Smc, Inc.

National Labor Relations Board - Board Decisions

Nov 30, 1987

286 N.L.R.B. 1291 (N.L.R.B. 1987)

SMCO, INC. 1291
SMCO, Inc. and its wholly owned subsidiaries RCA
Truck Lines, Inc. and Georgia Southern Trans-
portation , Inc. and Highway and Local Motor
Freight Employees, Local No. 667, affiliated
with International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of
America. Case 26-CA- 11172
30 November 1987
DECISION AND ORDER
BY MEMBERS JOHANSEN, BABSON, AND
STEPHENS
On 19 March 1986 Administrative Law Judge
Lawrence W. Cullen issued the attached decision.
The Respondent filed exceptions and a supporting
brief, and the General Counsel filed a brief in sup-
port of the judge's decision.
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 briefs and has
decided to affirm the judge's rulings ' and conclu-
sions, to modify the remedy,2 and to adopt the rec-
ommended Order.
In 1985 the Respondent discharged the union-
represented drivers at its Memphis , Tennessee
trucking terminal and subcontracted the drivers'
work to an independent cartage company and inde-
pendent owner-operators. The judge found that by
earlier threatening to take this action, if the Mem-
phis terminal employees did not rid themselves of
the Union, the Respondent violated Section 8(a)(1)
of the Act. He also found that the Respondent dis-
charged the drivers and subcontracted their work
for discriminatory reasons and without bargaining
with the employees' collective-bargaining repre-
sentative about the decision or its effects on em-
ployees, and thereby violated Section 8(a)(3), (5),
and (1) of the Act. He further found that by there-
after withdrawing recognition from the bargaining
representative, the Respondent violated Section
8(a)(5) and (1) of the Act. We adopt the judge's
conclusions that the Respondent violated Section
I The Respondent has excepted to some of the judge's credibility find-
ings The Board 's established policy is not to override 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), enfcl. 188 F 2d 362 (3d Cir 1951)
We have carefully examined the record and find no basis for reversing
the findings.
8 In accordance with our decision in New Horizons for the Retarded,
283 NLRB 1173 ( 1987), interest on and after 1 January 1987 shall be
computed at the "short-term Federal rate" for the underpayment of taxes
as set out in the 1986 amendment to 26 U S.C § 6621 Interest on
amounts accrued prior to 1 January 1987 (the effective date of the 1986
amendment to 26 U S.C § 6621) shall be computed in accordance with
Florida Steel Corp, 231 NLRB 651 (1977).
8(a)(1) by threatening to subcontract work and vio-
lated Section 8(a)(5) by withdrawing recognition
from the Union. For the following reasons, we
agree with the judge's conclusions that the Re-
spondent by discharging its employees and subcon-
tracting their work without bargaining with the
Union violated Section 8(a)(3), (5), and (1).
I. FACTS3
A. Background
RCA Truck Lines, Inc. (RCA), Georgia South-
ern Transportation, Inc. (GST), and SMCO, Inc.
(created in 1984 as a holding company for RCA
and GST) is a single employer within the meaning
of the Act. Operating through RCA and GST, the
Respondent transports freight and commodities in
the Southeastern United States.
The Respondent opened its first RCA terminal in
Atlanta, Georgia, in 1946, then shortly afterwards
opened another terminal in Chattanooga, Tennes-
see. Since the early 1950s the drivers at the two
RCA terminals have been represented by Team-
sters locals and have been covered under the
Teamsters national master freight agreement pursu-
ant to successive contracts between the Respondent
and the locals.
More recently the Respondent established termi-
nals in Birmingham, Decatur, and Montgomery,
Alabama; Calhoun, Georgia; Tupelo, Mississippi;
and Knoxville, Memphis, and Nashville, Tennes-
see.4 Rather than directly operating these termi-
nals, the Respondent had agreements with inde-
pendent cartage agents to provide local pickup and
delivery of the Respondent's freight.5 The cartage
agents employed their own drivers, used their own
tractors, and owned or leased the terminal facili-
ties.
In 1979, after the cartage agent in Decatur began
to experience difficulties, the Respondent pur-
chased the Company and continued the agent's
trucking operations under a new name, Georgia
Southern Transportation. The Respondent replaced
independent cartage companies with its own oper-
ations under the GST name in Birmingham in 1980,
Memphis in 1983, and Montgomery in 1984.
At its GST locations the Respondent owns or
leases the terminal space under its RCA name and
provides RCA trucks. The local (city) and line-
haul (over-the-road) drivers at these locations,
' The following recitation of facts corrects some inadvertent errors
and discusses facts the judge did not mention
4 Seven of these terminals have opened since 1978 The eighth, Cal-
houn , opened in 1967
5 Long-distance hauling was performed by independent owner-opera-
tors or RCA drivers from Atlanta and Chattanooga
286 NLRB No. 122
1292 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
however, are paid by GST. Unlike the drivers at
the RCA terminals in Atlanta and Chattanooga,
none of the Respondent's GST drivers are union-
ized.
B. Bargaining Negotiations at Memphis and
Discharge of the Memphis Drivers
In early October 1984 Charging Party Local 667
(the Union) notified the Respondent that a majority
of the Memphis terminal GST drivers had signed
cards designating the Union as their collective-bar-
gaining representative. The Union demanded rec-
ognition as the representative for the Memphis em-
ployees. After checking the cards, the Respond-
ent's attorney, David Vaughan, sent the Union a
letter dated 19 October 1984 stating that the Re-
spondent would recognize the Union, but insisting
that "by recognizing Local 667, our client is not
agreeing to be bound by the National Master
Freight Agreement or by any current labor agree-
ment between RCA Truck Lines and any other
local of the Teamsters International Union."
Vaughan's letter continued, "RCA will wish to ne-
gotiate a separate agreement for its Memphis city
and over-the-road drivers covering their wages,
hours and working conditions."
On 21 November 1984 the parties met for their
first bargaining session . Local 667 Representative
Duria Jones proposed that the Respondent agree to
a rider to the master freight agreement. 6 The Re-
spondent, represented by Vaughan, RCA President
James Smith, and GST President and RCA Vice
President Arthur Parker, rejected Jones' proposal
and reasserted the Respondent's position that it
wanted to negotiate a separate agreement for the
Memphis employees. The Respondent's representa-
tive submitted a document containing a number of
proposed terms.7 The parties reviewed the docu-
ment item by item, but Jones agreed to only a few
of the document's substantive provisions.
