Redway Carriers

National Labor Relations Board - Board Decisions

Feb 28, 1991

301 N.L.R.B. 1113 (N.L.R.B. 1991)

1113
301 NLRB No. 139
REDWAY CARRIERS
1 Respondents Ligon Transportation Company and Ligon Specialized Hauler,
Inc. argue that the General Counsel’s exceptions should be struck on the
ground they do not comply with Sec. 102.46 of the Board’s Rules and Regula-
tions. Although the General Counsel’s exceptions and brief do not comply
with the literal requirements of Sec. 102.46, we find that the deficiencies are
insufficient to justify striking them.
2 None of the Respondents filed exceptions to these conclusions, including
the judge’s discussion of RCA Del Caribe, 262 NLRB 963 (1982), or to any
of the judge’s factual findings.
3 East Dayton Tool & Die Co., 239 NLRB 141 fn. 1 (1978); Armitage Sand
& Gravel, 203 NLRB 162, 166–167 (1973), enfd. in part 495 F.2d 759 (6th
Cir. 1974), citing Southport Petroleum Co. v. NLRB, 315 U.S. 100, 107
(1942).
4 We find it unnecessary to pass on the judge’s finding that the Union is
defunct. We note that it is clear that the Union was a viable labor organization
at the time the unfair labor practices were committed and that our remedial
Order merely requires the Respondent to bargain with the Union on request.
In her exceptions, counsel for the General Counsel has requested that in
view of the Respondent’s cessation of operations, we require the mailing of
copies of the notice to all unit employees. We grant the General Counsel’s
request, and shall so order. P. J. Hamill Transfer Co., 277 NLRB 462 (1985).
5 All dates hereinafter are in 1982.
6 As set forth in the attached dissent, Member Cracraft would find that no
backpay remedy is warranted in the circumstances of this case.
Redway Carriers, Inc./Cardinal Leasing, Inc.;
Ligon Transportation Company, Successor
and/or Alter Ego, and Single Employer, and
Quicksilver Transportation, Inc., its Successor;
Litco-Wisconsin, Successor and/or Alter Ego,
and Single Employer; Ligon Specialized Haul-
er, Inc., Successor and/or Alter Ego, and Single
Employer; Smyrna Personnel Services, Inc.,
Successor and/or Alter Ego, and Joint Em-
ployer; and Richard Kutzler, Agent of the Em-
ployer and/or an Individual and Fraternal As-
sociation of Special Haulers
Laura Gail Kutzler, Agent of the Employer and/or
an Individual and Marlene Graham. Cases 30–
CA–7333, 30–CA–7575–1, 30–CA–7575–2, 30–
CA–7575–3, and 30–CA–7575–4
February 28, 1991
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND DEVANEY
On July 22, 1987, Administrative Law Judge Ste-
phen J. Gross issued the attached decision. The Gen-
eral Counsel filed exceptions and a supporting brief,
and the Respondents, Ligon Transportation Company
and Ligon Specialized Hauler, Inc. filed an answering
brief.1
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and the
record in light of the exceptions and briefs, and has
decided to affirm the judge’s rulings, findings, and
conclusions only to the extent consistent with this De-
cision and Order.
In the absence of exceptions, we adopt pro forma
the judge’s findings that the Respondent, Redway Car-
riers, Inc. and Cardinal Leasing, Inc., a joint employer
(Redway/Cardinal), violated Section 8(a)(5) and (1) by
failing to bargain with the Union over how to deal
with the ‘‘fold-in’’ of the fuel surcharge directed by
the Interstate Commerce Commission (ICC), and by
engaging in bad-faith bargaining by virtue of adopting
‘‘its accept-concessions-or-else negotiating stance.’’2
However, we do not agree with his finding that the
employees were on strike, with his dismissal of the
complaint, or his failure to remedy the violations. The
judge found that because the Respondent is defunct
and has been without assets since mid-1983 and be-
cause the Union is also defunct, ‘‘it would be useless,
even misleading, to order any affirmative remedy or
even to order any entity to cease and desist from vio-
lating the Act.’’ The judge’s conclusion is contrary to
Board law.
It is well settled that mere discontinuance in busi-
ness does not necessarily render moot allegations of
unfair labor practices against a respondent.3 A Board
Order is a vindication of public policy. Because such
an order is binding not only on a named respondent
but also on its ‘‘officers, agents, successors and as-
signs,’’ it cannot be said that the cessation of a busi-
ness necessarily means that there is no possibility of
remedying the unfair labor practices found. Therefore,
we shall issue conclusions of law, a remedy including
backpay, and an order appropriate to the violations
found.4
1. The collective-bargaining agreement provided that
drivers be paid 27 percent of gross revenue. In the
early 1970s the ICC instituted a fuel surcharge which
was to be billed separately from the motor carrier’s
own rates. Without objection from the Union, the Re-
spondent treated gross revenues for driver-pay pur-
poses as excluding the fuel surcharge. In February
1982,5 the ICC ordered that the amounts motor carriers
had been charging their customers as a fuel surcharge
be ‘‘folded-in’’ to the carriers’ rates. As the judge
found, the Respondent violated Section 8(a)(5) by con-
tinuing to deduct the fuel surcharge from gross revenue
after the ‘‘fold-in,’’ over the Union’s objection and
without bargaining to impasse. Thus, the drivers were
paid only 23 percent of the gross amount with the
amount representing the surcharge added. The General
Counsel argues that the drivers are entitled to a make-
whole remedy awarding them a full 27 percent of the
higher gross revenue amount which includes the sur-
charge.
Chairman Stephens and Member Devaney agree
with the General Counsel’s contention.6 The parties
bargained for a formula, not for a fixed amount of pay.
The judge’s finding (which we are adopting) that the
Respondent’s change in the compensation formula con-
stituted an unlawful unilateral change necessarily en-
compasses a finding that the change was ‘‘material,
1114 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
7 See, e.g., Weather Tec Corp., 238 NLRB 1535, 1536 (1978), and cases
there cited.
8 Had the parties agreed that the term ‘‘gross revenues’’ would not include
the fuel costs even when those costs were included in the basic transportation
rate charged the customer, then we would find not only that a backpay remedy
is inappropriate but also that no violation should be found. In such case, the
Respondent’s ‘‘new’’ percentage formula could be seen as just an awkward
means of perpetuating the contract formula in the face of a different billing
format, i.e., not a real change. See fn. 7, supra. But the judge has found that
the Respondent made an unlawful unilateral change, and that finding has not
been excepted to by the Respondent.
9 See Redway Carriers, 274 NLRB 1359, 1412 (1985).
10 The drivers refused to grant the concessions, and also stated that they
would not return to work for anything less than terms equivalent to those of
the expired 1979–1981 contract. (The judge did not credit testimony that the
Union indicated that the drivers would be willing to return to work under the
terms and conditions existing immediately prior to the August 28 lockout.)
The judge found that ‘‘given the drivers’ refusal to return to work, they were
on strike as of the evening of August 30.’’ We do not agree. Although the
Union’s communications concerning the working conditions sought by the
drivers were on strike, they fall short of a showing that a strike was, in fact,
in progress. Certainly the Union’s refusal to grant the concessions demanded
by the Respondent does not automatically translate into a strike. The record
reveals that no strike vote was ever taken by the drivers, that they never noti-
fied the Respondent that they were on continued strike, and that, in fact, the
Union kept insisting that the drivers were locked out, rather than on strike.
substantial, and significant.’’7 It is self-contradictory to
find that such a change has been made but that there
is no basis for a remedy. Either the asserted change
made no real difference, in which case it does not
meet the test for an unlawful unilateral change, or it
did make a real difference, in which case the employ-
ees are entitled to restoration of the status quo ante.
Given the nature of the change at issue here, the make-
whole remedy requested by the General Counsel is ap-
propriate.
Contrary to Member Cracraft, Chairman Stephens
and Member Devaney find that any increase in the
compensation of the drivers resulting from folding the
fuel charges back into the gross receipts would not be
a windfall to the drivers but simply a result of the ap-
plication of the contracted-for formula. The agreement
of the employees’ bargaining representative to the ap-
plication of the percentage to a smaller base at a time
when there was no single figure for gross compensa-
tion does not establish that once the single rate was re-
instated, gross revenues would not encompass that en-
tire single amount.8 Accordingly, Chairman Stephens
and Member Devaney find not only that the Respond-
ent’s failure to bargain about the change in the applica-
tion of the contractual formula is in violation of Sec-
tion 8(a)(5) and (1) of the Act, but also that the em-
ployees are entitled to backpay.
2. Chairman Stephens and Member Cracraft find
that the shutdown of the terminal and the resulting
lockout of the employees was lawful at all times.
At the hearing and before the judge, the General
Counsel contended that the shutdown of the Respond-
ent’s terminal and the resulting lockout of the employ-
ees on August 28 was unlawful because it was in sup-
port of the Respondent’s bad-faith bargaining position
and that the employees are entitled to backpay. The
judge found that the Respondent lawfully locked out
its employees on August 28 because of a reasonably
based fear of violence and that the lockout remained
lawful thereafter.
As the judge found, the Respondent’s owner,
Kutzler, mistakenly believed that his truckdrivers had
called a strike, and he feared that a strike could endan-
ger him and his family and could result in the destruc-
tion of property. During the 1980 strike the drivers had
sabotaged equipment, and the damage had resulted in
major expenses for equipment replacement, mainte-
nance expenses, lost trucktime, and security. Union of-
ficials threw rocks at trucks and threatened employees
with violence.9 Kutzler immediately responded to his
belief that the Union had called a strike by arranging
for around-the-clock guard services. One guard testi-
fied that the Kutzler family expressed concern about
the truckdrivers harming them.
The parties met on August 30. The Respondent’s at-
torney informed the union representatives that the Re-
spondent was taking this opportunity to demand con-
cessions it had long believed were necessary and that
the drivers had to grant them before the Company
would reopen.10 As noted above, we agree with the
judge’s finding that the Respondent bargained in bad
faith as of that date by ‘‘its accept-concessions-or-else
negotiating stance.’’
In agreement with the judge and their dissenting col-
league, Chairman Stephens and Member Cracraft con-
clude that the Respondent lawfully locked out its em-
ployees on August 28 because of its objectively based
fears of violence. However, contrary to Member
Devaney, Chairman Stephens and Member Cracraft
find that Kutzler’s unlawful bargaining position did not
materially motivate his decision to continue to lock out
the employees. Given Kutzler’s objectively based fears
of violence, the lockout was justified.
We do not agree that Wire Products Mfg. Corp., 198
NLRB 652 (1972), enf. denied in part 484 F.2d 760
(7th Cir. 1973), relied on by Member Devaney in his
dissent, requires a different result. In Wire Products,
the Board held that a lockout was unlawful where it
was motivated in part ‘‘by union animus and there was
the improper intent to injure the bargaining representa-
tive or to evade a bargaining duty.’’ Id. at 653. Given
the findings made by the judge in the instant highly
atypical lockout case concerning Kutzler’s state of
mind (in particular Kutzler’s continuing belief that the
drivers were refusing to come back except on terms
different from those in effect before August 28 and
were likely to react with violence to any failure to ac-
cede to their position), we do not find the requisite
nexus with unlawful motivation.
The record reveals that throughout the subsequent
negotiations, Kutzler continued to believe that the driv-
1115REDWAY CARRIERS
11 In the absence of exceptions, we find it is unnecessary to pass on the li-
ability of any other entities or persons. In light of her view that no backpay
is due the employees, Member Cracraft finds it unnecessary to pass on the
issue of which persons or entities are liable for backpay.
12 268 NLRB 1001, 1002 (1984). See also Vulcan Trailer Mfg. Co., 283
NLRB 480 (1987); Continental Radiator Corp., 283 NLRB 234 (1987).
13 268 NLRB 1002, quoting Fugazy Continental Corp., 265 NLRB 1301,
1302 (1982), enfd. 725 F.2d 1416 (D.C. Cir. 1984).
14 The remaining one-third was owned by LeRoy Dittmer. Dittmer had no
part in the day-to-day management.
15 American Pacific Concrete Pipe Co., 262 NLRB 1223, 1225–1226
(1962), enfd. mem. 709 F.2d 1514 (9th Cir. 1983). (Common control of oper-
ations is a factor establishing alter ego status even in the absence of common
ownership.) In the absence of exceptions, we find it unnecessary to pass on
the judge’s finding that Richard Kutzler was an owner of Litco-Wisconsin.
16 Southport Petroleum Co., supra; Knappton Maritime Corp., 292 NLRB
236 (1988).
17 We have found that, in fact, there was no strike, but rather the employees
were locked out.
18 Rogers Cleaning Contractors, 277 NLRB 482, 488 (1985), enfd. 813 F.2d
795 (6th Cir. 1987); Shearer Delivery Service, 262 NLRB 622 (1982).
19 East Dayton Tool & Dye Co., supra.
ers had struck before he secured the property. There is
no indication that Kutzler did not continue to maintain
full security or that he no longer had objective reasons
to believe that securing the terminal was necessary to
prevent violence. In the unusual circumstances of this
case, we do not find that the lockout, lawful at its in-
ception, was rendered unlawful because of Kutzler’s
bargaining stance. Consequently, the employees are not
entitled to backpay for any part of the period that they
were locked out.
3. The judge found that no entities or persons other
than Redway/Cardinal were responsible for the viola-
tions found, even though he found that Litco-Wis-
consin was an alter ego of Redway/Cardinal for ‘‘a
limited time.’’ In her exceptions, counsel for the Gen-
eral Counsel contends that, given the factual findings
made by the judge, he erred in failing to conclude that
Litco-Wisconsin remains liable as an alter ego and that
Redway/Cardinal’s owners, Richard and Gail Kutzler,
are personally liable. Chairman Stephens and Member
Devaney agree with the General Counsel’s conten-
tions.11
In Advance Electric,12 the Board stated it would find
alter ego status where two employers have ‘‘‘substan-
tially identical’ management, business purpose, oper-
ation, equipment, customers, and supervision, as well
as ownership.’’ The Board also stated that among the
other factors which must be considered is ‘‘whether
the purpose behind the creation of the alleged alter ego
was legitimate or whether, instead, its purpose was to
evade responsibilities under the Act.’’13 As the judge
found, the Kutzlers owned two-thirds of
Redway/Cardinal’s stock.14 Litco-Wisconsin was a sole
proprietorship of Gail Kutzler which was run by Rich-
ard Kutzler.15 The new operation used the same trucks,
terminal, dispatchers, and clerical employees, and had
the same phone number and customers as
Redway/Cardinal. Redway/Cardinal was in bankruptcy,
and the judge found that the Kutzlers did not advise
the bankruptcy court or Redway/Cardinal’s creditors,
including the Union or the employees, of the new busi-
ness. Kutzler testified that Litco-Wisconsin was created
so that Redway/Cardinal’s customers could be serviced
and their business retained until the ‘‘strike’’ was over
and Redway/Cardinal could reopen. Based on the fore-
going evidence, we find, in agreement with the judge,
that Litco-Wisconsin was an alter ego of
Redway/Cardinal.
Chairman Stephens and Member Devaney do not
agree with the judge’s finding that ‘‘it would be inap-
propriate and unfair to continue to require Litco-Wis-
consin, after its role as a temporary replacement for
R/C had ended, to fulfill any obligations that R/C
might owe to its employees.’’ Such a conclusion is
contrary to Board law.
It is well settled that two nominally separate busi-
nesses may be regarded as a single enterprise if one
is the alter ego or ‘‘disguised continuance’’ of the
other.16 If alter ego status is found to exist, the labor
obligations of the original employer will be deemed to
be shared by its alter ego, and both will be held liable,
as a single employer, for any violations of the Act. To
hold otherwise would allow an employer to alter its
corporate form whenever it is inconvenient or unprofit-
able to meet its obligations under the Act. This was
precisely what the Kutzlers did when they formed
Litco-Wisconsin to carry on Redway/Cardinal’s busi-
ness.
It does not matter that the Kutzlers intended Litco-
Wisconsin to be temporary, to exist only while
Redway/Cardinal’s employees were ‘‘on strike.’’17
Alter ego status is to be determined based on the de-
velopments which took place at the time the alter ego
was formed, not on what may have happened at a later
date.18 Thus, at the time Litco-Wisconsin was formed,
it was obligated to recognize and bargain with the
Union, and must share responsibility for
Redway/Cardinal’s unfair labor practices. Furthermore,
as noted above, the fact that a company is defunct
does not preclude the Board from issuing a remedial
order against it.19 Thus, given the finding that Litco-
Wisconsin is the alter ego of Redway/Cardinal, Litco-
Wisconsin is clearly liable for Redway/Cardinal’s vio-
lations of the Act.
Concerning the personal liability of the Kutzlers, it
is well settled that in certain circumstances it is appro-
priate to ‘‘pierce the corporate veil’’ and hold a cor-
poration’s officers or owners personally liable for vio-
lations of the Act. In deciding this issue, Chairman
Stephens and Member Devaney are guided by the prin-
ciples set forth in Riley Aeronautics Corp., 178 NLRB
495 (1969). In Riley, the Board adopted the judge’s
statement of the applicable law, as follows:
1116 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
20 G & M Lath & Plaster Co., 252 NLRB 969, 977 (1980), enfd. 670 F.2d
550 (5th Cir. 1982); Carpet City Mechanical Co., 244 NLRB 1031, 1034
(1979).
21 In finding that the Kutzlers should be held personally liable, we note that
no party has excepted to the judge’s finding that Litco-Wisconsin was ‘‘noth-
ing more than a name’’ that the Kutzlers labeled the series of transactions by
which they continued Redway/Cardinal’s business. In any event, we agree with
the judge’s characterization.
[T]he corporate veil will be pierced whenever it
is employed to perpetuate fraud, evade existing
obligations, or circumvent a statute. . . . Thus in
the field of labor relations, the courts and the
Board have looked beyond organizational form
where an individual or corporate employer was no
more than an alter ego or a ‘‘disguised continu-
ance of the old employer’’ . . . or was in active
concert or participation in a scheme or plan of
evasion . . . or siphoned off assets for the pur-
pose of rendering insolvent and frustrating a mon-
etary obligation such as backpay . . . . [Id. at
501.]
Applying these principles to the judge’s factual find-
ings, we conclude that the Kutzlers are personally lia-
ble for the backpay due the employees.
As the judge found, the Kutzlers themselves per-
petrated the unfair labor practices. The decision to uni-
laterally change the calculation of wages and the re-
fusal to bargain in good faith were theirs personally.
While seeking the protection of bankruptcy for
Redway/Cardinal, and within days of the filing of the
initial unfair labor practice charge against
Redway/Cardinal, the Kutzlers decided to conduct their
business and service their customers in the form of a
disguised continuance, namely Litco-Wisconsin. By
their own admission, Litco-Wisconsin was created in
order for them to operate their business so as to avoid
their labor problems. The Kutzlers used the assets of
Redway/Cardinal to start their new business operation
with Cardinal and Litco. Gail received a salary from
the new operation. The judge found that the bank-
ruptcy court was never informed of Litco-Wisconsin’s
existence. There is no evidence that the bankrupt estate
or any Redway-Cardinal creditors ever benefited from
the operation of Litco-Wisconsin.
Such personal participation in the commission of un-
fair labor practices and in a scheme to avoid corporate
liability for those acts by the persons who controlled
the corporation warrants a finding of individual liabil-
ity.20 Therefore, based on their personal participation
in the scheme and plan of evasion, including forming
an alter ego to avoid their statutory obligation to bar-
gain with the Union, Richard and Gail Kutzler are per-
sonally liable, jointly and severally with
Redway/Cardinal and Litco-Wisconsin, for any and all
backpay found to be owed to employees as a result of
the unfair labor practices found here.21
CONCLUSIONS OF LAW
1. Redway/Cardinal and Litco-Wisconsin are em-
ployers engaged in commerce within the meaning of
Section 2(6) and (7) of the Act.
2. Fraternal Association of Special Haulers is a labor
organization within the meaning of Section 2(5) of the
Act.
3. Respondent Litco-Wisconsin is, for the purposes
of this proceeding, the alter ego of Respondent
Redway/Cardinal.
4. It is appropriate to hold Richard Kutzler and Gail
Kutzler personally liable to remedy the unfair labor
practices found here.
5. All drivers, mechanics, spotters, shop helpers, and
owner-operators employed by Redway/Cardinal and by
its alter ego Litco-Wisconsin at or out of their Keno-
sha, Wisconsin and Plymouth, Indiana terminals, ex-
cluding all office clerical employees, dispatchers, man-
agerial employees, professional employees, guards and
supervisors as defined in the Act, constitute a unit ap-
propriate for the purposes of collective bargaining
within the meaning of Section 9(b) of the Act.
6. The Union is now and has been at all times the
exclusive representative of all the employees in the
above-described unit for purposes of collective bar-
gaining within the meaning of Section 9(a) of the Act.
7. By failing and refusing to bargain with the Union
regarding the ‘‘fold-in’’ of the fuel surcharge and by
engaging in bad-faith bargaining, the Respondents have
violated Section 8(a)(5) and (1) of the Act.
8. The aforesaid unfair labor practices are unfair
labor practices affecting commerce within the meaning
of Section 2(6) and (7) of the Act.
THE REMEDY
Having found that the Respondents have violated
Section 8(a)(5) and (1) of the Act, we shall order that
they cease and desist therefrom and take certain af-
firmative action designed to effectuate the policies of
the Act.
Having found that the Respondents failed and re-
fused to bargain about the ‘‘fold-in’’ of the fuel sur-
charge and its effect on the calculation of driver pay,
we shall order the Respondents to bargain and to make
their employees whole for any losses in wages or ben-
efits they may have suffered, in accordance with the
method described in Ogle Protection Service, 183
NLRB 682 (1970).
Having found that the Respondents engaged in bad-
faith bargaining, we shall order the Respondents to
bargain with the Union, on request, until an agreement
or bona fide impasse is reached, and embody the terms
of such agreement in a signed agreement.
1117REDWAY CARRIERS
22 283 NLRB 1173 (1987). We leave to the compliance stage the question
whether the Respondents must pay any additional sums into employee benefit
funds in order to satisfy our ‘‘make-whole’’ remedy. Merryweather Optical
Co., 240 NLRB 1213 (1979).
