baker would have accepted, a distributorship,
under which he would have been converted by contract
from a driver-salesman to a distributor , or independent
contractor , with earnings or income based on net profits
from sales, characterized in the specification as commis-
sions , as distinguished from the base pay and commissions
paid dnver-salesmen , and, accordingly, was entitled to an
offer of "reinstatement" as a distributor rather than as a
driver-salesman; (3) assuming Baker would have been
offered and would have accepted a distributorship, his
gross backpay should be computed upon the net profits of a
comparable distributor , as alleged in the specification, or
upon Baker's estimated case sales as a distributor,
computed by multiplying his former ratio of sales as a
driver-salesman by the average case sales of all driver-
salesmen and distributors during the relevant period, and in
turn multiplying such estimate by the average net profit per
case of the five top distributors during 1968, as alleged in
the answer ; and (4) although not alleged in Respondents'
answer to the supplemental specification , on December 11,
1968, All American offered Baker reinstatement or
employment which was substantially equivalent to what he
would have had if he had not been discriminatorily
discharged , as required by the Board's Order.
B. Background Facts
As hereinabove found, on June 10, 1964, the Board
ordered Golden State to reinstate Baker and make him
whole for any loss of earnings, and the court of appeals
affirmed this Order on December 2, 1965. Edwin J. Crofoot
was president of Golden State , and he and his son , Edwin J.
Crofoot II, vice president, owned all of its stock. Golden
State owned other assets and business properties in
addition to its bottling company, which it operated as
Pepsi-Cola Bottling Company of Sacramento under a
franchise from the Pepsi Cola Company . Eugene Schilling
was the general manager of the bottling company and also
the secretary of Golden State, although not a stockholder.
3 N L.R B v Golden State Bottling Company, Inc., 353 F.2d 667 (1965).
PEPSI-COLA BOTTLING CO. OF SACRAMENTO
As the general manager he was :n charge of and managed
the day-to-day operations of the bottling company, was a
major participant in the previously found unfair labor
practices, and was the official who discharged Baker in
violation of the Act. On January 31, 1968, unknown to the
Board, the court, or Morton B. Jackson, counsel for Golden
State in the prior proceeding and counsel for both Golden
State and All American in this present proceeding, Golden
State sold and transferred the bottling company as a going
concern to All American, who thereafter operated it as a
division doing business as the Pepsi-Cola Bottling Compa-
ny of Sacramento. Schilling thereupon became the general
manager and "president" of the division of All American
operating the bottling company, performing substantially
the same function of running the plant as he had for
Golden State. The meaning of the title president is not clear
inasmuch as the record establishes that Schilling was not an
officer or stockholder of All American.
On November 14, 1968, more than 9 months after the sale
and transfer of assets , Schilling, who was no longer
connected with or authorized to represent Golden State,
sent the court of appeals a substitution of attorneys in the
instant case signed by him as general manager of Golden
State. On November 27, 1968, the court issued its final
decree enforcing the Board's Order with respect to Baker.
Shortly after the court's decree, the Regional Director by
letter requested Golden State to post the notice to
employees and offer Baker reinstatement as required by the
decree. On December 11, 1968, Schilling posted such
notice, which he signed as "president of Golden State," and
sent the Board a certificate of such posting signed by him as
"president of Golden State." The same day on a letterhead
entitled "Pepsi Cola Bottling Company, Sacramento,"
Schilling sent Baker a letter offering him reinstatement to
his former position as a route driver, again signing this as
president, with copies to Jackson and the Board. Because
Baker and the Regional Director believed that Baker was
entitled to a reinstatement as a distributor, as considered
fully hereinafter, Baker did not accept this offer. On
January 22, 1969, Schilling sent the Regional Office certain
payroll information on behalf of Golden State, again
signing as president of the company. During February and
March 1969 the Regional Office corresponded with
Jackson and met with Schilling concerning the computa-
tion of backpay due Baker by Golden State. Neither
Jackson nor the Board knew of the transfer of the bottling
company to All American more than a year previously.
