Radiant Fashions, Inc.

National Labor Relations Board - Board Decisions

Apr 6, 1973

202 N.L.R.B. 938 (N.L.R.B. 1973)

938 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Radiant Fashions , Inc. and Local 482 of the Interna-
tional Ladies ' Garment Workers' Union, AFL-
CIO. Case 31-CA-2681
April 6, 1973
DECISION AND ORDER
By CHAIRMAN MILLER AND MEMBERS JENKINS
AND KENNEDY
On December 11, 1972, Administrative Law Judge
David E. Davis issued the attached Decision in this
proceeding. Thereafter, Respondent filed exceptions
and a supporting 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
authority in this proceeding to a three-member panel.
The Board has considered the record and the
attached Decision in light of the exceptions and brief
and has decided to affirm the rulings, findings, and
conclusions of the Administrative Law Judge only to
the extent consistent herewith.
Respondent has excepted, inter alia, to the Admin-
istrative Law Judge's finding that it is a successor-
employer to,Charmfit of Hollywood, Inc. (hereinaf-
ter "Charmfit"), and therefore obligated to bargain
with the Union as exclusive representative of its
employees. In our view, Respondent's exception to
the finding of successorship is meritorious. Accord-
ingly, we' further find that its refusal to bargain with
the Union was not violative of Section 8(a)(5) and (1)
of the Act.
For approximately 10 years prior to October 23,
1967, Charmfit had been engaged in the manufacture
of brassieres and related items under the presidency
and 50 percent stock ownership of Harry W.
Froehlich. On that date, Charmfit merged with Russ
Togs, Inc. (hereinafter "Russ"), and Froehlich
executed a 5-year employment agreement pursuant
to which he would remain as director and president
of Charmfit. For approximately 4 years thereafter,
Froehlich operated Charmfit as a wholly owned
subsidiary of Russ engaged in the design, manufac-
ture, and sale of brassieres under the Charmfit and
Charmfit by Youthcraft labels. Following the merg-
er, Charmfit continued to occupy the same premises
in Los Angeles which it had occupied prior thereto.
In April 1969, Froehlich, at the direction of Russ
management in New York, executed a collective-
bargaining agreement with the Union encompassing
all of Charmfit's, production and maintenance
employees. These employees promptly became and
I The Union has never been certified following a Board-conducted
election nor has its majority status in the unit ever been established through
production of the requisite number of authorization cards. Nevertheless, the
-remained dues-paying members of 'the Union in
accordance with the union-security and dues check-
off provisions contained in the agreement.'
Two years later, in April 1971, prior to the
expiration of both the collective-bargaining agree-
ment with the Union and Froehlich's employment
agreement with Russ, Froehlich received instructions
from Russ management to begin a gradual phasing
out of production in Los Angeles with a view
towards total cessation of operations by November
30, 1971. Russ planned to continue the Charmfit
business, and the nationwide marketing of Charmfit
products, but with production limited to facilities
located in Brooklyn, New York, and Puerto Rico.
During the period between April and late June
1971, Froehlich and representatives from the' Union
met several times in order to discuss the most
efficient manner of effectuating the impending
layoffs. By July 1, 1971, their efforts had resulted in a
complete cessation of all production, the termination
of all employees, and the award of severance pay to
each employee in accordance with the terms of the
collective-bargaining agreement. Thereafter, the Los
Angeles facility remained open for the sole purpose
of transferring business records to Brooklyn and
attending to other lingering administrative matters.
While the Los Angeles operation was in the process
of being phased out, Froehlich and Russ commenced
negotiations in early June regarding a settlement of
his employment agreement which then had approxi-
mately 1 1/2 years to run. Up to and including the
time of the cessation of operations in late June, these
negotiations focused exclusively upon the amount of
money which Froehlich would receive as a settle
-ment. However, in mid-July, approximately 2 weeks
after the Los Angeles plant had completely shut
down, Russ notified Froehlich for the first time that
a condition precedent to his release from the
employment agreement would be Froehlich's pur-
chase of the Los Angeles facility and assumption of a
lease on the premises then held by his mother.
The settlement negotiations culminated in the
execution of an agreement dated August. 25, 1971. In
exchange for a monetary payment and the release
from his employment contract, Froehlich consented
to (a) assume the unexpired lease on the Los Angeles
plant, (b) purchase all the physical assets owned by
Russ at the Los Angeles facility including all sewing
machines, tables, and office equipment, and (c) ship
Russ' remaining inventory to the purchasers thereof
at the direction and expense of Russ. In addition,
Froehlich consented to a provision akin to a
covenant not to compete wherein he agreed:
parties adhered to the provisions of the 1969 collective -bargaining'
agreement for over 2 years, including the dues deduction provision , without
objection.