23 Member Devaney finds, based on the violations of the Act found in this
proceeding, the unlawful lockout found in his dissent, and the unfair labor
practices found to have been committed by Redway/Cardinal in the prior
Board proceeding cited supra, that the Respondents have demonstrated a pro-
clivity to violate the Act and that a broad injunctive order is therefore war-
ranted. Hickmott Foods, 242 NLRB 1357 (1979).
24 If this Order is enforced by a judgment of a United States court of ap-
peals, the words in the notice reading ‘‘Posted by Order of the National Labor
Relations Board’’ shall read ‘‘Posted Pursuant to a Judgment of the United
States Court of Appeals Enforcing an Order of the National Labor Relations
Board.’’
Interest shall be paid on all sums due in the manner
prescribed in New Horizons for the Retarded.22
ORDER
The National Labor Relations Board orders that the
Respondents, Redway Carriers, Inc./Cardinal Leasing,
Inc., Litco-Wisconsin, Richard Kutzler, and Gail
Kutzler, their officers, agents, successors, and assigns,
shall
1. Cease and desist from
(a) Failing and refusing to bargain with the Union
regarding the ‘‘fold-in’’ of the fuel surcharge.
(b) Engaging in bad-faith bargaining.
(c) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.23
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) On request, bargain collectively and in good
faith with the Union as the exclusive bargaining rep-
resentative of the employees in the unit set forth below
concerning terms and conditions of employment, in-
cluding the ‘‘fold-in’’ of the fuel surcharge and, if an
understanding is reached, embody it in a signed agree-
ment. The appropriate unit is:
All drivers, mechanics, spotters, shop helpers, and
owner-operators employed by the Respondents at
their Kenosha, Wisconsin and Plymouth, Indiana
terminals excluding all office clerical employees,
dispatchers, managerial employees, professional
employees, guards and supervisors as defined in
the Act.
(b) Make whole the bargaining unit employees for
any losses they may have suffered as a result of the
Respondents’ failure to bargain about the ‘‘fold-in’’ of
the fuel surcharge in the manner set forth in the rem-
edy section of the decision.
(c) Preserve and, on request, make available to the
Board or its agents for examination and copying, all
payroll records, social security payment records, time-
cards, personnel records and reports, and all other
records necessary to analyze the amount of backpay
due under the terms of this Order.
(d) Mail a copy of the attached notice marked ‘‘Ap-
pendix’’24 to the Union and to all employees in the ap-
propriate unit at their last known address. Copies of
the notice, on forms provided by the Regional Director
for Region 30, after being signed by the Respondents’
authorized representative, shall be mailed immediately
upon receipt by the Respondents, as directed above.
(e) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondents have taken to comply.
MEMBER CRACRAFT, dissenting in part.
I join with Chairman Stephens in finding that the
bad-faith bargaining did not convert the Respondent’s
lawful lockout to an unlawful one. I agree with my
colleagues’ adoption of the judge’s finding that
Redway/Cardinal violated Section 8(a)(5) by engaging
in bad-faith bargaining and by failing to bargain about
the ‘‘fold-in’’ of the fuel surcharge. I also agree with
the reversal of the judge’s dismissal of the complaint
and with the issuance of conclusions of law and order
appropriate to these two violations. However, I do not
agree that the employees are entitled to backpay to
remedy the Respondent’s failure to bargain about the
fold-in of the fuel surcharge.
Although it is true that Redway/Cardinal failed to
bargain about the ‘‘fold-in’’ of the fuel surcharge and
its effect on the calculation of driver pay, I would find
that no backpay is needed to remedy this violation and
would limit the remedy to an order to bargain. The
collective-bargaining agreement provided the drivers
be paid 27 percent of gross revenue. The Interstate
Commerce Commission’s order to ‘‘fold-in’’ to their
rates the amounts previously charged as a fuel sur-
charge was circumstance that neither of the parties
could have foreseen. The change was in ICC regula-
tions which changed the definition of gross revenue.
When Redway/Cardinal thereafter applied the contrac-
tual percentage to gross revenues with the amount rep-
resenting the fuel surcharge subtracted, the drivers lost
no pay as a result of the failure to bargain. Chairman
Stephens and Member Devaney state that the employ-
ees are entitled to a return to the status quo ante. How-
ever, in the circumstances of this case, my colleagues’
literal interpretation of the contract does not restore the
status quo ante, but rather gives the drivers an 18-per-
cent increase in pay. An external circumstance such as
the action taken by ICC, which neither party could
have reasonably anticipated during collective bar-
gaining, should not operate to require Redway/Cardinal
to grant such a windfall to the employees. In light of
my view that no backpay is due the employees, I find
it unnecessary to pass on my colleagues’ conclusions
concerning which persons or entities are liable for
backpay.
1118 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The complaint names as respondents two different corporations called
‘‘Ligon Transportation Company.’’ One was incorporated in Kentucky. The
MEMBER DEVANEY, dissenting in part.
In agreement with the judge and my colleagues, I
believe that the Respondent lawfully locked out its em-
ployees on August 28 because of its objectively based
fears of violence. However, I find that the Respond-
ent’s bad-faith bargaining commencing on August 30
converted the lockout which was lawful at its inception
to an unlawful one and that the employees were not
on strike as of that date.
The Respondent demanded that the Union accept
concessions as nonnegotiable condition for reopening
the doors and returning the drivers to work. I agree
with my colleagues that the Respondent’s ‘‘accept-con-
cessions-or-else negotiating stance’’ constituted bad-
faith bargaining. In the context of strikes, it is well es-
tablished that bad-faith bargaining demands by an
employeer that result in prolonging a strike have the
effect of converting the strike into an unfair labor prac-
tice strike. See General Athletic Products Co., 227
NLRB 1565 (1977). Such a conversion is found by the
Board when the employer’s unfair labor practices are
a factor in prolonging the strike, even though eco-
nomic goals may still be present. Superior National
Bank, 246 NLRB 721 (1979). The Board has also
found that a lockout motivated in part by an improper
desire to injure the bargaining representative or to
evade a bargaining duty is unlawful, despite the exist-
ence of another legitimate motivation. Wire Products
Mfg. Corp., 198 NLRB 652 (1972), denied in part 484
F.2d 760 (7th Cir. 1973).
Accordingly, a lockout by an employer that is lawful
at its inception may be converted to an unlawful lock-
out when it is prolonged, at least in part, in support
of the employer’s bad-faith bargaining position. Apply-
ing this rationale to the facts of this case, once the Re-
spondent conditioned opening the doors on acceptance
of its demand for concessions, the lockout became an
extension of illegal bargaining demands. See Vore Cin-
ema Corp., 254 NLRB 1288, 1293 (1981); Strand The-
atre, 235 NLRB 1500, 1502 (1978). Therefore, as of
August 30, the Respondent violated Section 8(a)(5)
and (1) by locking out its drivers.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or-
dered us to post and abide by this notice.
WE WILL NOT fail and refuse to bargain with Fra-
ternal Association of Special Haulers regarding the
‘‘fold-in’’ of the fuel surcharge.
WE WILL NOT engage in bad-faith bargaining.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the
rights guaranteed you by Section 7 of the Act.
WE WILL, on request, bargain with Fraternal Asso-
ciation of Special Haulers as the exclusive bargaining
representative of the employees in the unit concerning
terms and conditions of employment, including the
‘‘fold-in’’ of the fuel surcharge and, if an agreement
is reached, embody it in a signed agreement. The ap-
propriate unit is:
All drivers, mechanics, spotters, shop helpers, and
owner-operators employed by the Respondents at
or out of their Kenosha, Wisconsin and Plymouth,
Indiana terminals, excluding all office clerical em-
ployees, dispatchers, managerial employees, pro-
fessional employees, guards and supervisors as
defined in the Act.
WE WILL make whole the bargaining unit employees
for any losses they may have suffered as a result of
our failure to bargain about the ‘‘fold-in’’ of the fuel
surcharge.
REDWAY CARRIERS, INC./CARDINAL
LEASING, INC., A JOINT EMPLOYER
AND/OR LITCO-WISCONSIN, AN ALTER
EGO, AND/OR RICHARD KUTZLER
AND/OR GAIL KUTZLER
Dennis M. Selby, Esq. and Joyce Ann Seiser, Esq., for the
General Counsel.
Jack Osswald, Esq., of Chicago, Illinois, on behalf of Re-
spondents Ligon Transportation Co. and Ligon Specialized
Hauler, Inc.
DECISION
STEPHEN J. GROSS, Administrative Law Judge. Redway
Carriers, Inc., was a motor carrier. It stopped operating in
August 1982. At that time Redway operated out of a terminal
in Kenosha, Wisconsin. Cardinal Leasing, Inc., was a lessor
of tractors and van trailers, with drivers. Cardinal’s owner-
ship and management were the same as Redway’s, and until
October 1982 Cardinal did business only with Redway. Car-
dinal stopped operating in February 1983.
Richard Kutzler was part owner of Redway and Cardinal
and ran both companies; he was, essentially, their only exec-
utive. (Several members of the Kutzler family were involved
in the matters that led to this proceeding. But when I refer
just to ‘‘Kutzler,’’ it will always be to Richard Kutzler.)
This proceeding began on 13 September 1982, when the
Fraternal Association of Special Haulers (FASH) filed an un-
fair labor practice charge against Redway and Cardinal (in
Case 30–CA–7333). FASH amended that charge on 18 Octo-
ber 1982. Thereafter, on 28 January 1983, an employee of
Cardinal, Marlene Graham, filed a charge against Kutzler, his
wife Laura Gail Kutzler (Gail), Ligon Transportation Com-
pany1 (a company with which the Kutzlers were then doing
1119REDWAY CARRIERS
other was incorporated in Tennessee. Both the Kentucky and Tennessee cor-
porations have had various names during the course of their corporate
existences. See fn. 81, below.
2 Like Ligon Transportation Company, Ligon Specialized Hauler has had
various names. It is now known as ‘‘Ligon Nationwide, Inc.’’ See fn. 89.
3 The 1985 amendment is in the record as G.C. Exhs. 1–8. The 1986 amend-
ment proposes imposition of a visitatorial clause. See G.C. Exh. 161. (See, in
this connection, my Orders dated 17 April 1985 and 3 July 1986.)
4 The amended complaint alleges, based on Graham’s charge, that Kutzler
Express was an alter ego of Redway and Cardinal. But I dismissed the allega-
tions against that company in an Order dated 30 April 1984.
The amended complaint can be read as claiming that IU International Cor-
poration and Nogil Management Corporation should be held derivatively liable
for the unfair labor practices alleged in the complaint. I granted the motions
to dismiss of IU and Nogil by Order dated 19 June 1985.
5 General Counsel’s Exhibit 25 at 8 (hereafter GCX). The 27-percent provi-
sion applied only to R/C’s over-the-road drivers, not to its ‘‘spotters.’’ More-
over, the provision did not apply to owner-operators who operated under lease
to R/C. But most of R/C’s drivers were covered by the 27-percent provision.
In this part of this decision, I use the term ‘‘driver’’ as referring only to over-
the-road drivers who were subject to the provision.
business), and a company called Kutzler Express (Case 30–
CA–7575–1 through 4). A complaint first issued on 6 Octo-
ber 1982, and was subsequently amended at various times,2
the latest amendments being made on 17 April 1985 and 30
April 1986.3
The amended complaint alleges that Redway and Cardinal
violated Section 8(a)(1), (3), and (5) of the National Labor
Relations Act (the Act), in various respects; that Kutzler and
Gail should be held personally liable for such unfair labor
practices; and that a number of companies became alter egos
of, single employers with, and/or successors to Redway and
Cardinal and, as such, should also be held liable for the al-
leged unfair labor practices of Redway and Cardinal.4
The hearing opened on 2 May 1983, adjourned for settle-
ment purposes, resumed on 12 March 1984, again adjourned
for settlement purposes and for consideration of motions to
dismiss or for continuance, then resumed in earnest on 10
September 1984. I closed the hearing on 30 April 1986, after
52 days of hearing. The General Counsel and, jointly, Ligon
Transportation Company and Ligon Specialized Hauler have
filed briefs.
The Relationship Between Redway and Cardinal
The complaint alleges that Redway and Cardinal were
joint employers.
Redway and Cardinal were the subjects of a previous pro-
ceeding. See Redway Carriers, 274 NLRB 1359 (1985). (The
parties here have taken to calling that proceeding ‘‘Redway
I,’’ and I will follow suit.) Redway I holds that Redway and
Cardinal were joint employers. Id. at 1366. The record in this
proceeding shows that the relationship between Redway and
Cardinal did not change in the interval between the hearing
in Redway I and 28 August 1982, when both Redway and
Cardinal stopped operating.
As for subsequent periods: Redway never resumed oper-
ations after 28 August; both Redway and Cardinal filed peti-
tions under Chapter 11 of the Bankruptcy Act on 17 Sep-
tember 1982; Cardinal (as debtor-in-posession) resumed op-
erations (without Redway) in October 1982; and in January
1983 (while Cardinal was still operating) Redway sought liq-
uidation under Chapter 7 of the Bankruptcy Act. (Those
events will be discussed in further detail later in this deci-
sion.) Until December 1982 Kutzler proceeded on the as-
sumption that Cardinal’s operations without Redway were
temporary phenomena and that the two entities would one
day resume their pre-September 1982 relationship. But given
the fact that Redway’s cessation of operations turned out to
be permanent, I conclude that Redway and Cardinal ceased
being joint employers in October 1982, when Cardinal re-
sumed operations without Redway.
For convenience’s sake, I will use the term R/C when re-
ferring to the Redway and Cardinal when they were acting
as joint employers. (And, also for convenience’s sake, I will
treat the term R/C as though it referred to one entity.)
I. R/C’S UNILATERAL CHANGE IN THE TERMS OF ITS
DRIVERS’ EMPLOYMENT IN APRIL 1982
The General Counsel claims that in April 1982 R/C vio-
lated Section 8(a)(5) and (1) by unilaterally changing the
terms under which it paid its drivers. According to the Gen-
eral Counsel: (1) R/C had been paying its drivers 27 percent
of the gross revenue of each load hauled; (2) in April 1982
R/C began paying the drivers only about 23 percent of each
load hauled; and (3) R/C made the change without affording
FASH—the union that represented R/C’s drivers—an oppor-
tunity to bargain.
This part of this decision considers that claim.
Redway I: FASH began representing R/C’S drivers (and
certain of its other employees) early in 1976. Then, in Janu-
ary 1980, in an election conducted by the Board, a majority
of R/C’s bargaining unit employees voted for representation
by the Teamsters. But FASH claimed that the election had
been tainted by unfair labor practices that R/C had com-
mitted prior to the election. And in May 1981 Administrative
Law Judge Marvin Roth issued a decision in which, among
other things, he: (1) found that R/C and FASH had entered
into a collective-bargaining contract for the period September
1979 through August 1981; and (2) recommended that the
January 1980 election be set aside and a new election or-
dered. R/C appealed. R/C contended that the 1980 election
was valid—so that the Teamsters, not FASH, represented
R/C’s employees. R/C further contended that R/C had never
agreed to FASH’s proposals for a 1979–1981 contract.
The Board issued its opinion in Redway I in March 1985.
The Board upheld Judge Roth in most respects, including his
finding that R/C and FASH had entered into a 1979–1981
contract and his recommendation that an election be held to
determine which, if any, union should represent R/C’s em-
ployees. (Because both Redway and Cardinal had ceased to
exist by the time the Board issued its opinion, the election
that Redway I ordered was never held.)
Other facets of Judge Roth’s and the Board’s actions will
be considered below.
The Terms of the Collective-Bargaining Contract Between
R/C and FASH; the ICC’s Imposition of a ‘‘Fuel Sur-
charge’’: R/C’s first contract with FASH, for the period
1976–1978, provided that starting in 1978 the drivers’ wages
were to be 27 percent ‘‘of the gross revenue paid to the com-
pany for the transportation of a load.’’5
The effect of that kind of wage provision was that when-
ever Redway increased the rates it charged shippers because
of, say, increases in its costs, driver wages per load increased
proportionately. But starting in June 1979 (which as during
the interval between the end of the 1976 R/C-FASH collec-
1120 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
6 See 46 Fed.Reg. 50075 (1981); id at 54745 (1981); 47 Fed.Reg. 4689–
4690 (1982). These documents are in the record as GCX 153.
7 Assume a freight rate of $100 and a surcharge (i.e., fold-in) of $18; 27
percent times $100 equals $27; and 23 percent times $118 equals $27.14.
tive-bargaining contract and the start of the 1979 contract),
the drivers’ wages no longer reflected increases in the
amounts shippers paid to Redway where those increases were
the result of R/C’s higher fuel prices.
That change stemmed from a series of orders of the Inter-
state Commerce Commission. What happened was this.
Thoughout the United States, generally many owner-opera-
tors operate under lease to motor carriers. Those leases often
provide that owner-operators are to receive as their com-
pensation a percentage of the motor carrier’s revenues, but
that the owner-operators are responsible for paying for the
fuel for their vehicles. During the 1970’s owner-operators be-
came financially hard-pressed by a combination of leases of
that nature, skyrocketing fuel prices, and various ICC actions
holding down motor carrier rates. In response to the owner-
operators’ vociferous complaints, the ICC instituted a ‘‘fuel
surcharge.’’ The ICC’s fuel surcharge orders had two effects
of interest here. First, each motor carrier began billing its
customers for two separate amounts—one that represented
the motor carrier’s own rates and charges, and another that
was the fuel surcharge. Second, motor carriers were required
to pass the amounts they received by way of the fuel sur-
charge on to ‘‘the person actually responsible for the pay-
ment of fuel charges.’’ See 44 Fed.Reg. 40467 (10 July
1979).
R/C paid its drivers 27 percent of ‘‘gross revenues’’ (as
stated above). And R/C, without objection from FASH, treat-
ed gross revenues—for driver pay purposes—as excluding
the fuel surcharge.
As noted above, in September 1979 R/C and FASH en-
tered into another collective-bargaining contract, this one for
a 2-year period ending in August 1981. The pertinent driver
wage provisions of the 1979 contract were identical to those
in the 1976 contract. Thus drivers were to receive 27 percent
of ‘‘gross revenues.’’ But in keeping with R/C’s earlier prac-
tice, the amounts that R/C paid its drivers during the course
of the contract did not reflect the fuel surcharge.
The 1979 collective-bargaining contract was the last to
which R/C was ever a party. But even after the termination
of the contract (in August 1981) R/C continued to pay its
drivers 27 percent of the gross revenues of the loads they
hauled—with gross revenues treated as not including the fuel
surcharge.
The Elimination of the Fuel Surcharge; R/C’s Response:
In February 1982 the ICC ordered an end to the fuel sur-
charge, effective 13 April 1982.6 The amounts that motor
carriers had been charging their customers as a fuel sur-
charge had to be ‘‘folded in’’ to the carriers’ rates. But the
ICC continued its protection of lessors who were responsible
for paying their own fuel costs. The ICC did that by requir-
ing motor carriers to pay the folded-in amounts to such les-
sors.
In 1982 the fuel surcharge amounted to about 18 percent
of the total amount that Redway’s customers paid Redway
for freight haulage. Thus if ‘‘gross revenues,’’ as used in the
R/C-FASH agreement, were deemed to include the fold-in,
and if Redway had continued to pay its drivers 27 percent
of gross revenues, R/C’s drivers would have received an 18-
percent pay increase beginning on 13 April.
R/C did not respond to the ICC’s action in that manner.
Instead R/C paid its drivers the same dollar amounts the
drivers had been earning. R/C did that by applying 27 per-
cent to a figure equal to the amounts R/C charged shippers
minus the fold-in. The upshot was that drivers received about
23 percent of the enlarged gross revenues assuming that
‘‘gross revenues’’ within the meaning of the R/C-FASH con-
tract included the fold-in.
That is the action that the General Counsel claims that R/C
should have bargained about.
Did R/C Bargain with FASH—the Facts; Kutzler’s Discus-
sions with FASH’s Steward: As noted earlier, Kutzler was
R/C’s only executive officer. Kutzler at no time even consid-
ered paying R/C’s drivers 27 percent of gross revenues as in-
creased by the fold-in. Rather, Kutzler simply presumed that
R/C would continue to pay the drivers the same dollar
amounts they had been receiving. Kutzler’s only concern was
how to change the weekly ‘‘settlement sheets’’ that R/C gave
its drivers so that the settlement sheets reflected that course
of action and also reflected the fold-in that the ICC had or-
dered. (Settlement sheets were the forms that R/C gave each
of its drivers that explained how the Company arrived at the
dollar amount of the driver’s paycheck. Among the entries
on the settlement sheets that R/C had traditionally used was
one that referred to ‘‘company gross revenue’’ and another
called ‘‘drivers pay . . . gross.’’ As indicated earlier, the
‘‘company gross revenue’’ entry did not include the fuel sur-
charge. Prior to the fold-in, the drivers’ gross pay entry on
the R/C settlement sheets was 27 percent of the company
gross revenue entry.)
William Burton was FASH’s head steward at R/C. On sev-
eral occasions, sometime in February or March 1982, Kutzler
spoke to Burton about the ICC’s fold-in order and R/C’s set-
tlement sheets. (The fold-in order was a topic of intense dis-
cussion among the nation’s over-the-road drivers. Thus
Kutzler’s reference to it was not news to Burton.) Kutzler
proposed that R/C handle the fold-in by either: (1) simply
using 23 percent, instead of 27 percent, when computing the
figure to insert on the ‘‘drivers pay . . . gross’’ line; or (2)
changing the settlement sheet form by adding entries nec-
essary to deduct the fold-in from ‘‘company gross revenue.’’
In the latter case, gross drivers’ pay would be computed as
27 percent of company gross revenue after the deduction.
(The reason for the 23-percent figure: 23 percent of gross
revenues including the fold-in approximated 27 percent of
gross revenues less the fold-in.)7
The Drivers’ Meeting and its Aftermath: Burton told
Kutzler that he (Burton) wanted to discuss the matter with
FASH’s officials. Burton did, and then in late March or early
April Burton called a meeting of R/C’s drivers for the pur-
pose of considering how the drivers wanted R/C to handle
the fold-in. Paul Dietsch, who was one of FASH’s principal
spokesmen, attended the meeting.