No agreement with respect to Baker's backpay having
been reached and Schilling having instructed Jackson not
to settle, on September 30, 1969, the Regional Director
issued the original backpay specification. On or before
November 18, 1969, Jackson advised the Regional Office
for the first time that Golden State had sold and transferred
its business to All American in 1968. Nevertheless, on
November 19 Jackson signed an answer to the backpay
specification on behalf of "Golden State doing business as
Pepsi Cola Bottling Company of Sacramento," also alleging
that Golden State so doing business had on December 11,
1968, offered reinstatement to Baker, which answer Crofoot
verified as president of Golden State "doing business as
Pepsi Cola Bottling Company" before a notary public on
1019
November 24, 1969, and which was filed with the Regional
Office on November 25. Thereafter the Regional Director
withdrew the previous backpay specification and issued a
supplemental backpay specification and notice of hearing,
alleging that All American was a successor to Golden State
as a result of the transfer and sale of the assets in 1968, and
had knowledge of the pending unfair labor practice
proceedings before the transfer . On January 16, 1970,
Jackson signed an answer to the supplemental backpay
specification on behalf of both Golden State and All
American, which answer was verified on January 15, 1970,
by Schilling as manager of the Pepsi-Cola Bottling
Company of Sacramento, a division of All Amencan, and
by Crofoot as president of Golden State, but not doing
business as the Pepsi-Cola Bottling Company of Sacramen-
to. Respondents' answer alleged that neither Respondent
was liable for Baker's reinstatement and backpay after
January 31, 1968, because of the bona fide sale and transfer
by Golden State to All American on that date. The answer
did not allege that either Respondent offered Baker
reinstatement, but Respondents' brief contends that the
letter sent by Schilling to Baker on December 11, 1968,
constituted an offer of reinstatement , without identifying
by whom.
C. The Liability of All American as a Successor
The record establishes and there is no dispute that All
American was a bona fide purchaser for value unconnected
with Golden State, in no sense an alter ego or participant in
any plan or device to evade the Board's Order. Despite the
pleadings, there was no substantial dispute and the record
establishes that All American was a successor employer
within the meaning of the Act. The well-established
applicable criterion is whether or not the "employing
industry" remains substantially the same . The transferred
business was continued substantially unchanged without
interruption, the only variance being that the three top
corporate officers of Golden State, two of whom owned all
of its stock, no longer continued with the operation in such
capacity, although each agreed not to compete and to
remain as a consultant for 10 years for a substantial
consideration set forth in the sale contract. Schilling, who
was the secretary of Golden State and general manager of
the bottling company, became general manager and
"president" of the bottling company, a division of All
American, but not an officer of All American. All of the
other managerial and supervisory personnel continued with
All American. All but two or three of the approximately 50
employees were transferred to and retained by All
American. All of the 12 distributors who handled the
products under contract continued with All American. The
product remained the same , the customers remained the
same and there was no cessation or change in the method of
operation of the plant. Thus the record establishes and I
find that the employing industry remained substantially
unchanged and that All American was a successor within
the meaning of the Act.
It has long been established that such a successor is
required to bargain with the labor organization which
represents the employees of the predecessor, and the Board
has recently held that such a successor is required to honor
1020 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the collective-bargaining contract entered into between its
predecessor and a labor organization .4 With respect to the
liability of such a successor for a predecessor's unfair labor
practices , particularly for reinstatement and backpay of
discriminatees , it is now established that such a successor,
who acquires with knowledge of the pendency of unfair
labor practice proceedings against the precedessor , is liable
for reinstatement and jointly and severally liable with its
predecessor for backpay .5 Respondents incorrectly con-
tend , based on earlier decisions6 of the Board since
expressly overruled by it,7 that a bona fide purchaser for
value, despite knowledge by it, a successor , of the pendency
of unfair labor practice proceedings against the seller, is not
liable and that the sale terminates all liability of both for
reinstatement and backpay thereafter.
In Perma Vinyl, supra, involving a bona fide purchaser for
value with knowledge of the pendency of unfair labor
practice proceedings against the seller, the Board, reversing
Symns Grocer Co ., supra, and in reliance upon the teachings
of the Supreme Court in Wiley, 8 held that "one who
acquires and operates a business of an employer found
guilty of unfair labor practices in basically unchanged form
under circumstances which charge him with notice of
unfair labor practice charges against his predecessor should
be held responsible for remedying his predecessor's
unlawful conduct." The Board noted that "the imposition
of this responsibility upon even the bona fide purchaser
does not work an unfair hardship upon him . When he
substituted himself in place of the perpetrator of the unfair
labor practices , he became the beneficiary of the unremed-
ied unfair labor practices . Also, his potential liability for
remedying the unfair labor practices is a matter which can
be reflected in the price he pays for the business , or he may
secure an indemnity clause in the sales contract which will
indemnify him for liability arising from the seller's unfair
labor practices ."9 The Board further stated: "If the unfair
labor practice has been the discriminatory discharge of
employees , this responsibility should include the reinstate-
ment of the discriminatees without loss of pay." (Emphasis
supplied.)
