Seaboard Packing Co.

National Labor Relations Board - Board Decisions

Feb 25, 1954

107 N.L.R.B. 1295 (N.L.R.B. 1954)

SEABOARD PACKING COMPANY 1295
6. By interfering with, restraining , and coercing his employees in the exercise of rights
guaranteed in Section 7 of the Act, Respondent has engaged in and is engaging in unfair
labor practices within the meaning of Section 8 (a) (1) of the Act.
7. The aforesaid unfair labor practices are unfair labor practices affecting commerce
within the meaning of Section 2 (6) and (7) of the Act
(Recommendations omitted from publication.]
SEABOARD PACKING COMPANY and FEDERAL LABOR
UNION NO. 24753, A. F. OF L. Case No. 1-CA-1334. February
25, 1954
DECISION AND ORDER
On August 31, 1953, Trial Examiner John C. Fischer issued
his Intermediate Report in the above-entitled proceeding,
finding that the Respondent had not engaged in the unfair
labor practices alleged in the complaint and recommending
that the complaint be dismissed in its entirety, as set forth
in the copy of the Intermediate Report attached herto. There-
after, the General Counsel and the Union filed exceptions to
the Intermediate Report. The General Counsel and the Re-
spondent filed briefs.
The Board has reviewed the rulings of the Trial Examiner
made at the hearing and finds that no prejudicial error was
committed. The rulings are hereby affirmed. The Board has
considered the Intermediate Report, the exceptions and briefs,
and the entire record in the case, and hereby adopts the find-
ings, conclusions , and recommendations contained in the In-
termediate Report.
[The Board dismissed the complaint.]
Intermediate Report and Recommended Order
STATEMENT OF THE CASE
This proceeding brought under Section 10 (b) of the National Labor Relations Act (61
Stat. 136) against Seaboard Packing Company, Respondent, upon charges duly filed by Federal
Labor Union No 24753, A. F. of L„ was heard by John C. Fischer, duly appointed by the
Chief Trial Examiner and pursuant to due notice, in Machias, Maine, on June 3, 4, and 5,
1953. A complaint was issued by the General Counsel of the National Labor Relations Board
and an answer was filed by the Respondent The complaint which was issued on March 18,
1953, was based upon a charge filed by the Union and alleged in substance that the Respond-
ent had engaged in unfair labor practices proscribed by Section 8 (a) (1), (3), and (5) of the
Act by discharging and/or locking out and refusing to reinstate all of its employees em-
ployed in its plant at Lubec, Maine, which plant Respondent closed down on July 19, 1952.
All parties were represented at the hearing and were afforded full opportunity to be heard,
to examine and cross-examine witnesses, to introduce relevant evidence, to argue orally,
and to file briefs and proposed findings and conclusions. A motion made by the General
Counsel, and agreed to by Respondent 's counsel , to amend the complaint in two respects
was granted: Paragraph 5 of the complaint was amended by the substitution of the date
107 NLRB No. 273.
1296 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
"July 19, 1952,11 for the date "August 18, 1952," and likewise, with respect to paragraph
12, the date of "September 24, 1952," was changed so as to read "July 19, 1952." Briefs
were submitted by the parties on July 24 and July 10, 1953
On the basis of my observation of the witnesses and upon the entire record in the case,
I make the following:
FINDINGS AND CONCLUSIONS
Upon the basis of the conceded facts, it is found that the Union is a labor organization
within the meaning of Section 2 (5) of the Act, and that the Respondent is engaged in com-
merce within the meaning of the Act.
The Issue
On July 19 , 1952, the Respondent closed its sardine canning and packing plant at Lubec,
Maine, and did not open that cannery any more that year The General Ccunsel and the
Union contend that the purpose of this act was to avoid dealing and bargaining with the
Union, and to lock out the employees in order to discourage membership in the Union, and
to otherwise interfere with, restrain, and coerce its employees. The Respondent's conten-
tion is that the action taken was for economic reasons
Background
The Respondent is a Maine corporation engaged in the business of canning sardines caught
in the waters off the coast of the State of Maine. It owns and operates plants located in South
Portland, Robbinston, and Lubec, Maine, and--through its wholly owned subsidiary, American
Canning Company- -one located in Machiasport , Maine.
As in other canning industries , where the supply is dependent upon the bounty of nature,
the Maine sardine canning industry is seasonal in nature, and the extent of operations at
any particular place is dependent upon the availability of schools of herring . In addition,
the State of Maine limits the season for commercial catching of herring from April 1 to
November 30.
In this industry the waters off the coast of Maine are divided into several districts or
areas , commonly referred to as western, middle , and eastern . Respondent ' s Portland
plant packed herring caught in the western area , Machiasport packed middle area fish,
and, normally , the Lubec and Robbinston plants packed fish caught in the eastern area.
The availability of fish within the various areas can vary sharply from year to year. In
1 year a vastly greater proportion of the fish will be caught in 1 area than in all others,
and in the next the fish may appear in a different area . In 1952 the catch of herring in the
eastern area was the lowest within the memory of persons familiar with the industry.
Because the quality of the pack depends on the freshness of the fish , herring caught in
the western area would not be transported to eastern area plants to be packed , and vice
versa. However, about 50 percent of the fish processed in Lubec in June and July 1952 came
from the middle area , from near or to the southwest of Machiasport "Boating fish" through
an extra district increases costs since the rate paid to the fishermen depends on the dis-
tance of the districts within which the fish are caught from the plant to which they are
delivered Herring are caught in weirs or trapped in shallow coves on changes of the tide
and brought to the plants in small boats for packing
Inventories of canned sardines fall into two broad categories , keys and keyless. As may
be inferred from the terminology, the first category refers to cans with which a "key"
is furnished to open -the can. The character and value of the pack is also affected by the size
of the fish, and in the industry, large fish are referred to as "fours" and "fives ," by which
is meant the number of fish packed to a can--"Tens" and higher are small fish. . The smaller
fish command a higher price and have a higher profit margin than large fish but the cost
of packing them is also higher . Thus the wage rates paid to packers at Robbinston in 1952
were as follows : 60 cents per case for "fours" and "fives ", 80 cents per case for "sixes"
to "nines"; and $1 per case for "tens" to "thirteens ." Only the smaller fish are packed
in "keys." During the period June 23 to July 19, 1952, the fish packed at Portland, Machias-
port, and Lubec were all "fours" and "fives ." It was not until fall that small fish began to
be caught in appreciable quantities.