In Judge Roth’s decision in Redway I, Judge Roth had rec-
ommended that R/C be ordered to ‘‘maintain and give effect
to its contract with FASH’’ until the conclusion of the elec-
tion he had ordered among R/C’s bargaining unit employees.
(Judge Roth issued his decision on 6 May 1981, when the
contract still had about 4 months to run.) Burton and Dietsch
1121REDWAY CARRIERS
8 Dietsch testified that he remembered no such meeting. He further testified
that ‘‘when we come to Bill Burton we have found him to be totally unable
to recall anything day to day . . . he has got a very poor recollection, and
would never rely on [Burtons] statements whatsoever about having a meeting
or anything.’’ Tr. 7829. I nonetheless credit Burton’s account.
9 Tr. 1500.
10 See 46 Fed.Reg. at 50072, 54746.
11 Compare GCX 2 with GCX 3.
assumed that that language spelled out R/C’s obligation to its
employees. As it turned out they were incorrect: The Board
(in 1985) modified Judge Roth’s Order in that respect, ruling
that R/C had to comply with the contract’s terms only until
contract’s termination date, 31 August 1981.
Burton and Dietsch also assumed that the contract’s ref-
erence to 27 percent of gross revenues meant 27 percent of
gross revenues including the fold-in.
The upshot of Burton’s and Dietsch’s assumptions was
that they (incorrectly) did not think that there was any issue
to bargain about. As far as they were concerned, R/C had no
choice but to pay its drivers 27 percent of gross revenues,
including the fold-in. They said as much at the meeting to
the drivers, and the drivers agreed that FASH should demand
that R/C pay the drivers 27 percent of gross revenues as in-
creased by the fold-in.8
No FASH official communicated directly with any R/C
representative about these matters until months after the
events we are here considering. But sometime before the ef-
fective date of the ICC’s fold-in order (April 13), Burton did
report the results of the drivers’ meeting to Kutzler. The
problem is that it is unclear exactly what words Burton used
in making that report.
It is clear that Burton thought that he communicated to
Kutzler that ‘‘the men rejected his [Kutzler’s] proposal.’’9
But it is also clear that Kutzler did not hear Burton’s report
that way. Rather, Kutzler thought that Burton’s report was a
statement about which of Kutzler’s two settlement sheet pro-
posals the drivers favored. Kutzler thought that Burton told
him that the drivers wanted R/C to use the settlement sheet
version in which R/C backed the fold-in amounts out of
gross revenues and then paid the drivers 27 percent of the
reduced amounts. Given the testimony of Burton and
Kutzler, given my evaluation of their credibility, and given
what I understand to be the personalities of the two and the
Burton-Kutzler relationship, I think that when Burton told
Kutzler about the drivers’ vote, he probably limited his mes-
sage to something like ‘‘the men want 27 percent of gross
revenues.’’ In view of Kutzler’s state of mind, Kutzler would
had to have heard that as an expression by Burton of which
settlement sheet form the drivers wanted.
Kutzler assented to what he thought Burton was saying.
Thus all R/C settlement sheets for pay periods subsequent to
13 April did compute the drivers’ pay at 27 percent of an
amount equal to gross revenues less the fold-in.
Did R/C Violate the Act—Did R/C Change the Terms
Under Which it Employed its Over-the-Road Drivers: If the
record were clear that the term ‘‘gross revenues,’’ within the
meaning of the R/C-FASH 1979–1981 contract, did not in-
clude the fold-in, then, of course, it would also be clear that
R/C’s actions in April 1982 did not change the terms of the
drivers’ employment. The record, however, provides no such
clarity. Rather, it suggests that when R/C and FASH entered
into their 1979–1981 contract, neither of them contemplated
how R/C should treat, for pay purposes, a fold-in of the kind
the ICC ultimately ordered. (The ICC’s orders did not use
the term ‘‘gross revenues.’’ But the ICC’s comments about
its orders did assume that the fold-in would be deemed part
of gross revenues for some purposes.10 It does not seem to
me, however, that such comments can be treated as a defini-
tive interpretation of the R/C-FASH contract.)
Given that R/C and FASH had not foreseen the cir-
cumstances of the fold-in when they entered into their con-
tract, I think that R/C’s action did amount to a change in
conditions of employment. In fact the settlement sheets them-
selves represent a change in the way R/C computed driver
pay.11 Indeed, given the ICC’s action, and given the fact that
there is no indication that either R/C or FASH had antici-
pated it, any response by R/C arguably would have been a
change in terms of employment—whether the company paid
27 percent of the resulting higher freight rates (causing a
massive pay raise), or (as it did) retained the same dollar pay
levels (resulting in the drivers getting somthing less than 27
percent of the freight rates that R/C charged its customers)
or took some other intermediate action.
Did R/C Bargain: As noted earlier, no collective-bar-
gaining contract was in force between R/C and FASH in
April 1982. But ordinarily an employer whose employees are
represented by a union may not change its terms of employ-
ment without bargaining with the union, even in the absence
of a contract. NLRB v. Katz, 369 U.S. 736 (1962).
If Katz applied to R/C’s circumstances in April 1982 then,
in my view, R/C violated the Act. Burton did, after all, tell
Kutzler that the drivers wanted 27 percent of gross revenues.
As for Kutzler’s failure to understand Burton’s message,
without question Burton could have been more specific. But
Kutzler was required by the Act (assuming Katz’ applica-
bility) to respond thoughtfully to the Union’s communica-
tions. See Interstate Food Processing Corp., 283 NLRB 303
(1987). And Burton said enough so that had Kutzler given
some thought to the matter, he would have realized that Bur-
ton was not merely naming which version of the settlement
sheet the drivers preferred
To summarize, Kutzler notified Burton (and, through Bur-
ton, FASH) that R/C planned a change in the drivers’ terms
of employment. FASH, through Burton, rejected the planned
change by means of language that Kutzler should have heard
as a rejection. At that point, if R/C had any duty at all to
bargain with FASH, the Act precluded R/C from altering its
terms of employment without reaching either agreement with
FASH or impasse. Because R/C made the change without
any further bargaining, R/C violated the Act—assuming the
existence of a duty to bargain.
Was R/C Required to Bargain About the Change: Given
Judge Roth’s, and the Board’s action in ordering an election
among R/C’s employees, R/C was in the midst of a question
concerning representation (QCR) at all relevant times. Had
R/C’s actions regarding the fuel surcharge and driver pay oc-
curred a few months later, the existence of the QCR would
have made no difference in R/C’s bargaining obligations:
since 16 July 1982 it has been clear that employers are re-
quired to bargain with incumbent unions even if QCR’s
exist. RCA Del Caribe, Inc., 262 NLRB 963, 965 (1982); see
also Dresser Industries, 264 NLRB 1088 (1982).
1122 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
12 The General Counsel argues that R/C’s actions in April 1982 should be
deemed subject to RCA Del Caribe even though RCA was decided 3 months
after those actions; even though RCA abruptly changed the law; and even
though it is clear that RCA’s companion case, Dresser Industries, applied pro-
spectively only. The General Counsel cites Richmond Waterfront Terminals,
265 NLRB 1214 (1982), in support of that position. In that case the employer
entered into a contract with an incumbent union even though a rival union had
filed an election petition and even though RCA Del Caribe had not yet been
decided. Then, a few days prior to the election (and still prior to RCA), the
employer rescinded the contract. The issue was whether a second election
should be ordered. The Board, deciding the case after RCA had issued, did
order a second election. In so doing, the Board ruled that: (1) the employer’s
act of contracting with the incumbent union did not violate Section 8(a)(2);
and (2) it was the employer’s recission of the contract that required that a sec-
ond election. But the Board did not state that its ruling was predicated on its
view that RCA should generally be retroactively applied. Because of that, and
because the facts in Richmond are so unique, my conclusion is that the Board
did not intend that Richmond’s retroactive application of RCA should be
deemed applicable to proceedings such as the one at hand.
13 121 NLRB at 1029
14 Baugham and Telautograph concerned decertification petitions, while the
cause of the QCR here was a petition filed by a rival union. But Telautograph
itself equates the two types of situations in respect to issues such as the one
at hand. See 199 NLRB at 892.
15 274 NLRB at 1375.
16 See sec. I, above.
But prior to July 1982, things were not that simple. Shea
Chemical Corp., 121 NLRB 1027 (1958); see also Telauto-
graph Corp., 199 NLRB 892 (1972).12 In Shea Chemical the
employer had entered into a collective-bargaining agreement
with the incumbent union in the face of a rival union’s peti-
tion. The Board held that the employer thereby violated Sec-
tion 8(a)(2):
We now hold that upon presentation of a rival or con-
flicting claim which raises a real question concerning
representation, an employer may not go so far as to
bargain collectively with the incumbent (or any other)
union unless and until the question concerning rep-
resentation has been settled by the Board.13
Then, in two subsequent cases, the Board, relying on Shea
and Telautograph, held that during a QCR an employer
could unilaterally change the terms of its employment. Ellex
Transportation, 217 NLRB 750 (1975), and Vernon Mfg.
Co., 214 NLRB 285 (1975), reaffirmed 219 NLRB 622, 623
(1975). Those cases have never been explicitly overruled (in
respect to employer action prior to RCA Del Caribe). In
other words, two cases arguably still extant in April 1982
stood for the proposition that since R/C was involved in a
QCR, R/C was entitled to make unilateral changes in driver
pay.
The problem with Ellex and Vernon is that, although they
had not been explicitly overruled, several cases subsequent to
them (but still prior to April 1982) held that even where a
QCR existed, an employer did have to bargain with the in-
cumbent union about any changes in terms of employment
the employer wanted to make. According to those cases, the
prohibitions of Shea and Telautograph were limited to bar-
gaining about or entering into a new collective-bargaining
contract during the pendency of a QCR. Baugham Co., 248
NLRB 1346 (1980); Coca Cola Bottling Co. of Memphis,
232 NLRB 794, 818 (1977). As Baugham puts it (at 1347
fn. 6):
Telautograph . . . absolves an employer from bargaining
for a new contract while a [decertification] petition is pend-
ing, but the Board clearly did not intend to hold in that case
that an employer would be permitted to take advantage of
such a period for the purpose of instituting unilateral
changes.14
What all this adds up to is that the question of whether
R/C had any obligation to bargain with FASH is a close one.
Given the fact that Ellex and Vernon have never been explic-
itly overruled in respect to pre-RCA matters, the law gov-
erning R/C’s actions is ambiguous. See Houston Coca-Cola
Bottling Co., 265 NLRB 766 fn. 2 (1982). Moreover we are
here dealing with an extinct area of the law (bargaining obli-
gations during QCR’s prior to RCA). This may well be the
last case ever to consider QCR bargaining obligations arising
from events occuring prior to the issuance of RCA Del
Caribe. Thus a finding in favor of R/C on this issue is un-
likely to send the law off in some inappropriate direction.
But Baugham and Memphis Coca Cola were decided sub-
sequent to Ellex and Vernon. And the interpretation of Shea
and Telautograph they espouse seems more in keeping with
the purposes of the Act than does Ellex’s and Vernon’s ap-
proach.
My conclusion, therefore, is that R/C violated Section
8(a)(5) of the Act when it failed to bargain with FASH about
how R/C should have taken account of the fold-in when it
computed the drivers’ pay.
FASH’s Two Rules: At all material times FASH (that is,
the Fraternal Association of Special Haulers) had an affiliate,
the Fraternal Association of Steel Haulers (the Steel Haulers),
that represented owner-operators who operated as inde-
pendent contractors. FASH and the Steel Haulers had the
same officers. Judge Roth accordingly referred to FASH as
‘‘part of what might be described as a double-breasted
union.’’15
The owner-operators whom the Steel Haulers represented
typically operated under leases with motor carriers that pro-
vided that the owner-operators had to pay for their own fuel.
The Steel Haulers accordingly had been in the forefront of
those urging the ICC to adopt the fuel surcharge. The Steel
Haulers never changed that position. Thus the Steel Haulers
urged the ICC to retain the fuel surcharge in the proceeding
that led to the fold-in and further argued that if a fold-in
were to be ordered, the folded-in part of the carriers’ reve-
nues should be treated specially.16
Kutzler was infuriated by what he saw as FASH’s incon-
sistent positions. And the Ligon respondents argue that
FASH’s ties to nonemployee owner-operators preclude it
from being deemed a ‘‘labor organization’’ for purposes of
the Act. But Redway I holds that FASH is a labor organiza-
tion, and the record contains no evidence showing that
FASH’s circumstances relevant to its labor organization sta-
tus had changed by April 1982. Thus, although Kutzler’s re-
action to FASH’s two roles is understandable, it does not ap-
pear to me that FASH’s ‘‘double-breasted’’ nature affected
R/C’s obligation to bargain with FASH.
II. DID R/C’S CESSATION OF OPERATIONS ON 28 AUGUST
1982 VIOLATE THE ACT
R/C stopped operating on 28 August 1982. The General
Counsel claims that R/C locked out its employees and that
1123REDWAY CARRIERS
17 Avery, Tr. 8021.
18 Id.
19 Tr. 7675.
20 Avery, Tr. 8022.
21 See 274 NLRB at 1406.
22 Tr. 9381.
23 During the week following FASH’s notice one of Kutzler’s sons, Frank,
opined that Kutzler ‘‘was going to close the place down.’’ (Another son, Scott,
disagreed.) I attach no significance to Frank’s comment. Frank’s personality
and capabilities were such that: (1) Kutzler would not have confided in Frank;
and (2) Frank would not have understood the circumstances any better than
any outsider.
R/C did so because of its employees’ concerted protected ac-
tivities and in order to discourage its employees from engag-
ing in such activities. The Respondents argue that R/C closed
because of a strike, not a lockout. This part of the decision
will consider those contentions.
The Situation at R/C in August 1982, as Viewed by
FASH’s Officials: FASH’s two business agents were George
Sullivan and Paul Dietsch. Beginning in about May 1982
they began to hear rumblings of irritation from some of
R/C’s drivers about R/C’s response to the fold-in.
Sullivan and Dietsch were certain that R/C’s drivers were
entitled to 27 percent of gross revenues as enlarged by the
fold-in. But rather than to try to discuss the matter with R/C,
they decided to call for a strike. Their reasoning: First, they
felt that mere talk would not produce the pay increase the
drivers wanted. Second, FASH had been losing support at
R/C, and Sullivan and Dietsch thought that a strike might
promote some enthusiasm for FASH among the drivers.
Third, Sullivan and Dietsch thought that R/C had the kind
of business that made it vulnerable to a strike. And fourth,
they believed that R/C was highly profitable. As it turned
out, they were correct about R/C’s vulnerability to a shut-
down. But they were incorrect about R/C’s profitability. R/C
had been suffering substantial losses, had been unable to pay
its bills as they came due, and had a negative net worth.
(R/C’s financial situation during the summer of 1982 will be
discussed in further detail in part III, below.)
The 14 August FASH Meeting: FASH held a meeting of
R/C drivers on 14 August. The first order of business was
to show the drivers that they ‘‘were not getting [their] full
percentage,’’ that they ‘‘were not getting their share.’’17 That
was accomplished, successfully. Dietsch then proceeded to
make the point that, as one of the drivers related it, the driv-
ers ‘‘should go on strike against the Company because that
was the only way that we would get our fair share.’’18
The drivers at the meeting backed Dietsch on the need for
a strike. But no more than about half of R/C’s drivers were
at the meeting. As Dietsch remembered it, in fact, attendance
was much sparser than that. In any case, Dietsch felt that
‘‘there weren’t enough drivers there to do much about it po-
litically.’’19 Dietsch therefore proposed, and the drivers
agreed, that ‘‘they would have another union meeting and at
that time we would call for a strike vote.20
Kutzler’s Response to the 14 August Meeting: Kutzler had
close ties to a number of R/C’s drivers—generally the most
senior of the drivers, and some of them routinely advised
Kutzler of what transpired at union meetings. Thus, soon
after FASH’s 14 August meeting, Kutzler learned that FASH
planned to call for a strike.
As Redway I and the record here make clear, any talk of
a strike against R/C precipitated a sense of outrage on
Kutzler’s part. Kutzler considered any employee who was
willing to engage in a strike against R/C to be disloyal and
underhanded. Moreover Kutzler considered August 1982 to
be a particularly unfair time for the employees to strike since
Kutzler had reason to think that R/C’s revenues were about
to increase dramatically if, but only if, no snags developed.
But anger was not Kutzler’s only reaction to the news of
an upcoming strike vote. His other reaction, and, I think, the
stronger one, was of anguish and fear. R/C’s survival was at
stake. In view of R/C’s losses, the company simply did not
have the financial resources necessary to sustain a strike.
Moreover Kutzler believed that a strike could endanger him
and his family and, in addition, result in the destruction of
R/C property. Kutzler knew that FASH had a reputation for
violence. More importantly, he had personally experienced a
FASH strike. FASH had called a strike against R/C in 1980,
and the strike was a destructive one even though virtually all
of R/C’s drivers stayed on the job. A number of the drivers
sabotaged R/C equipment, causing major expenses in terms
of equipment replacement costs, maintenance expenses, lost
trucktime, and security costs. Moreover FASH’s officials
personally sought to coerce R/C and its employees. George
Sullivan and FASH’s president, Bill Hill, threw rocks at
R/C’s trucks and threatened R/C employees with violence.21
And Paul Dietsch got into a fistfight with an R/C driver
when Dietsch tried to keep the driver from making a deliv-
ery.
Because Kutzler assumed that R/C was about to be revis-
ited by FASH-instigated violence, one of his first responses
to the news that FASH was going to call a strike was to
speak to the head of a guard service—one made up of off-
duty police officers. Kutzler told the guard service that he
expected a strike, that it might be violent, and that, if the
employees did go out on strike, R/C would need round-the-
clock guard service. (A guard, describing Dick and Gail
Kutzler’s attitude, referred to them as ‘‘extremely paranoid.
They were worried about the truckdrivers harming them.’’)22
On 20 August FASH issued a notice that called for a
meeting of R/C employees at 10 a.m. on Saturday, 28 Au-
gust. When Kutzler learned of the notice he became still
more convinced that R/C was about to face a strike.23
Kutzler accordingly told a carpenter to be prepared to board
up the windows of R/C’s terminal on 28 August. And he de-
cided to meet with R/C’s stewards.
The Meeting on 27 August: Kutzler met with R/C’s two
stewards, William Burton and Merle Reams, on 27 August.
R/C’s labor counsel, James Honzik, and R/C’s accountants,
John and Cathleen Lloyd, participated in the meeting.
Kutzler had met with R/C’s drivers a month earlier, on 24
July. He had spoken then about R/C’s troubled financial cir-
cumstances. But, clearly, the message had not been a con-
vincing one. Kutzler tried again at the 27 August meeting.
The meeting covered two topics. The first was the state of
R/C’s finances. The second topic was cost-cutting measures
that R/C would be adopting.
Kutzler, Honzik, and R/C’s accountants reported on R/C’s
financial picture. They said that R/C ‘‘was on the very verge
of turning itself around’’ but that the company was having
cashflow problems, that R/C could not afford increased costs,
and that R/C ‘‘was not strong enough to survive . . . any
1124 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
24 C. Lloyd, Tr. 7270–7271
25 Tr. 6526.
26 Kutzler also referred to a new system by which R/C would pay service
stations for fuel. The system, which would have affected drivers only slightly,
was a function of R/C’s poor credit worthiness, on the one hand, and on the
other, R/C’s lack of cash.
27 Burton, Tr. 6526. On 27 August Kutzler sent a letter to R/C’s employees
that reiterated the position the Company took in the meeting that day. See
Exh. 3 presented, jointly, by Ligon Transportation Company and Ligon Spe-
cialized Hauler. (I will hereafter refer to such exhibits as ‘‘LX’’.)
28 Some of the drivers’ proposals provided for specified periods for negotia-
tion, such as that afternoon, or that week. It could be that the drivers voted
without anyone ever making clear exactly which proposal was being voted on.
But the greatest likelihood is that the proposal that was the subject of the vote
did not limit the period for negotiations.
29 E.g., Dietsch: ‘‘Dick Kutzler told me, and she [Gail] told me that . . .
they would not talk to me under any circumstances. I had to talk to Honzik.’’
Tr. 7847.
30 Kutzler, Tr. 9554.
31 274 NLRB at 1406.
32 See Webster, Tr. 401.
33 See Kutzler, Tr. 9554.
kind of labor action.’’24 The accountants sought to bolster
R/C’s case by showing R/C’s financial statements to Burton
and Reams.
As it turns out, there was no way that anyone connected
with R/C’s management could have convinced the stewards
that R/C was having financial difficulties. Burton, in par-
ticular, was certain that R/C was highly profitable. As for the
picture portrayed by the financial statements, the stewards
did not understand the documents. (As Burton put it, ‘‘these
figures they showed us didn’t mean anything to us, because
we weren’t bookkeepers.’’)25 In addition the stewards did not
consider it to be their job to try to understand the documents,
and, as indicated above, they probably would not have be-
lieved that the documents accurately portrayed R/C’s cir-
cumstances even had they read and understood them.
Burton did ask for a copy of the financial statements. But
the financials portrayed such a devastatingly bad financial
picture that any company would have been hesitant about
having copies of such documents in the hands of persons
with hostile interests. And Kutzler is secretive and suspicious
by nature anyway. R/C accordingly refused to give a copy
of the statements to the stewards.
As for the cost-cutting actions, Kutzler told the stewards
that R/C would soon require its drivers to use self-service
pumps when they fueled company trucks (which would have
been a change from the then-current situation).26
Kutzler knew that the drivers did not want to use self-serv-
ice pumps. So however reasonable that proposal might have
been in other circumstances, it is astounding that he chose
27 August—the day before a strike vote—to announce the
change. I accordingly have considered the possibility that
Kutzler might not have been interested in heading off a
strike, after all. (The General Counsel raises a similar point,
claiming that R/C’s presentation of its financial data at the
27 August meeting was deliberately unbelievable.) Having
considered that possibility, however, I remain convinced that
Kutzler was horrified by the thought of a strike and urgently
wanted to keep R/C operating.
