S-H Food Service. Inc.

National Labor Relations Board - Board Decisions

Jun 26, 1970

183 N.L.R.B. 1216 (N.L.R.B. 1970)

1216 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
S-H Food Service , Inc. and Bartenders , Hotel,
Restaurant & Cafeteria Employees Union, Local
No. 36 , affiliated with Hotel & Restaurant Em-
ployees and Bartenders International Union,
AFL-CIO. Case 5-CA-4294
June 26, 1970
DECISION AND ORDER
BY MEMBERS FANNING , MCCULLOCH, AND BROWN
On October 15, 1969, Trial Examiner Bernard J.
Seff issued his Decision in the above-entitled
proceeding, finding that Respondent had not en-
gaged in certain unfair labor practices and recom-
mending that the complaint be dismissed in its en-
tirety, as set forth in the attached Trial Examiner's
Decision. Thereafter the General Counsel and the
Charging Party filed exceptions to the Trial Ex-
aminer's Decision and briefs in support of said ex-
ceptions. The Respondent filed limited exceptions
to the Trial Examiner's Decision and a brief in sup-
port of its exceptions and of the Trial Examiner's
Decision.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its
powers in connection with this case to a three-
member panel.
The parties agreed to a stipulation and waived a
hearing and the presentation of any evidence other
than that contained in the stipulation and the ex-
hibits referred to therein. The Board has considered
the Trial Examiner's Decision, the exceptions and
briefs, and the entire record in this case, and
hereby adopts the findings, conclusions, and recom-
mendations of the Trial Examiner, only to the ex-
tent consistent herewith.
The Trial Examiner found that Respondent was a
successor to Harry M. Stevens, Inc., of Maryland
(Stevens) in the operation of food services at the
Annapolis Statler Hilton Inn, but concluded that
under existing Board law the only obligation of a
successor is to recognize and bargain with the
Union. He found that the Respondent fully
discharged its obligations on this score by agreeing
' The Stevens ' contract was for 3 years effective October 15, 1967
2 182 NLRB 348.
'Burns, supra
Article XVII, Insurance
After ninety ( 90) days' employment , the Employer agrees to provide
the standard thirty-one ( 31) day basic Blue Cross Individual Plan for
the regular employees during the life of this Agreement at no cost to
the employees affected
In addition , the Employer shall provide for the regular employees dur-
ing the life of this Agreement at no cost to the employees affected an
183 NLRB No. 124
to include in any contract it might consummate
with the Union substantially all terms of the
Stevens' contract' except the insurance program,
on which it offered a replacement plan. He con-
cluded that the Respondent had bargained to im-
passe, and, therefore, had not refused to bargain,
and that the resulting strike was economic in
character. He recommended that the complaint,
which alleged no independent 8(a)(1) activity, be
dismissed in its entirety.
In the recently issued decision The William J.
Burns International Detective Agency,2 we fully ex-
plained our reasons for finding that a successor em-
ployer in a continuing business identity has an
obligation to honor the collective-bargaining agree-
ment in effect at the time it took over the employ-
ing enterprise. We further stated that the "obliga-
tion to bargain imposed on a successor-employer
includes the negative injunction to refrain from uni-
laterally changing wages and other benefits
established by a prior collective-bargaining agree-
ment.... "3
We agree with the Trial Examiner that Respon-
dent, though not a purchaser from Stevens, is a suc-
cessor to Stevens in the circumstances here which
show that the employing industry has remained es-
sentially the same. The Respondent contends that
even if the Board reaches the conclusion that it is a
successor-employer, the alleged violation here
should be viewed in the light of Respondent's im-
mediate recognition of the Union, its implementing
the contract in many important respects, its bar-
gaining on the one "substantive matter" on which it
did not implement the contract-insurance
benefits, and its implied lack of objection to
checkoff if supplied with the appropriate employee
authorizations . It also urges dismissal on the ground
that the Board has not thus far held that failing to
provide insurance benefits and to checkoff dues are
proscribed, unilateral changes in wages, hours, and
working conditions "when done by a successor em-
ployer." That, of course, is the problem here. Now
that the Board has decided in Burns that a succes-
sor must honor the contract of its predecessor, we
think it would vitiate the meaning of that decision
to except contractual provisions for hospital and in-
surance benefits as here.4 Benefits of this sort are in
insurance policy in the sum of $1,000 accidental death and dismem-
berment on the life of each of the aforesaid employees , benefits in the
sum of $25 00 a week for 13 weeks effective 8 days after sickness on
the 1st day for an injury sustained off the job , or for 6 weeks during
pregnancy In addition , effective October 15, 1968 , the Employer
agrees to provide a basic Blue Shield Individual Plan for the regular
employees during the life of the balance of this Agreement at no cost
to the employees affected At the Employer 's option , the Employer
may contribute the net cost of the aforesaid insurance to the Union's
Welfare Fund and the Union shall purchase appropriate insurance for
the aforesaid employees
S-H FOOD SERVICE , INC. 1217
reality part of the wage package and although they
constitute a separate bargainable issue whenever a
new contract is being negotiated, we believe that
they, like wages, must be continued for the remain-
ing term of the predecessor's contract unless the
successor and the bargaining representative can
mutually agree to changes. Similarly, the checkoff
provided in the contract5 is an important employer
undertaking which confers a distinct benefit upon
those employees who wish to avail themselves of
this method of paying union initiation fees, dues,
and assessments,6 as well as a benefit to the Union
in managing its affairs in a manner to facilitate op-
timum representation. Accordingly we find that
within the meaning of the Burns decision the
checkoff provisions of a predecessor's contract
should be preserved for the remaining life of the
contract upon presentation to the successor of un-
revoked voluntary authorizations from the em-
ployees.'
