Service Merchandise Co., Inc.

National Labor Relations Board - Board Decisions

Jan 23, 1986

278 N.L.R.B. 185 (N.L.R.B. 1986)

SERVICE MERCHANDISE CO.
Service Merchandise Company, Inc. and Service
Merchandise Drivers Association . Case 26-CA-
8333
23 January 1986
;DECISION AND ORDER
By CHAIRMAN DOTSON AND MEMBERS
DENNIS AND JOHANSEN
On 1 July 1981 Administrative Law Judge
Elbert D. Gadsden issued the attached decision.
The Respondent filed exceptions and a supporting
brief, and the General Counsel, filed cross-excep-
tions and a supporting brief.'
The National Labor Relations Board has delegat-
ed its authority in` this proceeding to a three-
member panel.
The Board has considered the decision and the
record in light of the exceptions and briefs2 and
i On 13 August 1981 the Charging Party filed a document entitled
"Charging Party's Exceptions to the Decision of the Administrative Law
Judge"-in which it stated that it joined in and adopted the General Coun-
sel's exceptions to the judge Accompanying that document was a "Brief
in Support' of Exceptions" in which the Charging Party simply stated
that it was adopting the General Counsel's brief in support of exceptions
and attaching its own brief to the judge in support of the judge's unex-
cepted-to findings On 18 August 1981, the General Counsel, not having
previously filed exceptions, filed cross-exceptions'and a brief in support
of his cross-exceptions On 1 October 1981, the Charging Party filed a
"Joinder" in the General Counsel's cross-exceptions which states that the
Charging Party, "joins in, accepts and adopts" the General Counsel's
cross-exceptions and brief in support of cross-exceptions
On 7 October 1981 the Respondent filed a response opposing the
Charging Party's joinder in the General Counsel's exceptions In view of
the particular circumstances here in which the Charging Party appears to
have anticipated and joined with the General Counsel's cross-exceptions
and later, albeit untimely, explicitly reaffirmed its adoption of those cross-
exceptions, and in view of the fact that we can perceive no prejudice to
the Respondent, we shall consider the Charging Party to have filed the
same cross-exceptions as filed by the General Counsel -
8 On 20 August 1981 the General Counsel filed a motion to strike the
Respondent's exceptions and a motion to strike documents attached to
the Respondent's brief in support of exceptions. On 25 August 1981 the
Respondent filed a response On 1 October the Charging Party filed a
motion seeking joinder with the General Counsel's motions On 7 Octo-
ber 1981 the Respondent filed a response
Regarding the motion to strike exceptions, we find that the form and
content of the Respondent's 82 enumerated exceptions, each of which
designates the part of the judge's decision to which objection is made and
the reason for the, objection, taken together with its brief, which cites to
portions of the record relied on, fulfills the requirements for form and
contents of exceptions set forth in Sec 10246(b) of the Board's Rules and
Regulations Accordingly, we deny the motion
With respect to the motion to strike documents, we note that the docu-
ments in issue, which were appended to the Respondent's brief in support
of exceptions, were also the subject of a motion filed with the Board by
the Respondent on 13 August 1981, seeking to make the documents a
part of the record On 20 August 1981 the General Counsel filed a tele-
graphic response to the Respondent's 13 August motion asserting that the
documents should be excluded from the record as "evidence of conduct
or statements made'in compromise negotiations "
The documents in issue are (1) a document submitted by the Charging
Party to the judge and the parties about I July 1981 which sets forth the
Charging Party's position in favor of a proposed settlement between the
Charging Party and the Respondent, and (2) two appendices to the
Charging Party's document, the first being an agreement between the
Charging Party and its counsel and the second being an unemployment
compensation determination The documents were filed after the Charg-
ing Party and the Respondent submitted a postheanng joint application
278 NLRB No. 23
185
has decided to affirm the judge's rulings, 3 find-
ings,4 and conclusions only to the extent consistent
with this Decision and Order.
to the judge seeking approval of an out-of-Board adjustment and after the
General Counsel filed a response in opposition to the settlement proposal
In his order denying the joint application, which order was included
within his decision, the judge described both the application and the
General Counsel's opposition motion and made the application an exhibit.
It appears that the Charging Party's responsive document was not filed
before the issuance of the judge's decision
We consider the Charging Party's responsive document, like the Gen-
eral Counsel's response in opposition, to be `appropriately a part of the
record as a response and position with respect to a motion within the
meaning of Sec 102 54(b) of the Board's Rules and Regulations We do
not, however, consider the matter in or append to these postheanng doc-
uments as proper evidence on review of the unfair labor practice allega-
tions and place no reliance on the documents in that regard
3 The Respondent has excepted to the judge's failure to approve an
out-of-Board settlement, including a withdrawal of the underlying
charge, -proposed by the Respondent and the Charging Party after the
close of the hearing. The Respondent contends that the proposed settle-
ment constitutes a complete and appropriate settlement of the effects
upon employees of the Respondent's subcontracting of its trucking oper-
ation
We find here, in accord with the judge, that the proposed settlement is
a wholly inadequate vehicle for effectuating the policies of the Act We
consider the procedural format of the proposed settlement to be both un-
workable, in, that it would require the Board to continue to monitor the
parties' conduct after withdrawal of the charge had been approved, and
inappropriate, in that it would require the Board to affirmatively sanction
release of the Respondent by all discriminatees, including objecting par-
ties, from any and all liabilities arising out of the employees' employment
and cessation of employment, and to sanction waivers of reinstatement
from objecting employees In addition, we note that at least one employ-
ee has expressed objections to the proposed settlement to the judge and,
according to the Charging Party, four employees failed to approve the
proposed settlement.
4 The Respondent has excepted to some of the judge's credibility find-
ings. The Board's established policy is not to overrule an administrative
law judge's credibility resolutions unless the clear preponderance of all
the relevant evidence convinces us that they are incorrect Standard Dry
Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Cir 1951)
We have carefully examined the record and find no basis for reversing
the findings
We correct the following inadvertent errors in the judge's decision (1)
in the section entitled "Background Infarnation," the paragraph begin-
ning "[o]n or about December 21, 1980, Respondent abolished its own
truckdriving fleet" is corrected to reflect that the Respondent's actions
occurred about 21 December 1979, (2) in the section entitled "Evidence
of the Existence of a Truckdriver's Organization, Its Activities, and Re-
spondent's Reactions Thereto," the sentence describing the Respondent's
asking Carnahan, in 1979, whether Carnahan had heard any union talk is
corrected to reflect that the Respondent's agent during the conversation
was Laban Hilton and not Jim Randolph, (3) in the section entitled "Ad-
ditional assurances by Respondent that their drivers' jobs were secure,"
the quoted phrase by Blatt, "I'm leaving with you," is corrected to read,
"I'm leveling with you"; (4) in the section entitled "Respondent's deci-
sion to terminate its trucking operation," the reference to the Respond-
ent's 21 December 1979 contract with Liberty Contract Carrier as being
G.C Exh. 23(a) is corrected to show that it was G C Exh. 32(a); (5) in
the first paragraph of the section entitled "Comparative cost of Respond-
ent's operations in 1979 and 1980," the total trucking expenses in 1'979 of
$600,602,230 are corrected to read $6,602,230; the other cost for dispatch-
ing and clerical services of $440,439 is corrected to read $44,439, the
total trucking mileage of 794,529 is corrected to read 7,794,529; and-the
sentence reading, "The contract [in 1980] covered $7,383,602," is correct-
ed'to read "The contract covered 7,383,602 miles" These errors do not
affect the outcome of the case Further, we note that in the section enti-
tled "Respondent's termination of its entire truckdriver fleet," in the dis-
cussion concerning a Department of Transportation (DOT) report' (R.
Exh 20), the judge refers to a duplicate copy of that report as dated on
15 November 1979 and introduced in evidence as G C Exh 31. The
record reflects that G C Exh 31 is not a duplicate copy of the DOT
Continued
186 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
1. The Respondent excepts to the conclusion, as
well as almost all the underlying findings, that its
discharge of its local and over-the-road drivers and
warehouse worker Blagburn and its subcontracting
of the truckdriver work violated Section 8(a)(3)
and (1) of the Act. Except as otherwise stated
herein, we agree with the judge's findings and con-
clusions concerning the 8(a)(3) violation.5 We
shall, however, restate some of the findings and
further record evidence to highlight certain facts
which support the violation found.
On several occasions after the beginning of the
Respondent's use of a private driver fleet about
1970 the Respondent expressed its opposition to
drivers' representation by an outside bargaining
agent. In 1972 the Respondent's president Ray-
mond Zimmerman warned driver Carnahan and
other drivers that if any word was ever mentioned
about any of the drivers joining a union, he would
close the doors of the warehouse and ship directly
to the showroom; he told them that he could do
without the drivers. Subsequently, but before 1975,
then Distribution Director Jim Randolph told
driver Carnahan that he had heard some drivers
talking about an outside union, to which Carnahan
replied that there had been some talk. Randolph
then reminded Carnahan about Zimmerman's warn-
ing, told Carnahan that the Respondent could cut
costs by not being union, and said that the drivers
were crazy if they even talked to a union. About
January 1979 Carnahan, who was at that time the
drivers' spokesman,6 was told that there was a
problem by Laban Hilton, who was then the distri-
bution director. Hilton stated that he had heard
union talk and asked Carnahan if he heard any-
thing. Carnahan replied that as far as he knew no
report, that the only copy of the DOT report offered in evidence was R
Exh. 20, and that the only record reference to the date of receipt on the
document, other than 30 November 1979, is 13 December 1979, which
was the date the parties agreed was stamped on the original document
showing its receipt in the Respondent 's personnel department. The
judge's ruling with respect to the introduction of R Exh . 20 and findings
related thereto are discussed below.
5 Although the complaint in this case framed the 8 (a)(3) allegation as
being only the termination of the truckdrivers and one warehouseman on
21 December 1979, it is clear from our review of the record , the decision,
and the briefs that the parties fully litigated , and the judge made findings
upon, the issue of whether the Respondent's contemporaneous subcon-
tracting of its , private drivers trucking operation was illegally motivated.
The Respondent did not file a procedural exception on this issue Ac-
cordingly, it is appropriate for us to decide the issue of an 8(a)(3) subcon-
tracting violation , regardless of whether it was specifically pleaded. Ken-
worth Trucks of Philadelphia , 236 NLRB 1299 (1978), Kux Mfg. Corp, 233
NLRB 317 (1977).
6 In 1973, when the Respondent employed only about four drivers,
Distribution Director Randolph told the most senior driver, Carnahan,
that more drivers were to be hired, suggested that the drivers have a
spokesman in order to channel complaints , and designated Carnahan as
spokesman Thereafter , the drivers continued to designate spokesmen
who had contact with the Respondent's management primarily on an ad
hoc basis concerning such matters as pay, driver discipline , equipment,
drivers' rules and regulations , and other conditions of employment
one was talking. Hilton told Carnahan to try to
talk it down if the drivers began talking union, and
to explain that the spokesman had always been able
to talk to him before and that they should continue
to come to him.