At no time during the meeting did anyone say anything
about a strike. But as the meeting closed, Honzik (R/C’s
labor counsel) asked the stewards to ‘‘talk to the men’’—that
is, the drivers—and ‘‘explain to them what [the accountants]
had shown’’ the stewards.27
FASH’s Meeting on 28 August: The meeting began about
10 a.m., as scheduled. Burton spoke first, reporting on the
meeting the day before with Kutzler, Honzik, and the ac-
countants. Burton voiced disbelief about R/C’s claims of
poverty.
Dietsch followed, saying that R/C could and should pay
the drivers 27 percent of gross revenues (including the fold-
in). Dietsch went on to argue that R/C was not making the
pension payments that the 1979 contract provided for, and
that the drivers were entitled to vacation pay (as also pro-
vided by the 1979 contract but not being paid by R/C). Bur-
ton and Reams supported Dietsch.
Dietsch and Sullivan then urged the drivers to go out on
strike forthwith, on the ground that that would give FASH
the best bargaining leverage. Several drivers, in response,
proposed that the employees go out on strike only if R/C re-
fused to negotiate with FASH. It turned out that those pro-
posals expressed the consensus of the meeting. Thus the res-
olution that the drivers ultimately adopted was something to
the effect that FASH was authorized to call a strike but
should exercise that authority only if R/C’s management re-
fused to negotiate with FASH.28
FASH’s Communications with R/C: The next step, after the
vote, was for FASH to advise R/C of the drivers’ demand.
Dietsch took that on himself, doing it via a telephone in the
lobby of the hotel where the meeting had just been held.
Years before, both Kutzler and his wife, Gail, had told
Dietsch that he was not to contact them directly, that he
should instead route all communications through Honzik.29 (I
will hereafter sometimes refer to Kutzler and Gail, collec-
tively, as ‘‘the Kutzlers.’’) Kutzler claimed that the reason
for that policy was that Dietsch and Sullivan could not be
trusted. And although Kutzler’s viewpoint about Dietsch’s
and Sullivan’s trustworthiness may have had something to do
with it, the more likely explanation is that Kutzler was un-
able to say anything to Dietsch without their getting into
‘‘screaming matches.’’30 That would be disagreeable and
counterproductive under any circumstances. It became a mat-
ter of greater importance beginning early in 1982, when
Kutzler had a heart attack. From that point on, Kutzler him-
self and, even more strongly, Gail, were desperately worried
that direct communication between Kutzler and Dietsch
would, literally, kill Kutzler.
Dietsch, however, hated dealing with Honzik. (The record
here shows that to be the case, as does the Board’s findings
in Redway I.)31 And the Kutzlers never told Dietsch about
their medical concerns. Dietsch accordingly made no effort
to reach Honzik. Dietsch instead telephoned R/C’s office in
an attempt to talk to Kutzler.
Dietsch called R/C’s office about noon. Neither of the
Kutzlers were there; they had gone home for lunch. Dietsch
spoke to Jon Woodman, one of R/C’s clerical personnel, tell-
ing Woodman that the drivers had just taken a strike vote,
but that ‘‘it’s not a strike, it’s just a vote, and I need to talk
to Dick.’’32
Woodman immediately called the Kutzlers’ home, reach-
ing Gail. Woodman told Gail that Dietsch had called.
Woodman then said something on the order of ‘‘Dietsch said
the drivers are going on strike and you [the Kutzlers] have
to call Dietsch immediately if you want to stop it.’’33
1125REDWAY CARRIERS
34 ‘‘People hear,’’ the truism goes, ‘‘what they expect to hear.’’ Tr. 9435.
35 For example, the record includes the testimony of many of the persons
who worked in the terminal with the Kutzlers during the period in question.
(Such persons include R/C’s clerical employees and employees of the Lloyd
accounting firm.) Without exception all such witnesses firmly believed that the
shutdown was caused by a FASH strike. Such beliefs could not have devel-
oped unless the Kutzlers honestly thought that FASH called a strike on 28 Au-
gust or unless the Kutzlers carefully plotted to lie repeatedly to such persons.
And given the personalities of Kutzler and Gail, that latter alternative is not
a real possibility.
36 274 NLRB at 1380.
37 The quotes are from Carlson Roofing Co., 245 NLRB 13, 16 (1979),
modified on other grounds 627 F.2d 77 (7th Cir. 1980).
Gail, after describing the conversation to Kutzler, called
Honzik’s office but was told that Honzik would not be avail-
able until that evening. At that point Kutzler wanted to call
Dietsch, but Gail convinced him that she should make the
call instead. She did so. Dietsch asked to speak to Kutzler.
Gail responded that she did not know where Kutzler was
(which, of course, was not the case) and that Honzik would
not be available until later that day. Dietsch, who thought
that he was getting a runaround and who personally favored
an immediate walkout by the drivers, replied curtly, saying
something to the effect that ‘‘the drivers have authorized a
strike,’’ and that he had to talk to Kutzler. The conversation
ended there.
The moment was emotionally charged. Gail had never had
much to do with R/C’s labor relations. And Gail knew that
Kutzler expected a strike.34 She thus was not in a frame of
mind to make careful distinctions between strikes and strike
authorizations. As a result Gail turned to Kutzler and said
words to the effect of ‘‘Dietsch says they’re on strike.’’
The foregoing description of the telephone conversations
represents an amalgam of the testimony of a number of wit-
nesses, testimony that conflicts in a number of particulars. I
thus would not be surprised if the actual conversations were
not precisely as described above. In fact, given the varying
testimony about those conversations, it would be remarkable
if the above description was entirely accurate. But the evi-
dence is overwhelming that the Kutzlers came away from the
conversations convinced that FASH had just called a strike.35
When Woodman telephoned the Kutzlers to tell them of
Dietsch’s call, he had indicated that there was a possibility
of stopping the strike. Moreover R/C’s employees had in the
past taken action similar to their vote on 28 August: Almost
exactly 3 years earlier the employees had voted to authorize
a strike if R/C ‘‘failed or refused to negotiate.’’36 Finally, in
the past when FASH had called a strike, it had done so only
after giving several days’ notice. (In fact, the 1979 contract
provided for such notice.) Given these factors and the impor-
tance of the matter to R/C, one might expect that Kutzler
would have pursued the matter further, checking to find out
exactly what Dietsch had in mind.
Kutzler did not. Kutzler had been sure that the drivers
were going to vote to strike R/C. And Gail’s words con-
firmed that expectation. Kutzler consequently did not even
consider the possibility that the employees had not called a
strike. Instead he moved to protect R/C from the violence he
thought would flow from what he thought was a strike.
Kutzler did that by telling the carpenter to board up the win-
dows of the terminal building and by telling the guard serv-
ice to patrol the property and to exclude all employees from
the property.
All of this occurred on a Saturday which, for most em-
ployees, was not a working day. For various reasons, how-
ever, some of the employees who had participated in the
meeting went to the terminal later in the day. What they
found was boarded-up windows and a uniformed guard who
would not let them on the property. (Those few employees
who were on the property when the guard arrived were or-
dered to leave.) R/C’s bargaining unit employees promptly
(and understandably) concluded that R/C had locked them
out and that the company had opted to refuse to negotiate
with the employees’ bargaining representatives.
Had R/C Done Anything Unlawful at this Juncture: The
question I address here is whether R/C had violated Section
8(a)(1), (3), or (5) of the Act as of the afternoon of 28 Au-
gust 1982.
Certainly Kutzler’s decision to shut R/C down was coer-
cive. The employees concertedly demanded that R/C nego-
tiate with their union (action protected by the Act) and cou-
pled that demand with a strike authorization, not a strike
(also action protected by the Act). R/C’s response was to
stop operations and to deny the employees access to com-
pany property. The ‘‘inhibiting effect’’ of that response on
the employees’ ‘‘willingness to engage in Section 7 activi-
ties’’ is obvious.37
Moreover, but for Kutzler’s union animus and his unwill-
ingness to view strikes as anything but an underhanded effort
to destroy his company, the shutdown might never occurred.
As discussed earlier, on 28 August Kutzler’s primary concern
was about potential violence. But had Kutzler been less an-
tagonistic toward FASH and employee strikes, he might have
retained sufficient clarity of thought to determine exactly
what position FASH had adopted before he shut R/C’s doors.
Finally, it was Gail Kutzler who erred most egregiously,
ignoring the distinction between ‘‘strike authorization’’ and
‘‘strike.’’ And although Gail was inexperienced in such mat-
ters, she was an owner and officer of R/C.
Those circumstances point to R/C having violated Section
8(a)(1) of the Act, and Section 8(a)(3), notwithstanding the
fact that both of the Kutzlers honestly thought that FASH
had called a strike, and notwithstanding the fact that the
Kutzlers were not motivated by any desire to punish employ-
ees for concerted protected activity or to discourage union
activity. See NLRB v. Burnup & Sims, 379 U.S. 21 (1964);
NLRB v. Erie Resistor Corp., 373 U.S. 221 (1963).
But two factors point in the other direction: FASH’s his-
tory of violence, and the fact that the Kutzlers had made it
clear that Dietsch was to deal with Honzik, not the Kutzlers.
As for FASH’s violence, FASH cannot escape responsi-
bility for the effects on Kutzler’s state of mind of FASH’s
violence during the 1980 strike at R/C. Chickens do come
home to roost. The probabilities are that Kutzler would not
have panicked into shutting down R/C had the 1980 strike
been free of violence.
As for Dietsch’s decision to communicate with the
Kutzlers rather than with Honzik, the shutdown was the
product of misunderstood communications that, in turn, were
the result of factors ranging from Gail’s inexperience in labor
matters to the weakened condition of Kutzler’s heart. Those
factors would not have obtained had Dietsch called Honzik
who, Dietsch knew, was R/C’s representative for purposes of
receiving communications from FASH. I accordingly have no
1126 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
38 Under Wisconsin law, employees are not eligible for unemployment com-
pensation if they lose their jobs as a result of a ‘‘labor dispute.’’ R/C’s bar-
gaining unit employees assisted by FASH, successfully applied for unemploy-
ment compensation, claiming that they did not lose their jobs as a result of
either a lockout or a strike. I have not taken the employees’ unemployment
compensation claims into account in arriving at the factual and legal conclu-
sions set out above even though those claims do conflict to at least some de-
gree with the position of FASH and the General Counsel in this proceeding.
39 One of FASH’s business agents, Sullivan, testified that the drivers did
picket in support of FASH. But that testimony appears to represent faulty
memory, not the facts as they occurred.
40 Tr. 6281.
41 Tr. 7766.
42 Tr. 6176.
basis for assuming that Honzik would have failed to under-
stand Dietsch’s message, and I therefore have no basis for
assuming that R/C would have shut down had Dietsch dealt
with Honzik. And Dietsch’s insistence on speaking with the
Kutzlers instead of Honzik is particularly egregious given
Judge Roth’s specific criticism about Dietsch’s unwillingness
to deal with Honzik.
Because of these considerations my conclusion is that: (1)
R/C’s act of shutting down on 28 August did not violate Sec-
tion 8(a)(1) or (3), and (2) R/C’s failure to notify FASH that
it was shutting down did not violate Section 8(a)(5).38
III. THE POSTSHUTDOWN MEETINGS BETWEEN R/C
AND FASH
Representatives of R/C and FASH met intermittently be-
tween 30 August and 17 November 1982. This part of the
decision discusses what happened at those meetings, the mo-
tivation behind R/C’s negotiating position, and whether R/C
violated Section 8(a)(1), (3), or (5) during the course of those
meetings.
The Situation in and near the Terminal: On Sunday morn-
ing (29 August) 30 or 40 drivers gathered near R/C’s ter-
minal area—specifically, across the street from the southwest
corner of the terminal property. At that location the drivers
were within easy sight of persons in the terminal building
and, concomitantly, could see all traffic entering and leaving
the terminal area. But the drivers were not directly in front
of the terminal itself.
The drivers did not hinder anyone in any way from enter-
ing or leaving the terminal. And none of the drivers dis-
played any picket signs. (One dissident driver set up a sign
directly in front of the terminal. But the message on the sign
attacked FASH, not R/C.)39 That set of circmstances contin-
ued day and night for several weeks. The only change during
that time was in the number of drivers present at the corner.
Throughout the period only a few drivers were present at
night. And as the days progressed the number of drivers con-
gregating near the terminal during the day decreased as well.
As for the situation in the terminal building and on its
grounds, security guards excluded bargaining unit employees
from the terminal area during the entire period under consid-
eration here. But that did not mean that the terminal building
was empty. The Kutzlers and R/C’s entire office staff
showed up at the R/C offices virtually every day during the
period even though, much of the time, there was no work to
be done and even though no one got paid.
The R/C-FASH Meeting During the Afternoon of 30 Au-
gust: At about 10 a.m. on Monday, 30 August, a security
guard walked across the street to where the drivers had sta-
tioned themselves and told Burton (the steward) that Kutzler
wanted to meet with the drivers that afternoon.
The meeting started about 1 p.m. in the terminal. Kutzler
and Honzik represented R/C. They did not get to meet with
the entire bargaining unit. Rather, Dietsch, Sullivan, Burton,
and one or two other drivers represented R/C’s bargaining
unit employees.
Kutzler started the discussion by asking why FASH called
a strike when the drivers knew that R/C had such bad finan-
cial problems. An argument ensued, with FASH asserting
that R/C locked out the drivers and Kutzler reiterating that
the drivers were on strike. No one used the occasion, how-
ever, to try to determine what was in fact the case.
At that point Honzik took over as spokesman for R/C. For
the rest of the meeting Kutzler rarely said anything. Dietsch
did most of the talking for FASH. Honzik began by talking
about R/C’s financial condition. Honzik said that that condi-
tion was terrible, that R/C had suffered huge losses and,
moreover, that if by 10 p.m. that night R/C was not able to
tell its two major shippers that it was about to resume oper-
ations, R/C might lose massive amounts of business and thus
be unable ever to reopen its doors. Honzik went on to say
that until recently R/C had not been permitted to negotiate
new terms with FASH. But, said Honzik, a recent change in
Board law coupled with the ‘‘life or death’’ circumstances
facing R/C meant that R/C now could propose those new
terms. (Honzik’s view that R/C had been prohibited from ne-
gotiating new terms with FASH presumably stemmed from
Shea Chemical and its progeny (see part I, above) coupled,
perhaps, with the provision in Judge Roth’s recommended
Order that R/C maintain in force the terms of the 1979–1981
collective-bargaining contract. The recent change in Board
law must have been a reference to RCA Del Caribe, which
the Board had issued on 16 July.) Honzik then said some-
thing like ‘‘we are taking this opportunity to demand conces-
sions we felt were necessary for some time’’40 and that the
drivers had to grant to R/C if R/C were to be able to resume
operating.
Dietsch thought that Honzik’s claims of R/C poverty were
‘‘no more than a ploy,’’ and said so.41 Honzik, however, re-
iterated that the company was failing. He then said that ‘‘in
order for the company to turn around rather than go out of
business [it] now needed these concessions.’’42 The conces-
sions he then demanded were the following:
(1) A reduction in the percentage of gross revenues
that drivers would receive (from 27 percent of gross
revenues—excluding the fold-in—to 23 percent of gross
revenues—excluding the fold-in). This, of course, was
in the face of the drivers’ belief that they should be get-
ting a substantially greater percentage of revenues.
(2) Reductions in the pay that drivers got for multi-
stop loads and for shipments that had to be loaded or
unloaded by hand.
(3) Decreased health insurance payments by R/C.
(4) A variety of other changes that would be unfa-
vorable to most of the drivers, including changes in the
dispatch system; affirmation by FASH that the drivers
were not entitled to pension payments or vacation pay;
and a no-strike agreement by FASH.
1127REDWAY CARRIERS
43 Tr. 7549.
44 Tr. 7634.
45 Burton testified that Dietsch told Honzik and Kutzler that the drivers
would be willing to work at their present terms—that is, the terms in force
on and before 28 August—while FASH and R/C tried to work out some com-
promise terms. But that testimony conflicts with considerable other evidence,
and I do not credit it.
46 R/C’s spotting fees are discussed at 274 NLRB 1375, 1389–1392.
47 See LX 4.
48 Tr. 7551.
49 Honzik, Tr. 6181.
50 One difference between the attachment and the 30 August proposals was
that the attachment referred to driver pay of 19 percent of gross revenues ‘‘in-
cluding the fuel surcharge fold-in’’ while the 30 August proposals referred to
23 percent of gross revenues excluding the fold-in. The two formulations,
Continued
The FASH representatives dismissed Honzik’s proposals
out of hand, saying that it was ‘‘ridiculous’’ for R/C to even
consider asking for such concessions.43 Instead, R/C had to
live up to the terms of the 1979–1981 contract, including
paying 27 percent of gross revenues including the fold-in,
vacation pay, pension payments, payment by R/C of dues
owed to FASH, and so on. (Dietsch was well aware that the
1979 contract had expired by its own terms; but he was also
well aware that Judge Roth had ordered R/C to abide by the
terms of the contract pending an election.) Dietsch went on
to say that if R/C would ‘‘take the contract that we have
[i.e., the 1979–1981 contract] and accept that,’’ then FASH
would be willing to go over the contract ‘‘item by item and
. . . discuss the renegotiation of some of these issues that
you don’t feel that you can live with.’’44 But, Dietsch em-
phasized, the starting point had to be R/C’s agreement that
the contract governed.45
Honzik rejected the applicability of the contract and said
that R/C would not agree to any of the terms Dietsch spoke
of.
As the meeting concluded, Honzik asked the FASH rep-
resentatives to allow the drivers to decide whether they want-
ed to accept R/C’s proposed set of concessions. Dietsch and
Sullivan agreed to do so and said that they would arrange
for a drivers’ meeting that evening.
The Evening Meeting on 30 August: As Dietsch and Sul-
livan had promised, the drivers met that evening. The drivers
not only rejected the R/C’s package, but also they decided
that they would not return to work for anything less than the
terms of the 1979–1981 contract (which included, as the
drivers saw it, driver pay based on 27 percent of gross reve-
nues including the fold-in). I earlier concluded that the driv-
ers did not go out on strike on 28 August. But, clearly, given
the drivers’ refusal to return to work, they were on strike as
of the evening of 30 August. The strike lasted for as long
as Redway and Cardinal continued to exist.
Dietsch and Sullivan promptly advised Kutzler and Honzik
of the drivers’ decision. Honzik asked if he could speak to
the drivers. Dietsch said no.
The Meeting of 1 September: At R/C’s request, representa-
tives of FASH met with Honzik and the Kutzlers at 4 p.m.
on 1 September.
Honzik and Kutzler began the meeting by urging FASH to
accept R/C’s 30 August proposal. But Dietsch again rejected
the proposal, and again said that the drivers would not return
to work until R/C agreed to live up to the terms of the 1979
contract. Dietsch, moreover, insisted that R/C pay backpay to
the drivers, withheld dues to FASH, COLA increases to
R/C’s mechanics, and spotting fees.46
Honzik responded by saying that R/C’s proposal of 30 Au-
gust was R/C’s ‘‘final’’ proposal, that the drivers had to ac-
cept the proposal for R/C to be able to operate, and that
there was no reason to meet again unless and until FASH
was willing to accept that proposal. Honzik went on to say
that even if FASH did subsequently agree to R/C’s proposal
of 30 August, R/C might not be able to reopen—that reopen-
ing would depend on whether any of R/C’s customers would
then be willing to resume shipping via R/C. Meanwhile, said
Honzik, R/C would be ‘‘exploring other avenues to solve
[its] financial problems without remaining in the trucking
business.’’47
Sullivan’s response was to draft a paper for Kutzler’s sig-
nature acknowledging that R/C was going out of business.
That led Honzik and Kutzler to retreat from Honzik’s earlier
statements. R/C was not going out of business, they said.
Rather, when R/C resumed operations it might be a lot
smaller.
During the course of the meeting Dietsch and Sullivan
asked to see R/C’s books. A meeting was set up for 3 Sep-
tember in response to that request.
The Meeting on 3 September: Once again the meeting was
held in R/C’s office. The usual representatives of FASH, the
drivers, and R/C were there, with the addition of Cathleen
Lloyd, an accountant who had been reviewing R/C’s books.
Kutzler and Honzik treated the meeting as one in which
Lloyd would explain R/C’s financial status to the FASH and
driver representatives. Lloyd did that, reading from a sheet
of figures. What Lloyd’s report added up to, essentially, was
a claim that, in Sullivan’s words, ‘‘the company was
broke.’’48 Kutzler then added that R/C was going to have to
end some truck leases, which would reduce R/C’s size by as
much as 50 percent, ‘‘unless there was an immediate settle-
ment of the strike’’ because ‘‘it would take some time for
him to get the business back.’’49
Dietsch and Sullivan responded that they did not believe
anything that Lloyd had said about R/C’s finances and that
they wanted to review R/C’s books of accounts themselves.
Kutzler and Honzik rejected that request, suggesting that
Dietsch and Sullivan content themselves with a look at the
paper from which Lloyd had been reading. Lloyd said that
she would be willing to have R/C’s books reviewed by any
accounting firm that FASH named. Neither Dietsch nor Sul-
livan considered either of those alternatives to be satisfac-
tory, and the meeting ended.
R/C’s Mailing to Employees on 3 September: On 3 Sep-
tember Kutzler sent a three-page letter to R/C’s bargaining
unit employees and, as an attachment, R/C’s proposal of 30
August. Kutzler intended the letter to be an accurate sum-
mary of the bargaining between FASH and R/C during the
period 27 August to 3 September and a plea for the drivers
to return to work at the terms proposed by R/C on 30 Au-
gust. Among other things the letter referred to R/C’s debts
and losses, to the ‘‘precarious financial position of the Com-
pany,’’ to the low wages paid by R/C’s ‘‘cut rate competi-
tors,’’ to a plan by Kutzler to explore ‘‘other avenues to
solve [R/C’s] financial problems without remaining in the
trucking business,’’ and to the claim that ‘‘Redway/Cardinal
may never recover even if there is an immediate settlement
and the Company receives all of the concessions it needs.’’50
1128 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
however, come close to resulting in the same pay levels. The letter and attach-
ments are included in the record as LX 4 and LX 4(a).