202 NLRB No. 137
RADIANT FASHIONS, INC. 939
(a) Not to manufacture, or cause to be
manufactured, garments from a set of patterns
which duplicates an existing set of patterns used
for a style now being made and sold under the
Charmfit by Youthcraft label, and specifically not
to manufacture, or cause to be manufactured, the
wireless underwire bra or , the new covered
separator bra. -
(b) Not to manufacture, . or cause to be
manufactured, garments from a set of patterns
which duplicates a set of patterns used for a style
sold under the Charmfit label or the Charmf it by
Youthcraft label, which patterns were designed
by Harry W. Froehlich or under his direction.
(c) Not to use the same or substantially similar
style number designations or identifications as
those used by Youthcraft/Charmfit.
Thereafter, on September 10, 1971, Respondent
was incorporated as Radiant Fashions, Inc., with
Froehlich as the sole stockholder. Respondent
commenced operations at the former Charmfit Los
Angeles facility approximately 2 weeks later on
September 25, 1971.
Soon after opening, Respondent made several
alterations in the physical layout of the plant. The
interior was redesigned in order to relocate some of
the working areas, approximately 20 percent of the
interior floor space was sublet, and 15,000 square feet
of the parking space was relinquished. Moreover,
some of the equipment acquired from Charmfit was
dismantled and placed in storage.
Unlike Charmfit which continues to be a manufac-
turing concern engaged in the business of designing,
manufacturing, and marketing its own products to
retail outlets 'on a nationwide basis, Respondent
commenced operations strictly as a sewing subcon-
tractor in the Los Angeles area. As such, Respondent
neither designed nor marketed products of its own.
Instead, materials were received from a jobber,
certain prearranged sewing operations were per-
formed by Respondent thereon, and the completed
units were returned to the jobber for distribution and
sale.
Initially, 80 percent of Respondent's work was
performed for Olga Company, a manufacturer of
brassieres for whom Charmfit had never done any
work. Subsequently, Respondent performed various
sewing operations on men's and women's bicycle
shirts and women's bikini bathing suits for the
Catalina Company, also a concern. for whom
Charmf it had never done any work. During Respon-
2 Charmfit 's normal complement of employees at the Los Angeles plant
numbered between 110-120.
3 Since Respondent informed the employees that its operations would be
nonunion, all but three of them had ceased. paying dues to the Union by the
time they were hired by Respondent. In fact, most of the 28 employees who
had been covered by the union contract when employed by Charmfit ceased
dent's initial period. of operation, Olga and Catalina
constituted its principal customers.
In view of the fact that Respondent contracted to
perform work on garments other than brassieres, it
became necessary to-make minor modifications in
the sewing machines acquired from Charmfit and to
purchase certain additional equipment. In addition,
the new and modified equipment required skills for
which the initial complement of operators hired by
Respondent had to be trained.
The record indicates that as of September 30, 1971,
5 days after commencing operations, Respondent
employed 10 unit and 5 nonunit employees, all of
whom had formerly worked for Charmfit.2 On that
date, the, Union demanded that it be recognized as
exclusive bargaining representative of Respondent's
employees. Froehlich refused this request. Within a
month thereafter, the initial 8(a)(5) and (1) charges in
this proceeding were filed by'the Union.
During the first 3' months of operation, Respon-
dent's business prospered. By December 14, 1971, the
work force had increased to 33 employees, all of
whom had previously worked for Charmfit, and all
but 5 of whom had been covered by the union
contract.3 In addition, there was a substantial
carryover of supervisory personnel, a majority of
whom were assigned to the same or similar positions
to those which they had occupied with Charmfit.
At the time of the hearing in September 1972,
Respondent employed 75-804 employees (two-thirds
of Charmfit's normal complement) and was then
engaged in the design, manufacture, and sale of its
own style of brassiere having evolved from a sewing
subcontractor into a full-fledged manufacturer.
Respondent currently maintains a sales force of five
individuals, none of whom were ever employed by
Charmfit, and competes with Charmfit in those
geographical areas where their marketing efforts
overlap. Sears, Roebuck & Co. currently constitutes
Respondent's primary customer and accounts for
50-60 percent of Respondent's total production.
Although Sears. at one time had been a customer of
Charmfit, their business relationship terminated well
before the cessation of operations in Los Angeles and
the vast majority of goods sold to Sears were
manufactured at plants other than the Los Angeles
plant.
On these facts, the Administrative Law Judge
concluded that Respondent was a successor-employ-
er to Charmfit whose refusal to bargain with the
paying dues shortly after their termination in June . The Union has
presented no evidence that it currently represents a majority of Respon-
dent's employees.
4 Of the 42-47, additional employees hired by Respondent after
December 14, 1971, there is no evidence as to how many , if any, were
former employees of Charmfit.
940 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Union violated Section 8(a)(5) and (1) of the Act. We
do not agree.