SEABOARD PACKING COMPANY 1297
Respondent 's Operations , 1951 and 1952
The following table taken from Respondent ' s Exhibit No. 12, summarizes the number of
cases of sardines packed in 1951 and 1952 at its four plants.
Cases of Sardines Packed
Year Plant Keys Keyless Total
1951 Machiasport 35,289 53,988 79,277
Lubec 41,602 42,688 84,290
Robbinston 8,709 24,230 32,939
Portland 8,048 20,965 29,013
Total 93,648 131,871 225,519
1952 Machiasport 36,693 101,417 138,110
Lubec 711 28,196 28,907
Robbinston 20,065 13,959 34,024
Portland 24,676 76,132 100,808
Total 82,145 219,704 301,849
The opening and closing dates of Respondent ' s plants in 1951 do not appear in the record,
but for most of that season the Robbinston plant was not in operation . In February 1951,
it had been totally destroyed by a tidal wave . During the course of the 1951 season it was
rebuilt and in the fall of the year was put back into use. Even then operations at Robbinston
were not normal because of delays caused by construction work which continued after the
reopening.
Because of financial difficulties in which Respondent found itself at the start of the 1952
season ( referred to below), it did not start operations until the end of May , when the Portland
plant was opened -- that being the first place where fish were available . Next to be opened
was the Machiasport plant . Because of a shortage of working capital about 2 weeks of avail-
able fish in this area were missed Even in opening this plant when it did in the first half
of June , the Respondent had "to take a chance and cut their prices." (Treasurer Johnson's
testimony .) The Lubec plant was opened on June 23 . The Robbinston plant was opened on
August 12.
The Portland plant was operated during the entire 1952 season, except that there were
temporary shutdowns in August and possibly September . Machiasport was operated steadily
until July 26 when , according to Respondent's treasurer, Eugene Johnson , " we had to slow
down, we didn 't have any cash to pay our bills , and we stopped there for two weeks, I be-
lieve-- then we packed one week in August and did not pack the last week in August We
packed over there in September and November at a very reduced rate, because of the fact
that there were very few fish in this area after the first and middle of August." The Lubec
plant was operated until July 19. The Robbinston plant continued to 4e operated till the end
of the 1952 season , although intermittently From its opening in August until the end of the
season , the Robbinston plant packed a total of 34,023 cases of sardines , of which 13,959
were keyless and 20,065 were keys (Respondent's Exhibit No. 12). The total number of cases
packed at the other 3 plants in the period during which the Lubec plant was open is in-
dicated in the following table (based on Respondent ' s Exhibit No. 8).
Period Plant Total No of Cases
6-23/7- 19-52 Machiasport 43,460
Lubec 28,907
Portland 36,328
Total 108,695
1298 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
An analysis of the number of cases of sardines packed at various times in 1952 at Re-
spondent's four plants corroborates the testimony of Respondent's witnesses on the avail-
ability of fish during the 1952 season. The following chart is based on data contained in
Respondent's Exhibits Nos. 8 and 12.
Cases of Sardines Packed During 1952 Season
Plant and Period
Number of
Cases Packed
Number of
Weeks
in Period
Average Number
of Cases Packed
Per Week
Portland:
Season of 1952 100,808 27 3,734
June 23-July 19, 1952 36,328 4 9,082
1952 less June 23-July 19 64,480 23 2,803
Machiasporr
Season of 1952 138,100 25 5,524
June 23-July 19, 1952 43,460 4 10,865
1952 less June 23-July 19 94,640 21 4,507
Lubec
June 23-July 19, 1952 28,907 4 7,227
Robbinston:
August 12-November 30, 1952 34,024 16 2,127
Data on cases of sardines packed week by week during the 1952 season are not avail-
able. Respondent's Exhibit No 8, however, gives the number of cases packed at Lubec,
Portland, and Machiasport from• June 23 to July 19, and Respondent's Exhibit No 12 gives
the number of cases packed for all plants during the 1952 season. That season ran from
June 23 to July 19 for Lubec, or 4 weeks, from August 12 to November 30 for Robbinston,
or 16 weeks The exact dates of the opening of Portland and Machiasport, which continued
to operate throughout the season once they opened, do not appear. But Portland opened
the end of May and Machiasport early in June, probably June 7. It may be assumed, there-
fore, that the former plant operated at least 1 week in May and the latter plant 3 weeks in
June, so that during the season they were in operation for 27 and 25 weeks respectively
Using the information from the exhibits referred to, it is possible, therefore, to estimate
accurately the average number of cases of sardines packed each week at various portions
of the season.
From the above table, it is quite apparent that the height of the 1952 packing season for
Respondent occurred during the, period when the Lubec plant was in operation , when that
plant canned and packed an average of 7,227 cases a week, Machiasport 10,865 a week,
and Portland 9,082 a week. This inference is buttressed not only by the testimony in the
record but by a comparison of this average at Machiasport and Portland with the average
number of cases packed at those plants in the season excluding the period of Lubec's op-
eration. At Machiasport the average number of cases packed each week for such period
drops down to 4,507 and at Portland to 2,803. When we examine the average number of
cases packed each week during Robbinston's 16 weeks of operation we find there the lowest
average weekly production of any plant, viz, 2,127, or about 30 percent of Lubec's average
production during its operation.