The Respondent's opposition to drivers' seeking
representation through an outside union as well as
its concern over the drivers' militancy in pursuing
their demands through their spokesman vividly sur-
faced at a September 1979 meeting between the
drivers and members of the Respondent' s manage-
ment hierarchy. Prior to the September meeting,
the Respondent had, in late June 1979, promulgat-
ed new rules for drivers concerning dispatch pro-
cedures, seniority, discipline, and other terms and
conditions of employment. In response to these
new rules, and particularly the rule eliminating dis-
patch by seniority, the drivers began discussing the
possibility of representation by a Teamsters local as
well as the possibility of securing a contract with
the Respondent through its own spokesman and
committee. The September meeting was called by
the drivers' spokesman, at the request of the driv-
ers, to explain their position. At the meeting, the
drivers' spokesman related the drivers concerns
and presented the Respondent with the alternative
of recognizing and bargaining with the drivers'
spokesman and committee or bargaining with an
outside union. The Respondent's vice president re-
plied that the drivers were "holding a loaded gun
to [his] head." However, in an obvious effort to
dissuade the drivers from immediate action, he
agreed to sit down and negotiate with the drivers'
spokesman and committee in about 90 days, after
the Christmas rush season was over. He also sug-
gested that a list of drivers' complaints be brought
to the vice president of personnel. The drivers
agreed to the Respondent's proposal but, evidenc-
ing continued action in support of their concerns,
the drivers' spokesman and several other drivers
delivered a list to the vice president of personnel
about a week later; the list included complaints
about the Respondent's failure to pay drivers for
all hours worked, scheduling, dispatch procedures,
seniority, and inadequate communication about
new company procedures.?
7 In finding illegal motivation on the part of the Respondent, we do
not rely on the judge's reference , in the section of his decision entitled
"Respondent 's termination of its entire truckdriver fleet," to a conversa-
tion between Vice President Laban Hilton and driver spokesman Jimmy
Howell during which Hilton assertedly urged Howell to dissuade the
drivers from affiliating with an outside union, and reference to a further
meeting between Howell and the drivers during which Howell assertedly
urged drivers not to join an outside union The record does not reflect a
conversation during which Hilton explicitly urged Howell to dissuade the
drivers as described, nor does the record reflect that Howell did so dis-
suade drivers at a meeting in October.
SERVICE MERCHANDISE CO. 187
Thereafter, the Respondent did not meet and ne-
gotiate with the drivers ' spokesman and committee
concerning their complaints . Instead , it proceeded
to an initial decision , in -October 1979 , to subcon-
tract the work of its, drivers and to engage a con-
tract carrier."' That the decision was precipitous is
apparent from a variety of circumstances . First, at
the time of the decision , the Respondent did not
have before it written bids from contractors for
contract carriage9 or cost - comparison figures be-
tween its private driver operation and contract car-
riage .1 ° Second , while Leasco 1 1 had solicited the
Respondent's business throughout the summer and
fall of 1979 , the thrust of its sales pitch , as reflected
in lengthy letters to the Respondent, was on behalf
of its truck leasing division and was for a full-serv-
ice leasing agreement-one pursuant to which
Leasco would furnish all equipment , maintenance,
fuel, safety programs, all services that accompany
the operation of the equipment except drivers, in-
surance , dispatching, and management of the fleet.
Third, -although, as found by the judge, certain
members of the Respondent 's management had dis-
cussed the idea of contract carriage before October
1979, 1 certain actions taken by the Respondent
before October 1979 were , inconsistent with an im-
minent change to contract carrier service. Thus,
the Respondent continued to hire new, permanan-
ent drivers throughout July and August 1979. It
hired four" new dispatchers and one assistant during
the period between about May and September
1979. It redesigned its drivers' logs in the summer
s In his decision , the judge,, at fn 11, reversed his ruling and allowed
into evidence the previously rejected exhibit, R Exh. 20, a Department
of Transportation survey of the Respondent 's records In the same foot-
note, the judge discussed the content of an offer of proof by the Re-
spondent , which was related to the exhibit , and he set forth reasons why
he would not credit the offer of proof if it were properly in evidence
We agree with the, appropriateness of the reversal of the exclusionary
ruling upon the exhibit Further, we do not rely on the judge's reasons
for "discrediting" the Respondent's related offer of proof Nevertheless,
we find that , even assuming the offer of proof were appropriate testimo-
ny, any information relayed to the Respondent about the report and the
report itself, even assuming it was -received 30 November 1979, was not
shown to have been received before the Respondent's October 1979 ini-
tial decision to discharge its drivers and subcontract their work and
therefore could not have influenced the decision
9 As described by the Respondent 's witnesses and as found by the
judge, the decision made at the October meeting was to convert to con-
tract carriage provided the Respondent could arrange for the transfer or
buy out of its equipment leases with its lessors other than Leasco
io The Respondent received its first written proposal for contract car-
nage in early December 1979 The proposal was from Leasco , the only
company with whom the Respondent negotiated concerning contract car-
riage
ii Leasco is a company with' six divisions, among them being Liberty
Contract Carrier, 'Inc ; a contract carrier division, a "full service" truck
leasing division; a daily rental division, a car leasing division; and an
equipment leasing division
12 The members of management who participated in such discussions
were Laban Hilton, vice president of distribution; Wayne Blatt, director
of traffic, transportation, and fleet management ; and Richard Schenk,
vice president of finance and administration , who began working for the
Respondent in this position on 1 June 1979
of 1979, hired a 'clerk -to audit the logs in July 1979,
and instituted its new log audit system in August
1-979 . It, set up a new dispatch office in September
1979, which provided additional space for the en-
larged staff of dispatchers and a needed parking
area for drivers' cars, as well as a parking area for
tractors and trailers: .
Further evidence of the Respondent 's illegal
motive is the fact that the - drivers and warehouse
worker Clifford Blagburn were summarily dis-
charged . According to employee Blagburn , the Re-
spondent, by its former vice president of distribu-
tion and by its vice-'president of personnel at the
time of the discharges , had told drivers at an
annual meeting about 1978'-that in the event drivers
had to be taken off the road , instead of firing the
drivers, the Respondent -would give them the
option of working in the warehouse . As of 16 Janu-
ary 1980 the Respondent was advertising for ware-
house workers in a local newspaper , but the evi-
dence does not show that, at the time of the dis-
charges or thereafter, the Respondent' offered its
drivers the option of warehouse work. In addition,
it appears that the Respondent 's desire to rid itself
of its drivers is made manifest by its inclusion of
Blagburn among them . Blagburn had been an over-
the-road driver from about September 1976 until
about August 1979 when he was taken off the road
because of his accident record . At that time he was
told that he would be placed in the warehouse for
3 years and then be returned to driving. However,
despite the fact that`, Blagburn's job in the ware-
house was not discontinued , Blagburn was dis-
charged along with , the local and over-the-road
drivers.
Finally, the Respondent 's claim of economic
considerations as being its impetus in the .change to
contract carriage is refuted both by its apparent
disinterest in a precise and actual cost comparison
between its existing private driver operation and a
contract carriage arrangement at the time of its Oc-
tober 1979 decision and, ultimately , the fruits of its
disinterest in the resulting approximate 25-percent
increase in costs , from 1979 to 1980, for the oper-
ation of the contract carriage arrangement with
Liberty Contract, Carrier , Inc. over its- own private
driver operation, - with approximately 400,000 'less
miles driven under the 1980 contract agreement.
2.' In order to remedy the 8(a)(3) and (1) viola-
tions found , the judge, in the remedy section
stated ; "[T]he recommended Order will provide
that Respondent reestablish its private trucking op-
eration and reinstate all of its' drivers, including
warehouse worker, Blagburn, who were terminated
on,' December 21, 1979, and make them whole, for
any loss of earnings ." The General . Counsel filed
188 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
cross-exceptions to the failure of the judge to con-
firm his recommended Order to his prescribed
remedy and to his failure to draft language in the
notice to employees in conformity with his pre-
scribed remedy.13 We find merit in the General
Counsel's cross-exceptions.
We have ordered reestablishment of operations
and reinstatement of employees accompanied by a
make-whole backpay remedy,,to restore the status
quo ante, in cases involving discriminatory subcon-
tracting of unit work and discharge of employees,
when, as here, it has been found that a respondent
has not demonstrated such remedy would endanger
its continued viability. See, e.g., Hood Industries,
248 NLRB 597 (1980); Smyth Mfg. Co., 247 NLRB
1139 (1980); C-F Air Freight, 247 NLRB 403
(1980); R & H Masonry Supply, 238 NLRB 1044
(1978); see also N. C. Coastal Motor Lines, 219
NLRB 1009 (1975). Accordingly, we shall affirma-
tively require the Respondent to reestablish its pri-
vate trucking operations, reinstate its local and
over-the-road truckdrivers, as well as warehouse
worker Blagburn, and make them whole for any
loss of pay, without including the conditional limits
set forth by the judge,14 and to expunge from its
files references to the discharge of such employees.
3. The Respondent excepts to all the judge's con-
clusions and his various findings pertaining to the
8(a)(5) and (1) allegations relating to the failure to
bargain over the subcontracting decision and its ef-
fects, including the labor organization, unit, majori-
ty status, and recognition issues . We do not affirm
the judge's findings and conclusions on these issues
and shall not make alternative findings and conclu-
sions. We find that the reestablishment and rein-
18 In his recommended Order, the judge did not unequivocally order
reestablishment of operations when, in the affirmative action portion of
the Order, he required the Respondent to "[r]einstate the former private
driver trucking operation which existed prior to December 21, 1979,
and/or, immediately recall or offer to reinstate all of the drivers and
warehouse worker Blagburn to their former positions or, if such positions
no longer exist , to substantially equivalent positions , without prejudice to
their seniority or other rights previously enjoyed, and make them whole
in the manner prescribed in the section of this decision entitled, `The
Remedy."' (Emphasis added) Further, in the recommended Order, the
judge, citing Winn-Dcxie Stores, 147 NLRB 788 (1964), added that discn-
minatees were to receive backpay "from the date Respondent unlawfully
refused to bargain (December 21, 1979), the date it closed its private
trucking operation, until one of the four conditions is satisfied." The four
listed conditions were- (1) agreement between the Respondent and the
Service Merchandise Drivers Association (SMDA) over abolition of its
private trucking operation and embodiment of such agreement in a signed
contract, (2) bargaining to bona fide impasse between the Respondent
and the SMDA, (3) failure of the SMDA to commence negotiations
within 5 days after receipt of the Respondent's notice of its desire to bar-
gain, or (4) failure of the SMDA to-bargain in good faith The judge's
recommended notice did not contain language notifying employees that
the Respondent would reestablish its private trucking operation and rein-
state all of its drivers , including warehouse worker Blagburn, and make
them whole for any loss of earnings
14 The Winn-Dixie-type remedy, inappropriately added here by the
judge, has been applied where there has been a failure to bargain over an
economically motivated decision to close
statement remedies we have granted, under the
particular circumstances of this case, effectuate the
purpose of the Act and essentially return the par-
ties to the status quo ante. In so doing, we note
that whatever relationship existed between the
Charging Party or the drivers and their spokesman,
on the one hand, and the Respondent, on the other
hand, it had never, as of the time of the discharges
and the subcontracting, been characterized by for-
malized or regular bargaining.
ORDER
The National Labor Relations Board orders that
the Respondent, Service Merchandise Company,
Inc., Nashville, Tennessee, its officers, agents, suc-
cessors, and assigns, shall
1. Cease and desist from
(a) Discharging or otherwise discriminating
against any employee because of the union activi-
ties of its employees.
(b) Contracting out its private driver trucking
operations because of the union activities of its em-
ployees.
(c) In any other manner interfering with, re-
straining, or coercing employees in the exercise of
the rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action neces-
sary to effectuate the policies of the Act.
(a) Reestablish its private driver trucking oper-
ations.
(b) Offer the following individuals immediate
and full reinstatement to their former jobs or, if
those jobs no longer exist, to substantially equiva-
lent positions, without prejudice to their seniority
or any other rights or privileges previously en-
joyed, and make them whole for any loss of earn-
ings and other benefits suffered as a result of the
discrimination against them, in the manner set forth
in the remedy section of the decision.