51 The text of Kutzler’s statement is in the record as LX 11.
52 LX–11.
53 The General Counsel does not claim that any post-September events con-
stitute a refusal to bargain on the part of R/C or the Kutzlers. As for the Octo-
ber and November meetings, the General Counsel argues that the parties’ in-
tent in attending them was to attempt to settle this proceeding and that I ac-
cordingly should not have received evidence concerning those meetings (see
Fed.R.Evid. 408). Although the issue is a close one, I think the record tends
to show that R/C and FASH treated the meetings as continuations of their Au-
gust-September meetings rather than as an effort to compromise the claims in
this proceeding of FASH and/or the General Counsel.
The Meeting on 10 September: On 10 September Kutzler
called a meeting for the purpose of reading a statement to
the FASH representatives. According to the statement: (1)
R/C had lost most, perhaps all, of its business with its major
customers; (2) R/C was ‘‘relinquishing the 31 tractors we
have now on lease’’; (3) those tractors and most of R/C’s
trailers ‘‘will be . . . taken over by an Illinois truck line’’;
(4) R/C’s terminal was ‘‘available for lease to anyone inter-
ested’’; (5) while R/C still retained 30 of its trailers and the
18 tractors that it owned, ‘‘if the strike continues’’ Kutzler
would consider leasing out that equipment as well; and (6)
even if the strike were promptly settled, the reduced level of
business available to R/C might mean that the company
could employ only few drivers.51
The statement was a peculiar one in that: (1) R/C never
did ‘‘relinquish’’ its trucks to any Illinois truckline; and (2)
at that point R/C had not disposed of any of its assets to any-
one.
The reference to an Illinois truckline does, however, point
to a company called Redway Contract Carrier Corporation
(hereafter sometimes referred to as RCCC), the only Illinois
truckline to which the record refers. Paul Maton, who was
R/C’s, and Kutzler’s, longtime lawyer and confidant, had
filed RCCC’s incorporation papers and applied for ICC au-
thority for RCCC in early 1982, a period in which R/C’s for-
tunes looked bleak. According to the ICC filing, RCCC was
located in northern Illinois and planned to serve Ocean Spray
(which was R/C’s main customer). Maton met with the
Kutzlers a few days after the shutdown on 28 August.
Kutzler claimed that he had ‘‘no ownership or responsi-
bility for’’ the unnamed Illinois company to which R/C had
purportedly provided its trucks.52 But if Kutzler’s reference
was to RCCC, as I think it was, the evidence suggests that
his claim was at best a half-truth. Similarly, Maton testified
that the Kutzlers had no interest in RCCC and that RCCC
had ‘‘no connection’’ with Redway. But as I listened to
Maton’s testimony, it seemed to me that it amounted to a
careful dance designed to avoid both the whole truth and out-
right falsehood.
RCCC was never more than a paper corporation (even
though its ICC application claimed that it operated 20 trac-
tors and 50 trailers). The State of Illinois dissolved RCCC
in 1983 because it failed to pay its franchise tax.
Robert Kutzler’s ‘‘Go-Between’’ Efforts: Kutzler’s brother,
Robert, drove his own truck for R/C and was a member of
the bargaining unit. He became dissatisfied with the course
of the negotiations between R/C and FASH, and proposed to
Kutzler that he (Robert) talk to the drivers about returning
to work under the terms that had been in force on 28 August.
Kutzler agreed, saying only that R/C could not afford to pay
more than the drivers had been receiving. But according to
Robert’s credible testimony, when he did propose to the driv-
ers that they return to work on those terms, the drivers flatly
refused.
The record provides no information about the dates of
Robert’s go-between efforts.
Events Subsequent to September 10—R/C Seeks Bank-
ruptcy Protection: Both Cardinal and Redway filed Chapter
11 petitions on 17 September 1982. Those petitions were the
product of Kutzler’s discussions with lawyers and account-
ants that probably began about 12 September, perhaps a
week or so earlier. The General Counsel claims that R/C’s
Chapter 11 filings were merely an antiemployee and
antiunion tactic. My conclusion is that that contention is
wrong and that R/C filed its petitions for entirely bona fide
purposes. (R/C’s Chapter 11 petitions are further discussed in
part IV, below.)
The 23 September Meeting Between R/C and FASH: On
23 September representatives of R/C and FASH held the last
meeting they were to hold in R/C’s terminal and the last they
were to hold for 3 weeks. The meeting was no more produc-
tive than any of the previous sessions. Neither R/C nor
FASH made any new proposals. FASH, moreover, insisted
that before the drivers would return to work, R/C would have
to pay all backpay claims, notwithstanding the barriers to
such payments presented by R/C’s Chapter 11 status.
Cairns’ Letter of 24 September: The following day, Don-
ald Cairns (an associate of Honzik’s and Honzik’s replace-
ment as R/C’s labor counsel) wrote to FASH stating his un-
derstanding of FASH’s position (as FASH had propounded
it at the meeting on 23 September); stating that as he under-
stood FASH’s representatives, the Union was unwilling to
shift its position and that the Union saw no purpose in sched-
uling further negotiating sessions; and stating that R/C was
‘‘not prepared to make any changes to its last offer at this
time.’’ FASH did not reply to Cairns’ letter.
Cardinal Resumes Operations in Conjunction with other
Companies: In early October 1982 Cardinal leased many of
its tractors and trailers to a Tennessee corporation named
Ligon Transportation Company. Thereafter Cardinal (but not
Redway) resumed operations out of the Kenosha terminal in
conjunction with Ligon Transportation Company and two
other companies, Smyrna Personnel Services (SPS) and
Litco-Wisconsin. SPS hired the drivers for the trucks. Some
of the striking R/C drivers unconditionally offered to return
to work, and SPS hired a few, but only a few, of those R/C
drivers. (All of that is the subject of part IV of this decision.)
Kutzler’s Last Meetings with FASH: Officials of Region
30 tried twice to bring R/C and FASH together for further
negotiations. A brief, nonsubstantive meeting was held in the
Region’s Offices on 14 October 1982. Then, on 17 Novem-
ber (again in the Region’s Offices), representatives of R/C
and FASH did discuss what it would take to get R/C back
into operation. R/C, on its part, claimed that its financial cir-
cumstances had so worsened that it needed concessions from
the drivers that were much greater even than those it had
previously demanded. FASH, in response, said that the driv-
ers would not return to work until R/C paid everything due
them under the terms of the 1979–1981 contract. Neither side
was willing to ease its stand, and the meeting ended.53
R/C and FASH never met again.
1129REDWAY CARRIERS
54 Tr. 6388–6389.
55 The General Counsel argues that R/C’s failure to replace the strikers with
new employees is additional evidence of Kutzler’s decision to terminate R/C.
But the record shows that Kutzler felt that any such attempt would produce
violence on FASH’s part, violence that not only would be a problem in its
own right, but would result in expenses that R/C was in no position to handle.
That is true even though, anomalously, Kutzler was willing to run Cardinal
trucks with new employees as part of an arrangement with Ligon Transpor-
tation Company (see part IV, below).
R/C’s Motivation for its Negotiating Tactics: The most dif-
ficult factual issue in this case is why R/C took the stance
that it did in its negotiatians with FASH from 30 August on-
ward. Try as I might, I have been unable to figure out why
R/C proceeded as it did.
The General Counsel’s Theories: The General Counsel
poses alternative possibilities for why R/C took the negoti-
ating stance that it did.
One is that the Kutzler wanted to ‘‘cause a capitulation
and require [FASH] to execute a contract that no self-re-
specting union would execute.’’54 The other is that Kutzler
knew from the start that FASH would reject R/C’s offers. In
fact, that was the plan. Kutzler claims the General Counsel
had no interest in having R/C resume its operations. Rather,
Kutzler’s plan was to transfer R/C’s business to another busi-
ness entity, perhaps temporarily, perhaps permanently. In the
case of a temporary shutdown, Kutzler’s point was to punish
the drivers for their efforts to gain better pay and fringe ben-
efits, to discourage any future efforts of that type, and to
neutralize FASH. If Kutzler intended a permanent shutdown,
his aim was to set up an alter ego in order to end having
to deal with R/C’s drivers and with FASH. And that, in turn,
was again a function of the drivers’ concerted protected ac-
tivities.
The most obvious evidentiary support for the General
Counsel’s contentions is the manner in which R/C ‘‘bar-
gained.’’ R/C’s demands for concessions, presented as ulti-
matums, virtually precluded any possibility of agreement
with FASH. (Alternatively, had FASH nonetheless agreed to
R/C’s demands, it is clear that FASH would thereby have
lost all of its support among the drivers.) In addition, R/C
based its demands for concessions on claims of poverty, but
then denied FASH direct access to R/C’s financial records.
Finally, after 17 November R/C never again sought to meet
with FASH.
Nonetheless, I am not convinced that the General Coun-
sel’s assertions paint an accurate picture.
To begin with, R/C was debt-ridden, was behind in its
payments to creditors, and lacked any cash at all. R/C ac-
cordingly was in no position to attempt to ‘‘cause a capitula-
tion’’ of anybody.
Second, if, as the General Counsel contends, R/C’s negoti-
ating posture was a function of Kutzler’s plan to transfer
R/C’s business to another entity, one would expect Kutzler
to have entered into some arrangements in that respect on or
before 30 August, when R/C first made its demands for con-
cessions from FASH. (If Kutzler’s intention was to transfer
R/C’s business, it would have been extraordinarily foolhardy
for Kutzler to have taken action that threatened R/C’s exist-
ence without having made such arrangements.) But the
record fails to show that Kutzler had made any such arrange-
ments on or prior to that date, or even within a few weeks
thereafter. (The closest the record comes in that respect is in
its limited references to Redway Contract Carrier Corpora-
tion. Matters pertaining to that company will be discussed
below.)
Third, R/C’s financial position was such that it grew
weaker (and less valuable) each day it failed to operate. Thus
Kutzler had nothing to gain, and much to lose, by keeping
R/C shut down until he effectuated a transfer of R/C’s busi-
ness.
Fourth, R/C was far and away the most significant feature
of Kutzler’s life, and Gail’s. Kutzler formed Redway in
1970. It was an outgrowth of Kutzler Cartage Company,
which had been begun by Kutzler’s father and for which
Kutzler began working while he was still a teenager. The
Kutzlers had for years spent long hours at the terminal, la-
bored for R/C’s success and growth, anguished over its dif-
ficulties, and mortgaged their home to provide funds for the
company. On top of all that, R/C provided the livelihood for
seven other members of the Kutzler family. The result of this
state of affairs was that both Kutzler and Gail considered
their well being and their family’s, on the one hand, and
R/C’s, on the other, to be utterly intermingled. I have trou-
ble, therefore, picturing Kutzler deliberately endangering
R/C’s continued existence by causing the prolonging of a
strike that R/C simply could not afford.
Fifth, neither the record in this proceeding nor in Redway
I shows Kutzler to be so venomus toward FASH and R/C’s
drivers that, in order to punish them, he would undertake to
put R/C at risk and, accordingly, his well being and that of
his family as well.
Sixth, although R/C’s unwillingness to give FASH direct
access to its books was provocative, for the reasons pre-
viously discussed (in part II), that unwillingness says nothing
about Kutzler’s interest in keeping R/C alive. And R/C did
offer to open its books to any accouting firm that FASH
named.
Seventh, Kutzler authorized his brother, Robert, to suggest
to FASH that the drivers return to work at their existing pay
scales. And last, the General Counsel’s arguments do not
take into account: the fact that the drivers were on strike (the
General Counsel claims, erroneously, that they were not on
strike); that FASH (and the drivers) refused to consider re-
turning to work unless R/C paid the drivers 18 percent more
than they had been receiving plus additional fringe benefits
(the General Counsel argues, again erroneously, that FASH
was willing to have the drivers return to work under the
terms and conditions existing on 28 August); and that
Kutzler’s view that R/C could not afford to pay the drivers
anything like what FASH was demanding was not unreason-
able given (a) R/C’s financial condition, and (b) the fact that
R/C already was paying its drivers more than its competi-
tors.55
Kutzler’s Claim that R/C’s Demand for Concessions was
a Bargaining Tactic: Kutzler was asked, only once, to ex-
plain ‘‘how it could be that . . . this stoppage . . . was the
basis for the company asking the employees for concessions,
with the optimism you had about the company?’’ (The ques-
tion was posed by the attorney for the Ligon Respondents.
Neither the Kutzlers nor R/C was represented by an attor-
ney.) Kutzler’s response was a hodgepodge of two different
thoughts. The first was that R/C was paying its drivers more
than R/C’s competitors were paying theirs. The second was
1130 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
56 Tr. 9706. 57 Tr. 7297–7298.
that R/C did not really expect concessions from FASH. Rath-
er, R/C’s demand for concessions was nothing more than a
bargaining tactic. In Kutzler’s words:
If we had . . . said ‘‘we will put you back to work for
exactly what you were getting yesterday,’’ they [the
drivers] would have asked for more. . . . I mean [in]
negotiation you never put on the table what you are
willing to settle for.56
Turning to Kutzler’s claim about negotiating tactics, it is
true that at no time did FASH evince any willingness to con-
sider the possibility that R/C could not afford to pay in-
creased wages and fringe benefits. FASH’s position was that
R/C had to honor the terms of the 1979–1981 contract (with,
perhaps, minor modification) and had to treat the fold-in as
part of ‘‘gross revenues’’ for driver pay computation pur-
poses.
But it is difficult to credit Kutzler’s explanation that R/C’s
proposal was merely a tactic designed to encourage FASH to
make more realistic responses. To begin with, R/C made its
proposal before FASH’s representatives made theirs. Second,
right from the start (on 30 August) Honzik, as R/C’s spokes-
man, went out of his way to present R/C’s proposal as an
ultimatum, not as a place from which to start bargaining.
And R/C continued to present its proposals as ultimatums in
every subsequent meeting. Kutzler knew that the drivers be-
lieved that they were entitled to a pay increase. In fact he
thought that they went out on strike on 28 August to gain
such an increase. Yet R/C responded by demanding cuts in
pay and tougher working conditions, on a take-it-or-leave-it
basis.
Did Kutzler Think that R/C Needed the Concessions it De-
manded: It could be that, as Honzik kept telling FASH, R/C
needed major concessions from the drivers to survive or, at
least, that Kutzler and Honzik honestly believed that to be
the case.
As just noted, Kutzler said that a reason for R/C’s negoti-
ating approach was that R/C’s wages and benefits were high-
er than its competitors. And, in fact, R/C’s driver wages and
fringe benefits were more costly than those paid by R/C’s
competitors. (There is virtually no dispute about that.
Dietsch’s testimony indicates that he considered R/C’s driv-
ers to be unusually well paid. And R/C’s drivers found that
when they searched for new jobs, none was as attractive as
their positions at R/C had been.)
But the question is why R/C chose to demand concessions
at a moment that seems extrordinarily inopportune—when,
Kutzler thought, R/C’s drivers had gone out on strike in the
belief that they were entitled to a wage increase. No one
claims, after all, that R/C’s disadvantage in labor costs had
just occurred. Thus R/C’s high labor costs would explain
R/C’s sudden demand for concessions only if Kutzler
thought that those wage costs were about to cause R/C’s col-
lapse.
It is true that R/C was in serious financial trouble. R/C
was deeply in debt. Some of R/C’s vendors had cut off cred-
it. Others had instituted lawsuits over unpaid bills. R/C owed
the Internal Revenue Service over $200,000 in unpaid payroll
taxes. The State had levied a large assessment against R/C’s
terminal which R/C was unable to pay. R/C had no cash at
all; in fact its checking accounts were overdrawn. And al-
though R/C’s cashflow had turned positive by August (its
cashflow had been negative for much of 1982), R/C’s oper-
ations remained unprofitable. In that regard, although R/C’s
biggest customers had promised increases in business starting
in September, increased volume is not a panacea for a truck-
ing company if the company is losing money on every ship-
ment it carries.
But shortly before the shutdown Kutzler had told R/C’s
accountants that good times were just ahead. As one of those
accountants, Cathleen Lloyd, testified, the Kutzlers ‘‘were
very positive about their company and its ability to survive
and repay its debts . . . prior to the work stoppage every-
thing was very positive.’’57 According to Kutzler’s own testi-
mony, moreover: (1) he did not believe that R/C really did
owe any substantial amounts to the IRS; (2) as of August
1982 some of R/C’s expenses were about to decline—R/C
was just about to make its final payments on some equip-
ment it had acquired through lease-purchase agreements; and
(3) the increased business that R/C’s customers had promised
would have had a markedly beneficial impact on the Com-
pany. And nowhere in his testimony did Kutzler claim that
in order for R/C to have operated successfully R/C actually
needed the concessions that Honzik kept demanding in the
negotiating sessions with FASH.
Honzik’s Concern About the Restrictions Imposed by Shea
Chemical and the Recommended Order in Redway I: As dis-
cussed earlier, RCA Del Caribe issued on 16 July 1982—
only 6 weeks before the 28 August shutdown; and the rec-
ommended Order in Redway I required R/C to maintain the
terms of its 1979–1981 contract with FASH, pendente lite.
Both Kutzler’s and Honzik’s testimony can be read as indi-
cating that until Honzik received, read, and digested the
Board’s decision in RCA Del Caribe, he thought that Shea
Chemical, as well as Judge Roth’s Order, precluded R/C
from bargaining with FASH about reducing driver pay rates
and fringe benefits. And Honzik’s testimony can also be read
as indicating that Honzik concluded that the drivers’ strike
(or what Honzik believed to be a strike) nullified FASH’s
right to rely on the provision of the recommended Order that
required R/C to adhere to the terms of the 1979–1981 con-
tract, but only for the duration of the strike. If Honzik did
come to that conclusion about the impact of the strike on
Judge Roth’s Order, he may well have told Kutzler that the
strike gave R/C its one chance, for the foreseeable future, to
bring the drivers’ pay and fringe benefits into line with those
of R/C’s competitors.
That would explain why: (1) R/C responded so anoma-
lously to the strike even if Kutzler believed that, for the mo-
ment, at least, R/C could survive without imposing pay re-
ductions; and (2) R/C had not previously sought any of the
concessions it demanded on 30 August and thereafter.
But that theory is based entirely on testimonial hints by
Honzik. He never specifically testified that that was the basis
for R/C’s bargaining position. In addition, there remains the
question of why Kutzler would take a track so likely to fail
and thereby cause R/C’s collapse.
The Possibility of a Planned Transfer of R/C’s Business to
Redway Contract Carrier Corporation: It is possible that
1131REDWAY CARRIERS
58 See Food & Commerical Workers Local 1439 (Food City), 262 NLRB
309, 312 (1982); General Electric Corp., 150 NLRB 192, 268 (1964), enfd.
418 F.2d 736 (2d Cir. 1969).
59 Because Cardinal’s equipment was all leased to Redway, on 24 Sep-
tember Kutzler applied to the bankruptcy court for permission for Cardinal to
rescind those its leases. (As a technical matter, Kutzler’s request was presented
as an application by Redway to reject its executory leases with Cardinal. But
R/C specifically advised the bankruptcy court that the purpose of the request
was to permit Cardinal to lease the equipment to third parties.) The General
Continued
R/C’s bargaining position stemmed from an abortive plan on
Kutzler’s part to transfer R/C’s business to RCCC.
As discussed above as of the summer of 1982 R/C’s debt
had reached catastrophic levels. Moreover R/C was faced
with a work force whose wages were out of line with those
of R/C’s competitors and which was represented by a union
that showed no inclination to face up to what Kutzler consid-
ered obvious economic realities. Finally, Honzik may have
advised the Kutzlers that the situation at hand was R/C’s
only chance for the foreseeable future to reduce its wages
and fringe benefits (as just discussed).
On the other side of the equation, Kutzler believed that
R/C’s two largest customers, Ocean Spray and American
Motors, were about to greatly increase their trucking needs.
But those customers were, ultimately, the Kutzlers, in that
R/C’s business with Ocean Spray and American Motors
stemmed from the Kutzlers’ relationships with officials of
Ocean Spray and American Motors. Thus Kutzler had good
reason to expect that those companies would be willing to
use whatever motor carrier that he and/or Gail recommended.
(Later events were to prove that to be the case; see part IV,
below.)
That could mean that by 30 August Kutzler had concluded
that R/C would be worth trying to save if, but only if, R/C’s
payroll costs and inefficiencies stemming from certain work
rules could be reduced. If R/C could not obtain those
changes, the more effective, albeit risky, course of action
would be to let R/C go under and to use RCCC to profit
from the Kutzlers’ relationships with the Ocean Spray and
American Motors traffic departments. (That might be the ex-
planation for Maton’s visit to R/C on or about 30 August.)
Under this hypothesis, Kutzler meant it when he claimed that
R/C would not resume operations unless FASH accepted
R/C’s demand for concessions.
Assuming the accuracy of that hypothesis, some unex-
pected event put an end to Kutzler’s hopes for RCCC. (Some
testimony suggests that RCCC ran into jurisdictional prob-
lems between Teamsters locals. Other testimony indicates
that RCCC’s problem was a lack of funding.) By the time
the RCCC arrangement fell through—presumably a few days
after Kutzler’s 10 September statement to FASH—R/C was
too far gone to save.
That scenario would explain Kutzler’s reference to ‘‘an Il-
linois trucking company’’ (in Kutzler’s 10 September state-
ment), and would explain why Maton so obviously withheld
information when questioned about RCCC.
The problem with all this is that it fails to fully recognize
the attachment that the Kutzlers felt to R/C, and it relies on
inferences based on inferences. In that latter regard, the the-
ory hinges almost entirely on one reference by Kutzler to an
Illinois trucking company (and, obviously, there are thou-
sands of Illinois trucking companies) and on speculation that
the failure of Kutzler and Maton to be forthright about
RCCC related in some way to a connection between RCCC
and R/C’s negotiating stance on and after 30 August.
Did Kutzler’s Negotiating Stance with FASH Violate Sec-
tion 8(a)(3) or (5) of the Act: As I view the record, I have
no basis for making any finding about why R/C negotiated
the way it did. All the evidence that might explain why R/C
adopted its accept-concessions-or-else negotiating stance is
contradicted by other, equally persuasive, evidence or, in the
case of the RCCC hypothesis, is too speculative to rely on.