Respondent's Financial Position
Until the Respondent suffered the loss of its Robbinston plant through a tidal wave in
February 1951, its financial position appears to have been secure. At the start of the 1951
SEABOARD PACKING COMPANY 1299
packing season (this was at the start of Respondent's fiscal year 1952 since it operates
on a fiscal period ending March 31 of each year), the Respondent owed a little on the prior
season's operations, but this was more than adequately covered by its inventories of sar-
dines. At this time, notwithstanding the Robbinston loss (a capital asset), it had approxi-
mately $450,000 in working capital (i.e , the excess of current assets over current lia-
bilities). Respondent was not indebted at this time to First National Bank of Boston and was
in good financial condition. Possibly because of its comfortable financial situation, the
management went ahead and rebuilt the Robbinston plant during the 1951 season, using
its working capital to finance this project. The management believed that "with a reason-
able year . . they would be able to earn enough money to replace their working capital.... '
During the 1951 packing season, as a result of using its working capital to rebuild the
Robbinston plant, Respondent found it necessary to borrow money from the First National
Bank of Boston to finance its 1951 pack At the end of fiscal 1952 (Le., March 31, 1952)
and just before the start of the 1952 season, the Respondent found itself unable to pay off
its borrowings from the First National to the extent of $ 435,000. Its current assets at that
time consisted only of some inventory of its 1951 pack which had not yet been sold. It had
no cash, and it was apparent that some extreme measures might be necessary to continue
in business for the coming season.
At this juncture in its affairs, either late in March or early April 1952, Respondent set
about to get the debt owed First National refinanced by switching it from an unsecured
short-term obligation to a long-term debt secured by a mortgage on its properties. Re-
spondent also had to secure additional funds to finance its 1952 operations. To achieve these
ends Respondent's officers (probably the then President Pike and General Manager Shipman)
got in touch with Hollis R. Wagstaff, of the accounting firm of Patterson, Teele, and Dennis
of Boston. Mr. Wagstaff was familiar with the financial problems of the Maine sardine
industry having been engaged since 1943 in auditing and systematizing the accounting sys-
tems of 5 or 6 of the larger sardine packers of Maine. To fund the debt due the First Na-
tional Respondent's officers also engaged the services of Coffin and Burr, investment bankers.
The negotiations with the First National Bank had the following results: The bank at
first insisted that the Respondent repay the outstanding loan of $435,000 by selling the
remainder of its 1951 inventory at whatever the market would bring. The bank was finally
dissuaded from insisting on such an extreme measure when it was pointed out that this
procedure would most likely depress prices throughout the industry at the very outset of
the new season The bank was persuaded to agree not to press for collection of the $435,000
loan, and also to advance additional funds, as needed, to finance operations during the
1952 season. As a condition, however, the bank insisted that Wagstaff was to spend 3 to 5
days a month in Lubec supervising Respondent's expenditures to insure that the fresh funds
were used only to finance current packing operations and not additional capital construction.
Meanwhile, Coffin and Burr were engaged in the attempt to fund the past due First Na-
tional $435,000 loan. It was this firm's recommendation that Respondent float a loan of
$ 600,000 covered by a first mortgage on its properties. About the middle of June they
opened negotiations with the Maine Savings Bank, the Portland Savings Bank, and the Union
Mutual Insurance Company of Portland. By about the middle of July 1952 all 3 institutions
had turned down the proposition and Coffin and Burr then turned to several insurance com-
panies in Hartford, Connecticut. These efforts, too, proved unsuccessful because the char-
acter of the business as well as the Respondent's unsatisfactory operations during the 1951
season made the prospects of repayment doubtful. (Respondent's Exhibit No. 6.) Subsequently
the Respondent applied to the Reconstruction Finance Corporation, again with no success.
Meanwhile, under the arrangements made with the First National Bank in June, the Re-
spondent secured the following loans on the dates indicated to enable it to operate during
the 1952 season:
June 17 $ 80,000
July 7 150,000
July 21 130,000
August 4 80,000
440,000
The bank notified Respondent after the August 4 loan that this represented the limit of
advances which it would make, and that Respondent should immediately start to liquidate
its inventory and start paying back its indebtedness to the bank. By this time, of course,
1300 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Respondent's hopes of funding its indebtedness by floating a long-term loan secured by a
mortgage were practically nil. Nevertheless, Respondent prevailed upon the bank to with-
draw its demand for immediate repayment, but from this time on it could only secure operating
funds, i.e., the cash needed to meet payrolls and current trade bills, from the sale of its inven-
tory. In this manner, Respondent managed to keep operating for the remainder of the 1952 season.
Respondent's financial troubles in 1952 were compounded by the necessity to sell inven-
tory at the start of the season to get cash with which to begin operations at Portland at the
end of May. At that time, when the fish began to run and it appeared that all sources of
cash had dried up, Respondent sent a telegram on May 25, 1952, to its brokers instruct-
ing them to meet competition in the market in order to move the inventory then on hand.
This was counter to the usual marketing practice in the industry, which is to make a firm
price (through the brokers) at which the inventories will be sold But this was possible
only if the Respondent had sufficient working capital to enable it to withhold its goods from
the market if its price were not met.
Since Respondent's pack of sardines usually amounted to from 10 to 15 percent of the
total Maine paclf, the result of the May telegram was to depress the market price (which
normally was made by the 4 or 5 larger companies) as these firms moved to
meet Respondent's competition.
Starting at the end of May 1952 with a price of $7.50 a case for keyless goods, the price
declined steadily to a price of $5.46 a case in August. This declining market caused Re-
spondent's management to incur an even greater loss for 1952 than might have resulted
from normal operations. In this declining market, Respondent oversold its pack, undoubt-
edly hoping to pick up the difference later at still lower prices on the market or to pack
additional fish later when the price might be still lower. In any event, Respondent ended
the packing season 50,000 cases "short," i.e., it had on hand orders for 50,000 more cases
of sardines than it could deliver. In the late summer and fall of the year, sardine prices
"firmed" to about $ 5.75 a case, but because of the poor run of fish in the fall, Respondent
was unable to pack the 100,000 cases of sardines it had counted on doing at that time. As
stated by Wagstaff, "if it had been possible ... to secure enough working capital, and if
there were enough fish in that area, [it would] have been a profitable operation (for Respond-
ent ] to can sardines against [those] orders." Because Respondent was unable to pack the
additional hundred thousand cases it had hoped to in the 1952 season, it was sued for its
failure to deliver.