At the outset, it should be noted that there are
present in this record certain factors which we have
relied on in the past in finding successorship. Thus,"
when Respondent commenced operations in Septem-
ber 1971, it .was engaged in a business related to that
of Charmfit although on a reduced scale. Moreover,
its business was run at the same location, utilizing
much of the same basic equipment, and employing a
reduced work force consisting mainly of employees
of the predecessor company under substantially the
same supervisory authority.
We have long recognized, however, that the crucial
inquiry in determining whether a purchaser is " a
successor for purposes of Section 8(a)(5) is the
continuity of the employing industry, Galis Equip-
ment Company, Inc., 194 NLRB No. 124, and that in
making this inquiry the totality of the circumstances
surrounding the transfer must be considered. Lincoln
Private Police, Inc., 189 NLRB No. 103. Accordingly,
in cases similar' to the instant case, in which all or
most of the above-described factors were present, we
nevertheless refused to find successorship when
persuaded that countervailing elements existed which
destroyed the continuity of the employing industry.
E.g., Norton Precision, Inc., 199 NLRB No. 140. We
are so persuaded by the record in this case.
First, when Charmfit ceased 'production and
terminated the employees in June, there were at that
time no plans to sell the Los Angeles facility to
Froehlich. "The possibility of such a sale was raised
for the first time the following month in conjunction
with discussions for a settlement of Froehlich's
employment contract. It was not until August 25 that
the sale was consummated and 1 month passed
thereafter before operations actually commenced.
Consequently, there was a hiatus of between 2 1 /2
and 3 months between the time that Charmfit shut
down completely and Respondent began-production.
While it is true that all of the employees hired by
Respondent within the first 3 months of operation
were former Charmfit employees, it cannot be said
that a sudden change in the employees' employment
relationship was. brought about by the sale of the
plant and equipment to Respondent. At the time of
their termination by,, and receipt of severance pay
from, Charmfit there was absolutely no basis
whatsoever for any expectation on the part of the
employees that their 'employment would ever be
resumed at the Los Angeles plant; much less by a
corporation which was then nonexistent and whose
formation had not as yet been contemplated by
anyone. Although not in itself controlling, the
lengthy hiatus in resumption of production at the
plant, and in the employment of those employees
eventually - hired by Respondent, is a significant
factor in determining whether there exists a continui-
ty in the employing industry. Norton Precision, Inc.,
supra; Gladding Corporation, 192 NLRB No. 40;
Ellary Lace Corp., 178 NLRB 73..
. Second, the record adequately demonstrates that
rather than purchasing an ongoing business enter-
prise from Charmfit, Respondent only purchased the
assets of one segment of such an enterprise. For
example, Charmfit continues to manufacture many
items at its Brooklyn and Puerto Rico facilities which
are marketed in competition With Respondent's
products. Moreover, Respondent is precluded by the
terms of the agreement settling Froehlich's employ-
ment contract from manufacturing any items which
duplicate patterns utilized by Charmfit, many of
which were created by or under the direction of
Froehlich himself. Also, Respondent did not under-
take to produce any products for Charmfit, assume
any of its liabilities (except for the lease), or assume
any accounts receivable. Indeed, all of the inventory
on hand at the time of sale, whether finished or
unfinished, was either shipped to Brooklyn or to the
purchasers thereof, at..the direction and expense of
Charmfit.
It is also significant in this regard that Respondent
acquired virtually none of Charmfit's customers as a
result of the sale. Initially, almost all of Respondent's
work was done for two customers, Olga Company
and Catalina Company, neither of which had ever
done any business with Charmfit. Currently, 50-60
percent of Respondent's business is with Sears,
Roebuck & Co., a customer with whom Charmfit
was not doing, business at the time of the sale and, in
any event, never a significant customer of the Los
Angeles facility. It is a fair inference, therefore, that
any overlapping of customers which may currently
exist was achieved by Respondent not through the
exchange with Charmfit, but rather by virtue of
successful marketing techniques. Again, while these
factors, particularly the virtual absence of a carry-
over, of customers, are not to be taken as controlling,
they are nevertheless significant in determining
whether there is a continuity in the employing
enterprise. Gladding Corporation, supra; cf. Lincoln
Private Police, Inc., supra.
Finally, we consider it important to analyze the
differences between the market which Charmfit
abandoned in Los Angeles in June and the market
which Respondent entered in September. As noted
earlier, Charmfit was a manufacturing concern which
designed, manufactured, and sold ladies' brassieres
under its own labels to various . retail outlets.
Respondent, on the other hand, commenced opera-
tions not as a manufacturer but as a sewing
subcontractor. Thus, Respondent initially did no
RADIANT FASHIONS, INC.
designing , did no marketing , and did not produce
any items under its own label. Instead , Respondent
merely performed certain prearranged sewing opera-
tions on materials supplied by its customers. In
addition , Respondent worked on garments other
than brassieres , including bicycle shirts and bathing
suits , thereby necessitating modifications in some of
the existing equipment , the purchase of certain new
equipment , and the retraining of several employees.