Frank Rice
Billy Joe Woodard
Forrest King
Tom Crawford
Charles Stanley
Burrell Davis
George Smothers
Percey Davis
R. D. Smith
David Boyd
Melvin Alcorn
J. J. Gibbs
George Stone
Roger Driver
Noble Best
Charles Morgan
Jimmy Howell
James Smythia
Louis Potts
John Mangrum
Gerald Milraney
Dudney Allen
Bob Stewart
Cliff Blagburn
Wilfred Bruce
Bill Archer
Phillip Edwards
Edward Vanderpool
Glenn Frasier,
James Eley
James Forrester
Robert Oldham
i
SERVICE MERCHANDISE CO.
James Burd Ronald Martin
Bobby Woodall Paul Green
Ralph Chapman Glen Tittle
Charles Henderson James Carnahan
Bill McClain
(c) Remove from its files any ,reference to the
discharges of the indiviudals listed above and
notify them in writing that this has been done and
that evidence of these unlawful discharges will not
be used as a basis for future personnel actions
against them.
(d) Preserve and, on request, make available to
the Board or its agents for examination and copy-
ing, all payroll records, social security payment
records, timecards, personnel records and reports,
and all other records necessary to analyze the
amount of backpay due under the terms of this
Order.
(e) Post at its Nashville, Tennessee plant and
place of business copies of the attached notice
marked "Appendix." 15 Copies of the notice, on
forms provided by the Regional Director for
Region 26, after being signed by the Respondent's
authorized representative, shall be posted by the
Respondent immediately upon receipt and main-
tained for 60 consecutive days in conspicuous
places including all places where notices to em-
ployees are customarily posted. Reasonable steps
shall be taken by the Respondent to ensure that the
notices are not altered, defaced, or covered by any
other material.
(f) Notify the Regional Director in writing
within 20 days from the date of this Order what
steps the Respondent has taken to comply.
MEMBER DENNIS, dissenting.
I would approve the settlement upon which the
Respondent and the Union agreed because it satis-
fies the standards set forth in my dissenting opinion
in Carpenters Conference Board 46 (Arntz Contract-
ing), 274 NLRB 1105 (1985).
15 If 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 Nation-
al Labor Relations Board" shall read "Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board."
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
189
The National Labor Relations Board has found
that we violated the National Labor Relations Act
and has ordered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain' collectively through representa-
tives of their own choice
To act together for other mutual aid or pro-
tection
To choose not to engage in any of these
protected concerted activities.
WE WILL NOT discharge or in any other manner
discriminate against any employee because of the
union activities of our employees.
WE WILL NOT contract out our private driver
trucking, operations because of the union activities
of our employees.
WE WILL NOT in any other manner interfere
with, restrain, or coerce you in the exercise of the
rights guaranteed you by Section 7 of the Act.
WE WILL reestablish our private driver trucking
operations.
WE WILL offer the following individuals immedi-
ate and full reinstatement to their former jobs or, if
those jobs no longer exist, to substantially equiva-
lent positions, without prejudice to their seniority
or any other rights or privileges previously en-
joyed and WE WILL make them whole for any loss
of earnings and other benefits resulting from their
discharge, less any net interim earnings, plus inter-
est:
Frank'Rice , Jimmy Howell
Billy Joe Woodard James Smythia
Forrest King Louis Potts
Tom Crawford John Mangrum
Charles Stanley Gerald Milraney
Burrell Davis Dudney Allen
George Smothers Bob Stewart
Percey Davis Cliff Blagburn
R. D.- Smith Wilfred Bruce
David -Boyd Bill Archer
Melvin Alcorn Phillip Edwards
J. J. Gibbs Edward Vanderpool
George Stone Glenn Frasier'
Roger,Driver James Eley
Noble Best James Forrester
190 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Charles Morgan Robert Oldham
James Burd Ronald Martin
Bobby Woodall Paul Green
Ralph Chapman Glen Tittle
Charles Henderson James Carnahan
Bill McClain
WE WILL remove from our files any references
to the discharges of the individuals listed above
and WE WILL notify them in writing that this has
been done and that-evidence of their unlawful dis-
charges 'will not be used as a basis for future -per-
sonnel actions against them.
SERVICE MERCHANDISE COMPANY,
INC.
William D. Levy, Esq., for the General Counsel.
Sidney S. Wolchok, Esq., and Jon David Sherry, Esq., of
New York, New York, for the Respondent
Avon N. Williams Jr., Esq., and Richard H. Dinkins, Esq.,
of Nashville, Tennessee, for the^Charging Party.
DECISION
STATEMENT OF THE CASE
ELBERT D. GADSDEN, Administrative Law Judge. On
original and amended unfair labor practice charges filed
on March 17 and April 16, 1980, respectively, by Service
Merchandise Drivers Association (the. Charging Party or
the Union), against Service Merchandise Company, Inc.,
(Respondent) a complaint was issued by the Regional Di-
rector for Region 26 on behalf of the General Counsel
on May 2, 1980.
In substance, the complaint alleges that Respondent's
employee truckdrivers, members of Service Merchandise
Drivers Association, the Charging Party, constituted a
labor organization within the meaning of Section 2(5) of
the Act, for the purpose of dealing with Respondent
concerning grievances, labor disputes, wages, rates of
pay, hours of employment, or conditions of work; that
the Association had been designated as the exclusive col-
lective-bargaining representative of Respondent's truck-
driver employees and, as such, was recognized by Re-
spondent, and with which Respondent had entered ,into
successive collective-bargaining agreements; .that in spite
of the Association's request on Respondent to bargain
collectively on proper subjects of collective bargaining,
Respondent decided to go out of, and thereafter in fact
went out of, the ' trucking business and terminated its
truckdriver employees without prior notice to the Asso-
ciation, and without affording the Association. an oppor-
tunity to negotiate on its closure, thereby refusing to-bar-
gain collectively with the Association in violation of
Section 8(a)(1), Section 8(a)(3) and (1), and Section
8(a)(5) and (1) of the Act.
Respondent filed an answer denying that it has en-
gaged in any unfair labor practices as alleged in the com-
plaint.
The hearing in the above matter was held before me in
Nashville, Tennessee, on 10 dates between November 17,
1980, and January 14, 1981. Briefs have been -received
from the General Counsel,-the Charging Party, and the
Respondent, respectively, and have been carefully con-
sidered.
On the entire record in this case and from my observa-
tion of the witnesses, I make the following
FINDINGS OF FACT
1. JURISDICTION -
Respondent is now, and has been at all times material,
a corporation with, an office and place of business in
Nashville, Tennessee (Respondent's facility), where it has
been engaged in the business of general merchandise
sales.
In the course and conduct of its-business operations
during the period ending 1979, Respondent derived gross
revenues in excess of $500,000, and it received at its
Nashville, Tennessee facility products, goods, and mate-
rials valued in excess of $50,000, directly from points lo-
cated outside the State of Tennessee.
The complaint alleges, Respondent admits, and I find
that Respondent- is engaged- in commerce within the
meaning of Section 2(6) and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
The complaint alleges and Respondent denies that
Service Merchandise Drivers Association, or any asso-
ciation of drivers, has been at any time material a labor
organization within the meaning of Section 2(5) of the
Act. Respondent also denies that its aggregation of some-
40 truckdrivers constituted a unit appropriate for the
purpose of collective bargaining within the meaning of
Section 9(b) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background Information
Respondent is, and has been at all times material, en-
gaged in the business of general merchandise , sales
through its operation of 110 catalogue showrooms locat-
ed in 25 or 26 States. In conjunction therewith, it main-
tains -for distribution purposes five warehouses in Nash-
ville, Tennessee, where goods purchased ^ from' vendors
are-stored until they_are packed and loaded for shipment
to the aforenumber of showrooms. Respondent is a rap-
idly growing business and its over-the-road truckdriver
operations expanded from 1 driver in 1970 to 42 drivers
in 1979.
In furtherance of its distribution operation, there were
42 truckdrivers in Respondent's employ prior to Decem-
ber 21, 1979, who transported the merchandise in trac-
tor-trailers to and from the various destinations hereto-
fore described. Approximately 6 of the 42 drivers were
classified as "local drivers" who made in-town pickups
from vendors, spotted and located trailers, and picked up
containers and piggyback trailers. The remainder of the
drivers were characterized as over-the-road (long-dis-
tance) drivers who transported merchandise from, the
vendors to Respondent's warehouses and from the ware-
house to Respondent's showrooms.
SERVICE MERCHANDISE CO. 191
At all times material the following named persons oc-
cupied the positions set opposite their respective names,
and are now, and have been at all times material supervi-
sors of Respondent within the meaning of Section 2(11)
of the Act and are agents of Respondent within the
meaning of Section 2(13) of the Act : Wayne K. Blatt,
corporation director , traffic and transportation ; Richard
L. Schenk, vice president, finance and admininstration;
Robert Mitchell , vice president , personnel; Raymond
Zimmerman, president; Howard Levy , executive vice
president; Laban Hilton , vice president, distribution; and
Harry Zimmerman , chairman.
About December 21, 1980, Respondent abolished its
own truckdriving fleet, contracted for carrier service,
discharged its truckdriver employees named below; and
has since that date failed and refused , and continues to
fail and refuse, to reinstate them:
Frank Rice
Billy Joe Woodard
Forrest King
Tom Crawford
Charles Stanley
Burrell Davis
George Smothers
Percy Davis
R. D. Smith
David Boyd
Melvin Alcorn
J. J. Gibbs
George Stone
Roger Driver
Noble Best
Charles Morgan
James Burd
Bobby Woodall
Ralph Chapman
Charles Henderson
Bill McClain
Jimmy Howell
James Smythia
Louis Potts
John Mangrum
Gerald Milraney
Dudney Allen
Bob Stewart
Cliff Blagburn
Wilfred Bruce
Bill Archer
Phillip Edwards
Edward Vanderpool
Glenn Frasier
James Eley
James Forrester
Robert Oldham
Ronald Martin
Paul Green
Glen Tittle
James Carnahan
The complaint further alleges that Respondent dis-
charged the above-named employees because they
joined , supported, or assisted the Union , and engaged in
concerted activities for the purpose of collective bargain-
ing or other mutual aid or protection , and in order to
discourage employees from engaging in such activities or
other concerted activities for the purpose of collective
bargaining or other mutual aid or protection.
The Charging Party further contends that the above-
named discharged employees constituted a unit appropri-
ate for the purpose of collective bargaining within the
meaning of Section 9(b) of the Act as follows:
All local and over-the -road truckdrivers employed
by the Respondent at its 2968 Foster-Creighton
Drive , Nashville, Tennessee , location, excluding all
warehousemen , office clericals , guards and supervi-
sors as defined in the Act. i
' The facts set forth above are neither in dispute nor conflict in the
record.
B. Evidence of the Existence of a Truckdriver's
Organization, Its Activities, and Respondent's
Reactions
A composite of the undisputed testimony of truckdriv-
ers James Carnahan , James Howell, and former truck-
driver Charles Morgan , whose testimony I credit, estab-
lished that James Carnahan was first hired as a truck-
driver by the Respondent in 1970 , and by November
1972 , three other truckdrivers were hired , including
Jimmy Howell . By this time, driver complaints were
being individually brought to Respondent 's distribution
director, Jim Randolph, with greater frequency. Conse-
quently , Randolph told Carnahan the drivers needed a
spokesman and that he believed Carnahan should serve
in that capacity because he was the most senior driver.
Carnahan discussed the suggestion with the drivers and
they agreed that Carnahan serve as spokesman, coordi-
nating driver complaints with Randolph and manage-
ment.