To illustrate the testimony of its officials with respect to its financial plight, Respond-
ent introduced into evidence a series of financial statements relating in time from the
closing of the Lubec plant to the start of the 1953 season. These statements, which consisted
of schedules of cash, receivables, inventories, and payables furnished to the First Na-
tional Bank of Boston as of the dates July 19, August 2, and August 16, 1952, and May
7, 1953, are presented herewith in tabular form. Although on the exhibits themselves, the
items are not specifically subtotaled into current assets and current liabilities groups,
usual accounting practice justifies such a procedure. i
Schedule of Cash, Receivables, Inventories, and
Payables at Stated Dates a
7-19-52 8-2-52, 8-16-52 5-27-53
Cash - 0 - - 0 - $ 25,000.00 $ 37,515.80
Accounts Receivable $169,690.31 $ 227,877.84 162,862.52 9,148.45
Inventories of Packed
Sardines:
Keyless 652,650.33 587,441 01 527,477.69 7,083.81
Keys 131,536.12 117,062.79 109,579.48 74,026.88
784,186.45 704,503.80 637,057.17 81,110.69
'Accountants' Handbook W A. Paton, Editor, New York, N. Y. (The Ronald Press Co.,
1949), pp. 38, 883 and Fig. 3.
SEABOARD PACKING COMPANY 1301
Schedule of Cash, Receivables, Inventories, and
Payables at Stated Datesa--Continued
7-19-52 8-2-52 8-16-52 5-27-53
Inventory of Direct Manu-
facturing Supplies -0- 100,000.00 100,313.87 68,902.63
953,876.76 1,032,381.64 925.233 56 196,677.57
Current Assets
Accounts Payable:
Cans 133,000.00 108,000.00 14,902.00 - 0 -
Freight 20,000.00 21,000.00 9,032.00 - 0-
Containers 3,700.00 960.00 - 0- - 0 -
Salt 800.00 2,610.00 - 0- - 0 -
Oil 51,000.00 25,784.00 - 0 - - 0 -
Miscellaneous 8,000.00 20,000.00 10,000.00 - 0 -
Fish, Boating, etc. 46,000.00 - 0- 7,500.00 - 0-
Brokerage 5,900.00 11,000.00 10,500.00 - 0 -
State Sardine Tax - 0- 25,645.00 2,324.00 - 0 -
Salt , Coal, etc. - 0 - - 0 - 8,819.00 - 0 -
Payrolls - 0 - - 0- 8,000.00 1,461.47
Insurance, etc. - 0- - 0- - 0- 15,032.34
268,400.00 214,999.00 71,077.00 16,493.81
Notes Payable - Current 230,000.00 360,000.00 440,000.00 - 0 -
Notes Payable - To Be
Financed 435,000 00 435,000.00 435,000.00 435,000.00
Notes Payable - Sealing
Machines 20,000.00 20,000.00 20,000.00 - 0 -
Current Liabilities 953,400.00 1,029,999.00 966,077 00 451,493.81
Excess (Deficit) of
Current Assets over
Current Liabilities 476.76 2,382.64 (40,843.44) (254,816 24)
$953,876.76 $1,032,381.64 $925,233.56 $ 196,677.57
a Based on Respondent's Exhibits Nos. 2, 3, 4, and 5
These schedules give a graphic picture of the plight of the Respondent at the time the
decision to close the Lubec plant was made, and thereafter. At the risk of some repeti-
tion, the financial position as presented both in uncontroverted testimony and the exhibits
may be recapitulated thus:
At the end of the fiscal period ending March 31, 1951, Respondent was in a secure finan-
cial position, having on hand at that time working capital of about $450,000. However, due
to the uninsured loss of the Robbinston plant shortly before the end of that fiscal year, the
Company during the 1951 season (i.e.. the fiscal year ending March 31, 1952) used a sum
in excess of $400,000 to rebuild the Robbinston plant. Because of this, the Respondent
found it necessary to borrow funds from the First National Bank of Boston to finance its
1951 operations. Just before the start of the 1952 season Respondent owed the bank $435,000
which it could not repay, had some inventory, but no cash.
To get started on its 1952 operations Respondent sold some inventory and borrowed addi-
tional sums of $ 230,000 by July 7, 1952. Through the conduct of its operations in the next
12 days the working capital position of the Company further deteriorated. On the day that
it decided to close the Lubec plant, July 19, 1952, Respondent's current assets amounted
to $953,876.76. They consisted of accounts receivable due from customers in the sum of
1302 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
$ 169,690.31, inventories of packed sardines, keyless, in the sum of $ 652,650.33, and of
keyed cans in the amount of $131,536.12, for a total inventory of $ 784,186.45
Set off against these current assets were the following current liabilities: Accounts
payable totaling $286,400 for cans, freight, containers, salt, oil, miscellaneous, fish, boat-
ing, etc., and brokerage; notes payable to the First National Bank of Boston incurred to
finance 1952 operations in the sum of $230,000, notes payable due the First National Bank
to be financed representing the unpaid loan advanced in the previous year to finance 1951
operations, $435,000, an additional series of notes payable for sealing machines, $20,000.
Thus the total of $ 953,400 of current liabilities set off against the total of $ 953,876.76
of current assets on July 19, 1952, indicates that the Company's working capital position
at this date was practically nonexistent. The ratio of current assets to current liabilities
on this date stood at 1.0005, or stated in another way, there were $1 0005 of current assets
to cover each dollar of current liabilities.
Respondent's schedule of cash, receivable, inventories, and payables on August 2, 1952,
shows the following: On the current assets side accounts receivable from customers
amounted to $227,877.84, inventories of keyless packed sardines amounted to $ 587,441.01,
and of keyed sardines $117,062.79, for a total inventory of $ 704,503.80 In addition, the
statement of this date shows an inventory of direct manufacturing supplies of $ 100,000
Total current assets were $ 1,032,381 64.