Alterations such as these in the methods of pro-
duction, type of ^ market supplied , and kinds of
products produced have frequently been utilized in
determining whether there has been a substantial
change in the nature and character of the employing
industry . Norton Precision, Inc., supra.
On balance , we find that the lengthy hiatus in
operations , the evidence pointing towards a purchase
of assets rather than the purchase of an ongoing
business , the absence of any significant carryover in
customers , and the differences in the markets
supplied by Charmfit and Respondent all indicate an
extinguishment of the continuity of Charmfit's
business enterprise . Accordingly , we find that Re-
spondent is not a successor to Charmfit for purposes
of applying the obligations of Section 8(a)(5) of the
Act and shall therefore dismiss the complaint in its
entirety.
AMENDED CONCLUSIONS OF LAW
Delete paragraphs 3.and 4 of the Administrative
Law Judge's Conclusions of Law and substitute
therefor the following:
"3. By refusing to recognize and bargain with the
Union as the collective-bargaining representative of
its employees since September 30, 1971, Respondent
has not engaged in conduct violative of Section
8(a)(5) and (1) of the Act.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, -as amended, the National Labor
Relations Board hereby orders that the complaint be,
and it hereby is, dismissed in its entirety.
' Local 496 of the International Ladies' Garment Workers' Union,
AFL-CIO.
2 Served on Radiant Fashions, Inc., Respondent herein, on October 26,
1971.
3 The Charging Party in the amended charge is Local 482. The amended
charge was served on Respondent on July 28, 1972.
4 The complaint alleges "It having been charged by Local 482, etc."
Therefore, the complaint correctly asserts that the amended charge
supersedes the original charge.
5 The record is hereby amended as follows: P. 24,1.6, change November
DECISION
STATEMENT OF THE CASE
941
DAVID E. DAVIS, Administrative Law Judge: This case
was heard by me on September 26, 1972, at Los Angeles,
California, pursuant to a charge filed by the Union' on
October 26, 1971,2 amended on July 28, 1972,3 and a
complaint issued on July 28, 1972, by the Acting Regional
Director for Region 31 of the National Labor Relations
Board, herein called the Board.4 The complaint alleged
that Respondent as the successor of Charmfit of Holly-
wood, Inc., herein called Charmfit, was under an obliga-
tion to recognize and bargain with the Union because of
the Union's majority status at all material times. As
Respondent has refused to recognize and bargain with the
Union, the complaint alleges that Respondent thereby has
engaged and is engaging in unfair labor practices within
the meaning of Section 8(a)(5) and (1) of the Act.
Respondent in its answer, while admitting certain allega-
tions of the complaint denied that it is the successor of
Charmfit or that it has engaged in any unfair labor
practices.
Upon the entire records in this proceeding, including my
observation of the witnesses and after due consideration of
the posthearing briefs, I make the following:
FINDINGS OF FACT
1. THE BUSINESS OF THE COMPANY
Respondent is a California corporation with its principal
place of business located in Los Angeles, California, where
it is engaged in the business of manufacturing and selling
ladies' intimate apparel including brassieres and bathing
suits. For the 12-month period ending September 1972,
Respondent in the course and conduct of its business
operation will have manufactured, sold, and shipped
finished products valued in excess of $50,000 to points
located outside the State of California and for the same
time period will receive goods and materials valued in
excess of $50,000 from points outside the State of
California. As the above jurisdictional facts are admitted, I
find that Respondent is an employer within the meaning of
Section 2(6) and, (7) of the Act and that it will effectuate
the purposes of the Act to assert jurisdiction herein.
II. THE ' UNION INVOLVED6
The complaint alleged, Respondent admitted , and I find,
that the Union is a labor organization within the meaning
of Section 2(5) of the Act.
"3" to "23"; P. 78,1. 25, change first "1971" to "1967"
6 None of the parties raised any questions concerning the identity'oI the
Union involved . I assume that Locals 482 and 496, as well as Los Angeles
Dress and Sportswear Joint Board are acting in unison under the aegis of
the International whose representatives participated in the events , negotia-
tions, and contracts with Charmfit. I will abide by the parties' apparent
understanding that there is no issue as to the Union 's identity. Accordingly,
hereafter , reference to the Union is a collective term applicable to Locals
496, 482, the Joint Board , and the International.
942 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background
The basic background facts are not in dispute.7 They
may be summarized as follows: In 1957, Harry W.