Because that decision constituted a reversal of its prior
position , the Board did not hold the successor liable for
backpay inasmuch as that would have constituted a
retroactive application thereof , but did hold the successor
liable for reinstatement. However , the Board made clear
that in all future cases such successors would be held jointly
and severally liable with the predecessor for backpay. With
respect to the predecessor , the perpetrator of the unfair
labor practices , the Board held that "it cannot be in the
public interest to permit the violator of the Act to shed all
responsibility for remedying his own unfair labor practices
by simply disposing of the business . If he has unlawfully
discharged employees before transferring ownership to
another, he should at least be required to make whole the
dischargees for any loss of pay suffered by reason of the
discharges until such time as they secure substantially
4 William J Burns Detective Agency, Inc, 182 NLRB No 50 (1970)
5 Perma Vinyl Corporation, 164 NLRB 968 (1967), enfd sub nom US
Pipe and Foundry Co. v N L R.B, 398 F 2d 544 (C.A 5, 1968)
6 E.g, Symns Grocer Co, 109 NLRB 346 (1954), and M Eskin & Son,
148 NLRB 1022 (1964)
7 Fn. 5, supra
equivalent employment with another employer . . . the
offending employer and his successor share a joint and
several responsibility in the matter of backpay." The court
of appeals affirmed the Board's Order requiring reinstate-
ment by the successor.10 The court, while expressing some
reservations in a footnote with regard to the Board's
holding with respect to backpay, specifically did not pass
upon the liability of a successor for backpay because such
was not involved in the case , stating that such "backpay
question remains for another day."
The Board has subsequently made clear that it did not
intend in Perma Vinyl to require successors to remedy all of
the unfair labor practices of their predecessors, e.g., the
posting of cease-and-desist notices concerning unfair labor
practices engaged in by the predecessor, but that in cases of
discriminatory discharge a successor with knowledge is
liable for reinstatement and jointly and severally with the
predecessor liable for backpay.ll Because of the special
circumstances present therein, i.e., the fact that the
successor employed only 90 of the 120-130 employees of
the predecessor, making it impossible to determine whether
the discriminatees would have been among those immedi-
ately offered employment by the successor, the Board did
not hold the successor liable for backpay, but only for
subsequent reinstatement and backpay thereafter. Howev-
er, the Board made clear that, absent such special
circumstances, the rule enunciated in Perma Vinyl with
respect to the liability of a successor with knowledge for
reinstatement and backpay remained unchanged. I con-
clude and find that All American, as a successor to Golden
State with knowledge of the pendency of the unfair labor
practice proceedings against it, is liable for the reinstate-
ment of Baker and jointly and severally liable with Golden
State for backpay.
Unlike the issue of successorship, i.e., the continuity of
the employing industry, the issue of knowledge by All
American prior to the purchase of the pending unfair labor
practice proceedings against Golden State was very much
in dispute and strenuously litigated, All American contend-
ing that it had no knowledge of the unfair labor practice
proceedings pending against Golden State, including the
Order of the Board and the decision of the court. However,
none of the officers or officials of All American were called
to support this contention. According to Schilling, who was
completely familiar with the unfair labor practice proceed-
ings both before and after the transfer and in fact handled
them for Golden State as its representative on the Board of
the Sacramento Bottlers' Association, he did not participate
in the negotiations of the sale to All American and did not
convey his knowledge to All American prior to the transfer.
Of course, after the transfer his knowledge, as president and
general manager of All American's division operating
Pepsi-Cola Bottling Company of Sacramento, was imputa-
ble to his superiors in All American. According to Crofoot,
he handled all of the negotiations for the transfer with the
representatives of All American and, although specifically
B John Wiley & Son, Inc v Livingston , 376 U.S 543 (1964)
9 As found herein , Golden State through Crofoot agreed to indemnify
All American for any monetary losses as a result of this proceeding
10 Fn 5. supra
11 Thomas Engine Corporation, 179 NLRB No 165 (1969)
PEPSI -COLA BOTTLING CO. OF SACRAMENTO
asked, did not advise them of the pending unfair labor
practice proceedings allegedly because he had no knowl-
edge whatsoever thereof.
Unless otherwise corroborated or undisputed, I do not
credit the testimony of either Schilling or Crofoot. Their
willingness to sign letters and execute documents contain-
ing either false or misleading statements concealing or
failing to disclose the sale of the bottling company to All
American, including Schilling's execution of a letter and
substitution of attorneys to the court of appeals as "general
manager of Golden State Bottling Company" more than 9
months after the termination of his connection with Golden
State, his execution of a formal notice to employees, a
certificate of posting thereof with delivery to the Board and
an offer of reinstatement to Baker , as "president of Golden
State doing business as Pepsi Cola Bottling Company of
Sacramento" more than 10 months after his connection
with Golden State ceased, Crofoot's verification on
November 24, 1969, of an answer to the original
specification as "president of Golden State doing business
as the Pepsi Cola Bottling Company of Sacramento" more
than 21 months after Golden State had ceased doing
business as such, including an allegation that on December
11, 1968, Golden State had offered Baker reinstatement to
his former position, more than 10 months after Golden
State had ceased doing business as the Pepsi-Cola Bottling
Company, as well as the subsequent execution by both of
the answer on January 15, 1970, contrary to their prior
positions, casts considerable doubt upon their reliability as
witnesses. In addition, Crofoot and Schilling contradicted
each other in several material respects.