The parties met for a second bargaining session
on 18 December 1984. The Union again suggested
a rider to the master freight agreement. The Re-
spondent rejected the proposal and resubmitted the
same document it offered in November. The Union
rejected the document, asserting that the Respond-
ent's proposal was not applicable to a trucking op-
eration . The Respondent, on the other hand, felt
that the national master freight agreement was too
restrictive for the Memphis terminal.
As a result of a scheduling conflict, the parties
were unable to keep a meeting commitment on 31
January or 1 February 1985.8 On 1 February, how-
ever, Vaughan sent the Union a letter claiming
that, after two meetings , the parties had "reached
the point in negotiations where it would be a waste
of both parties' time and money" to meet again.
Vaughan enclosed a "complete contract proposal,"
consisting of the contract proposal the Respondent
submitted at the two bargaining sessions, with sev-
eral minor modifications, plus the Respondent's
first proposed economic terms .9 Vaughan gave the
Union until 13 February to accept, and stated that
the Respondent was considering temporarily lock-
ing out the Memphis employees and substituting an
independent contractor or nonunit personnel.
On 21 February the Union by letter rejected the
Respondent's proposal and requested another meet-
ing. On 27 February Vaughan by letter replied that
another meeting would not be "worthwhile" and
resubmitted the Respondent's 1 February proposal.
Vaughan wrote:
The simple economic fact is Georgia South-
ern has great difficulty competing with non-
union trucking operations under its current
wage and benefit structure in Memphis.
Should Georgia Southern agree to a contract
similar to the National Master Freight Agree-
ment, as the local union has been proposing, I
doubt very seriously that the Company could
operate in Memphis at all. Therefore, I would
strongly suggest that the Memphis employees
take another look at our February 1 contract
proposal and seriously consider its acceptance.
Sometimes "half a loaf' is better than no loaf
at all!
On 8 March the Union by letter again rejected the
1 February proposal and requested a meeting.
Vaughan wrote the Union on 19 March telling the
Union to contact him after 26 March to discuss the
possibility of another bargaining session . Local 667
President Jimmy Carrington responded by letter on
3 April stating:
At the present time I am tied up on the Na-
tional Freight Agreement and will be in Chica-
go next week.
Since the contracts have expired in Chatta-
nooga and Atlanta we all have agreed to meet
together and work out an agreement.
8 Vaughan testified that Jones insisted the Respondent accept a rider to
the master freight agreement. Although Jones admitted he proposed a
rider to the master freight agreement, he denied that he insisted on such
an agreement The judge did not specifically resolve this conflict We
find it unnecessary to resolve this conflict.
' The document was not a complete contract proposal It contained no
economic terms
a All subsequent dates are in 1985 , unless otherwise stated
9 The Respondent's wage proposal provided for increases over 3 years
of 60 cents an hour for new city drivers ($6.60 to $7 20), 70 cents an hour
for city drivers with 18 months ' service ($7 to $7 . 70), 2 cents per mile for
over-the-road drivers (20 to 22 cents), and 60 cents an hour for over-the-
road drivers' "drop time "
SMCO, INC. 1293
Please advise us of the time and date most
suitable with you and your client.
According to Parker's testimony, the Respondent
did not want the Memphis unit involved in joint
negotiations with employees at the other two ter-
minals because in 1982 the Respondent had "very
hard and tough negotiations with the Teamsters in
Chattanooga and Atlanta." The parties had become
"polarized" in the negotiations and "with that ex-
perience in 1982, we did not feel like we needed
Memphis in there with that." When Vaughan, in a
letter to the Union dated 11 April, communicated
the Respondent's rejection of the Union's request
for joint negotiations, he stated that the Respond-
ent's reason for doing so was that the Atlanta and
Chattanooga drivers were RCA employees where-
as the Memphis drivers were GST employees, not
RCA employees. In the same letter, Vaughan noti-
fied the Union for the first time that the Respond-
ent was "contemplating shutting down its unprofit-
able Memphis operations," laying off the drivers,
and subcontracting the cartage work to an inde-
pendent cartage agent . Vaughan offered to meet
with the Union to discuss the decision and its ef-
fects on employees.
At some point in March or April, the Respond-
ent's sales manager, Jim Hewlet, suggested to an
employee another reason for the possible shutdown
of the terminal. Hewlet was the direct supervisor
of the Memphis location's terminal manager/-
salesman and was visiting Memphis from the Re-
spondent's headquarters in Georgia. In a conversa-
tion between Hewlet and Lee Thompson, a Mem-
phis driver who had earlier attempted without suc-
cess to get signatures on a decertification petition,
Thompson asked Hewlet what he thought the Re-
spondent would do if the employees did not get rid
of the Union. Hewlet replied, "if [the employees]
did not get rid of the Union, that the company
would get them a cartage agent to handle their
business." Hewlet continued that he "would like to
see [the employees] dissolve the Union and keep
on-go on and work, because: [the employees] had
plenty of work to do and [Hewlet] would hate to
see [Thompson] . . . out of a job."10
Duria Jones met with Parker and Vaughan on 30
April. Parker told Jones the Memphis terminal was
losing money and that revenue had declined signifi-
cantly due to the loss of a major customer. Parker
also stated that the Respondent was losing money
at its other terminals as well and that revenue was
10 In agreeing with the judge that Hewlet' s statement was attributable
to the Respondent, we do not rely on the ,fudge's finding that Hewlet
was involved in the decision to subcontract the Memphis hauling work to
a cartage agent We agree with the judge that Hewlet's statement consti-
tuted a threat in violation of Sec 8(axl) of the Act
down about 50 percent. Parker informed Jones that
the Respondent's lease at the Memphis terminal
was going to expire soon and that the Respondent
did not intend to renew the lease . Jones offered to
help the Company find other less expensive lease
arrangements . Jones was told the Respondent was
not interested because the terminal was definitely
going to be closed and the work subcontracted to
"the cheapest cartage company" the Respondent
could find. Jones proposed that the Respondent
sign a contract with the Union covering only the
over-the-road drivers, or enter into Teamsters con-
tracts for owner-operators if the Respondent in-
tended to replace GST employees with owner-op-
erators . Both requests were refused. Jones asked
what the Respondent was offering "for the effects
of closing or severance pay." Parker answered,
"Bullshit, the sum is zero." Jones requested another
meeting, but Vaughan told him it would be futile.