We find, therefore, that Respondent, by failing to
continue the insurance and checkoff provisions of
the preexisting collective-bargaining agreement,
violated Section 8(a)(5) and thereby Section
8(a)(1) of the Act, and cannot avail itself of the
defense of having bargained to impasse. The result-
ing strike which began on March 5, 1969, was
caused and prolonged by the Respondent's uni-
lateral actions which we have found to be unfair
labor practices.
Respondent is subject to the Union having provided
it with unrevoked voluntary authorizations from the
employees.
Having found that Respondent's employees were
engaged in and are engaging in an unfair labor
practice strike, Respondent shall be ordered, upon
unconditional request, to reinstate all strikers to
their former positions, or if those jobs no longer ex-
ist, to substantially equivalent positions, dismissing
if necessary any replacements hired. In addition,
Respondent shall make each of the striking em-
ployees whole for any loss of earnings which he or
she may suffer by reason of Respondent's refusal, if
any, to reinstate such striking employees in the
manner prescribed above, by payment to him or
her of a sum of money equal to that which such em-
ployee normally would have earned as wages during
the period beginning 5 days after the date on which
such employee applies for reinstatement and ter-
minating on the date of Respondent's offer of em-
ployment. Backpay, where due, shall be computed
in the manner set forth in F. W. Woolworth Com-
pany, 90 NLRB 289, and shall include interest in
the amount and manner set forth in Isis Plumbing &
Heating Co., 138 NLRB 716.
CONCLUSIONS OF LAW
The Remedy
Having found Respondent in violation of Section
8(a)(5) of the Act for failing to honor certain
provisions of the collective-bargaining agreement in
effect at the time of its takeover, we shall order
Respondent to reinstate the insurance and checkoff
provisions of the contract, the latter on the condi-
tion herein stated, and maintain said provisions in
effect during the term of the agreement, and to
reimburse, with interest, any employee who has suf-
fered an economic loss by its failure to maintain the
insurance, including reimbursement of any moneys
which employees may have paid to secure like or
similar insurance. Reinstatement of checkoff by the
° Article 111, Union Security and Checkoff
The Company agrees to deduct monthly from the wages of each em-
ployee initiation fees, dues, and assessments , providing the Union
furnishes the Company with a voluntary written authorization from the
employee Said authorization to be in compliance with the Labor
Management Relations Act of 1947 , as amended , and all other ap-
plicable laws and not to be irrevocable beyond a period of one (1) year
or termination of this contract, whichever occurs earlier Deduction
for this purpose will be transmitted by the Company to the Union's
1. Respondent is engaged in commerce within
the meaning of Section 2(6) and (7) of the Act.
2. Bartenders, Hotel, Restaurant & Cafeteria
Employees Union, Local No. 36, affiliated with
Hotel & Restaurant Employees and Bartenders In-
ternational Union, AFL-CIO, is a labor organiza-
tion within the meaning of Section 2(5) of the Act.
3. By unilaterally failing to continue in effect the
insurance and checkoff provisions of the existing
collective-bargaining agreement during the
remainder of its term, absent mutual agreement on
changes, Respondent, as a successor-employer to
Stevens, has engaged in and is engaging in unfair
labor practices within the meaning of Section
8(a)(5) and (1) of the Act.
