Pierre Pellaton Enterprises, Inc.

National Labor Relations Board - Board Decisions

Jan 23, 1976

222 N.L.R.B. 555 (N.L.R.B. 1976)

PIERRE PELLATON ENTERPRISES, INC.
Pierre Pellaton Enterprises , Inc.; Pierre Pellaton
Apartments at Mineola , Inc.; Pierre Pellaton Apart-
ments , Inc.; Pierre Pellaton at Clinton Avenue,
Inc.; Fardale Apartments Corp.; Pierre Pellaton, an
Individual , and Estate of Pierre Pellaton ; and Mi-
chael Kluger , Fred Seidenfeld and Aaron Sokol, a
co-partnership doing business as S.K .S. Associates
and Local 307, Service Employees International.
Union, AFL-CIO. Case 29-CA-2670
January 23, 1976
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN MURPHY AND MEMBERS FANNING
AND WALTHER
On January 24, 1973, the National Labor Rela-
tions Board issued its Decision and Order in the
above-entitled proceeding,' directing the Respon-
dent, Pierre Pellaton Enterprises, Inc., its officers,
agents, successors, and assigns, inter alia, to offer
four employees reinstatement and to make them
whole for their losses resulting from the unfair labor
practices found to have been committed by Pierre
Pellaton Enterprises, Inc., in violation of Section
8(a)(1) and (3) of the National Labor Relations Act,
as amended. Thereafter on January 15, 1974, the
Board's Order was enforced by the United States
Court of Appeals for the Second Circuit by default
judgment.
Pursuant to an amended backpay specification
and appropriate notice issued by the Regional Direc-
tor for Region 29, a hearing was held on January
21-24, 1975, before Administrative Law Judge Max
Rosenberg, for the purpose of determining the back-
pay due the discriminatees.
On May 30, 1975, the Administrative Law Judge
issued the attached Supplemental Decision. Thereaf-
ter, Respondent S.K.S. Associates filed exceptions
and a brief in support thereof. The General Counsel
filed a brief in support of the Supplemental Decision
of the Administrative Law Judge.
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 Supplemental Decision in light of the excep-
tions and briefs and has decided to affirm the rulings,
findings,' and conclusions of the Administrative Law
Judge, and to adopt the Supplemental Order.'
201 NLRB 409 (1973).
2 The Respondent has excepted to certain credibility findings made by the
Administrative Law Judge . It is the Board 's established policy not to over-
ORDER
555
Respondent Michael Kluger , Fred Seidenfeld and
Aaron Sokol , a co-partnership doing business as
S.K.S. Associates , Great Neck , New York, its agents,
successors , and assigns , shall pay to William Black-
man, Donald McCullough , Bernard Short , and Ru-
fus P . Short , the amounts specified in the Backpay
Specification , as amended , plus interest thereon at
the rate of 6 percent per annum , calculated in the
manner set forth in Local 138, International Union of
Operating Engineers, AFL-CIO, et al. (Nassau and
Suffolk Contractors ' Association, Inc.) 151 NLRB 972
(1965), less any lawfully required tax withholding,
and such additional backpay and interest as shall ac-
crue because of the continued failure and refusal of
Respondent to make valid offers of reinstatement to
the discriminatees.
rule an Administrative Law Judge 's resolutions with respect to credibility
unless the clear preponderance of all of the relevant evidence convinces us
that the resolutions are incorrect . Standard Dry Wall Products, Inc., 91
NLRB 544 ( 1950), enfd. 188 F.2d 362 (C.A. 3, 1951). We have carefully
examined the record and find no basis for reversing his findings.
3 S.K.S. Associates contends that it was improper for the General Counsel
to settle with the Pellaton parties. Inasmuch as the settlement agreement is
not before us , we express no opinion as to the propriety of the General
Counsel's action in settling with the Pellatan parties or the acceptability of
the terms of that agreement . Furthermore , inasmuch as the Pellaton parties
are not before us, our decision herein is limited to a resolution of the issue
of S.K .S.' liability. Our decision, therefore , is not to be construed as a find-
ing or a determination that the Pellaton parties are absolved from primary
responsibility for making whole the discriminatees for any losses they may
have sustained following S.K.S. Associates ' successorship . See, e .g., Golden
State Bottling Co., Inc. v. N.L.R. B., 414 U . S. 168 (1973 ); Perma Vinyl Corpo-
ration, et al., 164 NLRB 968 (1967 ). Member Fanning does not join in the
the above and would affirm the Administrative Law Judge without addi-
tional comment.