At the end of the meeting, as Jones rose to leave,
Jones was asked, "Why don't you get them a job at
a union truck line since they want a union so bad?"
The same day Vaughan sent the Union a letter
reiterating the Respondent's final decision to close.
In a letter dated 6 May the Union informed the Re-
spondent it was still "demanding the continuing of
negotiation ." Vaughan responded by letter on 10
May, "[T]here would be no purpose in continuing
to meet for contract negotiations for an employee
unit that will cease to exist once the Memphis ter-
minal is closed."
On 15 May Parker sent a letter to Local 667
President Carrington notifying the Union that the
Respondent would close its Memphis terminal on
17 May. Parker's letter stated, "Should you wish to
discuss this decision further, or the effects it will
have on existing personnel, please contact Mr.
Vaughan in Atlanta."
On Friday, 17 May, the Respondent reached an
agreement with East Memphis Delivery Service
(EMDS) to provide local freight-hauling in the
Memphis area . On the same day, the Respondent
closed the terminal facilities it had been operating
and discharged the unit drivers. The Respondent
continued to employ one over-the-road driver at
Memphis for 2 more weeks, after which the Re-
spondent contracted with owner-operators to per-
form over-the-road hauling for the Memphis termi-
nal or used other terminals' over-the-road drivers.
The Respondent continues to service the Memphis
area with its own salespersons. EMDS uses the Re-
spondent's trailers, and its local pickup and deliv-
ery work for the Respondent is directed by the Re-
spondent's own dispatcher.
1294 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
C. The Respondent's Business Defense
Arthur Parker, the only witness who participated
in the Respondent 's decision to terminate the Mem-
phis drivers and subcontract the hauling work,
stated the reasons for the decision were that the
Respondent was suffering large corporatewide
losses in the first quarter of 1985 and closed the
Memphis terminal to cut costs. He added that the
Respondent made a tentative decision about the
Memphis terminal on 11 April, but did not make a
final decision until 20 April when Parker and
James Smith received information on the first quar-
ter losses. The profit-and-loss information they al-
legedly relied on was drawn from monthly GST
and RCA operating budget reports, copies of
which were submitted in evidence.
Parker claimed that RCA suffered heavy losses
in late 1984 and early 1985, but stated that the
losses were attributable to all terminals and the Re-
spondent was unable to break down the losses ter-
minal by terminal . Nonetheless, according to
Parker, the Memphis terminal was the only loca-
tion where the Respondent took cost-cutting action
in 1985 that adversely affected employees. In fact,
during 1985 the over-the-road drivers at every
other terminal directly operated by the Respondent
received wage increases. So did the city drivers in
Atlanta, Chattanooga, and Decatur. Parker admit-
ted that in late 1984 and early 1985 the Respondent
was aware that the Decatur terminal in particular
was a drain on corporatewide resources. Yet in late
January 1985, 1 week after the Decatur employees
voted against union representation, the Respondent
raised the city drivers' wages from $7.20 an hour
to $8 an hour. At the time, Memphis city drivers
were being paid $6.60 to $7 an hour."
Parker asserted that GST was losing money op-
erating the Memphis terminal for RCA. Indeed, the
GST operating reports show that the Memphis ter-
minal 's expenses exceeded terminal revenue. But
RCA and GST were, and are, a single employer,
and the budget reports for RCA at Memphis show
terminal revenue exceeding expenses . The Re-
spondent failed to offer a plausible explanation of
how to combine the reports to demonstrate that
the Memphis terminal in fact was operating at a
loss for the Respondent in early 1985. On their
face, the operating budget reports indicate that in
the first quarter of 1985 the Memphis terminal
brought in more revenue than all but the Atlanta
11 Parker denied that the Decatur city drivers received a wage in-
crease in 1985 until presented on cross -examination with the Respond-
ent's payroll records. Parker then clauned that the terminal employees
had "probably" gone some time without a raise and the raise would
"probably" have been given earlier if not for the union election cam-
paign.
and Chattanooga terminals. The operating budgets
also indicate that for March 1985 and for the first
quarter of 1985, the Memphis terminal 's cost ratio,
i.e., terminal expenses per dollar of terminal reve-
nue, was comparable to or significantly less than
the corresponding ratio at the other five terminals
the Respondent directly operated.12
Parker testified that the Respondent replaced its
drivers with an independent cartage agent and
owner-operators in order to cut costs. Yet the cost
ratio for EMDS in the months following the
change in operations was not shown to be any
better than the cost ratio when the Respondent was
using its own drivers.13 There is also no evidence
the owner-operators who replaced the GST over-
the-road drivers were any more cost-efficient for
the Respondent. Further, if the Respondent be-
lieved it cheaper to use independent cartage agents
rather than its own drivers, the Respondent has not
explained why, after firing its Memphis drivers, it
continued to use its own city drivers at 5 out of its
10 terminals, and its own over-the-road drivers at
at least 6 out of its 10 terminals.
According to Parker, the reason the Respondent
terminated only its Memphis drivers was that the
Memphis terminal had lost a major customer ac-
count, the Southern States account, on 17 January
1985. Parker asserted that hauling for Southern
States constituted 50 percent of the "outbound rev-
enue" at the Memphis terminal . Parker testified,
however, that the Respondent calculates a termi-
nal's total freight revenue by combining fractions
of "outbound" and "inbound" revenue.14 Under
the Respondent's method of calculating terminal
revenue, 50 percent of a terminal's outbound reve-
nue constitutes only 30 percent of the terminal's
total revenue. While the loss of the Southern States
account would have meant a loss of Memphis ter-
minal outbound revenue, it would also have meant
a significant loss of inbound revenue to the Bir-
mingham and Decatur terminals where much of
the Southern States freight was shipped. Yet the
Respondent took no employment-related cost-cut-
ting measures in Birmingham and Decatur in re-
12 The Respondent asserts that a comparison of first quarter expenses
is unreliable because the terminal expense figures in the January and Feb-
ruary operating reports were erroneous , but does not claim that the fig-
ures in the March report are erroneous
13 Although the operating budget report figures suggest EMDS was
operating at a marginally better cost ratio , these figures do not include as
a terminal expense the salary of the terminal's salesman , an amount that
had been included as a terminal expense before June 1985 . When the
EMDS terminal figures are adjusted to include this expense , the advan-
tage in cost ratio disappears
14 Because a freight shipment typically requires hauling work by dnv-
era at both the terminal of origin and the destination terminal , the Re-
spondent divides the revenue from the shipment between terminals (60
percent to the terminal of origin , and 40 percent to the destination termi-
nal)
SMCO, INC. 1295
sponse to this loss of revenue. Indeed, the Decatur
employees received their postelection raises just a
week after the Respondent lost the Southern States
account.