Froehlich, together with his brother, each owned 50
percent of the stock of Charmfit. Harry W. Froehlich was
its president. He continued to be president of Charmfit,
until October 23, 1967, when it merged under a sales
agreement with Russ Togs, Inc., herein called Russ, a New
York-based corporation. Charmfit, at that time, chiefly
manufactured brassieres although some related items, like
garter belts, were also manufactured. The sale to Russ
included all items owned by Charmfit, including all the
stock owned by Froehlich. Simultaneously with the sale,
Froehlich entered into an employment agreement with
Russ which ran, to October 31, 1972. Froehlich continued,
under his employment agreement, to hold the office of
president of Charmfit which then became a wholly owned
subsidiary of Russ. As president, Froehlich was responsible
for the day-to-day operations of Charmfit from its plant
located at 11900 West Olympic Boulevard, Los Angeles,
which was the same location it had occupied prior to the
sale to Russ. In April 1969, Charmfit entered into a
collective-bargaining agreements with the Union effective
from April 21, 1969, to January 31, 1972, covering all
production and maintenance employees. Froehlich, as
president of Charmfit, signed the agreement. On April 30,
1969, Froehlich also signed an amendment9 to the
aforesaid labor agreement. The evidence showed that after
Charmfit entered, into the above labor agreements, it
continued to manufacture the same products, chiefly
brassieres, with the same employees performing similar
tasks at the same location in Los Angeles.
About April 1971, Froehlich received instructions from
Russ management officials to cut production in the Los
Angeles plant and to phase out the operations at the
Charmfit plant so as to cease operations as of November
30, 1971. As a result of these instructions, Froehlich had
two or three meetings with Sam Schwartz, manager of the
Western States Region of the ILGU, AFL-CIO, Max B.
Wolf, educational and political director of the Internation-
al Union,10 and Millstein, a business representative of the
Union.
By July 1, 1971, there was no one working ate the
Charmfit location in Los Angeles, production having
ceased during the latter part of June 1971. Froehlich,
during the period employees were being laid off, had
meetings, referred to above, with union representatives.
Froehlich, to preserve his employment agreement and to
provide work for the employees, 'was interested in keeping
the shop going and asked the Union to enlist the aid of the
union representatives located in New York to keep
Charmfit operating even if it meant shorter hours.
According to Froehlich, the union representatives reported
that they had tried but were unsuccessful.
Sometime in June 1971, Froehlich entered into negotia-
' The uncontroverted testimony of Harry W. Froehlich, herein called
Froehlich, is the principal source of the background.
8 G.C. Exh. 2. (Local 496.)
9 G.C. Exh. 3. (Substituting the L. A. Joint Board.)
tions with Russ regarding a settlement of his employment
agreement which had about a year and half to go. At first,
the discussions centered around the amount of compensa-
tion he was to receive. However, sometime in July 1971,
Froehlich was notified that Russ wanted Froehlich to
purchase the Charmfit plant and secure its release from the
current lease for the premises which had another year and
4 or 5 months to run. An agreement was reached as of
August 1, 1971, under which Froehlich purchased all the
physical assets owned by Russ at the Charmfit plant in Los
Angeles including all sewing machines, tables, and office
equipment effective as of August 1, 1971.11 As Froehlich's
mother was the owner of the property and the lessor of
Russ, Froehlich was able to secure Russ' release from the
terms of the outstanding lease and personally assumed the
obligations of the lease. It was also agreed that Russ would
notify the Union that Charmfit would cease operations on
a certain date. Contrary to Froehlich's understanding,
Russ did not notify the Union until November 23, 1971.12
About September 10, 1971, Froehlich formed the new
corporation, Radiant Fashions, Inc., Respondent herein,
and commenced operations about September 25, 1971.
B. The Refusal to Bargain
Froehlich, testifying as a witness called by the General
Counsel,13 testified that he put a "help wanted" sign out at
the premises; that he was under the impression that some
of the former employees of Charmfit saw the sign and
spread the news by word of mouth that Respondent was
hiring; that he hired Tony La Capria as production
manager for Respondent; that La Capria had been
production manager for Charmfit; that he was not aware
that La Capria was calling Charmfit employees.to come
back to work for Respondent; that from the approximate
date production commenced on September 25, 1971, until
December 13, 1971, all of the production employees were
former employees of Charmfit; that the designer , cutter,
and other supervisory employees were also former Charm-
fit employees; that the sewing machines and other
equipment being used during this period of time were the
same "ones that had been purchased from Charmfit; that
ladies' brassieres were being manufactured; that he had
instructed La Capria to inform employees that they were
coming to work for a new firm which had no connection
with Charmfit; that he told La Capria to make sure the
employees knew this as he didn't want to have anyone
disappointed at a later date when they found that seniority
would not be carried over from Charmfit to Radiant; that
he also told La Capria to tell the employees that
Respondent would have its own medical plan; that the
beginning' pay rate was established at $2.10 per hour; that
currently Respondent had about 75-80 employees; that
Sears Roebuck, for whom Respondent manufactures,
brassieres under a Sears Roebuck label, accounts for
approximately 50-60 percent of Respondent's brassiere
production; that Sears Roebuck was also a customer of
Charmfit until early in 1971. Finally, Froehlich testified
10 One of ILGU agents assigned to administer the contract at Charmfit.
11 G.C. Exh. 5.
12 G.C. Exh. 4.
13 Under Sec. 43-B under the Federal Rules of Civil Procedure.
RADIANT FASHIONS, INC. 943
that Schwartz and Wolf visited the plant sometime in
October 1971 and that it was after this visit that he
instructed La Capria to tell the employees that Respondent
was operating as a nonunion shop.