Carnahan served as spokesman for periods during 1973
and 1974 and discussed the drivers ' complaints about a
dispatching practice with Randolph (management). In
1974 Rowell assumed the spokesman position for 1 year.
He was selected spokesman again in October 1976, in
which capacity he served for 1 year . In June 1979,
Howell was elected spokesman or president and contin-
ued in that office up to and during the time of this pro-
ceeding. While serving as spokesman in 1974 to 1975,
Howell undisputedly had discussions with Personnel Di-
rector Carl Mackey, predecessor of Bob Mitchell, re-
garding drivers disability insurance. Howell proposed to
Mackey that the drivers be given a one-half-cent-per-
mile increase and one-half-cent-per-mile disability insur-
ance . In this regard Howell continued to testify as fol-
lows:
Q. Would you go ahead and relate what, if any-
thing , happened to this suggestion , or this discussion
following your conversation with Mr. Mackey?
A. I met Mr. Mackey shortly thereafter , I believe
it was in the parking lot, and he said-he said, don't
spread the word yet , but, we've got it approved;
and, we was having a safety meeting over at the
Sheridan , and him and Jim Randolph announced to
us our package benefits , and that was included in it.
The above raise amounted to $1 per day on expenses
and 35 cents per hour to the drivers.
The undisputed testimony of truckdrivers Carnahan,
Howell, and Morgan also established that their spokes-
men Carnahan and Howell had met with management
(Randolph, Barnard, and Mackey) on several occasions
and discussed "problems drivers had with vendors";
namely , "pay" and "equipment" (trailer trucks).2
2 It is particularly observed that neither Randolph nor Mackey ap-
peared and testified in the instant proceeding and that no explanation was
given for their nonappearance by Respondent . Consequently , the testimo-
ny of the aforeidentified truckdrivers is essentially consistent and uncon
troverted . Moreover , I was further persuaded by the demeanor of the
drivers as they testified on the stand that they were testifying truthfully
and, therefore, I credit their testimony
192 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Jimmy Howell testified that- the drivers occasionally
checked the mileage rate received by members of the
Teamsters Union for the purpose of attempting to keep
their own rates of pay within 1 percent of the Teamsters
rate; that in the spring of 1975, he told Barnard, then dis-
tribution director for the Respondent, that it was about
time for a raise ; and that Director Barnard agreed that it
was time to discuss the subject . He also testified that the
drivers elected a local driver, Frank Rice, to serve as
committeeman in discussing and resolving problems with
management . In his absence , he said Rice conferred with
Randolph concerning driver problems. However, Re-
spondent was continuing to utilize lease drivers and this
use became of concern to Respondent's drivers. Howell
asked the Respondent's vice president, Howard Levy, if
the Company would employ "extra-board" drivers to be
called in on a preferential basis. He said Levy agreed
with the request in 1978 and thereafter employed several
"extra-board" drivers. How ell's testimony is not disputed
in this regard.
The record shows that in January 1977, Distribution
Director Ken Barnard circulated instructions (C.P. Exh.
6) among the truckdriver employees with a covering
memorandum which included the following:
After you have reviewed the attached rules and
regulations and you feel there are some changes
that should be made or something that should be
made added, please make a note of them and give it
to Jimmy Howell. Jimmy Howell will then advise
me on the changes or additions.
Your cooperation in this matter will be greatly ap-
preciated.
Howell testified that the drivers met in the plant's
parking lot and voted by a show of hands to approve the
instructions or rules (C.P. Exh. 6), which results Howell
evidentally reported to management because the record
shows Respondent implemented the rules, and no issue
was made of Howell's testimony by Respondent.
Similarly, Respondent called a meeting of all drivers in
June 1979, at the Sheraton Hotel in Nashville. Present
for the Company were: Tom Ainsworth, director of risk
management; Howard Levy, executive vice president;
Leban Hilton, vice president for distribution; Robert
Mitchell, vice president of personnel; and Wayne Blatt,
director of traffic and transportation. Blatt was intro-
duced to the drivers and a copy of new driver instruc-
tions entitled "Rules and Instructions" (C.P. Exh. 2) was
distributed to each driver. Howell, who was present,
questioned the rule, which provided that drivers would
be held liable for any "weight tickets" they received, be-
cause the trailers are generally sealed at the time the
drivers take possession for transport. Vice President
Levy agreed with Howell and ordered that provision be
stricken. Howell also challenged the abolition of Re-
spondent's prior rule which allowed the drivers a prefer-
ence to select driving assignments on the basis of seniori-
ty. The new rule provided that drivers would be as-
signed runs on a "first -in, first-out" basis with no prefer-
ence of which runs to accept.
The drivers were also informed that they were no
longer permitted to drive their leased tractors to their
homes but were directed to park their tractors on the
premises of the leasing. companies. For rescinding this
privilege of driving the leased tractors home, the drivers
were given checks in varying amounts based on their se-
niority. In the case of Charles Morgan, who had a work,
ing tenure with Respondent in excess of 6 years, he was
given a check for $800, which was less in amount than
that received by some other drivers of equal tenure.
Morgan felt that he .should receive more and discussed
the matter with Howell. Howell took up the matter with
Vice President Howard Levy and Levy stated that if the
drivers felt that Morgan should receive the same amount
of money that the others had received, although he was
not driving that length of time but was working in a dis-
patcher's position, that is the way it would be. The driv-
ers voted by show of hands that Morgan should receive
the same payment as others with the same seniority and
Respondent gave a second check to Morgan in the
amount of $800 on July 2. Vice President Mitchell testi-
fied that Morgan personally expressed his disagreement
with the payment to him, and that Mitchell took up the
matter and recommended to Levy that Morgan be given
the second check.3
In August 1979 a list of chargeable accidents (C.P.
Exh. 14) of driver Clifford Blagburn was submitted to
Transportation Director Blatt by Director of Risk Man-
agement Ainsworth. The report was as follows:
As you can see, he-[Blagburn] has 9'accidents in
less than 3 years, 7 of which were obviously
chargeable . Strong disciplinary action is therefore
justified . My feeling is he should be immediately
terminated; however, in the absence of a formal
program, approved and published to the drivers, we
may be unable to take action this strong. The very
minimum action justified , in my opinion , is an im-
mediate and lengthy suspension.
Howell sat in on the safety committee meeting consist-
ing of drivers J. J. Gibbs, James Smythia, and Charles
Morgan. He told the drivers that he had been informed
about Blagburn's accident record by Ainsworth and Vice
President Leban Hilton, who informed him that the in-
surance company, as well as the Company, felt that
Blagburn should be dismissed. The committee then met
with Ainsworth, Hilton, and Blatt and agreed that Blag-
burn should be taken off the road. Howell said he then
appealed to Leban Hilton to allow Blagburn to work in
the warehouse and Blagburn was assigned as an order
puller with the same hourly rate of pay he received as a
truckdriver.
Howell also testified that just before the September 29
meeting, he told Bobby Woodall to go to Local 480 of
3 Although it is possible Morgan might have expressed his dissatisfac-
tion with Mitchell , such an occurrence does not refute Howell's, undis-
puted testimony that Morgan complained to hum, as spokesman for the
drivers, about the amount he received and Howell , in turn, discussed the
matter with management, including Mitchell I therefore credit Howell's
testimony in this regard because I was also persuaded ,by his demeanor
that he was testifying truthfully
SERVICE MERCHANDISE CO. 193
the Teamsters and see if the drivers could be accepted
under-their charter. Thereafter, he talked to the drivers
about unionization or affiliation with the Teamsters. He
told them he believed they could get more from the
Company as long as they could sit down and talk with
management.
Jimmy Howell undisputedly testified that during his
tenure as spokesman for the drivers, between 1977 and
1979, he was called spokesman and president of the driv-
ers; and that as of July 1979, the drivers had three com-
mitteemen, as well as a secretary-treasurer . Since 1975
the drivers have had two job stewards. The drivers
maintained a small bank account used for general pur-
poses, out of which they purchased gifts of management
and flowers for the ill. The bank account was not in the
name of the association but rather, in the name of former
driver Charlie Morgan, who initially opened and man-
aged the account. Howell said in August 1979 dispatcher
David Alexander told him he had heard that Respond-
ent's drivers were going to be replaced by Rent-a-Driv-
ers. Howell also testified that he had been told by a
fellow driver over a period of months, that Rent-a-Driv-
ers would tell Service Merchandise drivers over their
CB radios that Rent-a-Drivers were going to take their
jobs; and that in August 1979, Branch Manager Donavan
of Wilco told him about rumors that Rent-a-Drivers
were going to replace Service Merchandise drivers.
Howell said he was also told about the same rumor prior
to April 14, 1979, by Andy Cox of Wilco.
Additionally, a composite of the corroborated, undis-
puted, and credited testimony of record established that
pursuant to Jimmy Howell's request, local driver and
committeeman Frank Rice requested Respondent's distri-
bution office receptionist, Debra Holland, to type a
memorandum . The memorandum was addressed to "All
Service Merchandise Drivers," from "Jimmy Howell,
President of Drivers," advising drivers of a meeting at the
distribution center at 9:30 a.m. on September 29, 1979.
After typing the memorandum, Holland took it to Ware-
house Manager Henry Mitchell for inspection' and 'per-
mission to type and make copies. " Mitchell read it and
told Holland, "Whatever you can do for them, do it,
that's fine." Holland made 25 copies and gave them to
Rice.
The record shows that Jimmy Howell's previous testi-
mony is essentially corroborated by the testimony of
James Carnahan and other witnesses, with respect to his
meetings with Distribution Director Jim Randolph and
Respondent's other managerial officials, Carl Mackey
and Ken Barnard at some time during the years 1974 to
1979 , during which meetings they discussed drivers'
complaints, pay, and working conditions; that in a similar
meeting in 1975 with management (Jim Randolph), he
and other drivers discussed the type of -equipment, driv-
ers' pay, how the Respondent was growing, and the in-
creased number of drivers, which produced increased
driver problems; and that' during a like meeting in the
spring of 1975 with Carl Mackey, vice president of'per-
sonnel, the drivers discussed driver disability insurance.4
Based on the foregoing credited testimony, I conclude
and fmd that about 1973 a managerial official, Jim Ran-
dolph, suggested to truckdriver James Carnahan that the
drivers select a spokesman to coordinate driver griev-
ances with management ; that the drivers, on the recom-
mendation of Manager Jim Randolph, selected truckdriv-
er James Carnahan, who was succeeded by driver Jimmy
Howell; that since 1973 Respondent has met with the
designated spokesman of the drivers and at times with
the drivers, and discussed terms and conditions- of em-
ployment (wages, job security, disciplinary action against
drivers, disability insurance, individual driver grievances,
and driver rules and regulations proposed by manage-
ment) ' of its local and over-the-road drivers; -that Re-
spondent met with a committee of employee truckdrivers
to discuss the above-described terms and condition of
employment at various periods through the years 1973 to
1979 and actually reached negotiated -agreements with
them on rules and some other issues; that in October
1979, Respondent's vice president, Leban Hilton, in-
structed spokesman Howell to reassure the driver em-
ployees that Respondent had no intention of replacing
them with contract drivers which in fact Howell did;
that the record is unequivocally clear that Respondent
continued to recognize the representative function of the
designated spokesman of the driversx and that Respond-
ent was fully aware, through Distribution Director Larry
Koshman, as late as October 20, that the drivers were
circulating a notice for a drivers' meeting.
I also conclude and find that the truckdrivers' spokes-
man and their committee, as well as their so-called asso-
ciation, constituted a labor organization within the mean-
ing, of Section 2(5) of the Act; and that Respondent rec-
ognized the spokesmen, the drivers' committee, and the
association , as the collective-bargaining representatives
of its truckdriver employees. NLRB v. Cabot Carbon Co.,
360, U.S. 203,(1-957), and Walker Process Equipment, 163
NLRB 615 (1967).