Further, the Respondent did not demonstrate
what effect the loss of the account had on the eco-
nomic viability of its Memphis operations. The Re-
spondent presented no evidence correlating the loss
of the account to a loss of corporate profits.15 The
operating budget reports reveal that the freight
revenue at Memphis remained very high in com-
parison with the Respondent's other terminals, and
Sales Manager Hewlet, in his conversation with
Memphis driver Thompson at ]least 2 months after
the loss of the account, told 'Thompson that the
Memphis drivers had "plenty of work to do."
Although the Respondent claims the lost account
imperiled the Memphis terminal 's operations, at no
time during negotiations with the Union before 11
April did the Respondent mention to the Union
that the Memphis terminal was having difficulties
because of the loss of the Southern States ac-
count" or inform the Union that the Respondent
was contemplating permanently closing the termi-
nal. The Respondent never sought wage conces-
sions from the Union during this period. In fact, in
the month-and-a-half following the date the Re-
spondent lost the account, the Respondent made
proposals to the Union that included wage in-
creases and threatened a lockout if the Union did
not accept its proposals.
II. DISCUSSIO N
The General Counsel contends the record com-
pels an inference that the Respondent fired its
union-represented GST drivers at Memphis and
subcontracted their work in retaliation for Local
667's rejection of the Respondent's final contract
proposal and attempt to set up joint negotiations
with the Teamsters locals representing drivers at
other terminals, and in order to avoid contract ne-
gotiations with Local 667. We agree.
The Respondent's animus toward the Union is
evidenced by Sales Manager Hewlet's unlawful
threat that the Respondent would close the Mem-
phis terminal unless the employees got rid of the
Union. Its animus is also evident in Attorney
Vaughan's 30 April statement that Jones should
find jobs for the Memphis drivers at a union truck
line "since they want a union so bad."
From the very outset of the negotiations with
Local 667, the Respondent made clear its adamant
opposition to extending the Teamsters master
freight agreement to the Memphis terminal. It
sought instead to negotiate an entirely separate
agreement with Local 667. The parties had met but
twice when the Respondent suddenly asserted that
further bargaining meetings would not be worth-
while. The Respondent then repackaged its initial
noneconomic proposals, coupled them with its first
set of wage proposals, presented the package as a
final offer, and threatened a lockout. When the
Union did not accept, the Respondent reoffered the
proposal, this time with a veiled threat of closure if
the Union and the employees persisted in their de-
mands.17
The Union again rejected the Respondent's pro-
posals . Shortly afterwards the Union notified the
Respondent that it had agreed with the Teamsters
locals representing the Respondent's Atlanta and
Chattanooga drivers to negotiate jointly with the
Respondent. The Atlanta and Chattanooga termi-
nals were long-unionized, and the Respondent had
consented to master freight agreement riders at
these two terminals for years. The Respondent had
difficulties with the two locals in their previous set
of negotiations and apparently looked forward to
the 1985 contract talks with concern. The Re-
spondent wanted to keep labor relations at its GST
terminal in Memphis separate from labor relations
at these two RCA terminals. Within a week after
learning that the three locals would be pressing for
joint bargaining negotiations, the Respondent re-
jected the proposal under the pretext that the
Memphis employees worked for a different em-
ployer than the Atlanta and Chattanooga employ-
ees, and announced that it was making plans to
eliminate the Memphis unit.
As discussed above, the Respondent's proffered
business reasons for its decision do not withstand
scrutiny. Indeed, they are so baseless as to warrant
an inference that they were offered to conceal an
unlawful motive. Thus, for example, while the Re-
spondent contends that corporate losses in early
1985 demanded drastic cost-cutting measures at its
recently unionized terminal in Memphis, those
losses were apparently not so serious as to preclude
pay increases well beyond the Memphis wage
levels for the drivers at Decatur a week after they
voted against union representation.
is According to the operating budget reports , RCA's losses declined
after the Respondent lost the account
16 Vaughan , the Respondent 's negotiator , admitted that the first time
he heard about the Southern States account was in a phone conversation
with Parker on I I April when Parker and Vaughan were discussing the
Union 's request for joint negotiations
17 There is no allegation-nor do we make any finding-that the Re-
spondent's unyielding refusal to accept the extension of the master freight
agreement to the Memphis terminal constituted a refusal to bargain in
good faith . We are merely considering the course of the negotiations as
they bear on the question of the Respondent's motive for closing the
Memphis terminal.
1296 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
In finding that the Respondent engaged in dis-
criminatory conduct, we do not suggest that the
Respondent 's only lawful course of action in its ne-
gotiations with Local 667 would have been to
accede to the Union 's demand for joint negotiations
and a rider to the master freight agreement. The
Respondent was free to pursue its own bargaining
positions through good -faith bargaining . The Re-
spondent was not free , however, to retaliate against
the employees for their union activity , to discharge
them , and to subcontract their work in order to
avoid dealing with their bargaining representative.
We conclude that by engaging in this conduct the
Respondent violated Section 8(a)(3) of the Act.
We also agree with the judge that the Respond-
ent violated Section 8 (a)(5) by refusing to bargain
about the decision to subcontract the Memphis ter-
minal operation . 18 Where , as here , such a decision
is motivated by antiunion reasons , the Employer is
not exempt from a bargaining obligation under
First National Maintenance v. NLRB, 452 U.S. 666
(1981), or Otis Elevator Co., 269 NLRB 891 (1984).
See Strawsine Mfg. Co ., 280 NLRB 553 (1986).
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge and orders that the Respondent, SMCO, Inc.
and its wholly owned subsidiaries RCA Truck
Lines, Inc. and Georgia Southern Transportation,
Inc., Memphis, Tennessee, its officers, agents, suc-
cessors, and assigns , shall take the action set forth
in the Order.