Accordingly, although I certainly cannot conclude that R/C’s
motives for its negotiating stance were necessarily lawful, I
also cannot conclude that that stance was based on motives
that violated Section 8(a)(3).
The 8(a)(5) issue is another matter. The question there is
whether R/C bargained in good faith.
I think that R/C did not. The Act does not require that R/C
agree to compromise. Moreover, R/C was entitled to adopt
what sounded like an unbending position if in fact it was no
more than a bargaining tactic (as Kutzler claimed). But ev-
erything about R/C’s stance showed that its representatives
(Honzik and Kutzler) had made up their minds in advance,
that they were not ‘‘accessible to persuasion.’’ And that
spells out a violation of Section 8(a)(5).58
I have considered the fact that Honzik and Kutzler were
facing FASH representatives who also had made up their
minds in advance. (Kutzler, it may be recalled, claimed that
R/C would have proposed a compromise position as soon as
FASH had shown itself willing to do likewise.) But apart
from Kutzler’s testimony, the record gives no hint that
Honzik and Kutzler would have given an inch even had
FASH indicated that it was willing to compromise.
IV. REDWAY, CARDINAL, LITCO-WISCONSIN, AND THE
KUTZLERS: SEPTEMBER 1982 THROUGH THE SPRING
OF 1983
This part of the decision considers the activities of
Redway, Cardinal, and the Kutzlers from late September
1982 until May 1983. It also focuses on a company the
Kutzlers operated during part of that period: Litco-Wis-
consin.
This part discusses, in addition, the activities of a number
of other companies that the General Counsel alleges to be
alter egos or successors of R/C. Those companies: Ligon
Transportation Company, Ligon Specialized Hauler, and
Smyrna Personel Services. Part V of this decision will dis-
cuss why I have concluded that none of those companies was
an alter ego of or successor to R/C.
The Creation of Litco-Wisconsin; Cardinal Resumes Oper-
ations: As of mid-September 1982 R/C was in serious trou-
ble. Talks with FASH had stalled (as discussed in part III),
debts were mounting, no cash was coming in, R/C’s creditors
were becoming impatient, and much of R/C’s equipment was
in danger of being repossessed by lessors.
Kutzler’s initial response to these circumstances was to
file petitions under Chapter 11 of the Bankruptcy Act on 17
September, on behalf of both Redway and Cardinal.
Redway had few if any assets, other than receivables. But
Cardinal had its trucks and trailers (albeit generally as a les-
see rather than owner). Kutzler concluded that the only way
he could keep R/C viable pending resolution of its problems
with FASH was to lease out Cardinal’s equipment to third
parties.59 In late September, therefore, Kutzler began talking
1132 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Counsel appeared before the bankruptcy court and opposed the application.
The court granted the request on 7 October.
The General Counsel points out Cardinal had obtained much of the equip-
ment it wanted to lease out via leases in which Redway was joint lessee. But
that consideration seems more appropriate for consideration by the bankruptcy
court than by the Board. (R/C did bring the matter to the court’s attention.
See LX 41 at p. 12.)
60 Actually, R/C and Frank did not lease the trucks directly from Arnold.
Rather, they leased the trucks from two companies—Power Leasing Division
and Howell Leasing which, in turn, leased the trucks from other campanies.
Arnold owned Power Leasing Division. He had no ownership interest in How-
ell. But for reasons the record does not fully explain, Arnold had a vital stake
in the Howell leases as well as the Power Leasing leases in that he had signed
documents entitling the truck owners to turn to him if either Power Leasing
or Howell failed to make the required lease payments on the trucks. Becausee
Kutzler’s dealings were with Arnold, I will treat the matter as though the
trucks were Arnold’s. (The foregoing still does not do justice to the complex-
ities of the situation. For example: (1) some of the trucks I include in the
group leased to Frank were in fact leased to a company called FSK Leasing.
The principals of FSK were, originally, Frank and his brother, Scott. But Scott
later pulled out; (2) Litco was also a guarantor, along with Arnold, for the
lease payments on some of the trucks.)
61 The Kutzlers, Cardinal, Litco, and Arnold Ligon entered into a number
of different agreements, some superseding others. (The General Counsel as-
cribes nefarious motives to such goings on—wrongly, I think.) None of the
various sets of agreements were wholly internally consistent, moreover, or
fully reflected the actual conduct of the parties once operations began. The
above description of the arrangements among Litco-Wisconsin, Cardinal,
Litco, SPS, and Safeway accordingly represents a combination of several of
the various sets of agreements and the behavior of the parties during the
course of operations.
62 Tr. 1149.
63 Tr. 1149–1150, 2613.
64 As touched on earlier, about a half-year prior to its bankruptcy filings,
R/C retained the accounting firm of John Lloyd & Co. to review R/C’s finan-
cial records and to propose changes in its operations. During the existence of
Redway and Cardinal as debtors in possession, Redway and Cardinal contin-
to one Arnold Ligon about leasing some of Cardinal’s trucks
to a motor carrier that Ligon headed. (As this decision will
later discuss, this proceeding involves several different per-
sons and companies named ‘‘Ligon.’’ I will accordingly
sometimes refer to Arnold Ligon as ‘‘Arnold.’’)
Arnold Ligon had numerous interests. He was chief execu-
tive of a motor carrier called Ligon Transportation Company.
(I will sometimes refer to Ligon Transportation Company as
Litco, a name which that company used as a service mark.)
He owned and ran a number of ‘‘Safeway’’ companies, all
related in one fashion or another to the motor carrier busi-
ness. And he was in the business of leasing trucks to motor
carriers. Kutzler had first met Arnold when Arnold was act-
ing in his role as a lessor of trucks. As of September, R/C
had been leasing about 20 trucks from Arnold for about 9
months, and another dozen 30 or so for a samewhat shorter
period. (That batch of a dozen trucks was nominally leased
to Kutzler’s son, Frank. But Frank had leased the trucks from
Arnold only because R/C had then needed them.)60
Kutzler’s interest in Arnold Ligon and Litco was natural.
First, Kutzler knew that Litco had nationwide ICC authority,
routinely obtained its trucks by leasing them, and routinely
compensated persons able to find customers for Litco for
such revenue generation. And second, Kutzler knew that
R/C’s failure to make its truck lease payments to Arnold,
combined with Arnold’s inability to repossess the trucks (due
to the protection accorded by R/C’s Chapter 11 petitions),
was causing financial problems for Arnold. Kutzler knew,
therefore, that Arnold would be eager to enter into an ar-
rangement that might permit Kutzler to resume the truck pay-
ments.
The upshot of Kutzler’s discussions with Arnold as a set
of agreements that were decided on by 1 October and com-
pletely in place by mid-October. Under the agreements:
1. Cardinal would lease some of its trucks to Litco on a
monthly basis. (The trucks were the ones that Cardinal was
leasing from Arnold.) Cardinal would receive 78 percent of
the line-haul revenues that shippers paid to Litco for service
via those trucks. Cardinal would provide drivers for the
trucks, pay for fuel, and handle all maintenance.
2. A company purportedly owned by Gail Kutzler, called
Litco-Wisconsin, would receive 7 percent of the revenues on
freight it booked for Litco.
3. Frank Kutzler leased his dozen trucks to Litco.
4. Smyrna Personnel Services (SPS) was a company in the
business of providing truckdrivers and payroll services for
persons operating fleets of trucks. SPS was closely tied to
Litco and Arnold. The Kutzlers and SPS agreed that Litco-
Wisconsin would use SPS to obtain the drivers for the trucks
belonging to Cardinal and to Frank Kutzler that had just been
leased to Litco. They also agreed that Cardinal, Litco-Wis-
consin, and Frank would use SPS’ payroll services.
5. The Kutzlers agreed to pay one of Arnold’s ‘‘Safeway’’
companies, Safeway Transportation Company, 1 percent of
gross revenues for ‘‘consultant’’ services. Litco-Wisconsin
also agreed to pay 2 percent of gross revenues to Litco for
insurance. (Thus although Litco-Wisconsin nominally was
entitled to 7 percent of revenues, it kept only 4 percent.)61
From Kutzler’s point of view the above set of agreements
had a number of advantages.
One is that it permitted Kutzler to ‘‘maintain control’’ (as
he put it) over the shippers that had used R/C.62 Kutzler
wanted to be able to resume R/C’s operations if R/C’s labor
difficulties could be handled (and if, at the time, R/C had the
financial wherewithal to do so). But to have any chance of
success, the Kutzlers had to continue to provide trucking
services to such shippers.
Another advantage is that it did not lock Kutzler or Car-
dinal into a long-term commitment. Because the Kutzlers’
goal was to ‘‘resurrect’’ R/C, they considered the arrange-
ment with Arnold Ligon and Litco to be a temporary one—
‘‘a stop-gap,’’ as Gail put it.63 And under the arrangement,
the Kutzlers and Cardinal could have pulled out on short no-
tice.
The third advantage was the fact that the operations would
produce revenue for Litco-Wisconsin, which is to say the
Kutzlers, directly, rather than just for Cardinal. And because
Litco-Wisconsin was paid out of a Litco account rather than
through Cardinal, and because Litco-Wisconsin had not sub-
jected itself to the bankruptcy court’s jurisdiction, not all the
revenues generated by Cardinal’s equipment would be sub-
ject to disclosure to creditors. (The court, in fact, was never
informed of Litco-Wisconsin’s existence.)
In the last respect, however, it is only fair to note that: (1)
there is no evidence directly proving that Kutzler gave any
consideration to the fact that Litco-Wisconsin was not sub-
ject to supervision by the bankruptcy court; (2) there is noth-
ing in the record showing that Litco-Wisconsin’s connection
to the court-approved Cardinal-Litco arrangement was out of
the ordinary; and (3) Cardinal’s accountants were fully in-
formed of Litco-Wisconsin’s role.64
1133REDWAY CARRIERS
ued to use the firm, and personnel from the firm prepared the reports that Car-
dinal and Redway submitted to the court.
65 GCX 67, p. 10
66 Kutzler denied telling SPS not to hire any R/C drivers. I do not credit
that denial. Kutzler’s reason for not wanting SPS to hire R/C drivers is un-
clear. It could have been a product of animus, of course. But, equally likely,
it could have been because of Kutzler’s fear of sabotage.
67 The record provides only sparse evidence about the job applications of
exstrikers. For instance, the record does not specify how many of R/C’s driv-
ers applied for work with the new operation (although it is clear that only a
small percentage of R/C’s drivers did so), nor does it tell us the names of
any of the applicants. The lack of detail is due at least in part to the death
of SPS’ owner before he had a chance to testify.
68 There were one or two instances of violence aimed at the resumed oper-
ations.
69 A copy of Litco-Wisconsin’s contract with SPS is an appended to GCX
67. SPS had comparable agreements with Frank Kutzler and FSK Leasing.
On 11 October trucks started operating out of the Kenosha
terminal pursuant to the Litco-Wisconsin/Cardinal/Litco/SPS
arrangement. (No one ever bothered to remove the large
‘‘Redway’’ that had long ago been painted on the front out-
side wall of terminal. But about the time that the Litco-
Wisconsin/Cardinal operation got underway, someone
enscribed ‘‘Litco’’ or ‘‘Ligon Transportation Company’’ on
the terminal’s front door.)
The trucking activity attracted a number of R/C drivers
(and perhaps others, as well) to the Kenosha terminal as ap-
plicants for truckdriving jobs. ‘‘They came in peace,’’ they
said, and wanted only a job.65 Kutzler told SPS’ owner not
to hire employees of R/C.66 But SPS’ owner ignored Kutzler,
invited R/C drivers to apply for positions with SPS, and ulti-
mately did hire a few R/C employees as drivers for Car-
dinal’s trucks. (The paucity of job offers to R/C drivers
stemmed from the fact that SPS gave priority in job offers
to persons whom SPS had previously recruited for other
truckdriving jobs and who had since been laid off.)67
According to the General Counsel, the most obvious way
for R/C to have remained viable during a strike would have
been for R/C to have hired replacements for its drivers.
Kutzler’s willingness to resume operations out of the Keno-
sha terminal in conjunction with Litco and SPS, argues the
General Counsel, shows that R/C’s failure to try to operate
with replacement employees was not a function of any fear
of violence and that, accordingly, Kutzler’s arrangements
with Litco and SPS must have been the product of discrimi-
natory motivation. But there is ample evidence showing that
Kutzler felt any attempt by R/C to use replacement drivers
would produce only devastating attacks on R/C’s personnel
and property. And I have no basis for concluding that
Kutzler did not honestly believe that R/C’s striking employ-
ees would be less aggravated by the operation of trucks
marked ‘‘Litco’’ than by the operation of the same trucks
still displaying ‘‘Redway.’’68
Operations out of the Kenosha Terminal—11 October
Through 31 December 1982: As the agreements outlined
above suggest, and as detailed below, starting in October,
Litco-Wisconsin and Cardinal combined to operate a trucking
service that was in many respects identical to the service that
had been provided by the Redway/Cardinal combination
prior to 28 August. The new operation was run by Kutzler;
used only trucks that R/C had used; operated out of the ter-
minal that R/C had used; serviced only companies that had
been customers of R/C; charged the same rates that R/C had
charged based on a tariff that was a deliberate copy of R/C’s;
used the same telephone numbers that R/C had used; and had
its clerical work, most of its dispatching, and some of its
maintenance work done by the same persons who had done
that work for R/C. The major differences were: the drivers
used by the new operation were hired and paid by SPS rather
than by Cardinal; the drivers were paid on a different basis
(by the mile rather than as a percentage of revenues); the
new operation was smaller than R/C’s had been; Litco per-
sonnel at Litco’s headquarters in Tennessee did some dis-
patching of Cardinal’s trucks (for backhaul movements re-
turning to the Kenosha area); and the ICC authority sup-
porting the operation was Litco’s rather than Redway’s.
How the Litco-Wisconsin/Cardinal/Litco Operation
Worked: The new operation used the trucks that R/C had
leased from Arnold Ligon. But now the placards on their
doors said ‘‘Litco’’ or ‘‘Ligon Transportation’’ rather than
‘‘Redway.’’ Clerical personnel in the Kenosha terminal billed
shippers, who sent their payments back to the terminal. The
checks, however, were made out to Litco, not to Redway.
Those checks were deposited in a Litco account in a local
Wisconsin bank. Litco-Wisconsin drew on that account (pur-
suant to agreement with Litco) in order to pay the amounts
that Cardinal was entitled to under Cardinal’s agreement with
Litco, Gail’s salary (about $200 per week), Safeway’s 1 per-
cent (notwithstanding the fact that Safeway never provided
any ‘‘consultant’’ services to Litco-Wisconsin), and the
amounts owing to Litco. Cardinal was responsible for paying
for most of the operational costs, including the amounts
owing to SPS, dispatching costs, utilities, most of the clerical
help, the mechanics, fuel, lease payments on the trucks,
Kutzler’s salary, and the like. As it turned out, the operation
did not generate sufficient cash for Cardinal to be able to pay
all its bills.
The Relationship Between Litco-Wisconsin, Cardinal, and
SPS: Arnold Ligon proposed that Cardinal obtain its drivers
via SPS. Kutzler heard the proposal as a demand. (It thus re-
mains unclear how Cardinal would have obtained drivers had
Kutzler been left to his own devices.) SPS recruited drivers
for Cardinal’s trucks, selected from among those applying,
qualified the drivers (pursuant to U.S. Department of Trans-
portation standards), set the drivers’ rates of pay and fringe
benefits, paid the drivers, handled such matters as health in-
surance coverage for the drivers, and paid the various em-
ployment taxes (unemployment campensation, FICA, etc.).
Cardinal (either directly or through Litco-Wisconsin) reim-
bursed SPS for all such expenses and paid a fee to SPS for
its services. SPS’ duties were specified in a contract between
SPS and Litco-Wisconsin. That contract provided that ‘‘the
drivers shall at all times be and remain employees only of
SPS.’’69
The drivers were dispatched, however, by Cardinal (or, oc-
casionally, by Litco). And the dispatchers’ selections of
which runs a driver was to handle affected the driver’s pay
because the driver was paid by the mile. In addition, Car-
dinal itself advanced cash to the drivers for fuel expenses
and the like. The record does not indicate whether Cardinal
or Litco-Wisconsin had any other authority, direct or indirect,
over the drivers. For example the record does not tell us
whether Cardinal ever disciplined a driver, or asked SPS to
discipline a driver, or what the agreement was between
1134 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
70 Persons present in the Kenosha terminal’s office during the new oper-
ation’s existence included the following (in addition to Summers):
Litco-Wisconsin/Cardinal and SPS regarding drivers who
were not performing adequately.
Who Owned Litco-Wisconsin: The Kutzlers claimed that
Gail owned Litco-Wisconsin, and the complaint makes the
same allegation. In fact Litco-Wisconsin was nothing more
than a name that the Kutzlers used in connection with the
Cardinal/Litco arrangement. Litco-Wisconsin was not incor-
porated or otherwise registered as an entity, and it had vir-
tually no assets. As far as the record in this proceeding
shows, therefore, if it makes any sense to speak of the
‘‘ownership’’ of Litco-Wisconsin at all, then both of the
Kutzlers owned Litco-Wisconsin.
The Kutzlers’ Role in the Litco-Wisconsin/Cardinal Oper-
ation: Gail was paid by Litco-Wisconsin; Kutzler was paid
by Cardinal. Gail worked for the new operation in much the
same way as she had at R/C. She did some clerical work,
and from time to time she met with customers.
Of greater importance is Kutzler’s role. As stated earlier,
Kutzler had been R/C’s sole executive. He had handled
R/C’s financing, relations with customers and creditors,
equipment acquisition, and labor relations—which included
frequent conversations with the stewards and many of the
other drivers.
Kutzler’s role in the Litco-Wisconsin/Cardinal operation
was different, for two reasons. First, there was less for him
to do. SPS handled labor relations matters, and the new oper-
ation was relatively small. And second, Kutzler seems to
have been unable to recover from the events of that past Au-
gust and September. He appears to have lost the vitality and
drive that may have been R/C’s most important assets.
Kutzler could have, but did not, resist Arnold Ligon’s pro-
posal that SPS handle all matters relating to driver employ-
ment; he could have, but did not, look for ways to expand
the new operation; and although he continued to deal with
customers, his dealings were almost entirely defensive—
soothing complaints and seeking to retain some of the busi-
ness that R/C had enjoyed. All the people working in the Ke-
nosha terminal were affected by what amounted to a sense
of defeat on Kutzler’s part.
Size: The Litco-Wisconsin/Cardinal operation was roughly
half the size of R/C. R/C operated about 70 or 80 trucks
compared to the new operation’s 30 or so. R/C’s revenues
averaged about $400,000 per month in 1981–1982; the new
operation averaged about $200,000 per month.
The New Operation’s Customers: Ocean Spray had been
central to R/C’s viability, accounting for about 55 percent of
R/C’s gross revenues. Ocean Spray was even more important
to the Litco-Wisconsin/Cardinal operations, accounting for 65
percent of gross revenues. American Motors was R/C’s and
Litco-Wisconsin/Cardinal’s second largest customer, pro-
viding about 20 percent of R/C’s revenues and about 10 per-
cent of the revenues of the new operation.
The new operation was by no means able to retain the
business of all of the shippers served by R/C. Most impor-
tantly, S. C. Johnson, which had been R/C’s fourth largest
customer, refused to deal with Litco-Wisconsin/Cardinal (be-
cause of its unhappiness with R/C’s treatment of it in the
days immediately following the 28 August shutdown). On
the other hand, all the shippers served by the new operation
had been customers of R/C.
The New Operation’s Dispatchers and Clerical Help: Not
all the persons who had done the dispatching and clerical
work for R/C worked for the new operation. (As discussed
earlier, the new operation was smaller than R/C had been.
Moreover, Litco and SPS picked up some of the functions
for the new operation that had been handled by R/C, such
as some paperwork stemming from regulatory requirements
and payroll matters.) But all the persons who did the dis-
patching and clerical work out of the Kenosha terminal for
the new operation had worked for R/C. (As touched on
above, when Cardinal’s trucks carried loads from Kenosha
into areas frequently served by Litco, Litco’s dispatchers
found loads for those trucks that would send them back to
the Kenosha area.)
There was one notable difference. All the persons who had
handled R/C’s clerical and dispatching work had been em-
ployees of R/C. None of such persons were employees of the
new operation. At least none were treated as employees for
pay purposes. For example, prior to 28 August Cardinal had
employed Larry Summers as one of its dispatchers. Some-
time before the Litco-Wisconsin/Cardinal operation got un-
derway, Summers formed a one-person company called
‘‘Dispatch Services.’’ Summers, as Dispatch Services, han-
dled the new operation’s dispatching out of the Kenosha ter-
minal. Dispatch Services paid for the space it used in the ter-
minal and paid for the telephone service it used. Cardinal’s
payments to Dispatch Services, in turn, resulted in Dispatch
Services netting about the same as Summers had previously
earned as a Cardinal employee.70
Name Manner Employed Manner Employed by
by R/C Pre-28 the New Operation
August
Kristine Clerical employee Formed ‘‘K. B. Clerical
Buhnerkemper Services,’’ which
operated under contract
to the new operation.
Vickie Kutzler Clerical employee Worked in the terminal as
an employee of K. B.
Clerical Services.
Norbert
Pfeiffer
Part-time pay- Formed ‘‘Pfeiffer Accoun-
roll/bookkeeping Accounting Service’’;
employee worked in the
terminal one morning
per week.
Jon Woodman Handled rate and Formed ‘‘Jon T. Woodman
tariff work, etc. Associates,’’ and, as
such, did much the same
work as he had pre-August
(taking into account the
fact that the new
operation had fewer
regulatory responsi-
bilities since it did not
hold any ICC authority).
The New Operation’s Mechanics: The situation in the shop
facilities of the terminal was comparable to that in its office.