I further conclude and fmd on the uncontroverted evi-
dence of record, that Respondent's over-the-road and
local drivers share the same interest and common con-
cerns, as distinguished from the warehouse employees;
that the work functions of the local drivers are similar
and related to the functions of the over-the-road drivers;.
that neither group of drivers performs any loading or un-
loading functions, although the local drivers report to
dispatchers for employee benefits; that Respondent's
warehouse employees do not engage in truckdriving
duties but perform warehouse functions, including load-
ing, unloading , storing, locating, and preparing merchan-
dise for shipment; that the warehouse employees are su-
pervised by authority separate from the authority super-
vising local and over-the-road drivers constitute an ap-
propriate unit for purposes of collective bargaining, as al-
leged in the complaint herein. Gogin Trucking, 229
NLRB 529 (1977). Additionally, because the record
shows Respondent's dispatchers possess and exercise au-
thority to hire new drivers, and Respondent has treated
4 Because the testimony of Jimmy Howell and James Carnahan is con-
sistent and corroborative of each others' testimony, and I was persuaded
by their demeanor on the stand that they were testifying truthfully, I
therefore credit their testimony
194 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
them as a part of management , I also find that the dis-
patchers have been properly excluded from the unit rec-
ognized by Respondent.
James Carnahan further testified that as early as 1972,
Respondent 's president, Raymond Zimmerman, ap-
proached him and said a union-an outside bargaining
agency-or International union had been discussed and
"that if there was any word ever mentioned about any of
the drivers joining a union he would close the doors of
the warehouse and ship directly to the showroom, that
he could do without drivers." Thereafter, every time a
driver mentioned union, Carnhan said he would repeat
Zimmerman's statement to them. Carnahan further stated
that he had spoken to Distribution Director Randolph
about bringing in a union and the latter reminded him
about what Zimmerman had said ; and that Respondent
could cut costs by not being union and the drivers were
not being sensible by talking union . He said that as late
as 1979 , Respondent Randolph asked him had he heard
any union talk and urged him to tell the drivers that they
did not need a union.5
On September 29 the drivers initially met with Re-
spondent's vice president of personnel, Mitchell, during
which time Bobby Woodall informed Howell and the
drivers that Teamsters Local 480 advised him that the
drivers were referred to Teamsters Local 327 . Woodall
testified that his report was given in the presence of
Mitchell and that Howell informed the drivers that they
"could either go to 327 or stay with the Company
Union."
Howell as well as Woodall and other drivers essential-
ly testified that during the first portion of the September
29 'meeting when only Vice President Mitchell was
present, he told Mitchell the drivers were still hearing
rumors that Rent -a-Drivers were going to take their jobs
as regular drivers for Respondent ; that the drivers were
dissatisfied with the 1979 rules and, as a result, were be-
coming interested in affiliating with Teamsters Local
480; and that Howell asked the drivers to give the Re-
spondent and the drivers ' organization another chance,
and the drivers voted to remain nonaffiliated with the
Teamsters . Mitchell then stated that he was not aware
that things were that serious . He assured the drivers that
as far as he knew , the Rent-a-Drivers would not get their
jobs, and that he would speak to Zimmerman personally,
and that management was willing to sit down and work
with the drivers in any way that it could.
Subsequently , Howell sent for the other company offi-
cials, Blatt, Levy, Hilton , and Zimmerman . After their
arrival, Howell introduced Woodall as a representative
of the drivers' committee and Howell informed President
Levy that the Rent-a-Drivers were being dispatched
ahead of the regular drivers , and the drivers were still
hearing rumors that they would be replaced by Rent-a-
Drivers and were talking about affiliating with the
5 I credit Carnahan's testimony because former Distribution Director
Randolph did not appear and testify and Respondent gave no explanation
for his nonappearance Nor did Respondent deny Carnahan 's account.
Moreover, not only was I persuaded by Carnahan 's demeanor that he
was telling the truth but his account is consistent with the recorded evi-
dence of Respondent 's intentions and motive to avoid unionization of its
drivers
Teamsters . He discussed the insurance and drivers' prob-
lems and told Levy Respondent could recognize the
drivers as a bargaining agent or it could bargain with
outside representatives . Most of the truckdriver witnesses
testified , with virtually no dispute, that at that juncture,
Levy replied : "you're holding a loaded gun to my head,
this Christmas rush is facing us all"; "if you 'll give us
about 90 days until after we get this Christmas rush over
... everything is so hectic now . . . we 'll sit down and
negotiate with you , and try to work these problems out."
Howell's testimony in this regard is corroborated by the
testimony of Bobby Woodall . The virtually undisputed
and credited testimony of Woodall and other truckdriv-
ers show that Howell then called for a show -of-hands
vote among the drivers whether to accept Levy's request
for 90 days , and the drivers approved the request. The
driver witnesses further testified consistently , and essen-
tially without dispute, that Vice President Levy told the
drivers "the company drivers would never be replaced
by Rent-a-Drivers or anybody else as long as he owned
the company and he didn 't intend or plan on selling it."
Howell further testified that the drivers agreed to
accept Levy 's request that the drivers and management
would meet and discuss their differences after the Christ-
mas rush . However , he thereupon requested President
Zimmerman to tell the drivers that Rent-a-Drivers would
not take their jobs. Zimmerman told the drivers that as
long as he was president of Service Merchandise, no
Rent-a-Drivers would ever take their jobs. Carnahan and
former driver Charles Morgan corroborated Howell's
testimony in this regard.
On the contrary , Respondent Vice President Mitchell
testified that when he first entered the room on Septem-
ber 29, Howell was addressing the drivers and he imme-
diately introduced Mitchell. Drivers proceeded to ask
him questions about insurance , pay, etc. Howell then
told the drivers what they wanted to discuss was bidding
on their own vehicles, being dispatched by seniority, and
being paid by hub-mileage. He asked the drivers if they
did not get those things, how many of them would want
to form an in-house union and collect a couple of dollars
a month dues, and try to organize the rest of the distri-
bution center. He asked for a show of hands and there
were a few hands raised. Then he asked the drivers
would they want to go outside and get the Teamsters,
and a few hands were raised . Thereafter, other company
officials, Levy, Blatt, and others entered the room.
Jimmy Howell asked Vice President Levy, "Do you rec-
ognize me as a spokesman for the truckdrivers?" and
Levy said something to the effect that Howell was hold-
ing a loaded gun to his head; that this was the Christmas
season, they did not want to do that.
Howell also asked , Levy about the drivers being dis-
patched by seniority and Levy said, "This time of year
we never dispatch by seniority, we never have in the
past, it is, our busy season and the priority is to get the
merchandise to the units." However, he agreed to sit
down after Christmas and talk about these questions with
Howell and the drivers. Howell asked about bidding on
their own vehicles and Levy told him, "No," that he
would not okay a system of bidding on vehicles. Howell
SERVICE MERCHANDISE CO. 195
then asked could they be paid by hub-mileage as opposed
to household movers guide, and ,Levy-said, "No," that
was not competitive. Zimmerman entered the room a
few minutes before they adjourned and one driver asked
him would he assure them that they had a job. Zimmer-
man said, that as long as he was president and service
merchandise operated a private fleet, the drivers would
have jobs.6
C. Additional Assurances by Respondent that Drivers'
Jobs Were Secure
Bobby Woodall was previously employed by, Gateway
Transportation Company until he was laid off in ' March
1979. On July 118, 1979, he was hired as a driver by Re=
spondent. On October 4, he received an offer of recall
by Gateway Transportation. He was also informed by an
employee of Rent-a-Drivers that the drivers employed
by Rent-a-Drivers would replace Respondent's dri vers
around the first of the year. Having received that infor-
mation , Woodall testified that he went to Blatt's office
and informed him about his Gateway offer as well as the
rumors regarding the replacement of Respondent's driv-
ers. He emphasized-that he had to know something be-
cause he could not lose out on employment at Gateway
and Service Merchandise too. Blatt replied, "That's not
going to happen; you're doing a good, job . . . you're a
new man,, you're doing an especially good job . . . stay
with us . don't go back to Gateway." "I'm leaving
with you :.. if anybody knew about this, I'd have to
know." During the same conversation, Woodall said
Blatt said, "[w]hen we first started ... this talk about
the Union had them [sic] shook-up a little, but ... ev-
erything has settled down, we are over that now .. ev-
erything has quieted down."
As pointed out by the General Counsel, the corporate
director of traffic and transportation, Wayne Blatt, ap-
peared and testified in the instant proceeding, but he did
not deny or contradict Woodall's testimonial account of
the October conversation. Woodall testified that based
on the assurances he' received from Blatt , he did not
accept the offer of recall from Gateway Transportation.
I therefore credit Woodall's account of the conversation,
not only because I was persuaded by' his demeanor that
he was telling the truth, but because his account also co-
incides with the credited evidence of record.
James Carnahan further testified that as early as 1972,
Respondent-, Raymond Zimmerman approached him and
said that a union-an outside bargaining agent-or. Inter-
national union had been discussed and told Carnahan
"that if there was any word ever mentioned about any of
the drivers joining the Union, that he would close the
doors to the warehouse and ship directly to the show-
6 Although I credit certain aspects of Vice President Mitchell's testi-
mony about-the September 29 meeting, I do not credit his version of
Howell's question on which drivers voted to remain a company orgamza-
hon, and Howell's request for management 's recognition of Howell as
representative of the drivers. I was not persuaded by Mitchell's demeanor
because he was selective in answering questions- adverse to Respondent's
interest. On the contrary, I was persuaded by the credited testimony of
Howell, Woodall, ,and Carnahan ' that their , account of the discussion was
truthful and accurate because their accounts were consistent and corrobo-
rated by each of them. Mitchell's account was not substantially corrobo-
rated by convincing management witnesses.
room; that he could do without the drivers." Thereafter,
every time a driver mentioned union, Carnahan said he
would repeat Zimmerman's statement to them. Carnahan
also testified that he talked to Distribution Director Ran-
dolph about bringing in a union and the latter reminded
him about what Zimmerman had said; and that Randolph
also said Respondent could cut cost by not being union-
ized; that the drivers were not being sensible by talking
union.?
The undisputed evidence of record further shows that
during the week of October 17, 1979, driver Jimmy
Howell was assigned to southern Florida. He returned to
Nashville, Tennessee, on Saturday October 19, 1979: The
evidence is quite conflicting whether Howell returned to
Nashville on his own' volition, or whether he was called
long distance by Respondent Vice President Laban
Hilton and requested to return to Nashville to meet with
Hilton and Distribution Director Wayne Blatt on Octo-
ber 19 , as Howell - so testified . Although Howell ap-
peared confident in the accuracy of his testimony with
respect to all matters except the date on which he re-
ceived a long-distance call and the date on which he re-
turned. This was the only phase of his testimony on
which he appeared confused. I do not attribute any sig-
nificance to the conflict whether he returned on October
17, 18, or 19 because I was otherwise persuaded by his
demeanor and the sequence of events that said conflict in
dates was an honest mistake and not an- effort to falsify
any of his testimony against Respondent. In any event, it
would appear from the events which follow, according
to Howell's testimony, that Leban Hilton did call and re-
quest Howell to return to Nashville.
More specifically, during the meeting with Blatt and
Hilton, Howell testified that Hilton told him the rumors
had popped up again regarding the Rent-a-Drivers taking
their jobs, and he asked Howell had he heard what Zim-
merman had said to him, and Howell replied in the af-
firmative. Thereupon; Howell stated that Hilton instruct-
ed him to distribute a memo informing the drivers that
Zimmerman had no intention of replacing them with
Rent-a-Drivers so long as he- was president. He said
Hilton also told him that he should contact as many
drivers as possible, in person and by telephone.8
Pursuant to the' instructions of Vice President Laban
Hilton, driver Jimmy Howell had the following memo-
randum (G.C: Exh. 18) typed by Debra Holland, secre-
tary to Distribution Director Larry Koshman, who read
° I credit Carnahan's uncontradicted testimony because it is consistent
with Respondent 's manifested desire to avoid unionization of its truck-
drivers as found mfrs.