Sam.Schwartz, manager of the Western States Region of
ILGU, testified that the Los Angeles area has been under
his jurisdiction for 35 years; that during that time he has
been continually employed as a staff member of the
ILGU; that he has had the title of manager for the past 2
years; that, acting in behalf of the Union, he had signed
the agreements which had been introduced in evidence as
General Counsel's Exhibits 2 and 3; that he had also
negotiated a cost-of-living increase with Froehlich in 1970
when Froehlich was representing Charmfit; that he and
Wolf had visited Respondent 's plant on September 30,
1971; that when they reached the premises they saw a
paper sign reading "Radiant, Incorporated"; that they
found the front door locked but gained entrance through
the side door; that they then met La Capria and the
following conversation took place:
La Capria: I was expecting you fellows.
Wolf: Why?
La Capria: We are not a Union Shop anymore.
Wolf: Whoever told you that?
La Capria: You better wait for Mr. Froehlich. Lets
go for coffee.
The three of them then drove to a nearby restaurant and
Schwartz asked La Capria, "What's this all about?" La
Capria replied, "I have been calling the people on the
phone and asking them if they want to come back. This is a
non-union shop. If they want to come. back, they are
welcome.' ."Schwartz asked where he got the information
that it was a nonunion shop and La Capria said that when
Froehlich arrived they would discuss it with him. When
they returned to the plant about 9:30 a.m., Froehlich was
in his office and opened the conversation saying, "I guess
you want to know what the union status is." Schwartz
replied, "I know what the union status is." Froehlich then
addressed himself to La Capria and asked, "Tony, have we
asked the people if they want to come back under non-
union conditions?" La Capria replied in the affirmative
and Schwartz said, "We have a union. The workers are all
members of the Union. We are their bargaining agent."
Froehlich then said, "Well, we told anybody who wants to
work here they could work but it is a non-union shop. As a
matter of fact , we are taking out an insurance policy for
them." Schwartz then testified that he asked Froehlich
about Radiant Fashions, Incorporated; that Froehlich
replied he bought the equipment, his mother owned the
building, and he had taken over the lease with a condition
not to manufacture a certain type of wire brassiere; that,
other than that, he could manufacture whatever he pleased
and that he was getting work from "Olga Brassieres."
Schwartz testified that at this point .he left, saying that
there was nothing else to discuss and that Froehlich would
hear from him. Schwartz further testified that only one
former employee of Charmfit had withdrawn from the
Union and that was because she had to leave the State;
that the labor agreement with Charmfit contained a union-
shop clause , and a checkoff provision ; that a list14 had
been prepared showing when all the Charmfit employees
had last paid their union dues . Schwartz, after inspecting
the list 15 of employees at Radiant on a certain date,
testified that with the exception of three employees all
other employees appearing on the list of Radiant employ-
ees were included on the list showing employees who had
paid union dues. (G.C. Exh. 7.)
On cross-examination , Schwartz testified that he did not
know Charmfit had ceased operations prior to his visit in
September ; that he had ,learned there was a layoff through
some of the employees who came into the union office to
have their cards signed to the effect they were unem-
ployed; that when he met Froehlich in September and told
him that the Union had a contract, Froehlich replied,
We are not a union shop . We have asked all the people
before we hired them-we told them that there's not
going to be a union shop.
Max B . Wolf, called by the General Counsel , stated that
he had been a staff representative of the ILGU for 27 years
and that he accompanied Schwartz on the September 30,
1971, visit to Respondent's plant . His testimony confirmed
Schwartz' account of the conversation with Froehlich.
Elma Sanchez testified that she was employed by
Charmfit for about 5 years until June 1971; that she
worked on the labeling machine and a computer that made
price tickets; that sometime in September or October 1971
she had a telephone conversation with La Capria who
asked her to return to work ; that she had heard from some
of her former coworkers that the shop had opened up; that
she called La Capria, but he said that at that time another
girl was making up labels and price tickets; that there
wasn ' t much work then , but he would let her know ; that at
a later date he called her and told her the shop was
nonunion and that it was a different company. As Sanchez,
during this period, was caring for her two grandsons, she
told La Capria that she was unable to return to work at
that time. La Capria called her again and she was still
unable to go back to work until approximately I week
before the hearing , about September 21, 1972. When she
returned to work, La Capria told her it was a different
factory and that it was nonunion . She agreed to go back to
work at a starting rate of $2.10 per hour with a promise
that in 2 months she would get a raise of 10 cents per hour.