1s We also agree with the judge that the Respondent refused to bar-
gain about the decision 's effects on employees At the parties' 30 April
meeting in response to the Union 's question about the closing 's effects,
the Respondent replied , "Bullshit, the sum is zero " Under the circum-
stances, the Respondent' s written offers to bargain about effects cannot
insulate it from its refusal to do so
John Goree, Esq., for the General Counsel.
David Vaughan, Esq. and Richard Hankins, Esq. (Elarbee,
Thompson & Trapnell), of Atlanta, Georgia, for the Re-
spondent.
DECISION
STATEMENT OF THE CASE
LAWRENCE W. CULLEN, Administrative Law Judge.
This case was heard in Memphis , Tennessee, on 16, 17,
and 18 October 1985 and 6, 7, and 8 November 1985.
The original charge was filed by the Highway and Local
Motor Freight Employees, Local No. 667, affiliated with
International Brotherhood of Teamsters , Chauffeurs,
Warehousemen and Helpers of America (the Union) on
21 June 1985, and the first amended charge was filed by
the Union on 2 August 1985. The complaint in this case
issued on 2 August 1985. The complaint, as amended at
the hearing, alleges that SMCO, Inc. and its wholly
owned subsidiaries RCA Truck Lines, Inc. and Georgia
Southern Transportation, Inc. (referred to separately as
SMCO, RCA, or GS, or collectively as the Respondent
or the Employer) violated Section 8(a)(1) of the National
Labor Relations Act (the Act) by threatening the layoff
of its employees because of its employees' membership
and activities on behalf of the Union and by interrogat-
ing an employee regarding his union membership , activi-
ties, and sympathies, and that it violated Section 8(a)(3)
and (1) of the Act by subcontracting bargaining unit
work and laying off its employees James Dickson,
Robert Tate, Robert Holloway, Charles Parks, and
others (identified at the hearing as Lee Thompson and
Cottrill Crutcher) because its employees joined, support-
ed, or assisted the Union and engaged in concerted ac-
tivities for the purpose of collective bargaining or other
mutual aid or protection, and in order to discourage em-
ployees from engaging in such activities or other con-
certed activities for the purpose of collective bargaining
or other mutual aid or protection. The complaint, as
amended, further alleges that the Union is the designated
and selected collective-bargaining representative of the
bargaining unit and that Respondent violated Section
8(a)(5) and (1) of the Act by withdrawing recognition
from the Union and by failing and refusing to furnish the
Union with information requested by the Union concern-
ing Respondent 's claim that it was losing money in its
business operations as justification for the layoff of the
aforesaid employees, and by failing and refusing to nego-
tiate its decision to subcontract unit work, and to negoti-
ate the effects of this decision, which resulted in the
layoff of employees in the unit since about 30 April 1985.
The Respondent, by its answer, has denied any violations
of the Act.
On the entire record, including my observations of the
demeanor of the witnesses, and after due consideration of
the briefs filed by the General Counsel and the Respond-
ent, I make the following
FINDINGS OF FACT'
1. JURISDICTION
The complaint alleges , Respondent admits, and I find
that Respondent SMCO, Inc. and its wholly owned sub-
sidiaries RCA Truck Lines, Inc. and Georgia Southern
Transportation, Inc., in the course of its business oper-
ations maintained at all times material herein a corpora-
tion and office and place of business in Memphis, Ten-
nessee , herein called Respondent's facilities, and has been
engaged in the transportation of freight and commodities,
and that Respondent, in the course and conduct of its
business operations , derived gross revenues in excess of
$50,000 for the transportation of freight and commodities
in interstate commerce within the State of Tennessee, di-
rectly between points in Tennessee and points in Georgia
and other States , and that Respondent is now and has
been at all times material herein an employer engaged in
1 The following includes a composite of the testimony of the witnesses
at the hearing All dates are in 1985 unless otherwise stated.
SMCO, INC. 1297
commerce within the meaning of Section 2(2), (6), and
(7) of the Act.
II. THE LABOR ORGANIZATION
The complaint alleges , the answer admits, and I find
that the Respondent Union is and has been at all times
material herein a labor organization within the meaning
of Section 2(5) of the Act.
III. THE BARGAINING UNIT
The complaint alleges, the answer admits, and I find
that the appropriate unit is:
All over-the-road truck drivers, city truck drivers
and dockworkers at Respondent's Memphis, Ten-
nessee , terminal, but excluding all office clerical em-
ployees, watchmen, guards , and supervisors as de-
fined in the Act.
IV. THE ALLEGED UNFAIR LABOR PRACTICES
A. Background
SMCO and its subsidiaries RCA and GS are engaged
in the transportation of freight and commodities. SMCO
operates solely as a holding company for RCA and GS,
both of which have common officers and are represented
by the same legal counsel. SMCO is owned by James
Smith, his mother Mrs. James R. Smith, and his sister
Glenda S. Parker. James R. Smith is the president of
RCA. Arthur Parker, the husband of Glenda S. Parker,
is the president of GS and vice president of RCA and is
responsible for the labor relations policies of RCA and
GS along with James R. Smith. All three corporations
are Georgia corporations located at the same address in
Cartersville, Georgia. It is undisputed from the record in
this case derived from the unrebutted testimony of
Arthur C. Parker concerning the operations and relation-
ship of these three corporations and I have found that
they are a single employer within the meaning of the
Act. RCA operates trucking terminals located in Atlanta,
Georgia; Chattanooga, Tennessee; Birmingham, Ala-
bama; Montgomery, Alabama; Decatur, Alabama; Mem-
phis, Tennessee; Nashville, Tennessee; Knoxville, Ten-
nessee ; Tupelo, Mississippi; and Calhoun, Georgia. GS
also operates in Atlanta, Georgia, as a terminal operation
primarily for a single shipper. RCA directly operates its
terminals in Atlanta and Chattanooga, but has a verbal
agreement with GS to operate its Birmingham, Mont-
gomery, and Decatur terminals . RCA also has agree-
ments with independent cartage agents to provide local
pickup and delivery of freight for RCA at its Nashville,
Knoxville, Tupelo, and Calhoun terminals. RCA also
had a verbal arrangement with GS to operate its Mem-
phis terminal until 17 May 1985 when it closed down its
Memphis terminal, and GS laid off its truckdrivers (city
drivers and line-haul drivers) working out of that termi-
nal, and turned this operation over to a private cartage
agent, East Memphis Delivery Service, which operates
out of its own terminal in Memphis. RCA-operated ter-
minals are owned or leased by RCA and either operated
by RCA or GS, whereas the terminals operated under
agreements with the independent cartage agents are
owned or leased by the cartage agents.