The current liabilities on August 2, 1952, were as follows: Accounts payable totaled
$ 214,999 for the following accounts: Cans, freight, containers, salt, oil, miscellaneous,
brokerage, and State sardine tax. The current notes dlie to the bank and now payable, cur-
rent notes payable and unpaid, had risen to $360,000 while the $435,000 due from the 1951
season still remained due, owing, and unpaid, as did the notes payable for the sealing ma-
chines in the amount of $ 20,000. Current liabilities totaled $1,029,999. The conclusion
is obvious that the working capital position had not improved materially despite a further
advance of $ 130,000 by the bank on July 21 and despite a liquidation in inventories since
July 19 in the amount of $ 79,682.65. The working capital ratio had gone up to 1.0023, an
infinitesimal improvement over the previous statement.
The working capital position of the Company continued to deteriorate thereafter This
is evidenced by the fact that despite an additional $80,000 borrowed from the bank on August
4 the schedules furnished to the bank on August 16, 1952, show the following: Current assets
consisted of $ 25,000 in cash, $162,862.52 in accounts receivable; $ 527,477.69 in inventories
of packed sardines, keyless, and $109,579 48 in keyed sardines for a total of $ 637,057.17
in inventories and $ 100,313.87 in inventory of direct manufacturing supplies. Total current
assets on this date thus stood at $925,233:56. On this date current liabilities were as follows:
Accounts payable came to $ 71,077 for cans, freight, salt, miscellaneous, fish, boating,
etc., payrolls, brokerage, State sardine tax, current notes payable now totaled $440,000;
the obligation of $ 435,000 to the First National Bank remained unpaid as did the $ 20,000
for the sealing machines.
On this date, therefore, on the basis of schedules submitted to the First National Bank,
the current liabilities of the Company exceeded the current assets by the amount of $40,843.44.
This is also indicated by the working capital ratio, which on this date stood at 0.9577.
It would appear from the sharp drop in accounts payable as they stood on August 2, 1952,
of $214,999, compared with the accounts payable of $71,077 as of August 16 (a reduction
of $ 143,922) that a large part of the Company's funds in the period between these 2 state-
ments was devoted to paying off trade creditors, such as suppliers of cans, railroad freight
bills, as well as the State sardine tax. These figures show the precarious position of the
Company in midsummer of 1952.
That the subsequent months saw no diminution in the Respondent's financial distress is
borne out by the fact that it ended the fiscal year ending March 31, 1953, with a loss of
$290,000, and by the statement as of May 27, 1953, submitted to the bank
The financial debacle of Respondent's operations in 1952 had its inevitable repercussions
in the management of the Company. The First National Bank no longer had confidence in
that management's ability to operate the Company and would not agree to an extension of
the outstanding loan of $435,000. Through a voting trust agreement, Hollis Wagstaff, Powers
McLean, and Wilfred Stuart were made voting trustees, a new board of directors was elected,
and the old management went out.
About 2 weeks before the hearing opened the First National Bank had written to the Re-
spondent as follows:
SEABOARD PACKING COMPANY 1303
THE FIRST NATIONAL BANK OF BOSTON
BOSTON 6. MASSACHUSETTS
John C. Garland
Vice President
MAY 5, 1953
Seaboard Packing Company
Lubec
Maine
Attention: Mr. Hollis R. Wagstaff, President
Gentlemen:
At the present time Seaboard Packing Company is indebted to this Bank in the amount
of $435 ,000 on a demand basis . The intent of this letter is to make formal demand
for payment in full , and we expect to receive all proceeds arising from cash on hand,
collection of receivables, sale of inventory, in addition to whatever may be necessary
through the liquidation of other assets.
Naturally , we regret taking this action but under the circumstances , we trust you
will pursue this program of repayment as rapidly as possible.
Very truly yours,
John C. Garland
Vice President
Although the fish had started to run for 2 weeks in the Portland area, Respondent's plant
there had not been opened in early June 1953. On the day the hearing in this matter opened,
the new management was strenuously trying to stave off the closing down of Respondent's
properties and to secure funds with which to commence operations
The Alleged Lockout of Employees of Respondent's
Lubec Plant
On July 19, 1952, the Respondent ceased canning and packing operations at its Lubec
plant, laid off the employees there , and did not thereafter operate this plant in 1952. The
plants at Portland and Machiasport continued to operate , although not at full capacity.
On August 12, 1952, Respondent opened up its Robbinston plant, which had not been used
by it since the end of the 1951 season . It continued to operate it for the remainder of the
1952 season for a total period of about 16 weeks. The allegations of violation of Section
8 (a) (3) of the Act are grounded upon the above circumstances and the reasons therefor
subsequently proffered by the Respondent to the Union and the Regional Office.
Reduced to their simplest terms , the Respondent 's reasons for closing Lubec in July
1952 run as follows: In midsummer of 1952 Respondent 's precarious financial condition
and the scarcity of fish of the right size in the eastern area made it necessary to curtail
its operations in order to husband its available funds, apd so it decided to close down the
plant with the highest labor costs.
The direct evidence on which General Counsel's case as to the shutdown is based is
(1) Respondent, prior to closing Lubec, failed to notify the Union of its intention or reason
for doing so, (2) on July 30 Respondent's President Pike told the union representative, Eaton,
that operations had been suspended because Respondent had packed all the "fours" the
market could absorb; (3) on September 4, Respondent withdrew from bargaining negotiations
with the Union ; (4) in October 1952, while representatives of the Union were on Respond-
ent's premises at Lubec and engaged in bargaining negotiations with 2 other sardine can-
ning companies, Pike told an employee representative of 1 of these other companies, during
a break in the negotiations, that the Respondent's Lubec "plant would have been
running" at that time "if it hadn't been for the Union"; and (5) in October 1952, President
Pike asked Union Representative Eaton how many signatures were needed on a decertifi-
cation petition.
13 04 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The General Counsel did not present a scintilla of direct evidence relating to the time
of the shutdown to indicate that the Respondent closed Lubec on July 19 for the purpose
of discriminating against the Union or for the purpose of inducing its employees to with-
draw from membership in the Union . Indeed, the only bit of direct evidence presented
through one of General Counsel's witnesses on this phase indicated that a shutdown in mid-
season was not unusual This witness , Mrs. Catherine Barker (financial secretary and treas-
urer of the Union), stated at the hearing that the July 19 closing was no different from
many other closings she had experienced during 11 years of employment at Respondent.