8 I credit Howell's testimony in these respects because it is consistent
with all of the evidence of record, clearly inferring that Respondent
made a,subtle, skillful, and sophisticated effort to dissuade its truckdriver
employees from affiliating with organized labor This conclusion is par-
ticularly supported by the essentially undisputed testimony of truckdriver
Witnesses, as well as some management-witnesses, that high-level manage-
ment officials-(Randolph, Hilton, and Mitchell) urged the truckdnvers to
continue under their present arrangement with management because their
jobs were secure, while some of the officials (Mitchell and Blatt) knew,
or should have known, that Respondent was not only in the planning
stage 'in June and September, but in October was in the-process of con-
verting its transportation operation to a contract carrier arrangement
196 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and approved Holland's typing it and, pursuant to How-
ell's directions, distributed the following to the drivers:
On October 19, 1979 a meeting was held in the
office of Mr. Don Sabin to once again reemphasize
the fact that Mr. Zimmerman does not intend to ever
replace any regular drivers with leased drivers from
any Company.
In the future, regardless of any rumor you may hear
concerning this matter, simply disregard it.
James Carnahan further testified that as early as 1972,
Respondent's President Raymend Zimmerman ap-
proached him and said that a union-an outside bargain-
ing agent-or International union had been discussed and
Zimmerman told him, "that if there was any word ever
mentioned about any of the drivers joining a union he
would close the doors of the warehouse and ship directly
to the showroom, that he could do without drivers."
D. Conferences and Negotiation Sessions to Convert
Respondent's Private Driver Operation to a Contract
Carrier Service
Lucius W. Carroll III, vice president of Coble Sys-
tems, Inc., testified that he had been dealing in lease ar-
rangements with Respondent for 5 years; that -on March
27, 1979, Blatt called him and Carroll told Blatt that in
his judgment, Respondent needed help in its transporta-
tion system because of its rapid growth. Carroll met with
Blatt on that same day and again in April and talked
with him by telephone on a fairly regular basis from
March to December 1979, with reference to selling Re-
spondent's contract carrier service. In April he told Blatt
that the bid Respondent had accepted with Wilco was
higher than what Leasco had offered. In June 1979 Car-
roll testified that Respondent asked if Leasco could pro-
vide storage space for its trucks. - Leasco provided the
space to Respondent at Fessler Park in June or July
1979. Thereafter they held considerable discussions in
Blatt's office and, ultimately, had a meeting including an
official of Respondent, Schenk, in early August.
In the early August meeting, as well as in subsequent
meetings, Carroll testified he pointed out to Respondent's
management that the economic advantages, administra-
tive simplicity, and convenience of contract carrier serv-
ice over the private driver system of Respondent. In
September and October 1979 he was meeting with Re-
spondent's management (Blatt, Hilton, and Schenk)
almost on a weekly basis for such discussion. He held ad-
ditional meetings with Schenk and Blatt in October, con-
tinuing into November, in selling them the idea of con-
tract carrier service. In early November 1979 Carroll
said he met at Leasco's office with Dick Schenk and
Laban Hilton for the Respondent, and Vill Pendry and
Neely Coble for Leasco. The meeting was held at
Leasco to preserve the confidentiality' of the discussions.
He received permission from Schenk to buy out the lease
of Wilco Truck Rental, which he did in November 1979.
He saw General Counsel's Exhibit 10' sometime around
November 7, 1979. Some 50 trucks were put into the
Leasco system and in late November 1979 he went to
Leasco's attorneys for a contract for contract carrier
service. The contract carrier arrangement was -consum
mated, signed, and delivered in the office of Bill Coble in
early December 1979.
Respondent's Vice President Robert Mitchell testified
that he did not recall any discussion of wages during a
1975 safety meeting with the drivers. However, he said
he surveyed rates of pay by Gensco, Malone, and Hyde,
Inc. and adjusted Respondent drivers' pay in accord
therewith to be competitive. This, he stated, was done
two or three times in the last 5 years. Mitchell said he
first learned about the drivers' association when the
charge in the instant proceeding was filed. In the Sep-
tember 29 meeting Zimmerman said that as long as he
was "president and Respondent had a private fleet, the
drivers would have their jobs."9 When Howell asked if
the drivers could be paid by hub-mileage, Levy said,
"No." He denied that Howell, Carnahan, or any of the
other drivers ever came to him to discuss matters other
than their own private concerns. 10
Hilton testified that he and Blatt decided to pursue the
contract carrier arrangement with management in early
August- 1979. Thereafter, they contacted Schenk of the
financial department and apprised him how Respondent
could save money on backhauls through contract carri-
ers. Schenk then asked Hilton and Blatt to explore the
possibility of Respondent getting out from under its leas-
ing agreement with Wilco and other lease agreements.
He and Blatt then approached the leaseholders in early
September.
At the end of September, Hilton testified he, Blatt, and
Schenk were convinced that contract carrier was the
way to go and they decided to approach top manage-
ment, Zimmerman, Levy, Dick Schenk, and Wayne
Blatt, with whom they met in October 1979. At that time
they explained that Respondent could get out of its lease
agreement , which was substantiated in writing. Zimmer-
man said perhaps Respondent should not be in the -pri-
vate trucking business and directed them to proceed, to
buy out the leases and commence negotiating a lease for
contract carrier with Leasco. They requested the other
companies keep the negotiations secret. Hilton further
testified that during the latter part of November 1979,
Respondent decided to go contract carrier. Hilton testi-
fied that during mid-November 1979, Respondent, was
audited by the Department of Transportation (DOT)
until the end of November 1979. Hilton thereafter
changed his testimony concerning the audit dates from
mid-,November to late November 27, 28, 29, and 30,
1979. Thereafter they met with top management (Blatt,
Levy, Schenk, and Hilton). At that time a DOT repre-
sentative presented the Respondent with a list of viola-
tions revealed by the auditor (R. Exh. 20), which he re-
called was received by Respondent on November 30, as
9 I do not credit Mitchell's testimony in this regard because I was not
persuaded by Ins demeanor that he was testifying objectively, and be-
cause the drivers probably would not have conceded to delay discus-
sions, if Zimmerman 's assurance was conditional on Respondent 's keeping
a private fleet.
10 I do not credit the latter statement by Mitchell because it is incon-
sistent with the general tenor of the evidence of record ,
SERVICE MERCHANDISE CO. 197
the audit was dated. However, another copy of the audit
(R. Exh. 20) is dated December 13, 1979.111
Hilton said Respondent's Exhibit 20 was received
about the same time they decided to switch to contract
carrier service about November 30, 1979.
Some of the factors considered by Respondent in de-
ciding to switch to contract carrier service were as fol-
lows:
i i At the trial Respondent offered what was identified as R. Exh 20
for admission to show that Respondent had considered the substance of
the document in making its decision to switch to contract carrier service
on November 30, 1979. The document (R. Exh 20) was a report of a
DOT investigation revealing Respondent's divers' violations of DOT
regulations , which Vice President Hilton testified Respondent received
on November 30, 1979 The General Counsel objected to its admission
and was overruled Upon further argument objecting to the admission of
R Exh. 20 by the General Counsel and a bench examination of R. Exh
20, it was noted that space 10 on the document, under the topic "Date
Survey Completed," appears a date on which the figures indicating the
month was crossed through with pen or pencil and the figure "I1" writ-
ten above it; that the figures representing the day was apparently re-
traced or changed to appear more like "30"; and that the last figure rep-
resenting the year appears to have been changed or retraced, thereby
currently appearing more like "79 " Although under the topic "Date of
Survey" on pp 2 and 3 of the document, the dates November 27, 28, 29,
and 30, 1979, appear unaltered, neither of such dates, including the appar-
ently altered date at the top of p 1, establishes the date on which Re-
spondent actually received the document (R. Exh 20). On the above rev-
elations, the bench then reversed its ruling overrating the General Coun-
sel's objection, sustained the same, and included R. Exh 20 in a rejected
exhibits file. On the next day of the trial, January 14, 1981, counsel for
Respondent attempted to interrogate Corporate' Director of'Transporta-
don Wayne Blatt about what a DOT official told him regarding some of
the information included in the report (R Exh 20), prior to Respondent's
receipt of the report Both counsel for the Charging Party and the Gen-
eral Counsel objected on the ground that' Respondent was trying to do
indirectly what. it could not do directly through R Exh. 20, or by supple-
menting what is in R . Exh: 20 Their objections were sustained. There-
upon, counsel for Respondent made a proffer of what witness Blatt
would have testified to with respect to what the DOT official told him
prior to submitting the investigative report (R Exh 20), in late Novem-
ber 1979, had Blatt been permitted to testify The court was informed by
counsel for the General Counsel and counsel for the Charging Party that
the particular DOT official, to whom Respondent had reference, was
present in the same building in which this proceeding was being conduct-
ed. Respondent did not deny nor dispute their contentions. However,
none of the counsels for the General Counsel, the Charging Party, or the
Respondent made any effort to call the DOT official as a witness , in spite
of his contended office proximity to the hearing room and his apparent
availability to appear and testify. Having examined the record in view of
the foregoing procedural maneuvers on the part of counsel for respective
patties, I find that the bench erred in sustaining the General Counsel's
objection to the admission of R Exh 20, and I now reverse the ruling
and admit the exhibit for the purpose of revealing and evaluating the al-
teration of its date and the credibility of Vice President Hilton that it was
received by Respondent. Counsel for Respondent proffers that Corporate
Director of Transportation Wayne Blatt would have testified that in a
company meeting in late November 1979, a DOT agent told Blatt and
other company officials that his preliminary audit of Respondent's
records revealed many violations of DOT regulations; that there has been
considerable improvement since Blatt entered Respondent's employ, but
there was a long way to go, and that the agent was simply making Re-
spondent aware of the violations. While such proffer is not, and cannot
be, considered evidence, if it were in fact evidence, I would nonetheless
discredit it for the following reasons
I Vice President Leban Hilton attended the meeting but did not men-
tion the occurrence of such an oral report during his testimony.
2. Respondent appears to have recalled such conversation after its
DOT report (R. Exh 20) was rejected.
3 Respondent failed to call the DOT agent to testify, even though it
appeared convenient for it to do so.
4 Such testimony by Blatt would have been self-serving under the cir-
cumstances, from which it would have been reasonably inferred, was not
true
The number of trips that Respondent made
during the heavy seasons when there was an ab-
sence of backhauls where they could go one way
and would not have to pay that double mileage
charge, thereby eliminating a million and a half
miles and the charges therefor,
Corporate Director of Traffic and Transportation
Wayne Blatt testified that he reported drivers' failure to
turn in logs to Levy. In late April 1979 he recommended
that Respondent redesign the logs and hire compliance
people to properly audit them. Such logs were imple-
mented in August 1979 and an audit clerk was hired and
started work in July 1979. Blatt further testified Re-,
spondent conducted the first record review in the fall of-
1979. His record showed that after review during August
through December 1979, 39 out of 39 drivers had viola-
tions.
Blatt further testified that since May 1979 Respondent
(himself) considered cost analysis of private fleet oper-
ations, which included:
1. Dollars for compliance
2. Equipment
3. Security for parking equipment
4. Fuel
5. Other factors, drivers increasing in number, insur-
ance increase and safety supervisor
6. Motels
7. Phone bills
8. Meals
9. Fixed Cost = Driver's insurance, payroll taxes,
tractor trailer plates, permits, certificates for viola-
tions
10. Piggy-back operations by rail
The biggest cost factor was the empty returns (lack of
backhauls). Blatt corroborated the testimony of Hilton
that they gave their report of a cost study to the top
management in October 1979.