In October 1984 the Union presented the Employer
with a demand for recognition of the local (city) and
over-the-road (line haul) drivers at the Memphis terminal
by its letter of 9 October 1984. On 19 October 1984 Re-
spondent's legal counsel, David Vaughan, met with
Union President Jimmy Carrington and Union Repre-
sentative Duria Jones at the Memphis International Air-
port and performed a card check. At that time Vaughan
indicated to Carrington and Jones that it appeared that
the Union had a majority, that Respondent RCA would
probably recognize the Union, but that its Memphis ter-
minal was a small operation and RCA was not interested
in entering into a copy or version of the Teamsters na-
tional master freight agreement, but wanted to enter into
an agreement consistent with its operations, according to
the unrebutted testimony of Vaughan, which I credit.
Vaughan testified further that he returned to his office in
Atlanta that afternoon and drafted a letter recognizing
the Union on behalf of RCA for all its city drivers, over-
the-road drivers, and dock workers at the Memphis ter-
minal . Vaughan testified further that although his firm
had represented Respondent in the past, he personally
had only initially at this time been asked to handle this
matter by one of his partners, and subsequently learned
that the employees in the unit were actually employed
by GS rather than RCA.
On 2 November 1984 the initial bargaining session was
held in Atlanta and was attended by Arthur Parker,
James Smith, and Vaughan on behalf of the Respondent,
and Duria Jones on behalf of the Union. At that time
Jones was informed that the employees were employed
by GS rather than RCA and the parties commenced bar-
gaining . At this initial meeting Vaughan presented Jones
with its contract proposal (G.C. Exh. 4) and reviewed
the document item by item, and the parties reached ten-
tative agreement on several clauses, according to the un-
rebutted testimony of Vaughan, which I credit. Howev-
er, according to the testimony of Vaughan, Jones took
the position at the meeting that the agreement would
have to essentially track or serve as a rider to the Team-
sters master freight agreement. Jones testified he did not
take such a position, but contended at the hearing that
the agreement proposed by the Respondent was not suit-
able to a trucking operation. It is undisputed that one of
the central items of disagreement between the parties
concerned the grievance procedure with the Respondent
proposing grievance arbitration and the Union proposing
a multistate grievance committee. Jones testified that he
also suggested another variation of this grievance com-
mittee. Vaughan denied that he had made such a propos-
al.
The parties subsequently met on another occasion with
Vaughan and Parker meeting with Jones in Memphis on
12 December 1984. According to the testimony of
Vaughan and Parker, at that meeting Jones told them he
had received a directive from the International Union
that all labor agreements must be in compliance with the
national agreements and Jones also withdrew his tenta-
tive agreement to several items in Respondent's proposed
1298 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
contract . Jones contended at the hearing that he never
took a hard and fast position that the agreement must
comply with the national agreements , but contended that
Respondent's proposed agreement was not applicable to
a trucking operation . On 7 January 1985 Vaughan wrote
to Jones setting out the course of negotiations to that
date including what had transpired at the November and
December bargaining sessions and expressed Respond-
ent's concern with "the Union 's intransigent position that
it would never accept the company 's proposals for a
grievance procedure and final and binding arbitration, se-
niority , vacations , union representation , and several other
important provisions . At that meeting you took the posi-
tion that the Union would only accept language that was
exactly the same, or very similar to, language presently
contained in the Teamsters National Freight Agreement
for city drivers." Vaughan further stated in that letter
that at the second bargaining session in December Jones
had informed the Respondent that the Union was re-
scinding "the tentative agreements on language that were
reached at the November 21 meeting and taking the posi-
tion that the new contract at Georgia Southern would
have to conform to language contained in the national
master freight agreements for over-the-road and local
freight drivers ," as a result of the directive by the Inter-
national that local unions could not enter into "collective
bargaining agreements that contained language other
than the National Master Freight Agreements" (R. Exh.
12). Jones responded by letter on 11 January 1985 to
Vaughan 's 7 January 1985 letter that "You presented em-
ployees a contract proposal geared to production and
maintenance , plant work , nothing geared toward truck-
ing business ." Jones further stated in this letter, "We
cannot and will not sign a contract without a grievance
procedure" (R. Exh . 13), but did not otherwise address
the statements in the letter by Vaughan as to what had
transpired at the November and December bargaining
sessions.
According to the unrebutted testimony of Parker,
which I credit , on 17 January 1985 RCA lost a major
customer of its Memphis terminal operation without
prior warning as a result of service failure by GS. Prior
to this time , this customer (Southern States Warehouse &
Distribution) had accounted for approximately 50 per-
cent of the total outbound revenue at the Memphis ter-
minal in 1984 . As a result of a scheduling conflict, the
parties were unable to keep a meeting commitment on 31
January or 1 February . Vaughan then sent a letter to the
Union on 1 February and enclosed a contract proposal to
the Union, which he termed "a complete contract pro-
posal, containing both economic and non-economic
items , and calling for a 30 -month agreement to become
effective Monday, February 18 , 1985," which he request-
ed the Union to consider and "show it to the Memphis
terminal employees for their possible acceptance."
Vaughan further stated in this letter:
In the event the local union does not accept the
enclosed contract proposal by 4:00 p . m. CST on
Wednesday , February 13, 1985, we shall consider
that the proposal has been rejected in its entirety.
Moreover, my client has advised me that it is presently
considering locking out its Memphis employees on a
temporary basis and, further, is considering the con-
tracting out of its freight-hauling work to an independ-
ent contractor or utilizing its own non -unit personnel
on a temporary basis. Naturally, we would prefer not
to take such drastic action at Memphis but, under
the present circumstances , my client may have no
other viable alternative.
If the local union should wish to accept the com-
pany 's contract proposal or , in the alternative, dis-
cuss the possibility of a lockout and/or contracting
out of unit work , please call me by Wednesday,
February 13 , 1985. [R . Exh. 18 . Emphasis added.]
The Union did not respond to the Respondent's con-
tract proposal of 1 February until 21 February 1985,
when it sent two letters signed on behalf of Jones and
Carrington and acknowledged receipt of the proposal
that they characterized in one letter as "very disappoint-
ing" and stated , "Your proposal addresses very little in
the field of transportation ." In that letter the Union also
asked for 2 days to be set aside for bargaining (R. Exh.