There had been no advance notice of the intention to close on July 19, she said, but there
had been no such notice in the past.
General Counsel 's entire case as to Respondent 's alleged discriminatory motive in the
closing of Lubec on July 19 appears to rest on inferences to be drawn from reasons for
closing the plant given by the Respondent to the Union in July and September, and to the
Regional Office during the investigation of this case after charges were filed in November
1952. Understandably , it is difficult if not frequently impossible to secure admissions of
illegal motivation from persons who violate the Act . But circumstancial evidence of such
motivation to be of probative value should not be of such a nature as to allow of several con-
flicting interpretations of equal validity . Although shifting reasons for a particular action
may be some evidence of an illegal motivation for such act, it does not appear to be a
general proposition that the naming of only one or several of many reasons behind a partic-
ular business decision is per se a violation of the Act.
The fact which appears to be inescapable and which controlled all the acts of this Re-
spondent throughout the 1952 season was that Respondent was on the verge of insolvency.
Certainly, there is nowhere any contradiction of the fact that prior to commencing operations
at the end of May 1952 Respondent was not able to meet its debts as they matured. From
that time on it remained in business only because the First National Bank of Boston was
persuaded not only to forego immediate repayment of the $ 435 ,000 debt owing it on Re-
spondent 's 1951 operations , but also to finance Respondent 's 1952 operations to the extent
of $440,000. The evidence on this consists not only of the uncontroverted testimony of
Respondent 's officials , but also on the records introduced in evidence which were pre-
pared contemporaneously with Respondent 's financial difficulties in 1952 . The nature and
analysis of these difficulties has been sufficiently elaborated earlier in this report -
The record is not explicit as to the exact date , but does show that Respondent 's efforts
to secure long- term refinancing of its past due $435,000 obligation to the First National
through Maine saving institutions collapsed about the middle of July. (Respondent's Ex-
hibit No. 6.) Because of the financial stringencies of its situation , Respondent had kept
a sharp watch over labor costs in the 3 plants which it had mapaged to operate during the
season thus far. These records showed that its labor costs per case of sardines ran as
follows for the period during which the Lubec plant had been running: Machiasport, $ 0.8678;
Lubec, $1.0965; Portland, $ .8765 ( Respondent 's Exhibit No. 8.) Clearly, Lubec' s labor
costs were running well in advance of the other plants. Clearly , it would not be unreason-
able for a management hard pressed for operating funds such as this one was to select
the plant having the highest labor costs as the one to close down. The good faith of Re-
spondent 's action here is supported by the fact that operations at the other two plants were
at this time simultaneously curtailed . We do not have here the classic situation , illustra-
tive of illegal motivation , where a person closes down one plant upon the advent of a union
or union activity and almost immediately opens another, or shifts work which would nor-
mally have been performed at the shutdown plant to a sister plant.
The General Counsel has made much of the point that notwithstanding its precarious
financial position in August 1952, Respondent chose to open Robbinston , rather than Lubec.
Robbinston was the plant with the highest labor costs per case of sardines in 1951.
In 1951 Robbinston 's labor costs were $1.9132 per case, as compared with Lubec's $ 1.8282,
or a difference of about 61 cents per case.2
Standing alone, these figures might indicate that Respondent should have reopened the
Lubec plant when the smaller fish began to run . But these figures do not.stand alone. The
real question is whether or not Respondent had any reason to expect Robbinston to operate
2 From Respondent's Exhibit No. 12. For purposes of comparing labor costs with totals
thereof appearing on other exhibits, the item for "Cartoning and Wrapping Lah^r," which
appears only on Respondent's Exhibit No 12, has been deducted in stating the direct labor cost
given above.
SEABOARD PACKING COMPANY 1305
more cheaply in 1952 than in 1951 , and also whether or not there were other factors which
pointed to the operation of Robbinston instead of Lubec.
In August 1952 Respondent had available to it data on the labor costs (contained in Re-
spondent 's Exhibit No. 8) at the 3 plants which it had operated thus far. The table below
shows how these 3 plants compared with each other for the period during which the Lubec
plant was operated.
Labor Costs. June 23-July 19, 1952
Plant Direct Labor per
Case of Sardines
Machiasport $ 0.8678
Lubec 1.0965
Portland 0.8765
It is obvious that at midsummer in 1952. Lubec stood out as the plant with the highest
labor costs. The continued operation of Machiasport after July 19 has not been claimed
by General Counsel to have been an unfair labor practice, although quite conceivably this
fact, plus the one that it was a nonunionized plant, could point toward an inference that
Respondent intended to give employment only to unorganized employees. Nor has the fact
that, even prior to July 19, Respondent had packed over 50 percent more fish at Machiasport
than at Lubec during the June 23 to July 19 period (43,460 cases compared with 28,907)
been claimed to have been illegally motivated, although in 1951 Lubec had packed 5,000
more cases than Machiasport. So, it is equally obvious that the chief circumstance upon
which the General Counsel's case of alleged violation of Section 8 (a) (3) rests is that Re-
spondent elected to reopen the plant which had had the highest labor costs in 1951 while
keeping shut the plant which had had the next highest labor costs at that time. Since in
August 1952 Respondent did not know what its labor costs were to be at Robbinston for
the remainder of the season, no probative value for an inference of a discriminatory motive
can be derived from the fact that, as things turned out, labor costs at Robbinston for the
latter portion of the 1952 season turned out to be higher than at Lubec earlier in the season.
Similarly, if in 1952 the events had so turned out that Robbmston had ended up with lower
labor costs than Lubec, such a fact would have been practically irrefutable evidence of the
good faith of Respondent's motives in electing to keep Lubec shut down while opening Rob-
binston. Such an eventuality not having happened, it remains to determine whether or not
there was a reasonable expectation that Robbinston's costs would be lower than Lubec's
and also to determine whether or not there were certain imponderables (that is, factors
not readily reducible to statement in terms of "more or less") which dictated Respondent's
decision in August 1952.