Crofoot testified that he alone handled the negotiations
for the sale with All American, that Schilling did not
participate, and that Crofoot had no recollection whatsoev-
er of the pending unfair labor practice case, although the
Board had decided the case in 1964, the court had affirmed
in 1965 , and the case represented a potential substantial
monetary liability. Crofoot further testified that, although
specifically asked by All American concerning pending
litigation , he did not inform its representatives of the
pending unfair labor practice case because he did not recall
it. Crofoot tried to bolster his position by contending that
Schilling handled all of the labor relations matters through
the Sacramento Bottling Association , yet Crofoot admitted
that he consulted with Schilling on a day-to-day basis about
all matters involving the plant , that Schilling was not
allowed to settle or dispose of legal matters without
Crofoot's approval, and that he had to approve all unusual
and excessive expenditures, which included the substantial
assessments paid by Golden State to the Bottling Associa-
tion for legal fees in connection with the unfair labor
practice proceedings.
The sale contract contained a representation and
warranty by Golden State that there were no actions , suits,
or proceedings pending against Golden State. In addition,
Crofoot subsequently orally agreed to indemnify All
American against any losses arising as a result of this
proceeding. Patently as a result of such contractual
provisions and Crofoot's contention that he did not advise
All American of the pending proceeding, Crofoot and
Schilling testified that Schilling did not participate in the
1021
negotiations and was unfamiliar with the terms of the
contract . Nevertheless , Schilling executed the contract as
secretary of Golden State, which contained a condition that
he continue in the employ of All American as general
manager for a period of at least 1 year at a monthly salary
of $1,500. Schilling admitted participating in the first
negotiating session between Golden State and All Amen-
can, and meeting on another occasion with officials of All
American concerning his continuing as general manager.
After the transfer Schilling admittedly had no authority
over legal proceedings for All American and had to consult
his superiors for authorization of any unusual expenditures.
He admitted that he would consider any action by him
contrary to such instructions a negligent undertaking of his
duties . He also admitted that after the transfer he was not
authorized in any manner to represent Golden State. Yet he
offered Baker alleged reinstatement , handled all contacts
with Golden State's attorney, made the decision not to
settle the backpay proceeding, involving at that time a
claim in excess of $19,000, sent a substitution of attorneys
to the court , and issued the notices required by the court's
decree all in the name of Golden State and all allegedly
without ever advising All American of the pendency of
these proceedings until a few days before the commence-
ment of the hearings herein.
Patently, absent an establishable admission , only Golden
State and/or All American would have knowledge whether
All American knew of the pending unfair labor practice
proceedings against Golden State prior to the transfer. No
officials of All American were called to testify or deny that
All American had such knowledge, nor was their failure to
testify explained , which warrants an inference that had
such testimony been elicited it would have been unfavora-
ble to Respondents ' position . Under all of the circum-
stances , I do not credit the testimony of Crofoot and
Schilling that neither advised All American of the pending
unfair labor practice proceedings prior to the transfer and
sale. Moreover, such testimony tends only to establish a
negative , and casts no light on whether All American
received such information from other sources , including
other officials of Golden State. A preponderance of the
reliable , probative , and substantial evidence in the entire
record convinces me, and I find, that All American was a
successor employer with knowledge at or before the time of
the transfer of the pending unfair labor practice proceed-
ings against Golden State , and accordingly is liable for
Baker's reinstatement and is jointly and severally liable
with Golden State for Baker's backpay.
D. Whether Baker is Entitled to Reinstatement as
a Distributor
The record establishes that Baker , who was discnminato-
nly discharged August 16, 1963, was Golden State's leading
or top driver-salesman during the 14 months of his
employment . All of the parties agree upon the computation
of his gross backpay until October 1, 1964, based upon the
fixed wages paid driver-salesmen, plus a computation of his
commissions determined by multiplying the average
commissions for that period by Baker's ratio or percentage
of the average case sales of all of the drivers during his
employment . On October 1, 1964, Respondent began
1022 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
converting its driver-salesmen to distributors, or independ-
ent contractors, by offering each of them, particularly those
with the best sales records, contracts as distributors, or
independent contractors, under the terms of which they
realized net profits, after the deduction of their operating
expenses , from the purchase of the products from Golden
State and the resale to customers, as distinguished from the
salary and commission previously paid them as driver-
salesmen . In general , Golden State sold the distributors
Pepsi Cola at a discount of 30 cents a case from the price at
which they resold to the customers. Under this program
Respondent enlarged the previous routes of the salesman
by the addition of several high-volume stops, so that as
distributors they could expect to realize greater net profits
than their previous earnings as driver-salesmen , with the
additional objective of an added incentive to increase their
overall sales in order to increase their net income.