4. The strike embarked upon by the employees
on March 5, 1969, was caused by Respondent's
business office immediately after the second pay day of each month
° Concerning appropriate subjects for checkoff see Wm Wolf Bakery,
Inc, 122 NLRB 630
' The factual Stipulation upon which this case is based reveals simply
that " Respondent did not comply with the check-off provisions contained
in Article 111 of the collective bargaining agreement ," which tends to in-
dicate that the Union furnished the appropriate employee authorizations
However, the Respondent 's brief implies that it did not Our Conclusions of
Law, Order , and Notice reflect this state of the record
1218 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
unilateral change of contractual conditions and is
therefore an unfair labor practice strike.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that Respondent, S-
H Food Service, Inc., Annapolis, Maryland, its of-
ficers, agents, successors , and assigns , shall:
1. Cease and desist from failing to continue in
effect the insurance and checkoff provisions of the
existing collective-bargaining agreement , as succes-
sor to Stevens.
2. Take the following affirmative action which
will effectuate the policies of the Act:
(a) Reinstate the insurance and checkoff provi-
sions of the existing collective- bargaining agree-
ment for its duration, as described in the Remedy
section.
(b) Reimburse any employee who has suffered
an economic loss by Respondent's failure to main-
tain the insurance provisions including any moneys
employees may have paid to secure similar in-
surance.
(c) Upon their unconditional request, offer to all
strikers immediate and full reinstatement to their
former jobs or, if those jobs no longer exist, to sub-
stantially equivalent positions, dismissing if necessa-
ry any replacements hired, and make them whole
for any loss of earnings resulting from the failure to
reinstate them as set forth in the Remedy section.
(d) Notify any of the strikers if presently serving
in the Armed Forces of the United States of their
right to full reinstatement upon application in ac-
cordance with the Selective Service Act and the
Universal Military Training and Service Act, as
amended, after discharge from the Armed Forces.
(e) Post at its Annapolis, Maryland, office co-
pies of the attached notice marked "Appendix. "8
Copies of said notice, on forms provided by the Re-
gional Director for Region 5, after being duly
signed by the Company's authorized representative,
shall be posted by it immediately upon receipt
thereof, and be maintained by it for 60 consecutive
days thereafter, in conspicuous places, including all
places where notices to employees are customarily
posted. Reasonable steps shall be taken by Respon-
dent to insure that said notices are not altered,
defaced, or covered by any other material.
(f) Notify the Regional Director for Region 5, in
writing, within 10 days from the date of this Order,
what steps have been taken to comply herewith.
b In the event that this Order is enforced by a Judgment of a United
States Court of Appeals, the words in the notice reading "Posted by Order
of the National Labor Relations Board" shall be changed to read "Posted
Pursuant to a Judgment of the United States Court of Appeals Enforcing an
Order of the National Labor Relations Board."
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT fail to continue in effect the
insurance and checkoff provisions of the exist-
ing collective-bargaining agreement, as succes-
sor to Stevens.
WE WILL reinstate the insurance provisions
of the existing collective-bargaining agreement
for the duration of its term, as well as the
checkoff provisions based upon appropriate
authorizations from the employees.
WE WILL reimburse any employee who has
suffered an economic loss by our failure to
maintain the insurance, including any moneys
employees may have paid to secure similar in-
surance.
WE WILL, upon their unconditional request,
offer to all strikers immediate and full rein-
statement to their former jobs or, if those jobs
no longer exist, to substantially equivalent
positions, dismissing if necessary any replace-
ments hired and make them whole for any loss
of earnings resulting from the failure to rein-
state them within 5 days from their uncondi-
tional request.
WE WILL notify any of the strikers presently
serving in the Armed Forces of the United
States of their right to full reinstatement to
their former or substantially equivalent jobs
with the Company upon application, in ac-
cordance with the Selective Service Act and
the Universal Military Training and Service
Act, as amended, after discharge from the
Armed Forces.
S-H FOOD SERVICE, INC.
(Employer)
Dated By
(Representative ) (Title)
This is an official notice and must not be defaced
by anyone.
S-H FOOD SERVICE, INC. 1219
This notice must remain posted for 60 consecu-
tive days from the date of posting and must not be
altered, defaced, or covered by any other material.
Any questions concerning this notice or com-
pliance with its provisions may be directed to the
Board's Office, Room 1019, Federal Building,
Charles Center, Baltimore, Maryland 21202,
Telephone 301-962-2822.
ness operations purchased a substantial amount of
supplies which were shipped directly from points
and places located outside the State of Maryland. I
find that the Respondent is engaged in commerce
within the meaning of the Act and that it will effec-
tuate the policies of the Act to exercise jurisdiction
herein.