Wayne Blatt further testified that Respondent was
trying to reduce the number of empty carriers because
Liberty charged Respondent round-trip rates, even for
backhauls. He acknowledged that in September and Oc-
tober 1979, Liberty provided guard service, dispatcher
functions, compliance clerks (full time), briefers and de-
briefers, and the washing of equipment (tractors and
trailers), all performed in 1980. In 1980 Liberty took
over the new fleet that Respondent had leased in late
1979; it took over 250 trailers at the outset in December
and then a month or two later it took over an additional
50, increasing the fleet to 300, and increasing the ratio of
trailers to tractors to 6-to-1. Prior thereto the ratio of
tractors to trailers in 1979 was 4-to-1.
According to Blatt, the completed contract for contract
carrier service was December 6, 1979.
E. Respondent's Decision to Terminate its Trucking
Operation
Prior to receiving a written proposal for contract car-
rier service of its merchandise, Richard Schenk, vice
president of finance and administration for Respondent,
198 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
testified he and other company officials (Zimmerman,
Levy, Hilton, and Mitchell) met and decided to termi-
nate the private fleet trucking operation of its business in
preference for a contract carrier arrangement. In his pre-
trial statement, Schenk said their meeting occurred in
mid-October 1979. At trial he testified he could not
recall the date of the meeting but stated it could have
been held either in mid- or towards the latter part of Oc-
tober 1979.
Consistent with the above statement in the affidavit of
Vice President Schenk is the letter dated November 15,
1979, from Leasco Vice President Lucius Carroll advis-
ing Respondent that Leasco could lease certain transpor-
tation equipment to Respondent at specified lease rates.
The letter continued in part as follows:
Leasco would like to also offer an additional option
to your current lease agreement whereby after some
point in time Service Merchandise would like to enter
into a contractual agreement with our Contract Carri-
er Division on a dedicated fleet basis we, would
transfer the units that are on Schedule A with
Leasco Truck Rental over to our Contract Carrier
Division without further costs to Service Merchan-
dise [G.C. Exh. 5].
A subsequent letter was sent to Respondent from Car-
roll on December 3, 1979, which read as follows:
In my letter to you dated November 15, 1979, I
suggested the option of converting your leased fleet
to a dedicated contract carriage operation under the
auspicies of our contract carriage division-Liberty
Contract Carrier.
In response to your inquiry then as to its cost
and, based on preliminary information received
from your people, we would charge 1.18 per mile
based on a guarantee of 5,000,000 miles per year.
Service Merchandise would furnish cargo insur-
ance. While this rate is based on preliminary infor-
mation , we should have completed our analysis in
the next few days. At that time we will present to
you a complete, firm proposal [G.C. Exh. 26].
Schenk acknowledged that he received the above
letter about December 4 or'5, 1979, and that it was the
first written offer for contract carrier services received
by Respondent. The record further shows that another
letter was sent by Leasco Contract Carrier Division, Lib-
erty Contract Carrier, Inc., offering to furnish' Respond-
ent certain equipment and services (G.C. Exh. 4). The
letter quoted specific prices for: mileage , trailers in
excess of 300 feet, tractors in excess of 50, tractors used
inside Nashville, as well as adjustment increases or de-
creases . General Counsel's Exhibit 23(a) shows that Re-
spondent and Liberty Contract Carrier entered into an
agreement to provide Respondent contract carrier serv-
ices on December 21, 1979. Also on that date, Respond-
ent discharged all, except one, of its 40 over-the-road
and city drivers and 1 warehouseman.
The notice given to each driver stated in essence that
"management of Service Merchandise has made the deci-
sion to go out of the trucking business , effective immedi-
ately and has sold its trucking fleet." (G.C. Exh. 12.)
This was the first notice any driver or warehouseman
Blagburn had received from Respondent regarding the
termination of their employment.
F. Comparative Cost of Respondent's Operations in
1979 and 1980
The documentary evidence of the General Counsel
shows that Respondent's total trucking expenses in 1979
were: $600,602,230 of which $979,840 was expended for
lease drivers. Other costs for dispatching and clerical
services totaled $440,439. Administrative -cost totaled
$28,616. Trucking mileage totaled 794,529 miles and pig-
gyback trailers, used in transporting merchandise by rail,
totaled 3566 miles.
Expenditures for 1980 under Respondent's contract
with Liberty Contract Carriers were as follows:
$8,262,000 Transportation Services
Payment for mileage alone totaled $7,382,700. The
contract covered $7,383,602. There was $800,889 spent
for transportation by railroad and common carriers. Rail-
road and common carriers mileage totaled 696,000.
The record further shows that approximately 3 months
prior to Respondent's reaching its decision to terminate
its trucking operations, it entered into an agreement with
Evans Trailer Leasing Company to lease 250 new trail-
ers. The lease was for a term of 60 months. Almost cor-
respondingly, Respondent entered into an agreement
with Wilco Truck Rental, Inc. about June 1, 1979, for
the lease of 25 new tractors, subsequently acquired by
Respondent under terms of a "buy-out" agreement,
which Leasco subsequently acquired under its contract
with Respondent. Schenk testified that the new tractors
were scheduled to arrive in mid-summer 1979, but did
not in fact arrive until November.
As the record has shown previously, communications
and negotiations between Respondent and Leasco contin-
ued in process between June 1, 1979, and mid-November
1979, but that the first comprehensive and complete costs
proposal for contract carrier service was not presented
to Respondent for Liberty services until about December
5, 1979.
G. Analysis and Conclusions
It has been previously found that commencing in or
about 1973 and continuing into late 1979, Respondent
recognized the spokesman for its over-the-road and local
truckdrivers as the designated representative of the driv-
ers. On ' occasion Respondent recognized the drivers
themselves and/or their committeeman for purposes of
redressing driver grievances and bargaining on matters
with respect to wages, trucking equipment, dispatching
assignments , and other working conditions; that, as such,
Respondent's truckdrivers , regardless of the name by
which they were known, constituted a labor organization
within the meaning of Section 2(5) of the Act; and that
Respondent's over-the-road and city truckdrivers consti-
tuted a unit appropriate for collective-bargaining under
Section 9 of the Act as found above.
SERVICE MERCHANDISE CO 199
H. Respondent's Termination of its Entire Truckdriver
Fleet
The above findings bring us to the crucial question
whether Respondent 's termination of its entire comple-
ment of 40 truckdrivers and 1 former driver (warehouse-
man) on December 21, 1979, was in any way motivated
by the drivers' activities protected by the Act. In this
regard, the credited evidence of record shows that since
about 1972 , Respondent was opposed to its drivers affi-
liating with organized labor. At that time President Zim-
merman told drivers if Respondent heard any word
about the drivers joining a union , Respondent would
close its trucking operation and ship its merchandise di-
rectly to the showrooms . However, more recently, in
September 1979, Vice President Leban Hilton urged
driver spokesman Jimmy Howell to dissuade the drivers
from affiliating with an outside union and assured them
that their jobs would not be taken by Rent-a-Drivers. In
a meeting held on October 19, 1979, Howell did urge the
drivers not to join an outside union and assured them, in
response to Hilton's request, that their jobs were not in
jeopardy. Additionally, during a meeting consisting of
drivers and management on September 29, 1979, manage-
ment (Levy, Zimmerman , Schenk, Blatt, and others)
were advised by spokesman Howell that its drivers were
seriously thinking about affiliating with the Teamsters
Union. At that juncture, Vice President Levy said,
"You're holding a loaded gun to my head," reminding
the drivers that Respondent was approaching the Christ-
mas rush season , and requested them to delay bargaining
or discussing their problems , or doing anything about
them (like joining an outside union) until January 1980.
The drivers immediately voted to comply with Levy's
request on his assurance that they were not being re-
placed by Rent-a-Drivers.
Nevertheless , the record shows that almost immediate-
ly after that September 29 meeting, Respondent partici-
pated in weekly meetings in October 1979 with one
Lucius Carroll , a contract carrier service sales agent for
Leasco-Liberty ; that Respondent 's interest became more
comprehensive and its efforts more diligent in pursuing
contract carrier services in October 1979 ; and that ac-
cording to Vice President Leban Hilton, Respondent
more or less decided to go for contract carrier service
during an October meeting when they advised manage-
ment (Levy, Zimmerman, Schenk, Blatt) that Respond-
ent could get out of its contract lease arrangements. Zim-
merman thereupon directed them (Hilton and others) to
buy out the lease.
Respondent continued its discussions with Carroll for
contract carrier service on into November 1979, when it
allegedly received an investigative report (R. Exh. 20)
from the Department of Transportation (DOT) regarding
driver violations of DOT regulations. Respondent con-
tends that it relied on this report in arriving at its deci-
sion for contract carrier service. However , I do not
credit Respondent Vice President Leban Hilton 's testi-
mony that the subject report (R. Exh. 20) was received
by Respondent on November 30, 1979, because the date
at the top of that document was obviously altered. Also,
a duplicate copy of the document (G.C. Exh. 31) is dated
November, 15, 1979, rather than November 30, 1979.
When questioned about this discrepancy, Respondent re-
plied that the second document (G.C. Exh. 31) was
transmitted to another department of -Respondent. More-
over, after Respondent 's Exhibit 20 , was excluded from
admission , counsel for Respondent made a proffer of tes-
timony of Corporate Director of Traffic and Transporta-
tion Wayne Blatt about a preliminary report involving
some of the contents in the document excluded (R. Exh.
20).
Blatt would have testified that the DOT official in-
formed Respondent of numerous driver violations during
a company meeting on or just before November 30,
1979. However, even if the subject of Respondent's prof-
fer had been permitted , I would nevertheless have found
such testimony self-serving and an attempt to support in-
formation in a document, previously excluded and essen-
tially not credible, because if such an oral report had in
fact been given to Respondent prior to November 30,
Respondent failed to call the appropriate witness (the
particular DOT agent) whom the court had been advised
was reasonably accessible and available to testify.
It is clear from the evidence that during the June and
September 1979 meetings with management, spokesman
Jimmy Howell was quite vocal in protesting" Respond-
ent's new proposed rules regulating , driver operations, , in-
dicating that they had an adverse affect on the benefits
and working conditions of the drivers . In September
Howell told management the new rules had so adversely
affected the drivers that they were seriously considering
affiliating with Teamsters 480; and that if conditions did
not improve within a reasonable time, they would affili-
ate with the Teamsters Union.
Although the record shows that Respondent had pre-
viously made less comprehensive cost studies prior to
June 1979, there is no showing that any, top managerial
discussions were held and/or that any action was taken
by management based on such studies. On the contrary,
it is profoundly clear that Respondent's efforts in obtain-
ing cost data and holding management meetings to dis-
cuss matters relevant to a change to contract carrier
service were not so diligent after the September 29 meet-
ing until a first comprehensive offer for contract service
was received by Respondent on December 5. Thereafter,
a contract for carrier service was consummated by Re-
spondent on December 21, 1979, not quite 3 months'sub-
sequent to the heated meeting with its drivers on Sep-
tember 29, 1979.
When Respondent was asked to produce the working
papers involving cost proposals which led up to its cru-
cial decision, Respondent stated that they were discarded
prior to this proceeding . I do not credit the Respondent's
reply in this regard because I find it difficult to conceive
any huge and expanding corporation, comparable to Re-
spondent , entering into a business undertaking of such fi-
nancial magnitude as contract carrier service on what
Respondent describes as working papers. I cannot imag-
ine that the "working papers" were of such little signifi-
cance or that they were discarded within less than 1, year
subsequent to the undertaking.