19). In the second letter of that date , the Union stated:
It has been brought to our attention that RCA
Truck Lines is in violation of the Act by using con-
tract carriers and other employees ahead of our bar-
gaining unit employees to erode the unit and create
a labatory [sic] of fear and discontent because of
their union activities in behalf of the Teamsters
Local 667. [R. Exh. 20.]
On 27 February 1985 Vaughan responded by letter to
the 21 February letters sent by the Union . In his 27 Feb-
ruary letter Vaughan stated that he did not "see how an-
other meeting would be worthwhile since there is no in-
dication that either party has changed its position."
Vaughan also responded to the charges in the Union's
letter of 21 February concerning the erosion of the unit
by the use of noncontract carriers and other employees
ahead of bargaining unit employees . He also stated his
understanding that "the company has operated at a loss
since last fall, and that the owner/operator (in question)
has been used to obtain additional business . .. ." He
concluded by stating:
The simple economic fact is Georgia Southern has
great difficulty competing with non -union trucking op-
erations under its current wage and benefit structure in
Memphis. Should Georgia Southern agree to a con-
tract similar to the National Master Freight Agree-
ment, as the local union has been proposing , I doubt
very seriously that the Company could operate in
Memphis at all. Therefore, I would strongly suggest
that the Memphis employees take another look at
our February 1 contract proposal and seriously con-
sider its acceptance . Sometimes "half a loaf' is better
than no loaf at all! [R . Exh. 21 . Emphasis added.]
On 8 March Jones responded to the 27 February letter
of Vaughan rejecting the proposal of Respondent and
again requesting a 2-day meeting to negotiate a contract.
SMCO , INC. 1299
Vaughan was out of town and noted the letter and
agreed to respond and set up another bargaining session.
On 3 April Union President Carrington wrote to
Vaughan that he was unavailable the next week for a
meeting but noted that the contracts had expired in
Chattanooga and Atlanta (the two other terminals
wherein Respondent had Teamsters contracts with two
different local unions), and informed Vaughan "we all
have agreed to meet together and work out an agree-
ment." On 11 April 1985 Vaughan responded to the 3
April letter of Carrington as follows:
In your April 3 letter you indicate that you are
presently involved in the negotiations for the new
National Master Freight Agreement and that you
will be in Chicago all of this week. You further
state that "since the contracts have expired in Chat-
tanooga and Atlanta we have all agreed to meet to-
gether and work out an agreement." By that state-
ment I assume you refer to the labor contracts be-
tween RCA Truck Lines, Inc. and the respective
Teamsters Locals in Atlanta and Chattanooga that
represent the drivers at those two facilities.
First of all, my client will not agree to negotiate
jointly the labor agreements at the Atlanta and Chat-
tanooga facilities along with the Memphis facility since
the former are RCA terminal's whereas the latter is an
RCA leased terminal sub-leased to and operated by
Georgia Southern Transportation. As you know, the,
local and over-the-road drivers at Memphis are em-
ployees of Georgia Southern, not RCA Truck
Lines.
Moreover, Georgia Southern is presently contemplat-
ing shutting down its unprofitable Memphis operations
and permanently laying off the five or so remaining
drivers at that facility. RCA Truck Lines is currently
negotiating with an independent cartage agent in the
Memphis area for the latter to assume the local and
over-the-road business presently handled by Georgia
Southern and, if those negotiations are finalized, there
will be no further work for Georgia Southern drivers to
perform in the Memphis area. Naturally, my client
would be willing to meet with you at your earliest con-
venience to discuss the contemplated decision to shut
down the Memphis operations and the effects such a
managerial decision would have on the Memphis em-
ployees.
Should the local union desire such a meeting to
discuss this managerial decision and/or the effects it
will have on bargaining unit personnel , please call
me no later than 12:00 noon CST on Friday, April
19, 1985. If we do not hear from you by that time,
we will assume no such meeting is desired. [R. Exh.
26. Emphasis added.]
On 18 April 1985 the Union responded to the 11 April
1985 letter of the Respondent as follows:
Please be advised that we have received your
letter dated April 11, 1985, certified mail, in which
you indicated that the operation in Memphis by
RCA was unprofitable and that your client would
be willing to meet with us at our earliest conven-
ience to discuss the contemplated decision to shut
down the Memphis operation and the effect such a
managerial decision would have on the Memphis
employees.
This local union will also desire a meeting to dis-
cuss this managerial decision and/or the effect it
will have on the bargaining unit personnel. We
whole heartly [sic] disagree on the use of cartage
companies doing bargaining unit work.
Please advise us of the time and place most con-
venient for your client and you for this meeting. [R.
Exh. 27]
Vaughan testified that on 11 April Parker telephoned
and advised him that RCA had sustained a corpor-
atewide loss in the first quarter of 1985 and a $67,000
loss in December 1984 and that GS had lost money in
November, December, and January, that RCA had been
unable to replace the Southern States account and had to
reduce operating costs at the Memphis terminal and was
considering closing the terminal, contracting with an in-
dependent cartage agent to perform local pickup and de-
livery service, and hiring owner operators to perform the
over-the-road operations.
Parker also testified at length concerning the financial
situation of RCA and GS and the Respondent's efforts to
reduce costs. He testified he was aware that RCA had
sustained a substantial loss in December 1984 and was in-
curring losses in the first quarter of January, that he was
unable to replace the Southern States account in Mem-
phis, and looked to the closure of this terminal as one of
many items of cost reduction. He testified that the lease
at the Memphis terminal was due to expire and currently
cost $2000 per month and was expected to increase.
Parker testified further that management of RCA and
GS issued instructions to its sales force to increase reve-
nue and to reduce costs such as repairs and sought to
reduce costs overall. He testified further that RCA con-
sidered closing down its Decatur, Alabama terminal, and
utilizing a cartage agent to reduce operating costs, but
that RCA was unable to find a cartage agent to handle
the complete operation. On cross-examination by the
General Counsel, Parker acknowledged that the Deca-
tur, Alabama employees had recently rejected union rep-
resentation in December 1984 and had been subsequently
given a pay raise in January 1985, but contended that the
raise had been previously withheld pending the election.