II. THE LABOR ORGANIZATION INVOLVED
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
BERNARD J. SEFF, Trial Examiner: All parties
were represented by counsel when this case came
on for trial on September 2, 1969, in Baltimore,
Maryland. The complaint is based on a charge filed
on January 29, 1969, and an amended charge dated
May 29, 1969, alleging that Respondent engaged in
certain unfair labor practices proscribed by Section
8(a)(1) and (5) of the National Labor Relations
Act, as amended. An all-party stipulation was en-
tered into on September 2, 1969.1
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
Respondent, S-H Food Service, Inc., is, and at all
times material herein since December 17, 1968, has
been, a corporation duly organized under and exist-
ing by virtue of the laws of the State of Maryland,
having its principal office and place of business at
Annapolis, Maryland, where it is engaged in the
operation of all food and beverage facilities at the
Annapolis Statler Hilton Inn.
The Annapolis Statler Hilton Inn (herein called
Annapolis Hilton) was built as a new hotel facility
and opened on December 15, 1967. All the food
service operations and facilities were contracted
out to Harry M. Stevens, Inc., of Maryland (herein
called Stevens), which is a nationwide organization
operating food service facilities at racetracks, stadi-
ums, and other locations throughout the United
States. Stevens had a Maryland division which pro-
vides the food services at Maryland racetracks. The
Annapolis Hilton was Stevens' first hotel venture.
Respondent, in the course and conduct of its
business operations anticipates that during the 12-
month period between December 1968 through
December 1969, a representative period, it will
derive in excess of $500,000 gross revenue from
this operation. Stevens, in the course and conduct
of its business operations during the 12-month
period between December 1967 through December
1968, a representative period, derived in excess of
$500,000 gross revenue from this operation.
Respondent, in the course and conduct of its busi-
' Unless otherwise indicated all dates fall in 1969
The Charging Party is, and at all times material
herein has been, a labor organization within the
meaning of Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
At the hearing the parties submitted an all-party
stipulation which sets forth the facts involved in the
instant matter as follows:
A contract was entered into between Stevens and
the Annapolis Hilton Hotel which provided for
Stevens to have complete control and responsibility
for all food operation in the hotel, including restau-
rants, bars, all banqueting facilities, and room ser-
vice. No food or beverage service of any kind was
handled by Annapolis Hilton or Annapolis Hilton
employees. Stevens provided all of its own em-
ployees, many of whom were secured from its
racetrack operations in Maryland. Stevens, which
has collective-bargaining contracts nationally with
the Bartenders' Union, signed a contract with Local
36 of that Union, effective October 15, 1967, to
cover its employees at that location. The balance of
the employees at the hotel were employees of the
hotel itself and were not covered by any collective-
bargaining agreement.
The Stevens' operation at the Annapolis Hilton
was not a success. Stevens lost money on the opera-
tion from the start. As the year went on, this loss
picture began to reflect itself in what Annapolis
Hilton considered to be inadequate service by
Stevens. Among other things, this was indicated by
the failure of certain organizations which had used
the facilities of the hotel on prior occasions to re-
book the facilities for later functions. It was deter-
mined by Annapolis Hilton to end the contract with
Stevens if it could be worked out and a settlement
was arranged whereby, as of December 17, 1968, a
new corporation, S-H Food Service, Inc., Respon-
dent herein, formed by the ownership interest of
Annapolis Hilton, began operating the food services
there which had formerly been operated by
Stevens . An experienced man who would run the
food service operations at a local Baltimore country
club was hired to run the operations.
There was an informal agreement between
Stevens and Annapolis "-Tilton that certain of
Stevens ' administrative , a rtive, and supervisory
personnel could remain at the hotel, on Stevens'
427-258 O-LT - 74 - 78
1220 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
payroll, during a transition perion while S-H was
hiring replacements for them. Under this agree-
ment, Stevens' chef, maitre d'hotel, banquet head-
waiter, and night manager continued to work in
those capacities for S-H after December 17. By
January 6, 1969, all of them had left S-H. The chef,
banquet headwaiter, and night manager returned to
work elsewhere for Stevens and the maitre d'hotel
left for other employment elsewhere.
Of the 89 nonsupervisory food service employees
on the S-H payroll as of December 23, 1968, the
first payroll period after December 17, all but 8
also appeared on the December 14, 1968, payroll
of Stevens. Of these 81 former Stevens' employees
who appeared on the S-H payroll on December 23,
1968, 32 remained out of a total payroll of 90 rank-
and-file food service employees of S-H as of March
3, 1969, the last payroll before the strike. All the
former Stevens' employees who were employed by
S-H as of March 4, 1969, left voluntarily during the
interim period.