On October 1, 1964, Respondent selected Donald
Thorne, who was then its best driver-salesman and had
been third while Baker was employed, as the first driver-
salesman to become a distributor. After a short period of
experimentation with Thorne, at a meeting in early October
1964 Schilling announced to the rest of the driver- salesmen
Golden State's planned program of distributorships,
advising them that each could convert to a distributorship if
he wished and if not could remain as driver- salesman, that
the distributor's route's would be somewhat expanded by
the addition of several high-volume stops, that as
distributors they could expect to earn more money than
they had as driver-salesmen, and that each would have first
refusal of his then route. Schilling informed the men that
the larger volume routes would gradually be converted to
distributorships and those who desired to remain driver-
salesmen would be assigned low-volume city routes.
Schilling invited each of the drivers to consult him after the
meeting with respect to whether or not each wished to enter
into a contract as a distributor under the proposal. During
October three drivers in addition to Thorne were converted
to distributors, two more during November 1964, and two
more in January 1965. The second driver to become a
distributor in October was Leonard Willeford, who had
been assigned Baker 's route after his discharge. The record
establishes that Willeford was not as well qualified a driver-
salesman as Baker. Substantially all of the driver-salesmen
who became distributors retained the same routes, with
several stops added to bolster volume.
Schilling, in an attempt to bolster Respondents' conten-
tion that Baker would not have been offered a distributor-
ship, testified that Golden State did not offer all of the
driver-salesmen distributorships, but the driver-salesmen
called as witnesses , whom I credit, testified, and I find, that
Golden State offered all of the driver-salesmen an
opportunity to convert to distributors if they so desired.
Golden State was particularly interested in converting its
large-volume routes and top driver-salesmen , of which
Baker was number one while employed, to distributors.
Golden State ultimately increased the number of its
distributors to 12 before the sale to All American. All 12
12 International Union of Operating Engineers, Local 925 (J L Mania
Inc), 180 NLRB No 117 (1970); Mooney Aircraft, Inc, 156 NLRB 326,
enfd 375 F.2d 402 (C A 5, 1967); Gainsville Publishing Company, ISO
assigned their contracts to All American and were
continued by it as distributors. Schilling, whom I do not
credit, testified that he would not have offered Baker a
distributorship because he required constant supervision
and thus could not have operated independently. Schilling's
testimony with respect to Baker's qualifications contains
several contradictions and evasions, and it must be recalled
that it was Schilling who discriminatorily discharged Baker
in 1963. Only 1 week before Baker's discharge Schilling had
informed him that he was a good employee doing a good
job. Schilling also told Willeford that Baker had done a
good job. Golden State's own records establish that Baker
was its top driver-salesman. Quite clearly the same qualities
which made Baker Golden State's top driver-salesman
would have been enhanced by the added incentive of
increased profits as a result of conversion to a distributor.
The record establishes, and I find, that Baker, if he had not
been discriminatorily discharged, would have been the first
driver-salesman offered a distributorship instead of
Thorne, who succeeded Baker as Golden State's number
one driver-salesman . In addition, Willeford, who succeeded
Baker on his route and was not as good a driver -salesman
as Baker , was the second employee given a distributorship
in early October 1964. Baker testified, and it was
undisputed, that he would have then accepted, and would
now accept, a distributorship if offered.
Respondents contend that because their distributors are
independent contractors, not employees, Baker is not
entitled to reinstatement as a distributor under the Board's
Order, but only to the job of a driver-salesman which he
held at the time of his discharge. Respondents fail to
distinguish the Board' s remedial powers from protection of
employees under the Act. As the General Counsel
concedes, if Baker had been "discharged" while an
independent contractor, clearly such discharge would not
fall within the purview of the Act. However, it is well settled
that employees who are unlawfully discharged are entitled
to whatever promotions, increments, and other benefits
they would have received absent such unlawful discrimina-
tion, and that the Board is empowered to make such
employees whole by ordering their "reinstatement" to that
which they would have had but for the unlawful
discrimination.12
The General Counsel also contends that Respondents'
distributors were not in fact independent contractors,
basing his argument on the well-established degree or right-
of-control test. However, it is unnecessary to resolve this
factually involved issue inasmuch as it is well established
that the Board's remedial powers include authority to
require a discriminatee's reinstatement to that which he
would have had but for the discrimination. I am satisfied
and find that under the Board's Order Baker is entitled to
"reinstatement" as a distributor, an improved position
which he would have had but for Golden State's
discrimination against him.