It was stipulated by the parties that, if Grace Mori were
to testify , she would state that La Capria talked with her in
September 1971 and told her that the plant was nonunion,
that the pay was $2.10 per hour, and that they had a
medical plan.
Froehlich , recalled as a witness for Respondent , testified
that in the spring of 1971 when he was told by the Russ
officials at a meeting in- New York to phase out the Los
Angeles operations , it was planned that there would be an
orderly transfer of production to the Puerto Rico plant of
the parent company. Froehlich , at that time , was given a
schedule detailing what was to be produced in Los Angeles
over,a given number of months . Thereafter, he received
periodic instructions from New York as to what to transfer
G.C. Exh. 7.
15 G.C. Exh. 6.
944 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to Brooklyn or Puerto Rico. Following instructions,
Froehlich cut the merchandise he was scheduled to
produce and, after the cutting was completed, the dies or
patterns were shipped to Brooklyn. Froehlich then shipped
half of his inventory of -finished products to Brooklyn
where shipments, would thereafter originate, the other half
of the finished products continued to be shipped by
Charmfit to customers. After Froehlich had been notified
of the arrival of the merchandise (finished products) sent to
New York, all orders received in Los Angeles were
forwarded to New York for shipment out of Brooklyn. The
process of phasing out commenced early in May and the
complete shutdown of the plant occurred the latter part of
June, possibly in July, 1971. The business records were sent
to New York after a representative from New York had
inspected them and determined what records they would
need. The only records remaining at Charmfit concerned
the employment data of employees. Froehlich, continuing
his testimony, asserted that Charmfit presently is a, going
concern manufacturing brassieres in Brooklyn and Puerto
Rico and selling these items on a national basis. Charmfit
has a national salesforce with salesmen located on the
West Coast. After Radiant started its operations, 4,000 of
the approximately 19,000 square feet covering Charmfit's
lease was sublet. Radiant also surrendered a 15,000-square-
foot area that Charmfit used as a parking lot. Froehlich
purchased two automotive vehicles owned by Charmfit,
selling one at a later date. Froehlich also testified that he is
currently building a salesforce, none of whom was ever
employed by Charmfit, and that Radiant is in competition
with Charmfit. On cross-examination, Froehlich conceded
that currently Radiant customers were the same as those
with whom Charmfit did business.
C. Analysis and Conclusions
As recited above, the basic facts are essentially not
disputed. The primary question requiring resolution is
whether Respondent is a successor within the meaning of
the legal precedents applicable to this case. I find adequate
support for the. General Counsel's position on this issue in
the Supreme Court's recent decision in Burns International
Security Services, Inc.,16 and related cases.
In Burns,17 the Supreme Court affirmed the Board's
adoption of the Administrative Law Judge's finding that
Burns had a duty to bargain, which arose when it selected
as its work force the employees of the previous employer to
perform the same tasks at the same place they had worked
in the past.
Here, unlike the Burns situation, however, the employees
did not participate in an election of a collective-bargaining
representative. The claim of majority status by the Union
rests upon the current membership of all except five
employees in the appropriate collective-bargaining, unit. 18
The evidence shows that Charmfit, Respondent's predeces-
sor, entered into a labor agreement with the Union which
included a union-shop proviso and a checkoff. This
agreement has been honored since April 1969 and,
pursuant to that agreement, all employees of Charmfit who
are now empl6yees19 of Respondent are.members of the
Union having paid dues to the Union.20 As Charmfit
operations ceased in July 1971, the payment of dues
thereafter and their retention of membership in the Union
reflects the continuing desire of the employees to have the
Union continue as their collective-bargaining representa_
tive.
Froehlich admitted that, pursuant to his instructions, La
Capria advised former Charmfit employees that Respon-
dent was operating "non-union." The. evidence shows and I
find that this in fact was a condition of employment.
Obviously, when confronted with such a choice, employees
out of work consented to return under this condition. It
seems significant that no employee renounced membership
in the Union, after employment by Respondent under the
nonunion conditions. I believe that, under all the circum-
stances, the presumption of continued majority in this case
is rather strong. Accordingly, a finding seems warranted
that Respondent unlawfully refused to recognize and
bargain with the Union on September 30, 1971, when the
Union representatives, Schwartz and Wolf, met with
Froehlich.
Respondent in its brief argues that it had a good-faith
doubt of the Union's majority status on September 30,
1971. In support of this argument, it made an offer of proof
that La Capria would testify that many of the girls were
dissatisfied with the Union because the Union was not
doing anything to help keep the plant open, and that La
Capria told Froehlich of the girls' dissatisfaction. This
testimony was rejected as improper because it was hearsay.