On or about October 16, 1967, Stevens and the
Charging Party entered into a collective-bargaining
agreement effective until October 14, 1970. Effec-
tive midnight, December 16, 1968, Stevens can-
celed the insurance coverage provided by the col-
lective-bargaining agreement, described above, by
notification to the respective insurance carriers.
Since December 17, 1968, when Respondent as-
sumed the operation at the Annapolis Hilton, it
maintained and continued to maintain the provi-
sions of the collective-bargaining agreement
described above except, as material herein, that
Respondent did not comply with the check-off
provisions contained in the collective-bargaining
agreement. Further, Respondent did not reinstate
the insurance policies canceled by Stevens and has
not provided for its employees the insurance
coverage provided for in article XVII of the collec-
tive-bargaining agreement.
On or about December 26, 1968, at the request
of the Union, a meeting was held between represen-
tatives of the Union and the Respondent, at which
the Union raised the question of the status of the
former Stevens' employees then working for S-H
and the status of the former Stevens' collective-bar-
gaining agreement with the Union. The Union took
the position that the former Stevens' contract was
binding in its entirety on S-H. S-H took the position
that it was not bound in any respect by the Stevens'
contract. The Respondent's position was that it
would recognize the Union as the bargaining agent
for the employees formerly covered by the Stevens'
contract and would negotiate a new agreement with
the Union covering wages, hours, and working con-
ditions for such employees to replace the agree-
ment which the Union had had with Stevens.
The Union requested that S-H study the Stevens
agreement and tell the Union in what respects S-H
would or would not agree to apply the provisions of
the Stevens' agreement to the S-H employees. S-H
agreed to do this.
Thereafter representatives of the parties met to
discuss a new contract on at least three more occa-
sions between December 26, 1968, and March 5,
1969. On each of these occasions, the position of
the Respondent was that it was in substantial agree-
ment with all provisions of the Stevens' contract ex-
cept the insurance provisions; that it could not af-
ford to meet the employee insurance program set
forth in the Stevens' contract and at the same time
be able to operate the food and beverage facilities
at a profit. Respondent indicated that it was
prepared to discuss a lesser insurance program than
the one provided for in the Stevens' contract and,
in the last meeting prior to March 5, proposed such
a program at a cost of approximately one-half the
Stevens' program.
The Union's position was consistent throughout
in that it insisted on the same insurance program as
was contained in the Stevens' contract and that it
would not agree to anything less. The parties main-
tained these positions on the insurance issue
throughout the meetings and never approached any
closer to an agreement on this issue.
S-H has no time since its inception on December
17, 1968, provided any insurance program for its
employees.
On March 5, 1969, the employees of Respondent
in the agreed-upon bargaining unit set forth in the
Stevens' contract engaged in and continue to en-
gage in a strike in furtherance of their demand that
Respondent honor all the provisions provided by
the said Stevens' collective-bargaining agreement.
At no time prior to the strike on March 5, 1969,
did Respondent question the status of the Union as
the collective-bargaining representative of the em-
ployees formerly covered by the Stevens' contract.
The parties waived a hearing and the presenta-
tion of any evidence other than that contained in
the above-described stipulation and the exhibits
referred to therein.
A. Analysis of the Facts
In order to evaluate the instant case in its proper
frame of reference particular attention is called to
the following salient facts:
1. S-H no contractual or business relations with
Stevens and the record is barren of even a sug-
gestion that it had dealings with Stevens.
2. Stevens had a contract to operate its conces-
sion with the Annapolis-Hilton Hotel.
3. S-H had business and contractual relations
only with Annapolis-Hilton.
4. Annapolis-Hilton had no relations and no
business with the Union.
5. Stevens alone recognized, dealt with, and en-
tered into contractual relations with the Union.
6. Respondent did not unilaterally change
anything in the contract that previously existed
between Stevens and the Union. Stevens canceled
the insurance provisions which existed in its con-
S-H FOOD SERVICE, INC.
tract with the Union before Respondent appeared
on the scene.
7. From the outset S-H took the position that it
was not bound in any respect by the Stevens' con-
tract with the Union.
8. Respondent 's position was that it would
recognize the Union as the bargaining agent for the
employees formerly covered by the Stevens' con-
tract and offer to negotiate a new agreement with
the Union covering wages , hours, and working con-
ditions for such employees to replace the agree-
ment which the Union had had with Stevens.
9. The Union requested that Respondent ex-
amine the Stevens ' agreement and notify the Union
as to whether or not S -H would agree to apply the
provisions of the Stevens ' agreement to the S-H em-
ployees. S-H agreed to this suggestion.