SUPPLEMENTAL DECISION
MAx ROSENBERG, Administrative Law Judge: With All
parties represented, this proceeding was heard before me in
Brooklyn, New York, on January 21, 22, 23, and 24, 1975,
on an amended Backpay Specification filed by the General
Counsel of the National Labor Relations Board and an
answer filed thereto by Pierre Pellaton Enterprises, Inc.;
Pierre Pellaton Apartments at Mineola, Inc.; Pierre Pella-
ton Apartments, Inc; Pierre Pellaton Apartments at Clin-
ton Avenue, Inc.; Fardale Apartments Corp.; Pierre Pella-
ton, an Individual, and Estate of Pierre Pellaton, herein
called Pellaton Enterprises, and Michael Kluger, Fred
Seidenfeld and Aaron Sokol, a co-partnership doing
business as S.K.S. Associates, herein called S.K.S. or the
Respondent. This backpay litigation finds its origin in a
222 NLRB No. 88
556 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Board Decision and Order rendered on January 24, 1973,1
which directed Pellaton Enterprises to compensate Donald
McCullough, William Blackman, Bernard Short, and Ru-
fus P. Short for any loss of pay which they may have suf-
fered as a result of Pellaton Enterprises' discrimination
practiced against them in violation of Section 8(a)(3) of the
National Labor Relations Act, as amended. Thereafter, on
January 29, 1974, the United States Court of Appeals for
the Second Circuit entered a decree enforcing the backpay
provision of the Board's Order.
Following the court's decree, a controversy arose over
the amount of backpay owed to the discriminatees. In con-
sequence of the dispute, the Regional Director for Region
29 issued his amended backpay specification and notice of
hearing on October 23, 1974. Pellaton Enterprises and Re-
spondent interposed their answers to the foregoing affirma-
tive pleadings.
Prior to the opening of the hearing, and on January 21,
1975, Pellaton Enterprises entered into a settlement stipu-
lation with the General Counsel and the Charging Party,
Local 307, Service Employees International Union, AFL-
CIO, herein called the Union, pursuant to which it fulfilled
its backpay liability to the discriminatees from the com-
mencement of the backpay periods until September 15,
1972, the date on which Pellaton Enterprises sold the
above-mentioned properties to Respondent, by the pay-
ment of the following sums to the claimants:
William Blackman $2,696
Donald McCullough 3,934
Bernard Short 1,443
Rufus P. Short 3,927
Accordingly, when the hearing commenced on January 21,
1975, only S.K.S. was before the bar, and only two issues
remained for consideration, namely, whether S.K.S. was a
bona fide successor to Pellaton Enterprises which should
be held responsible for remedying the unlawful conduct of
its predecessor, by reinstating the discrimmatees, and mak-
ing them whole for any loss of pay since the date it suc-
ceeded to Pellaton Enterprises' business, and, whether cer-
tain of the General Counsel's calculations of backpay were
appropriately made. I turn next to a consideration of these
issues.
A. Successorship
In Perma Vinyl Corporation,2 the Board, with court ap-
proval, set forth its policy regarding the responsibility of a
successor to remedy the unfair labor practices of its prede-
cessor, and announced the reasons therefor. Thus, the
Board stated that:
To further the public interest involved in effectuating
the policies of the Act and achieve the "objectives of
national labor policy, reflected in established princi-
ples of federal law," we are persuaded 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 no-
tice of unfair labor practice charges against his prede-
'201 NLRB 409 (1973).
2 164 NLRB 968, 969 (1967), sub nom , United States Pipe and Foundry
Company, enfd. 398 F.2d 544 (C.A. 5, 1968)
cessor should be held responsible for remedying his
predecessor's unlawful conduct.