Although the Respondent contends its cost studies in-
dicated it would be able to carry out its transportation
200 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
operations at a cheaper rate under a contract carrier ar-
rangement , the evidence shows that under Respondent's
1980 contract carrier arrangement , Respondent transport-
ed merchandise 281,507 miles more than it did in 1979, at
an additional cost of $2,460,653. Consequently, when the
record evidence of the time within which Respondent
completed the complicated business transaction of
switching from a private fleet to contract carrier service,
on the heels of the very heated meeting with its drivers
on September 29, 1979, it would be an understatement to
characterize its decision to convert as anything less than
precipitous. Moreover, when Respondent's antiunion ef-
forts and the veil of secrecy with which it wrapped its
negotiations for contract carrier service is considered,
along with all the foregoing findings , the conclusion is
inescapable, and I so find, that Respondent's unilateral
decision to discharge its drivers and convert to private
contract carrier service was substantially motivated by
its truckdrivers' group support and their contemplated
union activity in violation of Section 8(a)(3) and (1) of
the Act. See Tennessee Cartage Co., 250 NLRB 112
(1980), and National Family Opinion, 246 NLRB 521
(1979), appropriately cited by the General Counsel.
Although Respondent contends it had been consider-
ing cost studies of its transportation operation for several
months prior to September 29, 1979, the record is barren
of any tangible and probative evidence that Respondent
gave any serious consideration to converting its private
trucking operation to a contract carrier arrangement
until after the September 29 meeting . By its own ac-
knowledgement , Vice President Hilton and Director of
Transportation Blatt did not meet with top management
(Schenk) until early October 1979, when they were di-
rected by Schenk to see if Respondent could get out of
its lease agreements. Under these circumstances, Re-
spondent has -failed to demonstrate that it contemplated
or planned to abolish its private driver fleet and enter
into a contract carrier arrangement until after it learned
on September 29, 1979, that its truckdrivers were seri-
ously considering affiliating with organized labor (Team-
sters). Consequently, Respondent has also failed to show
that its switch to contract carrier service and its termina-
tion of all its drivers were motivated by economic con-
siderations . Its conduct in not doing so was in violation
of Section 8(a)(3) and (1) of the Act. Wright Line, 251
NLRB 1083 (1980), and Weather Tamer, 253 NLRB 293
(1980).
I. Respondent's Unilateral Decision to Abolish its
Private Driver Operation Without Notice to its Drivers
or Their Spokesman
As found above, since about 1973 through most of
1979, Respondent has recognized and has bargained with
its driver spokesman, or the drivers themselves, and it is
obligated to continue such bargaining relationship be-
cause no question has been raised about the majority
status of the drivers. In fact, in the absence of such evi-
dence, majority status is presumed. Nevertheless, as Re-
spondent acknowledged, it unilaterally decided and in
fact terminated its driver employees without discussing
the effects of its decision on them and without notifying
their spokesman or the drivers themselves of its decision
to do so. In fact, the evidence shows that not only did
Respondent fail to notify the drivers of its decision, but it
made a deliberate effort to conceal its plans and its deci-
sion and denied it had such plans or had made such a de-
cision when spokesman Howell, driver Woodall, and
other drivers inquired about the validity of rumors of
such a decision. Because abolition of private drivers af-
fected conditions of drivers' employment, such action
was included within the meaning of "terms and condi-
tions of employment" of unit employees. Respondent
therefore was under an obligation to bargain with its
drivers about such decision and terminations, even if it
were in fact motivated by economic considerations. By
failing to do so, Respondent violated Section 8(a)(5) and
(1) of the Act. Ozark Trailers, 161 NLRB 561 (1966), and
Brockway Motor Trucks, 230 NLRB 1002 (1977).
Although Blagburn worked in the warehouse because
of his driver violations, he was a truckdriver receiving
drivers' pay and was evidently considered a driver by
Respondent when it discharged him, along with the driv-
ers, on December 21, 1979. All other warehouse workers
were laid off for about 30 days. For all practical pur-
poses, Blagburn is found to be a driver.
It is amply shown by the record that Respondent is a
rapidly growing and economically thriving business. It is
likewise shown that Respondent expended $2 million
more for transportation during the first three quarters of
1980 than it did during the year 1979, even though it had
switched to contract carrier service. Respondent can re-
establish its private trucking operation by immediately
cancelling its current agreement with Liberty Contract
Carrier or, alternatively, commence phasing in its former
private trucking arrangement by leasing trucking equip-
ment and reemploying its terminated truckdrivers until
the current contract with Liberty Contract expires. It
would appear that, in either event, Respondent would
not be subjected to economic hardship, because the
record shows it now expends more for transportation
than it did under its prior operation. This is especially so
in view of the high probability that Respondent's growth
or expansion has continued since the date of the record
financial data herein. Blue Grass Provision Co., 238
NLRB 910 (1978).
Order Disapproving Service Merchandise, Inc., and
Service Merchandise Drivers Association's
Application for Approval of the Proposed
Settlement in Case 26-CA-8333, Withdrawal of the
Complaint, and Close of the Case
The hearing in the instant proceeding commenced on
November 17, 1980, at 11 a.m. The parties engaged in
settlement discussions during the early part of which
they advised me that they had reached an agreement in
principle. After approximately 4-1/2 hours, I was ad-
vised by the parties that 'their efforts to achieve a settle-
ment had failed and they were ready to litigate. After 4
days of trial, the proceeding was adjourned on Decem-
ber 1, 1980, and the parties were urged by me to contin-
ue settlement efforts during the recess. The trial resumed
on December 1, 1980, and adjourned on December 3,
1980, until January 12, 1981. Again the parties were en-
SERVICE MERCHANDISE CO.
couraged to continue their settlement efforts. Finally, the
trial concluded on January 14, 1981, and counsel for the
respective parties were given until March 23, 1981, to
submit briefs in the instant -matter . Pursuant to request of
counsel for the General Counsel, the time for submitting
briefs was extended to April 8, 1981.
Subsequently , pursuant to the request of counsel for
the Charging Party, the time for submitting briefs was
extended to May 5, 1981 . The time `for submitting briefs
was further extended to May 20, 1981, on the request of
counsel for the Respondent . Nevertheless , about April
27, 1981 , counsel for Respondent requested , on behalf of
Respondent and Charging Party, that the time for filing
briefs be extended to May 25, 1981 , because Charging
Party and Respondent had agreed , in principle , to a set-
tlement and needed the additional time to work out de-
tails. However, owing to the posture of this case, the
prior unsuccessful efforts by the parties to achieve a set-
tlement, and the several extensions previously granted
for filing briefs, I nevertheless extended the time for
filing briefs to May 13, 1981, to allow some time to work
out details of a settlement . On May 11, 1981, Respond-
ent's brief was received by me.
On June 8, 1981 , I received the joint application of
counsel for Respondent and counsel for Charging Party,
dated June 4, 1981, proposing settlement of the instant
case on " several conditions , contingencies , provisos, as-
sumptions , and presumptions , enumerated in the pro-
posed lump-sum settlement , herein identified and admit-
ted into the record as Administrative Law Judge's Ex-
hibit 1. Several discriminatees did not join in the pro-
posed settlement which was not computed in accordance
with the Board's backpay formula. Neither counsel for
the General Counsel nor the Regional Director for
Region 26 participated in the recent settlement discus-
sions or the preparation of the proposed settlement. On
June 24, 1981, I received counsel for the General Coun-
sel's motion in opposition to Respondent and Charging
Parties' application for approval of the proposed settle-
ment, withdrawal of the complaint herein, and closing
the case.
The parties have had ample time to prepare a firm,
fair, unconditional , and unequivocal settlement agree-
ment, in accordance with Board settlement procedures,
and to work out satisfactory and just details of such an
agreement . Moreover, if all the contingencies , provisos,
assumptions, and presumptions , and all parties affected
thereby, are hereafter made so satisfied , and such agree-
ment does not abridge any provisions or the spirit of the
Act, there is nothing to prevent the parties from actually
achieving a settlement which can be readily approved
subsequent to the issuance of the judge's decision herein.
Therefore, from my examination of the proposed settle-
ment, the several conditions , contingencies, provisos, as-
sumptions, and presumptions appear to be of such a sig-
nificant nature and number, that I am prevented from
fully comprehending and interpreting the proposal as a
firm, just, unequivocal, and unqualified settlement agree-
ment, regardless how well intentioned the parties. More-
over, I find merit in the General Counsel' s motion in op-
position to the proposed settlement.
201
Accordingly, under the above circumstances, I am
persuaded by the proposed settlement (ALJ Exh. 1), as
prepared in its current form, that it should not, and it is
not, approved. Withdrawal of the complaint is denied,
and my decision is issued forthwith.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES
UPON COMMERCE
The activities of the Respondent set forth in section
III, above, occurring in connection with its operations
described in section I, above , have a close, intimate, and
substantial relationship to trade, traffic , and commerce
among the several States and tend to lead to labor dis-
putes burdening and obstructing commerce and the free
flow of commerce.
V. THE REMEDY
Having found that Respondent has engaged in certain
unfair labor practices within the meaning of Section
8(a)(3) and (1) and Section 8(a)(5) and (1), I shall recom-
mend that it be ordered to cease and desist therefrom
and take certain affirmative action designed to effectuate
the policies of the Act.
It having been found that Respondent discriminatorily
abolished its private trucking operation and terminated
all its local and over -the-road truckdrivers and a former
driver warehouse worker because the drivers were sup-
porting their drivers' association and were considering
affiliating with the Teamsters Union , in violation of Sec-
tion 8(a)(3) and (1) of the Act; and that Respondent,
without notifying or discussing the effects of its decision
on its unit drivers , unilaterally abolished its private
trucking operation and terminated all its drivers and a
former driver/warehouse worker , without notifying or
bargaining with the drivers ' association , or the group
consisting of its drivers , concerning its decision to termi-
nate its private trucking operation and to discharge all
local and over-the-road drivers, in violation of Section
8(a)(5) and (1) of the Act , the recommended Order will
provide that Respondent reestablish its private trucking
operation and reinstate all its drivers, including ware-
house worker Blagburn , who were terminated on De-
cember 21 , 1979, and make them whole for any loss of
earnings within the meaning and in accordance with the
Board 's decision in F. W. Woolworth Co., 90 NLRB 289
(1950), and Florida Steel Corp., 231 NLRB 651 (1977),12
except as specifically modified by the wording of such
recommended Order.
Because of the character of the unfair labor practices
found, the recommended Order will provide that Re-
spondent cease and desist from or in any other manner
interfering with, restraining , or coercing employees in
the exercise of their rights guaranteed by Section 7 of
the Act. NLRB v. Entwistle Mfg. Co., 120 F .2d 532, 536
(4th Cit. 1941).
On the basis of the above findings of fact and on the
entire record of this case, I make the following
12 See generally Isis Plumbing Co, 138 NLRB 716 (1962),
202 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUSIONS OF HAW 4. By discriminatorily terminating the employment of
all its local and over-the-road drivers, including a former
driver/warehouse worker, on December 21, 1979, Re-
spondent violated Section 8(a)(3) and (1) of the Act.
5. By failing to notify and bargain with the group con-
sisting of its drivers, Service Merchandise Drivers Asso-
ciation, concerning its decision to terminate its private
trucking operation and to discharge its local and over-
the-road drivers, Respondent violated Section 8(a)(5) and
(1) of the Act.
6. The aforesaid unfair labor practices affect commerce
within the meaning of Section 2(6) and (7) of the Act.
[Recommended Order omitted from publication.]
1. Service Merchandise Company, Inc. is an employer
engaged in commerce within the meaning of Section 2(6)
and (7) of the Act.
2. Service Merchandise Drivers Association is, and has
been at all times material herein, a labor organization
within the meaning of Section 2(5) of the Act.
3. Respondent has at all times material recognized the
association or group consisting of its drivers and their
spokesmen as the bargaining representative of the em-
ployees of Respondent employed in a unit consisting of
all local and over-the-road drivers.