10. Thereafter the parties met on three occa-
sions between December 26, 1968, and March 5,
1969. Respondent said it was in substantial agree-
ment with all the terms of the Stevens' contract ex-
cept for the insurance provisions; that it could not
afford to meet the cost of what Stevens had agreed
to and at the same time be able to operate the food
and beverage facilities at a profit.
11. S-H demonstrated its bona fides by propos-
ing to the Union a new insurance program at a cost
of approximately one-half the Stevens' plan.
12. The Union requested that Respondent con-
tinue to observe the checkoff provision in the
Stevens' contract . S-H refused to take this action
because it had no contract with the Union and hav-
ing no contract it had no dues checkoff authoriza-
tions from its employees . The deduction of dues
without employee authorizations is illegal.
13. The Union flatly insisted it was not in-
terested in any proposals that varied in any way
from the Stevens' agreement . The parties found
themselves at a total impasse on the insurance is-
sue. The Union thereupon , on March 5 , took its
members out on strike . The strike has continued to
the present day.
B. The Alleged Violation of Section 8(a)(5)
The General Counsel argues that when Respon-
dent continued to operate substantially the same
business formerly operated by Stevens; used the
same equipment and facilities at the same place;
employed substantially at the turnover the same
personnel except for supervisory people; made no
attempt to discharge or replace any of the Stevens'
bargaining unit employees; bargained with the
Union and maintained the same basic conditions of
employment, these factors add up to a successor-
ship. As a successor to Stevens, Respondent is not
only obligated to bargain with the Union but it has
' Rohhk, 145 NLRB 1236
' Also see Jolly Giant Lumber Co, 114 NLRB 413, General Extrusion
Company, Inc, 121 NLRB 1 165
1221
the further duty to honor the contract of the
predecessor. Further, as a successor the Respon-
dent violated Section 8(a)(5) by failing to continue
the preexisting benefits such as the same insurance
program as existed in Stevens' contract with the
Union. The predicate to this argument is that if the
Respondent is obligated as a successor to recognize
and bargain with the collective-bargaining
representative of the employees it is of little value
to the employees if the successor is free to make
unilateral changes in conditions of employment or
not adhere to conditions of employment established
by its predecessor without first notifying and bar-
gaining to impasse with the Union.
In the course of reaching this conclusion the
General Counsel relies on a series of cases which he
concedes have not yet been passed upon by the Na-
tional Labor Relations Board. In fact, his brief
states that the Board has only on one occasion
passed upon the question as to whether a successor
is bound by its predecessor's collective-bargaining
agreement.2 The Board, in the Rohlik case, at 1242,
fn. 15, stated:
It is clear from the facts recited above that the
Union's request for recognition and bargaining
included, inter alia , a request that the Respon-
dent administer certain provisions of the col-
lective-bargaining agreement between the
Union and Respondent's predecessor. As
Respondent had not assumed and was not
bound by the contract, and therefore was not
obligated to bargain concerning its administra-
tion, Respondent's refusal to bargain with
respect thereto was not unlawful.3
It is then argued that Rohlik should no longer be
the law of the case because of the decision of the
U.S. Supreme Court in the John Wiley & Sons, Inc.
v. Livingston matter, 376 U.S. 543.
The Supreme Court was required to determine
whether a company, found to be a successor em-
ployer, should be considered bound to arbitrate cer-
tain claims bottomed upon a collective- bargaining
contract which its predecessor had signed. The
specific questions with respect to which arbitration
had been sought were questions dealing with certain
current and prospective contractual obligations
which purportedly bound the successor, following
the predecessor company's disappearance through
merger . The Court held at 548:
... that the disappearance by merger of a cor-
porate employer which has entered into a col-
lective-bargaining agreement with a union does
not automatically terminate all rights of the
employees covered by the agreement, and that,
in appropriate circumstances, present here, the
successor employer may be required to ar-
bitrate with the union under the agreement.
[Emphasis supplied.]
1222 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The Court then went on to explain its rationale as
follows at 549:
This Court has in the past recognized the
central role of arbitration in effectuating na-
tional labor policy. Thus, in Warrior & Gulf
Navigation Co., ... arbitration was described
as "the substitute for industrial strife," and as
"part and parcel of the collective bargaining
process itself." It would derogate from "the
federal policy of settling labor disputes by ar-
bitration," United Steelworkers v. Enterprise
Wheel and Car Corp.,4 if a change in the cor-
porate structure or ownership of a business en-
terprise had the automatic consequence of
removing a duty to arbitrate previously
established; this is so as much in cases like the
present, where the contracting employer disap-
pears into another by merger, as in those in
which one owner replaces another but the
business entity remains the same.