In imposing this responsibility upon a bona fide
purchaser, we are not unmindful of the fact that he
was not a party to the unfair labor practices and con-
tinues to operate the business without any connection
with his predecessor. However, in balancing the equi-
ties involved there are other significant factors which
must be taken into account. Thus, "It is the employing
industry that is sought to be regulated and brought
within the corrective and remedial provisions of the
Act in the interest of industrial peace." When a new
employer is substituted in the employing industry
there has been no real change in the employing indus-
try insofar as the victims of past unfair labor practices
are concerned, or the need for remedying those unfair
labor practices. Appropriate steps must still be taken if
the effects of the unfair labor practices are to be er-
ased and all employees reassured of their statutory
rights. And it is the successor who has taken over con-
trol of the business who is generally in the best posi-
tion to remedy such unfair labor practices most effec-
tively. The imposition of this responsibility upon even
the bona fide purchaser does not work an unfair hard-
ship upon him. When he substituted himself in place
of the perpetrator of the unfair labor practices, he be-
came the beneficiary of the unremedied 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.
On August 25, 1972,3 Administrative Law Judge Lloyd
Buchanan issued the initial decision in this proceeding in
which he found that Pellaton Enterprises had discriminato-
rily discharged William Blackman, Donald McCullough,
Bernard Short, and Rufus P. Short. He therefore ordered
that Pellaton Enterprises make them whole for any loss of
pay sustained by reason of the discrimination practiced
against them, and to offer them immediate and full rein-
statement to their former positions or, if those positions no
longer existed, to substantially equivalent positions, with-
out prejudice to their seniority or other rights and privi-
leges. William H. Burke, the general organizer and secre-
tary for the Union, received a copy of Judge Buchanan's
decision about a day or two following its rendition. Burke
testified credibly and I find that, having learned that S.K.S.
was one of the potential buyers of Pellaton's apartment
houses, he telephoned Aaron Sokol, a partner in S.K.S., on
or about August 27, and informed the latter that the Union
had won the pending unfair labor practice case against
Pellaton Enterprises; that Judge Buchanan' s decision or-
dered that Blackman, McCullough, Bernard Short, and
Rufus P. Short be awarded backpay and reinstated; and,
that Pellaton Enterprises bargain with the Union. Burke
added that, in the event S.K.S. acquired the properties of
Pellaton Enterprises, S.K.S. might be liable for remedying
Pellaton Enterprises' unfair labor practices. Sokol re-
sponded that he had been working on a clause in the con-
s Unless otherwise indicated, all dates herein fall in i972
PIERRE PELLATON ENTERPRISES, INC.
templated purchase contract with Pellaton Enterprises
which would hold S.K.S. harmless for any liability which
the former company may have incurred under the Act.
Burke further credibly testified and I find that, on Sep-
tember 7 or 8, he again telephoned Sokol and once more
advised of the Administrative Law Judge's decision, even
reading portions of it to Sokol. Sokol replied that he did
not believe S.K.S. would be responsible for Pellaton Enter-
prises' illegal labor acts in the event he purchased its apart-
ment houses, and remarked that he had decided to refrain
from any discussions with the Union concerning the dis-
criminatees or from negotiating with the Union.
On September 7, S.K.S. and Pellaton Enterprises execu-
ted a purchase agreement pursuant to which S.K.S. bought
the apartment buildings here involved, with a closing date
set for September 15. On September 12, pursuant to
Burke's instructions,- the Union's attorney wrote to Ber-
nard Langweiler, S.K.S.'s counsel, informing the latter of
the terms of Administrative Law Judge Buchanan's deci-
sion and requesting that Langweiler contact the Union's
law firm to discuss those terms. The letter was received by
Langweiler on September 13, 1972.4
At the closing on September 15, Sokol and his counsel
sought to obtain a clause in the purchase agreement pur-
suant to which Pellaton Enterprises would shoulder the
burden of liability after that date for its antecedent unfair
labor practices. However, the representatives of Pellaton
Enterprises demurred at this request and, because S.K.S.
would lose a large money deposit if it failed to sign the
contract and because Sokol believed that he had arrived at
a good business deal, he decided legally to close on the
agreement. Thereafter, in the belief that it had no responsi-
bility to rectify the unfair labor practices committed by
Pellaton Enterprises, S.K.S. declined to reinstate the dis-
criminatees or bargain with the Union following Septem-
ber 15.