At that time, labor costs for the remainder of the season at Robbinston were an unknown
factor. With respect to Lubec, Respondent knew that its labor costs, although running lower
than the previous year, were still the highest among the 3 plants it had operated. Respond-
ent knew of several factors relating to the 1951 operation at Robbinston which made it
reasonable for Respondent to assume that if Robbinston had been operated within 62 cents
of Lubec's costs in 1951, it would most likely be operated at less than Lubec's costs in
1952. In addition to different wage rates in effect at Robbinston, because of the rebuilding
of the plant there, Respondent belidved its operations there would be more efficient due
not only to the physical layout and the type of machinery which had been installed but be-
cause "the operation could be carried only with a tot less people than most of the plants
along the coast."
Another factor impelling Respondent to open Robbinston was that just because of the
strong possibility that insolvency might overtake the Company, it was anxious to make
some use of the facilities into which it had so far poured so much wealth to so little pur-
pose. Robbinston's production of 32,939 cases of sardines in 1951 had been only 141 per-
cent of Respondent's total output of 225,519 cases in that year. Respondent's manage-
ment was anxious not only to justify its Robbinston expenditures to itself, but also to pro-
spective lenders. At the time it opened the plant in August its investment counsel, Coffin
and Burr, were approaching several insurance companies in Hartford, Connecticut, in
a final effort to secure private long-term funds to bail the Company out of its desperate
1306 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
financial situation . Management believed that it was necessary to indicate to prospective
lenders that all its properties were in operating condition.
Still another factor impelling the opening of Robbinston was the fact that in the fall
Robbinston was the place where Respondent usually got small fish which make good key-car-
ton sardines and are sold at a premium . Seventy-five to eighty percent of Respondent's Nep-
tune brand of key-carton fish had been packed in previous years at Robbinston , but in August
1952 Respondent was "way behind in ... key pack because of the size of the fish .... all
the key fish that we packed previous to that were picked out of larger fish " Respondent
felt that to have any kind of season at all , it had to open Robbinston , "hoping Robbinston
could pack as many keys as we could , and, normally , the fall run up there is very satis-
factory size fish for that key pack that we hold over , carry over in our warehouses for dis-
tribution to the trade during the winter months and early spring ...." Unfortunately for
Respondent's hopes, the run of fish proved to be most disappointing, as evidenced by the
fact that only a total of 34,024 cases were packed in the 16 weeks Robbinston remained
open. It was perhaps this scarcity of fish, more than any other factor, which doomed Re-
spondent 's hopes to have the Robbinston plant run more efficiently and at lower cost than
Lubec had thus far. And, in any event, labor costs at Robbinston in late summer and fall
with labor costs at Lubec in early summer could not, strictly speaking , be compared since
the fish packed at Robbinston in 1952 were mostly the smaller ones, which, though com-
manding a higher price , also cost more to pack , whereas the fish packed at Lubec earlier
in that season had been mostly "fours" and "fives," which cost less to pack than the smaller
fish.
In the light of the facts which existed at the time of Lubec's closing in July and thereafter
to the date of the hearing in this case , the statements attributed to Respondent 's president,
Frank Pike , as having been made in October do not appear to carry sufficient weight, when
considered in the light of the evidence as a whole , to overcome the reasons put forth during
the hearing for the closing of Lubec and the opening of Robbinston. If we consider the context
in which Pike 's remarks were made, it is difficult to ascribe an antiunion animus to them.
After Respondeni had withdrawn from the bargaining negotiations in September , it permitted
the Union to continue negotiations with the two other canneries on its premises and to have its
employees who were on the Union's bargaining committee for the Lubec plant sit in on these
negotiations . It is difficult to conceive of a more enlightened labor relations policy for an em-
ployer to take . From testimony in the record, the negotiations that went on in the Lubec plant
after Respondent 's withdrawal were punctuated by intervals when Respondent 's officers dropped
in and engaged in persiflage and banter with the Union's representatives . In popular parlance,
they "needled " one another .' The evidence is clear that it was in such an atmosphere that
President Pike, distraught and distressed from the financial worries that were ever pressing
upon him, made the remarks which have now been seized upon to furnish evidence of intent to
discriminate against the Lubec employees in July and August because they were members of a
union . While not denying that the factors enumerated above could point to such an illegal
motivation for the shutdown of Lubec for the rest of 1952, it would appear that the other evi-
dence in the record more than overcomes the effect of the direct evidence introduced by the
General Counsel on this phase of the case.
I therefore conclude that the evidence does not preponderantly establish that the Re-
spondent closed down Lubec and locked out its employees to avoid dealing with the Union.
The Alleged Refusal to Bargain
The Union became the certified collective -bargaining agent for the Respondent's em-
ployees at its Lubec plant on October 23, 1950, after a Board - conducted election in Case
No. 1-RC-1651 (91 NLRB 361). Thereafter, the Union and the Respondent entered into a col-
lective-bargaining agreement effective for the period September 1, 1951, to August 31. 1952.
Pursuant to the 60-day renewal provision of this agreement, the president of the Union on June
27, 1952, notified the Respondent of the Union's desire to meet with it and negotiate changes
in the existing agreement . By letter of its attorneys , dated July 2, 1952, Respondent ac-
knowledged this request, as well as similar requests for the North Lubec Manufacturing
and Canning Company and Booth Fisheries , all represented by the same firm of attorneys.
In this letter of July 2, Respondent expressed its desire to enter upon early negotiations,
the writer stating that " if you will call me upon receipt of this letter I will make the nec-
essary arrangements to meet with you and your committee " The testimony shows that
SEABOARD PACKING COMPANY 1307
Roger Chipman, secretary and general manager at Seaboard, had telephoned Attorney
Stoneman and stated, "We're very anxious to get this meeting with the Union as quickly
as possible, because we want to determine what our costs will be this year, if possible."