James Kutzler (Kutzler’s brother) had been R/C’s shop fore-
man and, similarly, ran the shop for the new operation. And
Ernest W. Gilmore, whom Cardinal had employed as one of
its mechanics prior to August 28, formed ‘‘EWG Truck Re-
1135REDWAY CARRIERS
71 Tr. 2543.
pair,’’ hired some mechanics as employees of EWG, and—
as EWG—repaired and maintained the trucks run by the new
operation (again, in the Kenosha terminal’s shop facilities).
Litco-Wisconsin Comes to an end in January 1983; the
Collapse of the Kutzlers’ Hopes to Revive Redway: For rea-
sons that are not entirely clear, the Litco-Wisconsin/Cardinal
operation was never a financial success. The problem was
not lack of business. As the operation’s dispatcher put it,
‘‘there was more freight out there than we knew what to do
with.’’71
One problem was that the operation’s trucks kept breaking
down, perhaps because of a lack of funds with which to
maintain them properly, perhaps because the trucks were
nearing the end of their useful lives, and/or perhaps because
of inattention on Kutzler’s part. Another was that the oper-
ations’ drivers did not know how to handle the kinds of
freight the operation generated, resulting in a surfeit of cus-
tomer claims and complaints. A third was a management
issue: Gail testified that due to the nature of the Litco-
Wisconsin/Cardinal/Litco/SPS operation, Kutzler was unable
to control it as tightly as he had R/C’s. Finally, as discussed
above, a sense of defeat pervaded the terminal.
By late December (about 2-1/2 months after Litco-
Wisconsin/Cardinal’s first truck runs), the Kutzlers reached
two depressing conclusions. The first was that the Litco-
Wisconsin/Cardinal operation could not generate sufficient
profits to support them. The second was that Redway’s exist-
ing debts, coupled with the considerable outlays it would
take to put Redway back into operation, meant that there was
no possibility of resuming business with Redway. Life to the
Kutzlers looked bleak indeed. They contemplated suicide.
The Kutzlers’ conclusion that Redway could not be
salvaged led Kutzler to petition the bankruptcy court to liq-
uidate Redway (under Chapter 7 of the Bankruptcy Act). The
petition was filed on 17 January 1983. The fact that Litco-
Wisconsin/Cardinal did not generate sufficient funds to sup-
port the Kutzlers led them to discuss their situation with Ar-
nold Ligon. He offered them jobs with his Safeway organiza-
tion in Madisonville, Kentucky (which was Arnold’s home
and place of business). Kutzler, said Arnold, could advise
Arnold about matters pertaining to Arnold’s fleet of trucks.
Gail could do sales work.
The Kutzlers accepted Arnold’s offer and moved to Mad-
isonville in January, still hoping that before long they could
return to Kenosha to resume some form of trucking business.
(Arnold offered jobs to the Kutzlers more out of sympathy
for their plight than because he needed their services. Once
in Kentucky the Kutzlers discovered that there was little
work for them to do there.)
By and large the Kenosha operation continued as before
through much of January (notwithstanding the absence of the
Kutzlers). But January was to be Litco-Wisconsin’s last
month. In mid-January Litco’s owner agreed to sell most of
Litco’s assets to a company called Quicksilver Transpor-
tation, Inc. The sale was to be consummated on 31 January.
Quicksilver promptly advised Litco that Quicksilver did not
want to associate itself with the Kenosha operation and that
Litco should end its relationship with the Kutzlers. Litco
complied and, effective on 31 January or 1 February, Litco
severed its connection with Litco-Wisconsin, with Cardinal,
and with Frank Kutzler. Cardinal and Frank Kutzler were
able to find a new home for their trucks (as will be discussed
below). But Litco’s action permanently snuffed Litco-Wis-
consin out of existence.
Cardinal’s Association with Ligon Specialized Hauler: A
company called Ligon Specialized Hauler (LSH) operated
out of Arnold Ligon’s home town of Madisonville. At one
time LSH had been affiliated with Litco, but starting in Sep-
tember 1982 it was not. (That will be discussed in more de-
tail in part V.) LSH saw Litco’s severing of ties with Car-
dinal as an opportunity for it to gain additional business in
the Kenosha area. On 1 February, LSH accordingly entered
into a set of agreements involving Cardinal, Frank Kutzler,
and Safeway Transportation (the Arnold Ligon company to
which Litco-Wisconsin had been paying 1 percent of the rev-
enues generated by the Litco-Wisconsin/Cardinal operation.)
Under one such agreement, LSH leased from Cardinal the
trucks that Cardinal was leasing from Arnold Ligon. It was
a routine type of LSH lease, providing, among other things,
that Cardinal would provide the drivers for the trucks. (Car-
dinal continued to use SPS’ services in this regard.) Unlike
Litco’s arrangement with Litco-Wisconsin and Cardinal, the
compensation that LSH agreed to pay Cardinal did not re-
flect the fact that the Kutzlers had important contacts with
shippers in the Kenosha area. LSH also entered into a com-
parable lease agreement with Frank Kutzler. Third, LSH en-
tered into an agency agreement with Safeway Transportation
under which Safeway would be compensated for sales in the
Kenosha area (in somewhat the same way that Litco-Wis-
consin had been compensated by Litco).
As a result of that arrangement Cardinal trucks continued
to operate out of the Kenosha terminal, serving—in the
main—Ocean Spray and American Motors. But in almost all
respects the Kutzlers lost control of the operation. For exam-
ple, shippers now sent their payments to LSH in Madison-
ville, not to Kenosha.
The LSH-Cardinal arrangement was short-lived. Soon after
it was set in motion, LSH learned that its connection with
Cardinal might lead to alter ego allegations against it (as in-
deed it did). Probably because of a concern about that, on
15 February LSH terminated its agreement with Cardinal.
Redway was gone. Litco-Wisconsin was gone. Now Car-
dinal’s operations came to a final end too. The day after
LSH ended its agreement with Cardinal, Arnold Ligon repos-
sessed the trucks he had been leasing to Cardinal. (LSH con-
tinued to operate out of the Kenosha terminal, using the
same trucks—which now were back in Arnold Ligon’s pos-
session, and serving the same customers. But in late March
LSH ended all operations out of the Kenosha terminal.)
On 24 February Cardinal petitioned the bankruptcy court
to convert from Chapter 11 to Chapter 7 (liquidation).
The Kutzlers kept drawing paychecks from Safeway until
some time in April. But from mid-February on they did not
have anything to do with the Kenosha operation. In May
they moved to California for a life unconnected with the
trucking business. The First Wisconsin Bank of Racine had,
as security for R/C’s debts to the bank, a ‘‘blanket lien’’ (in
the words of R/C’s trustee in bankruptcy) on all R/C’s assets
and held a mortgage on the Kutzlers’ home in Kenosha as
well. By the time of the hearing in this proceeding the bank
1136 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
72 As noted earlier, LeRoy Dittmer held a one-third interest in R/C. Dittmer
too had given the bank a lien on some assets to secure a loan to R/C. The
bank liquidated Dittmer’s assets along with R/C’s and the Kutzlers’.
73 Once upon a time Cardinal Leasing, Inc., debtor-in-possession, as it ex-
isted after 17 September 1982, would have been deemed to be an entity dif-
ferent from the Cardinal Leasing, Inc., that existed prior to the 17 September
bankruptcy filing. From that viewpoint, of course, Litco-Wisconsin’s relation-
ship was with an alter ego of Cardinal, not with Cardinal itself. But NLRB.
v. Bildisco & Bildisco, 465 U.S. 513, 527–528 (1984), put an end to such talk.
See Ohio Container Service, 277 NLRB 305 (1985).
74 As discussed earlier, the new operation’s clerical work and most of its
dispatching work was done by persons purporting to be contractors (or em-
ployees of contractors) rather than, as at R/C, employees of R/C. It would
serve no purpose, however, to attempt to determine whether the purported con-
tractors were in fact such or, instead, actually were employees of the new op-
eration.
had taken possession of, and then disposed of, all such prop-
erty.72
Conclusion—Litco-Wisconsin as an Alter Ego of or Single
Employer with R/C: The issue of whether Litco-Wisconsin
was an alter ego of R/C or a single employer with R/C is
a peculiar one in that half of the joint employer
Redway/Cardinal continued in business (Cardinal), although
the other half (Redway) did not.73
Turning first to Litco-Wisconsin’s single-employer rela-
tionship, Litco-Wisconsin and Cardinal formed a single-inte-
grated business. They had common management, a common
business purpose, and they shared common premises and fa-
cilities. Their clerical and bookkeeping work was handled by
the same people. That adds up to Litco-Wisconsin and Car-
dinal being a single employer. E.g., Airport Bus Service, 273
NLRB 561 (1984); Mashkin Freight Lines, 272 NLRB 427
(1984). Although the ownership of the two companies was
not identical, in that LeRoy Dittmer owned one-third of R/C,
given all the other indicia of single-employer status that dif-
ference is not a critical one.
As for the alter ego status of the single employer Litco-
Wisconsin/Cardinal, in a few particulars Litco-
Wisconsin/Cardinal did differ from R/C. Most of those dif-
ferences are insignificant. They include the fact that the new
operation’s trucks were sometimes dispatched by Litco and
that Litco-Wisconsin/Cardinal depended on Litco’s certificate
authority. One such difference, however, is noteworthy. That
is, during the entire period in which Litco-Wisconsin existed,
it was SPS, not Litco-Wisconsin or Cardinal, that determined
who should be hired to drive Cardinal’s trucks, handled all
the details of the hiring process, set the drivers’ rates of pay,
determined their fringe benefits, and paid them.
But in most respects, Litco-Wisconsin/Cardinal was re-
markably similar to the earlier Redway/Cardinal combination.
All the new operation’s customers had been customers of
R/C. The new operation’s clerical work was done by the
same persons who had done that work for R/C.74 Litco-
Wisconsin/Cardinal used the same terminal that R/C had.
The new operation’s principal mechanic had been employed
as a mechanic by R/C. All the trucks had been used by R/C.
The way that Litco-Wisconsin/Cardinal operated was in
many ways identical to the way R/C had. As for ownership,
Cardinal’s remained unchanged, and the Kutzlers, who held
majority interest in R/C, wholly owned Litco-Wisconsin.
An additional circumstance that I think deserves some
weight in determining whether the new operation should be
deemed R/C’s alter ego is the fact that the Kutzlers made
Litco-Wisconsin part of the arrangement with Litco without
advising R/C’s creditors or the bankruptcy court of Litco-
Wisconsin’s existence. Kutzler sought the protection of
Chapter 11 for Redway and Cardinal, as he had the right to
do. But given Cardinal’s status as debtor-in-possession, Car-
dinal’s creditors—including its bargaining unit employees
and FASH—had the right to expect that Kutzler would seek
to shape the Cardinal-Litco lease agreement in a way that
maximized Cardinal’s profits and, thereby, the likelihood that
Cardinal could pay off its debts. Kutzler, however, did not
do that. Instead he opted for an agreement that funneled
moneys to Litco-Wisconsin (and away from the bankruptcy
court jurisdiction) that could otherwise have gone directly to
Cardinal. No witness claimed that the Kutzlers are the kind
of people who would try to make off with money that they
did not earn. In fact the evidence on point was to the con-
trary. Moreover there is no indication that, as things turned
out, Cardinal would have been better off had Kutzler worked
out a deal with Litco that did not include Litco-Wisconsin.
Nonetheless, as of the time that Litco-Wisconsin was created,
it stood to profit at the expense of persons who had become
creditors of Cardinal when Cardinal was part of the joint
Redway/Cardinal peration.
For all of that, Litco-Wisconsin, whether considered alone
or together with Cardinal, was a beast fundamentally dif-
ferent from anything the Board has ever held to be an alter
ego (even if one puts aside the changed relationship with the
drivers).
That difference has to do with why, and for what period,
Kutzler created Litco-Wisconsin. The Litco-Wiscon-
sin/Cardinal operation was intended to be temporary, to exist
only while R/C’s employees were on strike. Kutzler shaped
Litco-Wisconsin/Cardinal’s business arrangements, in fact,
with a view to enabling R/C to resume operations promptly
after the strike and to regain as many of its customers as
possible. These objectives, in turn, are the very reverse of the
usual purposes for which an alter ego is created.
What that points to, I think, is that Litco-Wisconsin should
be considered to have been the alter ego of R/C for only lim-
ited purposes—or rather, for only a limited time. The Litco-
Wisconsin/Cardinal operation was so similar to R/C that dur-
ing the period in which Litco-Wisconsin/Cardinal replaced
R/C, Litco-Wisconsin should be held to have had the same
obligations to R/C’s employees that R/C had. But given
Kutzler’s objective in establishing the Litco-Wiscon-
sin/Cardinal operation, it would be inappropriate and unfair
to continue to require Litco-Wisconsin, after its role as a
temporary replacement for R/C had ended, to fulfill any obli-
gations that R/C might owe to its employees.
I recognize that, in the present context, it seems academic
to discuss imposing a temporal limitation on Litco-Wiscon-
sin’s alter ego status. Litco-Wisconsin ceased to exist, after
all, even before Cardinal came to an end. But Litco-Wis-
consin was not incorporated. As a result, a holding that
Litco-Wisconsin picked up all the usual responsibilities of an
alter ego might mean that the Kutzlers would thereby be-
come personally liable for backpay obligations of R/C
stretching back to the 1970’s. (For additional discussion re-
garding the Kutzlers’ personal liability for unfair labor prac-
tices committed by R/C, see part VI, below.)
Did R/C’s Transfer of Services to the Cardinal/Litco-
Wisconsin/Litco/SPS Combination Violate Section 8(a)(5):
R/C did advise FASH, several times, that R/C planned to
1137REDWAY CARRIERS
75 The Chapter 11 petitions of Redway and Cardinal did not affect R/C’s
duty to notify FASH of these new arrangements. See Bildisco, above, 465 U.S.
at 534.
76 I have considered whether Cardinal’s failure to reinstate exstrikers to ex-
isting vacancies on their unconditional offers to return to work (see the text
at fns. 65–67, above) constituted a violation of the Act. See NLRB v.
Fleetwood Trailer Co., 389 U.S. 375 (1967). But it would appear that Cardinal
had no reinstatement obligation at the time the R/C drivers sought reinstate-
ment given the fact that Cardinal had temporarily contracted out the driver hir-
ing process. Cf. American Cyanamid, above; Harter Equipment, above.
77 A finding of successorship by the Board can yield two different results.
One is that the successor must bargain with the union that represented the em-
ployees of the predecessor. NLRB v. Burns Security Services, 406 U.S. 272
(1972). The other relates to the responsibility of the successor to remedy the
unfair labor practices of the predecessor, as discussed above. The Board has
always required the General Counsel to show that a majority of the employees
of an alleged Burns-type successor had been employed by the predecessor (or
that the successor’s hiring policies were marred by discrimination). See Fall
River Dyeing Corp. v. NLRB, 482 U.S. 27 (1987); Love’s Barbeque Restaurant
No. 62, 245 NLRB 78 (1979). Then, in Airport Bus, the Board adopted the
same criterion for successorships in which the issue is whether the alleged suc-
cessor should be liable for the predecessor’s unfair labor practices.
78 The complaint alleges that Litco and LSH were single employers with
R/C as well as successors to and alter egos of R/C. But the evidence falls
far short of showing any single-employer relationships between those compa-
nies and R/C, as the General Counsel recognizes on brief.
79 Br. at 15.
80 This issue arose earlier in this proceeding, when the General Counsel
sought to exclude from the record the aove-discussed order of the bankruptcy
court. See my Order dated 23 May 1986.
81 The company I call ‘‘Litco’’ was named ‘‘Cherokee Hauling & Rigging,
Inc.’’ until 1980, when its name was changed to ‘‘Ligon Transportation Com-
pany.’’ It subsequently changed its name to ‘‘Litco Transportation Company,’’
but switched back (to Ligon Transportation Company) on 1 July 1982, retain-
ing, however, the service mark ‘‘LITCO’’ until 15 February 1983. (On that
date Herbert transferred the right to use the mark ‘‘LITCO’’ to a subsidiary
of IU International Corporation. That will be touched on again in connection
with the discussion of Ligon Specialized Hauler, below.) Subsequently the
Continued
lease out much of its equipment. R/C never did, however,
notify FASH that Cardinal was going to resume operations
under the Cardinal/Litco-Wisconsin/Litco/SPS form of orga-
nization.75 But because Kutzler intended that form of organi-
zation to be temporary, for the duration of the strike, it ap-
pears that Cardinal was entitled to obtain drivers for its
trucks through a contractor, and to do so without bargaining
with FASH. See American Cyanamid Co., 235 NLRB 1316,
1323 (1978), enfd. 592 F.2d 356 (7th Cir. 1979); Empire
Terminal Warehouse Co., 151 NLRB 1359, 1363–1366
(1965), enfd. 355 F.2d 842 (D.C. Cir. 1966); cf. Harter
Equipment, 280 NLRB 597 (1986).76
Was Litco-Wisconsin a Successor to R/C: The complaint
alleges that Litco-Wisconsin was a successor to R/C and is
thereby responsible for remedying R/C’s unfair labor prac-
tices.
Where a new employer acquires substantial assets of a
predecessor, doing so with knowledge of the predecessor’s
unremedied unfair labor practices, the new employer is liable
for remedying the predecessor’s unfair labor practices. Pepsi-
Cola Bottling Co. of Sacramento v. NLRB, 414 U.S. 168
(1973). But Litco-Wisconsin purchased none of R/C’s assets.
It did not even lease them. Rather, Litco-Wisconsin was
merely the name under which two owners and officers of
R/C participated, briefly, in a business venture with Cardinal
which was, in turn, previously part of the joint employer
Redway/Cardinal. Under those circumstances it is fair to ask
whether Litco-Wisconsin was an alter ego of R/C (as dis-
cussed above). But it would be stretching the concept of suc-
cessor beyond recognizable proportions to consider Litco-
Wisconsin a successor to R/C, particularly because Kutzler
planned to do business via Litco-Wisconsin only for the du-
ration of FASH’s strike.
In any event, it appears that for Litco-Wisconsin to be
considered a successor to R/C, the majority of its employees
(in this case, the majority of the employees of Litco-
Wisconsin/Cardinal) must have previously been employees of
R/C, or the record must show that the reason that that was
not the case was discrimination violative of the Act on the
part of Litco-Wisconsin/Cardinal. Airport Bus Service, 273
NLRB 561, 562–563 (1984).77 (I am assuming, for present
purposes, that Litco-Wisconsin/Cardinal was a joint employer
with SPS. If Litco-Wisconsin/Cardinal was not a joint em-
ployer, Litco-Wisconsin for that reason alone could not be a
successor. Container Transit, 281 NLRB 1039 fn. 4 (1986).)
Plainly the work force used by Litco-Wisconsin/Cardinal was
almost completely different from R/C’s. Because that dif-
ference was not a product of discrimination, I conclude that,
for that reason too, Litco-Wisconsin was not a successor to
R/C.
V. WERE LIGON TRANSPORTATION COMPANY, SMYRNA
PERSONNEL SERVICES, OR LIGON SPECIALIZED HAULER
ALTER EGOS OF OR SUCCESSORS TO R/C
The preceeding pages focused on R/C and the
Kutzlers. This part of the decision considers whether
SPS, Litco, or LSH should be deemed alter egos of or
successors to R/C.78
The Bankruptcy Court’s Order Settling all Claims Against
SPS, Litco, and LSH: During the early stages of this litiga-
tion, SPS, Litco, LSH, and several other companies offered
to pay a total of $12,500 to the trustee in bankruptcy of the
Redway and Cardinal estates to settle all claims ‘‘that the
Trustee or either of the estates in Bankruptcy . . . may have
. . . against’’ any of such ‘‘settlors.’’ The General Counsel
urged the bankruptcy court to accept that offer. The bank-
ruptcy court did so in an order dated 17 November 1983.
The settlors subsequently did pay the $12,500 to the trustee.
Litco and LSH argue that that order of the bankruptcy
court ‘‘renders moot these proceedings against [Litco] and
LSH (and SPS).’’79
The overlap in the authority of, on the one hand, the
Board, and, on the other, the bankruptcy courts, can present
knotty questions about who is responsible for what. But here
the bankruptcy court order at issue stemmed from an agree-
ment that the parties in the bankruptcy case entered into for
settlement purposes. The court’s order was not the product
of litigation over the issue of the liability of Litco, LSH, or
SPS. Had the parties to this (Board) proceeding intended the
$12,500 payment in the bankruptcy proceeding to settle this
proceeding as well, they readily could have so agreed. But
they did not. And because the bankruptcy court’s order was
the product of a settlement agreement, it is not entitled to
any weight here. See U.S. v. International Building Co., 345
U.S. 502 (1953), rehearing denied 345 U.S. 978 (1953); Re-
statement, 2d, Judgments, § 27.80
Litco: Litco—that is, Ligon Transportation Company—was
at all relevant times owned by Herbert Arnold Ligon, Jr. (He
is Arnold’s son. I will hereafter refer to Ligon, Jr. as ‘‘Her-
bert’’).81
1138 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
company once again changed its name, this time returning to the original,
‘‘Cherokee Hauling & Rigging, Inc.’’
Herbert did not directly own this variously named company. Rather, Litco
was a second-tier subsidiary in a chain of companies all wholly owned directly
or indirectly by Herbert.
To complicate things still further, during the period relevant to this pro-
ceeding Herbert owned three different coexisting companies that were named
‘‘Ligon Transportation Company.’’ One was incorporated in Georgia, one in
Kentucky, and one in Tennessee. (The Kentucky company owned the Ten-
nessee company which, in turn, owned the Georgia Company.) The Tennessee
company had the broadest ICC authority, and it was the Tennessee company
that entered into the agreements with Cardinal and Litco-Wisconsin. Thus
when this decision refers to ‘‘Litco,’’ the reference is to the company that was
incorporated in Tennessee.
As a final matter, the Georgia and Kentucky companies went through name
changes analogous to those of the Tennessee company. See, e.g., LX 56.
82 Tr. 7416.
83 Arnold Ligon did not have an opportunity to testify in this proceeding.
He died just as the hearing got underway. Safeway employed the Kutzlers,
starting in January 1983. But the evidence shows that Safeway’s employment
of the Kutzlers was not part of any scheme on Litco’s part (or Arnold’s) to
gain ownership of, or to control, Cardinal. It was, as claimed by an associate
of Arnold’s, and as touched on in part IV, a gesture by Arnold of friendship
and sympathy for the Kutzlers who were, by then, in serious trouble—both
financial and emotional.