E. Method of Backpay Computation
It has been found that but for his discharge Baker would
NLRB 602 (1964), and East Texas Steel Casting Company, Inc, 116 NLRB
1336, enfd 255 F 2d 284 (C A 5, 1958)
PEPSI -COLA BOTTLING CO. OF SACRAMENTO 1023
have become a distributor on October 1, 1964. The parties
are in agreement with respect to the computation of Baker's
gross backpay until that date. The General Counsel
contends that the most accurate and appropriate method
available to compute Baker 's gross backpay as a distributor
after October 1, 1964, is by the use of the net profits, or
earnings , of Thorne, the distributor most comparable to
Baker. As found above , during Baker 's employment he was
the top salesman and Thorne ranked third. During the 14
months from July 1962 through August 1963, the records of
case sales in evidence show that in monthly sales Baker
ranked 1st four times, 2nd five times, and 3rd five times,
whereas Thorne's rankings varied from 1st to 10th. In
overall sales Baker ranked first and Thorne third. If
anything, as the General Counsel points out, the use of
Thorne's net profits as the basis for computing Baker's
gross backpay is more of a detriment to Baker than to
Respondents , inasmuch as during Baker 's tenure the ratio
of his case sales to that of the average exceeded Thorne's
ratio.
Respondents , assuming but not conceding that Baker
would have become a distributor , contend that his gross
backpay should be computed by multiplying the ratio of his
sales while employed to the average (as to which the parties
are in agreement), by the average case sales of all of the
salesmen and distributors during the relevant period, to
determine his estimated case sales as a distributor, and in
turn multiplying that by the average net profit per case of
the five top distributors during 1968. Coincidentally or
otherwise, the average net profit of the five top distributors
during 1968 was substantially less than such average during
1965, 1966 , or 1967. Because of Respondents' contention
that the sale of the bottling business to All American
terminated all liability of both Respondents for reinstate-
ment and backpay, Respondents' alternative computations
did not proceed beyond January 31, 1968, the date of the
sale.
It is well established that the use of a comparable
employee 's earnings as a basis for computing a discrimina-
tee's gross backpay is appropriate, particularly where it
demonstrably results in no monetary detriment to a
respondent. Here the use of Thorne's net profits as the
distributor most nearly comparable to Baker results in a
built-in bias in favor of Respondents because of Baker's
undisputed superior sales record. The record establishes, as
computed by Respondents and subsequently accepted by
the General Counsel, that the ratio of Baker's case sales
while employed to the mean case sales per man was 125.6
percent. An independent computation by me from the
figures available in the record reveals that Thorne's ratio to
the mean for the same period of time was 117.1 percent.
Respondents ' computation of Baker 's estimated case sales,
plus calendar 1968 which was computed by me because of
Respondents' failure to do so, both based on the average
13 The 1968 average net profit per case used by Respondents was
$ 1837. Independent calculations reveal that the average net profit per case
of the top five distributors from 1965 through 1968 was $ 2057 , and that
Thorne 's average net profit per case for the same 4 years was $ 2112 Other
calculations reveal that, coincidentally , the average case sales for the top
five distributors during the fourth quarter of 1964 and the same 4 years are
substantially the same as the average of all case sales multiplied by Baker's
established ratio, the formula employed by Respondents Except for 1966
case sales per quarter for the relevant period multiplied by
Baker's established ratio , result in estimated case sales by
Baker substantially below those made by Thorne during the
same relevant period , with the exception of 1966 and 1967.
In addition, Respondents use of the average net profit per
case of the five top distributors for the year 1968,
substantially the lowest of the 4 years involved, caused an
even greater disparity in Baker's estimated profits vis-a-vis
Thorne's net profits.13
Respondents suggest no reason why Baker's estimated
gross backpay should be based on the average of all case
sales by driver-salesmen and distributors, increased by
Baker's prior ratio, multiplied by the average net profit of
the top five distributors during 1968, instead of the sales
and net profits of Thorne, admittedly the top salesman and
distributor after Baker's discharge. As noted above, even
the use of Thorne 's net profits to calculate Baker 's gross
backpay results in some bias in favor of Respondents, and
the use of their formula would substantially increase such
distortion in their favor . I am satisfied and find that the use
of Thorne's net profits as a method of calculating Baker's
gross backpay after October 1, 1964, was both appropriate
and reasonable, and the most accurate method available
short of involved calculations to eliminate the slight bias
favoring Respondents. 14
F. Respondents' Alleged Offer of Reinstatement
Respondents ' answer to the supplemental specification,
prepared by the same attorney and verified by the same
officer of Golden State as its original answer, did not allege
that either Respondent had offered Baker reinstatement,
unlike Golden State 's answer to the original specification,
which alleged that it had offered Baker reinstatement to his
former position on December 11, 1968. Despite the failure
of Respondents ' answer to so allege , Respondents contend
in their brief that on December 11, 1968, Baker was offered
reinstatement to his former position as a driver -salesman.