In my opinion, even if the testimony were admitted and
was regarded as truthful, it lacked sufficient probative
value and impact to overcome the presumption of majority
status. I regard Froehlich's additional testimony that he,
himself, was told by various employees of their dissatisfac-
tion with the Union as of slight importance with regard to
this presumption. I find, and the evidence amply demon-
strates, that the employees' complaints about the Union to
La Capria, or to Froehlich, played no part in Froehlich's
decision to operate nonunion and his subsequent refusal to
recognize and bargain with the Union. The record is clear
that La Capria and Froehlich had never ascertained or
made a determination as to employee sentiment with
regard to the Union, rather Froehlich ordered La Capria to
tell the employees that they, when they came back to work,
would be employed under nonunion conditions and this is
what La Capria told the employees. Moreover, when
Froehlich met with Schwartz and Wolf on September 30,
1971, he refused to recognize and bargain with the Union
not because the Union lacked a majority, but, as Schwartz
credibly testified, Froehlich said:
We are not a union shop. We have asked all the people
before we hired them. . . . we told them there's not
going to be a union shop. .
Respondent further argues that substantial differences
between Respondent's and Charmfit's work forces, physi-
16 406 U.S. 272. 20 G.C. Exhs. 6 and 7. A comparison of these exhibits shows that three
17 Supra. employees paid no dues after June 17. 1971; one employee paid no dues
18 There is no conflict as to the appropriate unit. after July 21, 1971; while all the other employees paid dues in August 1971
19 Except five. or later.
RADIANT FASHIONS, INC. 945
cal plant facilities, products; nature and extent of business
and customers favor a finding that Respondent is not a
successor toCharmfit. I disagree. The evidence shows that
there has been a substantial continuity of identity in the
business- enterprise by virtue of the manufacture of
substantially the same product at substantially the same
place by substantially the same employees for substantially
the same customers under substantially the same manage-
ment. The change in ownership, the change in name, the
slight change in product styles are insignificant factors that
do not warrant a finding that Respondent is not a
successor.
Nor do I regard the decrease in the employee comple-
ment and the hiatus of 2 months in production as decisive
or substantial factors which would warrant a finding in
support of Respondent's contention that it was not the
successor of Charmfit.21
In agreement with the General Counsel's argument, I
find that the presumption of continued majority status is
not dependent on independent evidence that the bargain-
ing relationship was originally established by a certification
or majority card showing.22 It is also well established that
the presumption is applicable to a successor situation as in
the present case.23
As Respondent has failed to adduce any credible
evidence to rebut the presumption, the presumption must
prevail.
Accordingly, I find that Respondent as the successor of
Charmfit was obligated to recognize and bargain with the
Union on September 30, 1971, in the following unit which I
find to be appropriate:
All production and maintenance workers, including
shipping and receiving employees, employed by Re-
spondent at its Los Angeles, California, plant, but
excluding office clerical employees, guards, watchmen,
and supervisors as defined in the Act.
Respondent, as recited above, since September 30, 1971,
has refused to recognize and bargain with the Union in the
appropriate unit found above and thereby has engaged and
1 Cf. C. G. Conn. Ltd., 197 NLRB No. 84. Cf. Ellary Lace Corp., 178
NLRB 73.
=2 Valleydale Packers Inc., 162 NLRB 1486.
is engaging in conduct violative of Section 8(a)(5) and (1)
of the Act. It is so found.
Upon the basis of the foregoing findings of fact and the
entire record in the case, I make the following:
CONCLUSIONS OF LAW
1. Respondent is an employer engaged in commerce
within the meaning of Section 2(6) and (7) of the Act.
2. The Union is a labor organization within the
meaning of Section 2(5) of the Act.
3. Respondent, commencing September 30, 1972, un-
lawfully refused, and continues to refuse, to recognize and
bargain with the Union as the collective-bargaining
representative of its employees in the appropriate bargain-
ing unit, described as follows:
All production and maintenance workers, including
shipping and receiving employees, employed by Re-
spondent at its Los Angeles, California, plant, but
excluding office clerical employees, guards, watchmen,
and supervisors as defined in the Act.
4. By refusing to recognize and bargain with the Union
since September 30, 1971, Respondent has engaged, and
continues to engage, in conduct violative of Section 8(a)(5)
and (1) of the Act.
THE REMEDY
Having found that Respondent has breached its duty to
recognize and bargain with the Union, it will be recom-
mended that Respondent cease and desist therefrom and
take certain affirmative action designed to effectuate the
policies of the Act.
In view of the nature of the unfair labor practices found
herein which go to the very heart of the Act, I shall further
recommend that Respondent cease and desist from in any
manner interfering with its employees' rights guaranteed
under Section 7 of the Act.
[Recommended Order omitted from publication.]
23 K. B. & J. Young Supermarkets, 157 NLRB 271, enfd. 377 F.2d 463
(C.A. 9)