It appears that it was necessary to get this information to the bank, as well as to calculate
the cost to the Respondent to pack sardines. However, on July 19, the Respondent shut down
the Lubec plant before engaging in any bargaining negotiations. The first meeting between
union and management thus occurred on July 30 when Ernest Eaton, the union representative,
met to discuss grievances, but nothing was said about the contract negotiations at that time.
Next, on September 4, the Respondent and the Union met in the restroom of the Lubec
plant to negotiate a new agreement . In addition to Respondent ' s management, representa-
tives of Booth Fisheries and North Lubec Canning Company were present. In the language
of the General Counsel's brief, "After Eaton had submitted a new proposed contract, the
Companies requested a recess and left the room. Upon their return, Respondent's counsel,
James Hughes, who was also representing Booth and North Lubec, announced that the Re-
spondent was withdrawing from the joint negotiations. Thereupon, Respondent's representa-
tives, President Pike, General Manager Chipman, Treasurer Johnson and Attorney Hughes,
left the conference room." I accept the explanation advanced by Respondent that it was with-
drawing from the group negotiations because the other parties had to continue to operate
and to do so must negotiate, whereas Lubec could not again operate as Respondent lacked
sufficient funds.
The next meeting appears to have been on September 18 when Eaton asked Attorney
Hughes when the Respondent was "going to get together and negotiate with the Union."
In the then financial condition of Respondent, Hughes could give no definite or better answer
than, "I don't know." On October 17 Eaton also spoke to Chipman and requested that the
Respondent meet with the Union. However, Chipman demurred, stating that there was no
rush since the Lubec plant was not going to be operated any further in 1952, and in fact
was never operated again under the then management--the Respondent being insolvent.
Even at the time of this hearing, and under a trusteeship of new management, Respondent
was unable to reopen any of its four plants and to this day may be so unable to operate.
Obviously , to have engaged in bargaining at this late date, in the language of Treasurer
Johnson "it was futile to talk about a dead horse." I find no refusal to bargain.
The Petition to Decertify the Union
There was much testimony given in this case concerning a petition that was circulated
in Lubec among the laid-off employees . It appears from the evidence that Melvin Stanley
and Sidney Farmer conceived the idea of circulating a petition to get rid of the Union and
Carlton Miller printed the petition. This petition, dated September 5, 1952, reads as follows:
"We, the undersigned employees of Seaboard Packing Co ., Lubec , Maine, do not want to
be represented by any Union ." Both Stanley and Miller occupied dual positions . During
the canning season , Stanley was a foreman of the " flaking room" when the Lubec plant
was in operation . When it was closed down , he was a carpenter maintenance man. Miller
was a foreman of the packing room when the plant was in operation and at other times he
was a maintenance man doing general labor.
Thereafter, Farmer, on company time and his own, commenced circulating the petition,
together with Stanley's son, a laid-off employee. They succeeded in getting some 62 sig-
natures, about one-third of the employees, on the petition, and on or about September 7
they handed the petition to Treasurer Johnson. It is shown that Johnson and Chipman, in
the presence of President Pike, checked off the names secured on the petition with the
payroll list . In the language of the Respondent ' s brief which I credit as a correct statement
of the facts "the petition was turned over to Gene Johnson and put away in a drawer and
forgotten until produced at the hearing by the Respondent at the request of counsel for
General Counsel." From the evidence, I am convinced and hold that the circulation of the
petition was not instigated or authorized by the Respondent . There is no question of manage-
ment being charged with responsibility for actions by Stanley or Miller because they were
only part-time or subforemen when the plant was operating , and at the time of the petition
the plant was not operating nor were they acting as foremen. It is clear from the record
that all three of these men acted on their own initiative in the vain hope that they might
save their livelihood by eliminating the Union and them importuning their insolvent em-
ployer to reopen Lubec. Thus in this connection , no unfair labor practice was committed
by Respondent.
1308 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUSIONS OF LAW
1. The Union is a labor organization within the meaning of Section 2 (5) of the Act.
2. Respondent is engaged in commerce within the meaning of Section 2 (6) and (7) of
the Act.
3. Respondent has not engaged in unfair labor practices in violation of Section 8 (a)
(1), (3), and (5) of the Act.
[Recommendations omitted from publication.]
THE FROHMAN MANUFACTURING CO., INC. and INTERNA-
TIONAL ASSOCIATION OF MACHINISTS, LODGE NO. 613,
A.F.L. Case No. 10-CA-1476. February 25, 1954
DECISION AND ORDER
On September 2, 1953, Trial Examiner David London issued
his Intermediate Report in the above -entitled proceeding, finding
that the Respondent had engaged in and was engaging in certain
unfair labor practices, and recommending that it cease and
desist therefrom and take certain affirmative action, as set
forth in the copy of the Intermediate Report attached hereto.
The Trial Examiner further found that the Respondent had
not engaged in certain other unfair labor practices alleged
in the complaint, and recommended dismissal of those al-
legations . Thereafter, the Respondent and the General Counsel
filed exceptions to the Intermediate Report and supporting
briefs.'
The Board has reviewed the rulings made by the Trial Ex-
aminer at the hearing and finds that no prejudicial error was
committed. The rulings are hereby affirmed. The Board has
considered the Intermediate Report, the exceptions and briefs,
and the entire record in the case, and hereby finds merit
in the Respondent's exceptions and adopts the findings, con-
clusions, and recommendations of the Trial Examiner only
to the limited extent that they are consistent with this Decision
and Order.
1. For the reasons fully stated in the Intermediate Report,
we find, as did the Trial Examiner, that the discharge of em-
ployee Nash on February 13, 1952, was not violative of Section
8 (a) (3) and (1) of the Act.
2. The complaint alleges, and the Trial Examiner found,
that since January 2, 1952, the Respondent refused to bargain
with the Union in violation of Section 8 (a) (5) and (1) of the Act.
We do not agree.
As described in the Intermediate Report, the Union was certi-
fied as exclusive bargaining representative of Respondent's
'The Respondent also filed a request for oral argument. The request is denied as the rec-
ord, including the exceptions and briefs, adequately presents the issues and the positions
of the parties.
107 NLRB No. 279.