Respondents ' beef refrains from indicating whether such
offer was made by Golden State or All American. As
hereinabove found, pursuant to the court decree and the
subsequent request of the Regional Director, on December
11, 1968, Schilling posted the required notice and sent the
Board a certificate of such posting, both signed by him as
the "president of Golden State," and the same day, as also
required by the court decree, sent Baker an offer of
reinstatement to his former job as a route driver, again
signing as "president" of the Pepsi Cola Bottling Company,
with copies to Jackson and the Board. Schilling admitted,
and it is undisputed, that his connection with Golden State
had terminated more than 10 months previously, and that
he had no authority whatsoever to represent Golden State
thereafter.
The record establishes beyond dispute, Schilling admit-
ted, and Respondents' brief in effect contends, that he
and 1967, they too are substantially below Thorne 's case sales for the same
period of time The use of such estimated case sales plus the use of either
lower average net profit per case would result in substantially lower gross
backpay than that based on Thorne's net profits
14 It could, for example , be argued that Thorne 's net profits should be
multiplied by 107 2 percent, Baker's prior ratio of sales expressed as a
percentage of Thorne 's prior ratio of sales
1024 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
made this "offer" on behalf of Golden State Clearly such
offer was ultra vires, void and a nullity. Not only did
Schilling have no such authority, but Golden State had no
such job, having sold the bottling business on January 31,
1968. Schilling signed and sent to the Board all of the
contemporary documents required by the decree as the
"president" of Golden State.15
Moreover, the General Counsel contends that such
"offer" was not in compliance with the Board's Order,
inasmuch as Baker was entitled to "reinstatement" as a
distributor, the position which he would have had but for
Golden State's discrimination, the "offer" was only for a
job as driver-salesman, would not make Baker whole, and
thus was invalid. I have found hereinabove that under the
Board's Order Baker was entitled to "reinstatement" as a
distributor, for the reasons there explicated. I conclude and
find that Baker was never given a valid offer of
reinstatement to the position which he would have had but
for the discrimination, and accordingly that liability for
backpay continues to run.
G. Backpay Calculations
As hereinabove found, there was no dispute with respect
to the computation of Baker's gross backpay until October
1, 1964, when it has been found he would have become a
distributor. The General Counsel substituted Respondents'
Exhibit A for his Appendix A of the specification and thus
the parties agreed that the ratio of Baker's case sales to the
overall mean was 125.6 percent, which ratio was used by all
to compute the commissions Baker would have earned as a
driver-salesman until October 1, 1964, the base pay of
driver-salesmen being undisputed. General Counsel's
Exhibit 2, received in substitution for Appendix B of the
specification, calculated Baker's quarterly gross backpay
from August 24, 1963,16 through the third quarter of 1964
upon such basis, agreed to by Respondents with the
correction of a minor error of $5 in the calculation of the
first partial quarter, as the result of failing to prorate the
allowance for uniforms for such partial quarter. Thus the
parties agreed that Baker's total gross backpay as corrected
for the period ending with the third quarter of 1964 was
$7,208.
Beginning with the fourth quarter of 1964, it has been
found that an appropriate method of projecting Baker's
gross backpay consisted of Thorne's net profits, which are
available in the record through 1968. Respondents'
calculations after the third quarter of 1964 do not
correspond with those of the General Counsel, because of
their contention, heretofore considered and found without
merit, that if Baker would have become a distributor his
gross backpay should be computed upon the average case
15 If, on the other hand, it be contended that Schilling signed on behalf
of All American, contrary to the facts and from which Respondents' brief
refrains, the notice and letter constituted a public admission that All
American would offer Baker full reinstatement and make him whole for
sales multiplied by his ratio of sales prior to his discharge.
General Counsel's Exhibit 3, substituted for Appendix C-1
of the specifications, calculates Baker's gross backpay from
the fourth quarter of 1964 to and including the fourth
quarter of 1968. With respect to the fourth quarter of 1964,
Respondents stipulated that Thorne's net profits, set forth
in General Counsel's Exhibit 3 as Baker's gross backpay for
that period, were accurately derived from Thorne's Federal
tax returns, without conceding their position with respect to
the use of Thorne's net profits in calculating Baker's gross
backpay. The accuracy of the calculations set forth in
General Counsel's Exhibit 3 are not challenged or disputed
and result in gross backpay total from the fourth quarter of
1964 through 1968 of $52,285.