It is to be especially noted that the whole thrust of
the Court's opinion in Wiley is directed to the
furtherance of the Federal policy favoring arbitra-
tion of industrial disputes. It would not appear that
the case should be cited for the proposition that the
entire labor contract of a predecessor employer
survives a change of ownership. The Court made no
such pronouncement.
Despite the dearth of such a holding in Wiley the
Ninth Circuit Court of Appeals held in the Wacken-
hut case:'
The specific rule which we derive from
Wiley is that where there is substantial similari-
ty of operation and continuity of identity of the
business enterprise before and after a change
of ownership, a collective bargaining agree-
ment containing an arbitration provision, en-
tered into by the predecessor employer is bind-
ing upon the successor employer.... It follows
that under the rule of Wiley, Wackenhut is
bound by the collective bargaining agreement
entered into by General Plant, and is bound
therefore to arbitrate .... [Emphasis sup-
plied. ]
The Third Circuit in the Reliance case' when
faced with a similar issue likewise came up with the
same conclusion except that the court expressed a
caveat as to whether the entire collective-bargain-
ing agreement of a predecessor binds a successor.
The contract in that case specifically contained a
provision that the buyer would not assume any
obligation of the seller under any collective-bar-
gaining agreement. The question as stated at 892 by
the court:
is whether a purchaser of an industrial
plant who has continued the operation substan-
tially unchanged is free to impose terms and
conditions of employment in disregard of the
4 363 U S 593, 596
Wackenhut v. International Union of United Plant Guards, 332 F 2d
collective bargaining agreement which was in
force between the seller and the union
representing the plant's employees at the time
of the sale.
The court, at 895, stated:
In any event, we find implicit in the guarded
language of the Wiley opinion, recognition and
concern that new circumstances created by the
acquisition of a business by a new owner may
make it unreasonable or inequitable to require
labor or management to adhere to particular
terms of a collective bargaining agreement
previously negotiated by a different party in
different circumstances. Although the pre-ex-
isting labor contract indicated the structure of
labor relations and the established practice of
the shop at the beginning of the new proprie-
torship, an arbitrator of a subsequent com-
plaint charging unwarranted departure from
that scheme may properly consider any rele-
vant new circumstances arising out of the
change of ownership, as well as the provisions
of and practices under the old contract, in
achieving a just and equitable settlement of the
grievance at hand. The requirements of the
contract remain basic guides to the law of the
shop, but the arbitrator may find that the equi-
ties inherent in changed circumstances require
an award in a particular controversy at vari-
ance with some term or terms of that contract.
It can hardly be stated that, in view of the court's
caveat, Reliance unequivocally stands for the
proposition that a second employer is bound by all
the terms and conditions of the first employer's
contract with the labor organization. This is not
what either the Supreme Court or the Third Circuit
Court said in Wiley or Reliance. Despite the above,
the Fifth Circuit Court of Appeals, in a case not on
all fours with the instant matter, stated in U.S. Gyp-
sum Co. v. Steelworkers, 384 F.2d 38, 44 (C.A. 5):
In the ordinary course of events, a collective
bargaining agreement entered into by the
union and the employer will be binding on the
employer, or his successor, until it expires.
The last mentioned comment appears to be obiter
dictum.
The General Counsel continues his argument in
his brief that the Board has made no meaningful
pronouncement on this issue. Starting in 1965,
several complaints have been authorized by the
General Counsel involving this issue. Some Trial
Examiners have held that where there is a continua-
tion of an "employing industry" together with a
continuation of the statutory obligation to bargain
with the representative of the employees the Board
should hold that the agreement in effect between
the union and the predecessor employer continues
in effect with respect to the successor upon its com-
954, 958 (C A. 9)
Steelworkers v Reliance Universal , Inc., 335 F.2d 891 (C.A. 3)
S-H FOOD SERVICE , INC. 1223
mencement of operations and that the refusal by
the successor to give effect to such a contract con-
stitutes an independent violation of Section 8(a)(5)
of the Act. Thus far the Board has not ruled on the
issue . In addition , there are four cases presently be-
fore the Board which present this problem but no
ruling has been handed down by the Board.
The uncertain state of the law on the point at
issue in the instant case is further underscored by
the fact that a Trial Examiner ruled in Hackney Iron
& Steel Co., Case 23-CA-2505 and 23-CA-2554,
that a successor was bound by the contract ex-
ecuted by its predecessor. The Board in 167 NLRB
613 refused to pass upon that part of the Trial Ex-
aminer 's holding as it appeared to go beyond the
scope of the complaint and the record did not
establish if that contract was presently in effect.