After Litco ended its relationship with Cardinal and Litco-Wisconsin (on 31
January 1983), Arnold began to supervise the persons who had handled the
Litco-Wisconsin/Cardinal clerical and dispatching work in the Kenosha ter-
minal. But that supervision related to Safeway, to Arnold’s truck leasing com-
pany (Power Leasing Division), and to LSH, not to Litco.
Herbert participated directly in the management of Litco
until the summer of 1982. At that point he decided to tie his
fortunes to a company that competed with Litco, IU Inter-
national Corporation. (IU International is a large, publicly
held company that owns a number of motor carriers. Her-
bert’s opportunity to associate himself with IU occurred as
a result of IU’s interest in another company that Herbert
owned, Ligon Specialized Hauler. The IU-LSH connection
will be discussed below.) Herbert accordingly opted to end
all of his managerial connections to Litco. Complicating mat-
ters was that at about the time that Herbert sought to limit
his ties to Litco, a number of Litco’s executives quit, includ-
ing Litco’s chief operating officer.
Herbert’s response was to begin looking for a way to dis-
pose of Litco and, in the meantime, to appoint his father, Ar-
nold, as ‘‘caretaker’’ president of Litco.82 Thus Arnold had
just become chief executive of Litco when Kutzler made his
overtures to Litco in September 1982.
As discussed in part IV, Litco did business with Litco-
Wisconsin and Cardinal during the period October 1982
through January 1983. The three companies were connected
during the period in ways that went way beyond Litco’s
lease of Cardinal’s trucks. To begin with, Litco allowed, or
perhaps required, the Kutzlers to use the service mark
‘‘Litco’’ as part of the name of their sales agency (Litco-
Wisconsin). Second, the Litco-Wisconsin/Cardinal operation
depended on Litco’s ICC authority and utilized Litco’s tariffs
which, in turn, were copies of R/C’s (in respect to Kenosha
operations). Third, Litco gave Litco-Wisconsin personnel, in-
cluding Gail Kutzler, direct access to a Litco bank account
in Wisconsin. Fourth, the trucks that Cardinal leased to Litco
were the ones that Cardinal had leased from Arnold Ligon.
Fifth, the Litco-Wisconsin/Cardinal/Litco deal included pay-
ments by Litco-Wisconsin to a company personally owned
by Arnold—Safeway Transportation Company. Sixth, the
deal included driver recruiting and payroll services by SPS,
and SPS, as previously noted and as will be discussed below,
was closely connected to Arnold and to Litco. And last, the
deal enabled Litco to gain access to an area of the country
and to customers to which Litco otherwise would have had
no practicable access.
Notwithstanding all those connections, it does not seem to
me that Litco can be deemed an alter ego of R/C.
First, the negotiations that led to the Cardinal/Litco-
Wisconsin/Litco/SPS arrangement did not get underway until
sometime after R/C filed its Chapter 11 petitions (in mid-
September). That means that Litco played no role in R/C’s
cessation of operations or in the postshutdown bargaining be-
tween Kutzler and FASH. And that, in turn, means that Litco
could not have participated with Kutzler in any plot to cause
the 28 August shutdown or to stonewall FASH during the
R/C-FASH talks (even assuming that Kutzler’s actions in
that connection were deliberately antiunion). Compare Circle
T Corp., 238 NLRB 245 (1978). It is true that Arnold Ligon
had contractual relationships with R/C and with Kutzler’s
son, Frank, that predated R/C’s shutdown. But those relation-
ships amounted to nothing more than a routine set of truck
leases. The existence of those truck leases, in fact, meant that
Arnold had every incentive to encourage R/C to keep oper-
ating.
Second, there has been no showing that Litco’s relation-
ship with Litco-Wisconsin and Cardinal was in any way
predicated on an antiunion bias on Litco’s part.
Third, there were no ownership links between R/C and
Litco.
Fourth, the connection between R/C and the Kutzlers, on
the one hand, and Litco, on the other, only lasted 3-1/2
months, at which time Litco ended it.
Finally, the connection between Cardinal/Litco-Wisconsin
and Safeway Transportation Company says little about any
alter ego relationship on the part of Litco, even though
Safeway was owned by Litco’s chief executive, Arnold
Ligon. Based on the evidence before me, the ‘‘consultant’’
contract between Safeway and Litco-Wisconsin contract rep-
resented self-dealing on Arnold’s part, contravening Arnold’s
fiduciary obligations to Litco. (The existence of the contract
between Safeway and Litco-Wisconsin suggests that, but for
the contract, Litco might have been able to negotiate an
agreement with Litco-Wisconsin or Cardinal that would have
been more lucrative for Litco.) Safeway’s contract with
Litco-Wisconsin thus might be evidence of an alter ego rela-
tionship between Arnold Ligon and/or Safeway, on the one
hand, and, on the other, Litco-Wisconsin/Cardinal (had one
been alleged); it is not evidence of an alter ego relationship
on Litco’s part.83
Smyrna Personnel Services: Litco neither owned any
trucks nor employed any drivers. Rather, Litco leased all the
trucks it used, and required the lessors to provide drivers for
the trucks (as we have seen in the case of its arrangements
with Cardinal and Frank Kutzler). Litco leased most of its
trucks from Arnold Ligon and one or two other Litco insid-
ers. Arnold and those other insiders created SPS as the entity
that would find drivers for the fleets of trucks that Litco
leased from them, and that would administer the fleets’ pay-
rolls. As SPS’ owner and chief executive, Melvin Potter, put
it, the ‘‘corporate purpose’’ of SPS was to ‘‘select, hire, ori-
1139REDWAY CARRIERS
84 GCX 67, p. 2.
85 The complaint alleges that SPS was a joint employer with Litco and LSH,
as well as with R/C and Litco-Wisconsin. But the record does not provide suf-
ficient evidence about the four-way relationship between SPS, Litco, the per-
sons from when Litco leased its trucks, and the drivers of the trucks that Litco
used, or the comparable relationship involving LSH, to permit me to make
findings in those respects.
86 SPS’ owner telephoned the Board’s Regional Office for Region 30, advis-
ing Regional personnel of SPS’ role, before SPS began its work for Litco-
Wisconsin/Cardinal.
87 As with Litco, Herbert’s ownership was not direct. Rather, LSH-Kentucky
was a wholly owned subsidiary of a corporation that Herbert wholly owned.
88 Included in the 15 February transfer was Litco’s conveyance to LSH-
Delaware of the right to use the names ‘‘Ligon Transportation’’ and ‘‘Litco.’’
See fn. 81, above, and GCX 122.
89 In the interest of readability the foregoing discussion did not cover all the
name changes involving the companies I have referred to as LSH-Delaware
and LSH-Kentucky. To begin with, LSH-Delaware began life on 12 August
1982 with the name ‘‘LSH Carriers, Inc.’’ That was changed to ‘‘Ligon Spe-
cialized Hauler, Inc.’’ on 5 October 1982. Finally, in September 1983 Ligon
Specialized Hauler, Inc. (the Delaware corporation) changed its name to
‘‘Ligon Nationwide, Inc.’’ In January 1983, meanwhile, LSH-Kentucky—that
is, the Kentucky corporation named ‘‘Ligon Specialized Hauler, Inc.’’—
changed its name to ‘‘Cherokee Leasing, Inc.’’
ent and qualify drivers for fleets under contract with’’
Litco.84
When Kutzler proposed the Litco-Wisconsin/Cardinal
arrangment to Arnold Ligon, Arnold suggested that Cardinal
use SPS’ services. (The Kutzlers claimed that Arnold re-
quired Cardinal to use SPS, but, as discussed earlier, I do not
credit that testimony.) Kutzler agreed, and SPS—without sig-
nificant input from the Kutzlers—recruited applicants for
Cardinal’s truckdriving positions, checked the applicants’
qualifications, selected from among the applicants, hired
them, set their terms of employment, paid them, and handled
their fringe benefits. Litco-Wisconsin or Cardinal reimbursed
SPS for such services .
SPS considered itself to be the drivers’ employer. But Car-
dinal directed the drivers’ day-to-day work. Cardinal (via
‘‘Dispatch Services’’) handled most of the dispatching of the
drivers, and that dispatching not only affected where they
drove, at what hours they drove, and with what kinds of
loads they drove, but it also directly affected their pay. (The
drivers were paid on a per-mile basis, and they were paid
more per loaded mile than per unloaded mile.)
SPS may accordingly have been a joint employer with
Cardinal (and with Litco-Wisconsin) during the period of
Cardinal’s trucking operations as debtor-in-possession. But
the complaint does not allege that either Cardinal or Litco or
Litco-Wisconsin (or SPS) violated the Act during that period;
thus a finding that SPS was a joint employer with Cardinal
and/or Litco-Wisconsin would be beside the point.85
As for whether SPS was an alter ego of R/C, the answer
is clear. It was not.
To begin with, neither SPS nor the owner of SPS ever had
any ownership interest in Redway or Cardinal or Litco-Wis-
consin. And none of those companies nor any owner of any
of those companies had any ownership interest in SPS.
Second, SPS was created for reasons that had nothing to
do with R/C—and vice versa. SPS’ business with Litco-Wis-
consin and Cardinal represented only a small part of SPS’
overall business. No member of SPS’ management nor any
SPS supervisor held any position with R/C and vice versa.
Third, SPS did not participate in any scheme by which
R/C and/or the Kutzlers sought to circumvent the require-
ments of the Act. In that regard I will assume that if the
Kutzlers had created the Litco-Wisconsin/Cardinal arrange-
ment in order to avoid dealing with FASH, and if SPS had
knowingly participated in that scheme, SPS could be consid-
ered an alter ego of R/C. But the Kutzlers did not enter into
the Litco arrangement in order to avoid their obligations to
FASH or to R/C’s employees. Moreover: (1) SPS was not
privy to the Kutzlers’ motives for entering into the arrange-
ment; (2) SPS entered into its relationship with Cardinal for
ordinary commercial reasons; (3) SPS made no attempt to
hide its activity from R/C’s employees or from the Board;86
and (4) SPS in many respects acted entirely independently of
the Kutzlers.
Ligon Specialized Hauler, Inc.: This, I’m afraid, may seem
complicated. The problem is that there were two motor car-
riers named ‘‘Ligon Specialized Hauler,’’ and both were con-
nected in one way or another to the events at issue here. One
company named Ligon Specialized Hauler was a Kentucky
company owned by Herbert Ligon. The other was a Dela-
ware company owned by IU International. (I will refer to the
two companies as LSH-Kentucky and LSH-Delaware. I am
using the past tense because, as will be discussed below: (1)
both companies have been renamed; and (2) the company
that was LSH-Kentucky is no longer in the trucking busi-
ness.)
LSH-Kentucky was headquartered in Madisonville, Ken-
tucky, but operated throughout the United States. Until the
summer of 1982, Herbert managed LSH-Kentucky as well as
owned it.87 Like Litco, LSH-Kentucky did not own any
trucks or employ any drivers. Rather, it provided service via
owner-operators with whom it had lease arrangements.
In August 1982 Herbert agreed to sell the assets of LSH-
Kentucky, including its operating rights, to LSH-Delaware
(the subsidiary of IU International). Because interstate oper-
ating rights were involved, the agreement could not be
consumated without approval by the ICC. The agreement ac-
cordingly provided that LSH-Delaware would take over the
operation of the assets of LSH-Kentucky on a temporary
basis as soon as the ICC granted temporary authority to
LSH-Delaware, pending final ICC approval of the acquisi-
tion. (The parties to the agreement knew that the ICC gen-
erally took months to consider asset acquisitions, but that the
ICC could be expected to promptly approve a request by
LSH-Delaware for temporary authority to operate LSH-Ken-
tucky’s assets.)
In late September 1982 the ICC did grant LSH-Delaware
the temporary authority to operate the assets of LSH-Ken-
tucky. And from that point on LSH became an IU operation.
That is, while the assets still nominally belonged to LSH-
Kentucky, in fact they were treated as though they were part
of LSH-Delaware. (The assets were formally transferred to
LSH-Delaware on 15 February 1983.)88
In sum, LSH-Kentucky ceased operating as a motor carrier
in September 1982.89
Prior to the summer of 1982, Herbert Ligon had run LSH-
Kentucky and Litco as though they were divisions of one
company. A shipper that called Litco for service might end
up with its shipment on a truck leased by LSH-Kentucky (or
vice versa). Because of that, and because both Litco and
LSH-Kentucky had the word ‘‘Ligon’’ in their names, ship-
pers and, sometimes, truckdrivers, did not readily distinguish
1140 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
90 Herbert Ligon became a member of LSH-Delaware’s management on 15
February 1983. Arnold Ligon had been on the payroll of LSH-Kentucky, and
he went onto the payroll of LSH-Delaware when the latter company took over.
But he played no management or supervisory role at either LSH-Kentucky or
LSH-Delaware. LSH-Delaware ended its connection with Arnold in the sum-
mer of 1983, over Arnold’s protests.
91 LSH-Delaware ended its ties to the Kutzlers on 15 February 1983. It for-
mally completed its acquisition of the assets of LSH-Kentucky on the same
day, 15 February. Because of that chronological relationship, Kutzler assumed
that there was a cause-and-effect connection between the two events. There
was not. LSH-Delaware continued to operate some trucks out of the Kenosha
terminal for about a month after LSH had ended its ties to Cardinal, in con-
junction with Safeway Transportation Company and Arnold’s Power Leasing
Division. But that says nothing about LSH’s status as an alter ego of R/C.
92 Power Leasing Division was the company from which R/C had leased
trucks. See fns. 60 and 83, above. By February 1983, Power Leasing Division
had changed its name to ‘‘Leasing Division, Inc.’’
93 Pars. 11 and 12 of the amended complaint.
between the two carriers. The relevance of that here is that
when the Litco-Wisconsin/Cardinal operation began doing
business under contract with Litco, shippers and drivers
sometimes treated Litco-Wisconsin/Cardinal as though its
connection was with Ligon Specialized Hauler rather than
with Ligon Transportation Company.
But that was solely a matter of confusion on the part of
the shippers and/or drivers that was generated by the then ex-
tinct ties between Litco and LSH-Kentucky. For at the time
such events occurred: (1) Cardinal and Litco-Wisconsin had
contracted with Litco, not with LSH-Kentucky or with LSH-
Delaware; (2) LSH-Kentucky was no longer in the trucking
business—or rather, it had no part in the management of any
trucking business; (3) LSH-Delaware was owned by IU,
which had no ownership interest in Litco; (4) Litco had not
entered into any sort of arrangement with LSH-Delaware re-
garding Cardinal and/or Litco-Wisconsin; and (5) although
there were some connections between Litco and LSH-Dela-
ware (both used the same computer facilities, for instance)
the two companies were distinct, separate operations.90
On 1 February LSH-Delaware entered into a set of trans-
actions that involved leasing trucks (with drivers) from Car-
dinal and from Frank Kutzler and agreeing to pay an agency
fee to Safeway Transportation. The trucks operated out of the
Kenosha terminal serving, in the main, Ocean Spray and
American Motors. The connection between LSH-Delaware
and the Kutzlers ended after 2 weeks. (All that has been dis-
cussed in part IV.)
LSH-Delaware entered into those arrangments with Car-
dinal, Frank Kutzler, and Safeway for usual commercial rea-
sons. The number of trucks involved in those arrangements
amounted to only a tiny fraction of LSH’s total fleet. There
is no evidence at all that LSH-Delaware leased trucks from
Cardinal as part of any plot with Kutzler to do harm to
FASH or to the rights of R/C’s employees, or that LSH-
Delaware would have had any reason to suspect that Cardinal
was behaving discriminatorily toward R/C’s employees (even
if Cardinal had been doing so). And because the ownership
of LSH-Delaware was (and is) entirely different from R/C’s,
there is no basis to deem LSH-Delaware to be an alter ego
of R/C—even if the ties between LSH-Delaware and Car-
dinal had lasted more than 2 weeks.91
Cardinal’s switch to LSH-Delaware from Litco again re-
sulted in some confusion among shippers using Cardinal’s
services. Thus at least one such shipper erroneously sent pay-
ments to Litco for services via Cardinal after 1 February in-
stead of to LSH-Delaware. But the happening of mistakes of
that nature says nothing about either Litco’s relationship to
LSH-Delaware or about any alter ego relationship between
R/C and either Litco or LSH-Delaware.
As for LSH-Kentucky, for all intents and purposes it had
ceased its trucking business before Cardinal entered into any
relationship with Litco, much less with LSH-Delaware. Thus
there is no basis at all to hold LSH-Kentucky derivatively
liable for R/C’s unfair labor practices.
Successorships: I do not understand how Litco could be
deemed a successor to R/C since Cardinal, during the entire
time it dealt with Litco, maintained the same kind of owner-
ship of its equipment and facilities that it had when it oper-
ated with Redway. Successorship, after all, implies some
change in ownership.
Turning to LSH-Delaware, it is true that: (1) starting in the
middle of February Cardinal’s interest in the trucks it had
been leasing and, apparently, the Kenosha terminal, did
change drastically; and (2) LSH-Delaware utilized those
trucks and terminal until sometime in March. But LSH-Dela-
ware used such assets via contract with two companies
owned by Arnold Ligon, Safeway Transportation, and Power
Leasing Division.92 Thus if any entity were to be held a suc-
cessor based on the mid-February shift in the ownership in-
terests in the trucks and terminal, it would be one or both
of those two Arnold Ligon companies, not LSH-Delaware.
Finally, both Litco and LSH operated exclusively via
leased trucks driven by persons who were employees of the
lessors (or, in Litco’s case, of SPS). Because the record fails
to show that either Litco or LSH was a joint employer of
those drivers, for that reason too neither Litco nor LSH may
be deemed a successor to R/C. See Container Transit, 281
NLRB 1039 at fn. 4 (1986).
As for SPS, I will assume, for present purposes, that a
labor broker like SPS could in some circumstances be
deemed a successor to a motor carrier. Turning specifically
to SPS and the facts at hand, SPS did employ truckdrivers,
including some who had worked for R/C. But SPS acquired
none of R/C’s equipment or facilities. Its offices, moreover,
were always in Tennessee, while R/C’s were in Wisconsin.
Finally: (1) only a small percentage of SPS’ drivers had been
employed by R/C; and (2) the fact that less than a majority
of the drivers SPS employed had previously been with R/C
was not a function of discrimination on SPS’ part. On sev-
eral counts, therefore, SPS was not a successor to R/C.
VI. THE KUZLERS’ PERSONAL LIABILITY
The complaint alleges that the Kutzlers were ‘‘principal
shareholder[s] in and responsible for the daily operations of
Redway/Cardinal,’’ that they ‘‘employed the operations’’ of
Redway/Cardinal, Litco-Wisconsin, Litco, LSH and/or SPS
to insulate themselves ‘‘from effective liability under the Act
for unfair labor practices,’’ and that Kutzler and Gail should
therefore be jointly and severally liable for the unfair labor
practices considered in this proceeding.93
The Board does not hold corporate shareholders or officers
personally liable for unfair labor practices unless such indi-
viduals perpetrate a fraud, disregard the corporate form by
intermingling personal and corporate assets, or dissolve the
employing corporation in favor of a disguised continuance.
See Martin Arsham Sewing Co., 275 NLRB 633 (1985);
Workroom for Designers, 274 NLRB 840 at 840–841 (1985).
1141REDWAY CARRIERS
94 R/C’s failure to bargain in the postshutdown period generated no backpay.
As for R/C’s failure to bargain about fold-in matters, my conclusion (as stated
in part I) is that R/C violated the Act by failing to bargain with FASH over
whether ‘‘gross revenues,’’ within the meaning of the drivers’ terms of em-
ployment, included the fold-in. It is not clear that a violation of the Act of
that nature gives rise to backpay obligations.
95 See fn. 3, above.
96 See Electrical Workers IBEW Local 3 (Telecom Plus), 280 NLRB 265
(1986).
The record fails to disclose any such behavior on the
Kutzlers’ part. They neither dissolved R/C in favor of a dis-
guised continuance nor intermingled personal and corporate
assets. As for the perpetration of a fraud, there is the matter
of the Kutzlers’ failure to notify the bankruptcy court and/or
Cardinal’s creditors that the Kutzlers had formed Litco-Wis-
consin (as discussed in part IV). But the record proves no
mens rea on the Kutzlers’ part (as also discussed in part IV)
and as things turned out the formation of Litco-Wisconsin
caused no harm.
I accordingly will recommend dismissal of the allegations
against Richard and Gail Kutzler.
THE REMEDY
I have found (in part I) that in the spring of 1982 R/C vio-
lated Section 8(a)(5) of the Act by failing to bargain with
FASH about how the pay of R/C’s over-the-road drivers
should be affected by the fold-in that the Interstate Com-
merce Commission had ordered. And, in part III, I concluded
that R/C violated Section 8(a)(5) in the period following the
shutdown on 28 August 1982.
The question is what remedy, if any, to order.
Redway and Cardinal are defunct. That, alone, would not
stand in the way of an order requiring the remedying of the
unfair labor practices committed by those companies. E.g.,
Construction Erectors, 265 NLRB 786 fn. 6 (1982). Here,
however, not only are Redway and Cardinal defunct, they
have been without assets since mid-1983. Moreover FASH
too is defunct. Finally, as this decision has discussed at some
length, no other entity is liable for any of R/C’s unfair labor
practices.
Under these circumstances it would be useless, even mis-
leading, to order any affirmative remedy or even to order any
entity to cease and desist from violating the Act. Redway
and Cardinal are not in any position to bargain with FASH.
In any case, there is no FASH. There is no place to post a
notice. And there is no money available with which to pay
any backpay (even assuming that an Order requiring R/C to
pay backpay would otherwise be apposite).94 All that also
means, or course, that a ‘‘visitorial’’ provision95 would be
singularly inappropriate.
The accompanying recommended Order accordingly dis-
misses the complaint.96
[Recommended Order for dismissal omitted from publica-
tion.]