Accordingly, I find and conclude that S.K.S. acquired
the properties of Pellaton Enterprises on September 15
with full prior knowledge that the seller had previously en-
gaged in unremedied unfair labor practices.
Moreover, I am convinced and find that, with the
change in ownership which occurred on September 15, no
concomitant change in the "employing industry" by S.K.
S.'s acquisition of Pellaton Enterprise's properties resulted.
Sokol testified that it was the policy of S.K.S. that, when it
acquired additional rental properties, "The usual thing is,
when you're taking over a building, you are not making
changes right away." Thus, Sokol retained the building su-
perintendents who had been employed by Pellaton Enter-
prises, and hired two employees of Pellaton Enterprises.
4 In his testimony, Sokol claimed that he first became aware that Pellaton
Enterprises had committed violations of the Act on either September 20 or
22, almost a week after S K.S. acquired the apartment houses I credit
Burke's contrary testimony, not only because he impressed me as a sincere
and forthright witness, but also because I deem it implausible that Sokol's
attorney would have failed to apprise him of the letter from the Union
which his attorney received on September 13, 2 days prior to the closing
557
Hence, it is not unreasonable to assume that, had the dis-
criminatees been working for Pellaton Enterprises on Sep-
tember 15 when S.K.S. acquired the apartment houses,
they would have been retained by S.K.S. While it is true
that S.K.S. instituted changes regarding the duties and re-
sponsibilities of the superintendents, and increased the
centralization of its business operations at the four loca-
tions, I am not persuaded that these alterations in operat-
ing procedure changed the essential character of the "em-
ploying industry" in any significant respect.
In short, I find and conclude that, on and after Septem-
ber 15, S.K.S. became a bona fide successor to Pellaton
Industries and, as such, became responsible for remedying
the unfair labor practices committed by Pellaton Industries
which persisted after that date, under the teachings of Per-
ma Vinyl Corporation.'
B. Backpay Calculations
Respondent, at the hearing, had no substantial quarrel
with the backpay calculations set forth in the Backpay
Specification .6 It did, however, protest the award of mone-
tary amounts for rentals of apartments and the services of
laundry, although Respondent agreed as to the value of the
laundry offered to the men in the past. However, Respon-
dent adduced no testimony relating to whether or not it
provided laundry services to its employees. Moreover, with
respect to the sum of $400 per month which the General
Counsel claimed as the appropriate amount paid to em-
ployees for rentals of apartments, this figure was obtained
from Respondent's complaint in a local suit which was
brought to evict the superintendents from their quarters in
Respondent's buildings. Accordingly, I adopt the backpay
calculations contained in the Backpay Specification.
ORDER?
Having found and concluded that Respondent, S.K.S.
Associates, Great Neck, New York, became the bona fide
successor to Pellaton Enterprises on September 15, I shall
order that it pay to William Blackman, Donald McCul-
lough, Bernard Short, and Rufus P. Short, the amount
specified in the Backpay Specification, as amended, plus
interest thereon at the rate of 6 percent per annum, calcu-
lated in the manner set forth in Local 138, International
Union of Operating Engineers, AFL-CIO, et al, 151 NLRB
972 (1965), less any lawfully required tax withholding, and
such additional backpay and interest as shall accrue be-
cause of the continued failure and refusal of Respondent to
make valid offers of reinstatement to the discriminatees.
5 See In , 4 supra
6 In its brief, Respondent failed to take issue with the propriety of any of
the General Counsel's calculations
7 In the event no exceptions are filed as provided by Sec 102 46 of the
Rules and Regulations of the National Labor Relations Board , the findings,
conclusions , and recommended Order herein shall, as provided in Sec
102.48 of the Rules and Regulations , be adopted by the Board and become
its findings , conclusions, and Order, and all objections thereto shall be
deemed waived for all purposes.