The case was later remanded to the Board by the
United States Court of Appeals, District of Colum-
bia Circuit, in the case of International Chemical
Workers Union and Its Local 773 v. N.L.R.B., 395
F.2d 639, for further consideration of the question
as to whether the successor should be called upon
to observe the terms of the collective-bargaining
agreement in effect at the time of the acquisition.
This issue came before the court on the union's
claim that the Board erroneously failed to include
in its order a provision requiring the successor to
observe the contract.
To conclude his argument, the General Counsel
urges that the Trial Examiner in the instant case re-
gard Rohlik as no longer being the law and that the
Wiley case and its rationale require that a successor
be bound by the contract previously negotiated by
the union and the successor's predecessor.
It might be noted that in the context of a
representation proceeding, General Extrusion Com-
pany, 121 NLRB 1165, 1168, the Board has held:
... the assumption of the operations by a
purchaser in good faith who had not bound
himself to assume the bargaining agreement of
the prior owner of the establishment removes
the contract as a bar ....
In addition, the Board has long required that for
contract bar purposes such an assumption of a prior
contract by a new employer must be expressed and
must be in writing.?
C. Conclusion
I am bound by the decisions of the Board unless
the Supreme Court decides otherwise. The case at
bar poses the question as to whether or not a new
employer is bound by the collective-bargaining
agreement executed by a union and the prior em-
ployer. The Board has not yet passed on this issue
in the recent cases presented to it post the Wiley
decision. In my opinion the Supreme Court in Wiley
does not hold that the entire contract agreed to by
an employer survives a change of ownership and
devolves upon a new employer. The Supreme Court
held only that the duty to arbitrate agreed to by the
first employer does become the obligation of the
new employer. This is so because such a decision is
in furtherance of the Federal policy of settling labor
disputes by arbitration. I must reject the proposi-
tion that by logical extension this doctrine also
requires a new employer to be bound by a
predecessor 's entire collective-bargaining contract
with a labor union.
A recapitulation of the facts shows that Stevens
had a contract with the Union. Respondent's only
contract was with the Annapolis Hilton Hotel,
which in turn had had no relations of any kind
whatsoever with the Union. Insofar as Respondent
operated the food and beverage concession for-
merly operated by Stevens certain indicia of succes-
sorship appear to be present. The same type of ser-
vice was rendered ; services were performed at the
same physical place; the same equipment was util-
ized; at the commencement of Respondent's opera-
tions the employment force of nonsupervisory em-
ployees was substantially made up of former em-
ployees of Stevens.
Viewing the totality of the circumstances it
would appear that Respondent was a successor but
such a finding cannot support the conclusion that
Respondent is guilty of a violation of Section
8(a)(5). In any case, in the present posture of
Board law, the only duty that devolved upon
Respondent as the result of being a successor in
contemplation of law was the duty to recognize and
bargain with the Union. Respondent fully
discharged its obligations on this score. It should be
emphasized that Respondent agreed to include in
any contract it might consummate with the Union
substantially all the terms and conditions which ap-
pear in the Stevens' contract except for the in-
surance program which it said it could not afford.
As to this it did offer an insurance plan which
would be much less costly than the one it was
designed to replace.
Therefore, on the facts of the instant case, when
S-H refused to reinstate Stevens' insurance pro-
gram, but nevertheless bargained with the Union to
impasse on this demand of the Union, it was not
guilty of a refusal to bargain. Having so found, I
recommend that the allegation in the complaint
charging the Respondent with a violation of Section
8(a)(5) be dismissed.
The strike, embarked upon by the employees on
March 5, 1969, was an economic strike in its incep-
tion and never lost its economic character. I there-
fore recommend that the allegation in the com-
plaint concerning the said strike be dismissed.
The complaint does not allege that the Respon-
dent engaged in any independent 8(a)(1) activity. I
7 American Concrete Pipe ofHawau, Inc , 128 NLRB 720
1224 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
therefore recommend that the complaint be
dismissed in its entirety.
3. The General Counsel has failed to establish
that the Respondent engaged in the unfair labor
practices alleged in the complaint.
CONCLUSIONS OF LAW
1. The Respondent is an employer engaged in
commerce within the meaning of Section 2(6) and
(7) of the Act.
2. The Union is a labor organization within the
meaning of Section 2(5) of the Act.
RECOMMENDED ORDER
Upon the basis of the foregoing findings of fact
and conclusions of law, it is recommended that the
complaint herein be dismissed in its entirety.