Appendix D of the specification calculates Baker's net
interim earnings, i.e., his interim earnings less necessary
expenses incurred in obtaining and retaining interim
employment, from the third quarter of 1963 through the
second quarter of 1969. The accuracy of such calculation is
undisputed. General Counsel's Exhibit 4, received in
substitution for Appendix E-1, calculates the resulting net
backpay from the third quarter of 1963 through 1968 by
subtracting the net interim earnings from the gross
backpay, resulting in a net backpay total of $16,497 (with
the correction of the minor error in the calculation of gross
backpay for the third quarter of 1963). The accuracy of
these calculations is not challenged. Because of the
unavailability at the time of the hearing of Thorne's net
profits for calendar 1969, the supplemental specification
estimated Thorne's net profits for the first two quarters of
1969 in order to estimate Baker' s gross and net backpay for
the same period of time, his net interim earnings being
available in Appendix D. Inasmuch as it has been found
above that Baker has not been offered reinstatement as
required by the Board's Order, and that backpay continues
to run until such offer has been made, it will be necessary
hereafter to calculate Baker's net backpay for all of 1969
and whatever subsequent period in 1970 and thereafter may
run until Respondents comply with the Board's Order.
Accordingly it would appear unnecessary and inappro-
priate at this time to base Baker's gross and net backpay for
the first two quarters of 1969 upon estimates derived from
averaging Thorne's net profits for the corresponding
quarters of 1965 through 1968. The calculations so
estimating Baker's gross and net backpay are set forth in
General Counsel's Exhibit 24 and 25, received in substitu-
tion for Appendixes C-I and E-2. Admittedly they result in
an estimate. Inasmuch as it will be necessary hereafter to
calculate backpay until Baker is offered reinstatement, I
find it appropriate to defer such calculations until Thorne's
actual net profits are available, and accordingly terminate
the calculation of interim backpay herein with the last
quarter of 1968.
any loss of pay
16 Because Baker, terminated August 16, 1963, was given I week's
vacation pay
PEPSI-COLA BOTTLING CO OF SACRAMENTO 1025
The following tabulation summarizes the above calcula-
tions
Calendar
Quarter
Gross
Backpay
Net Interim
Earnings
Net
Backpay
1963-3 673 659 14
1963-4 1602 1630
1964-1 1582 1526 56
1964-2 1629 1619 10
1964-3 1722 1635 87
1964-4 2700 2101 599
1965-1 2412 1586 826
1965-2 2927 1621 1306
1965-3 3269 2056 1213
1965-4 2824 2096 728
1966-1 2838 1660 1178
1966-2 3201 1800 1401
1966-3 3359 2388 971
1966-4 2728 2280 448
1967-1 2708 1755 953
1967-2 3027 2015 1012
1967-3 3406 2087 1319
1967-4 2685 2512 173
1968-1 3081 2080 1001
1968-2 3891 2450 1441
1968-3 4076 2551 1525
1968-4 3153 2917 236
TOTAL NET BACKPAY 16,497
H. Conclusions and Recommendations
It is concluded and found that the net amount of backpay
due to Baker for the period from the date of his discharge,
August 16, 1963, to December 31, 1968, is $16,497, plus
interest at the rate of 6 percent per annum on each
quarterly amount as provided in the Board Order and court
decree, less any tax withholding required by law, plus such
further amounts of backpay as have or may hereafter
accrue from January 1, 1969, to the date of a valid offer of
reinstatement to Baker by All American.17
Upon the basis of the foregoing findings and conclusions
and upon the entire record in this case, I recommend that
the Board issue the following:
ORDER
Respondent Golden State Bottling Company, Inc. d/b/a
Pepsi-Cola Bottling Company of Sacramento and Respon-
dent All American Beverages, Inc. d/b/a Pepsi-Cola
Bottling Co. of Sacramento, and their officers, agents,
successors, and assigns, shall jointly or severally pay to
Kenneth L. Baker the sum of $16,497, with interest at the
rate of 6 percent per annum computed on the basis of the
quarterly amounts of net backpay due, less any tax
17 Tennessee Packers, Inc, 158 NLRB 1316 (1968)
1026 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
withholding required by law, as net backpay due under the reinstatement to Baker, plus interest at the rate of 6 percent
Board Order and court decree for the period ending per annum computed in the manner provided herein, less
December 31, 1968, plus an undetermined amount of any tax withholding required by law.
backpay from January 1, 1969, to the date of a valid offer of