The General Counsel in its brief has compared the
actual performance of the Memphis terminal for the
month of March 1985, and for the first quarter of 1985 as
compared with other terminals. This comparison high-
lights the actual figures contained in RCA's budget
(G.C. Exh. 6) for the month of March and the first quar-
ter of 1985, and shows that the profit ratios for Memphis
exceeded those of the other terminals for both periods.
This budget also reflects that the Memphis terminal
made a greater contribution to overhead (net income) of
RCA than all but the Atlanta and Birmingham terminals.
Additionally, the General Counsel utilized the RCA
budget and the GS budget and highlighted in its brief a
comparison of the cost ratio of revenues to expense for
the four terminals operated by GS for RCA. That com-
parison shows that the Memphis terminal operated at a
1300 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
lower cost than the Decatur and Montgomery terminals
for the month of March and at a lower cost than all
three of the other terminals for the first quarter of 1985.
The General Counsel also contends that the Respondent
did not present any evidence correlating the loss of the
Southern States account (which Parker conceded was a
highly labor intensive account) with a loss of profits.
On 19 April Vaughan sent a letter to Carrington
agreeing to meet with the Union (R. Exh. 28). The meet-
ing was rescheduled to 30 April at which time Jones met
with Parker and Vaughan in Vaughan's office. Accord-
ing to the testimony of Jones, almost immediately after
he arrived at the meeting he was told by Parker that the
Memphis terminal was losing money and that the loss
was occurring "all over" and that other terminals were
losing "approximately 50 percent." Jones testified he
asked Parker "if he had any proof of the loss but they
didn't have anything with them, it was unavailable and
also . . . ." In answer to another question Jones testified
that Vaughan had told him the proof was not available.
He also testified that he asked what Respondent was of-
fering "for the effects of closing or severance pay?" and
that the answer he received from Parker was "bullshit,
the sum is zero." He attempted to discuss their lease and
suggested other terminals but was told that they were
not interested and that the Memphis terminal was defi-
nitely to be closed and he would be informed about a
week in advance of the closing date and Respondent
would post a notice for the employees and also inquired
of Jones, "Why don't you get them a job at a union
truck line since they want a union so bad?" and that
"what he [Charlie Parks-one of the bargaining unit
members] wants out of it is retirement: you ought to try
to get him a job." Jones testified he also inquired con-
cerning the over-the-road drivers and was told they were
going to be leased as well as the services of a cartage
agent . Jones testified he asked to meet again but was told
it would not be necessary.
On the afternoon of 30 April Vaughan wrote a letter
to Jones as follows:
As we discussed at the meeting in my office this
morning , my client sees no viable alternative to the
closing down of its Memphis operations and the
permanent laying off of existing bargaining unit per-
sonnel, possibly as soon as May 10 but, more likely,
by Friday, May 17, 1985.
As you know, Georgia Southern is presently
under contract with RCA Truck Lines, Inc. to op-
erate the Memphis terminal and furnish the drivers
and supervisory personnel necessary to pickup and
deliver freight and perform over-the-road oper-
ations as dictated by RCA. However, since Novem-
ber 1984, the outbound revenue at Memphis has
been reduced approximately 60%, largely due to
the loss of a major customer (Southern States Ware-
house & Distribution), but also due to the uncertainty
over labor negotiations. During the first quarter of
1985 RCA suffered a corporate-wide loss of unprece-
dented proportions, which included the unprofitable
Memphis operations. These losses cannot continue and
the Memphis terminal must therefore be closed.
As you requested, a notice is being posted in the
Memphis terminal advising those employees that a
meeting will be held at the union hall this Saturday,
May 4, at 1:00 p.m.
When the exact closing date of the Memphis ter-
minal is ascertained , you will be notified. [R. Exh.
30. Emphasis added.]
The Union responded by its letter of 6 May to
Vaughan's letter of 30 April as follows:
You stated that due to the lost [sic] of Southern
States Warehouse and Distribution Center and also
due to the uncertainty over labor negotiations and
other loses [sic] the Memphis Terminal must be
closed and the work subcontracted out. As I stated
at the meeting in Atlanta, we are definitely not in
favor of the terminal closing or subcontracting the
work to another Truck Line. Bear in mind that we
are the Certified Bargaining Representative for the
Memphis, Tennessee unit and are still demanding
the continuing of negotiation, plus starting to nego-
tiate with Atlanta, Georgia and Chattanooga, Ten-
nessee . [R. Exh. 32.]
Vaughan responded to this letter by his letter of 10 May:
There are several points in your letter that should
be addressed. First of all you state that the local
union is "definitely not in favor of the terminal clos-
ing or subcontracting the work to another truck
line." This is not surprising since the local union has
no capital investment in the Memphis terminal,
trucks, equipment, etc., and is not the party that is
suffering a pecuniary loss every day that terminal is
in operation . Georgia Southern and RCA Truck
Lines are not so fortunate and, as we pointed out to
Mr. Jones at the April 30 meeting and in my letter,
my client sees no other viable alternative to the sit-
uation.
You further state in your letter that management
should bear in mind that the local union is the "Cer-
tified Bargaining Representative for the Memphis,
Tennessee unit and are still demanding the continu-
ing of negotiations, plus starting to negotiate with
Atlanta, Georgia and Chattanooga, Tennessee."
In actuality, Local 667 is not a certified bargain-
ing representative since my client recognized the
local union as bargaining representative on October
19, 1984 on the basis of an informal card check at
the Memphis airport. [Furthermore, there would be
no purpose in continuing to meet for contract nego-
tiations for an employee unit that will cease to exist
once the Memphis terminal is closed. The local
union has made it clear that it will not accept Geor-
gia Southern's final contract proposal and, in fact,
will not accept any contract for Memphis short of a
duplication of the Teamsters' National Master
Freight Agreement.] (R. Exh. 33.)
SMCO, INC. 1301
B. The Alleged 8(a)(1) Violation2
I credit the unrebutted testimony of employee Lee
Thompson that in March or April 1985 RCA Sales Man-
ager Jim Hewlett told him that the Respondent would
get a cartage agent to handle its business in the event the
employees did not get rid of the Union. Although this
statement was made in response to an inquiry by Thomp-
son regarding what he thought the Respondent would do
if the employees did not get rid of the Union, it never-
theless constituted a threat of the loss of employment for
the employees and constituted a violation of Section
8(a)(1) of the Act. The initiation of an inquiry by an em-
ployee concerning what effects the support of a union
will have does not obviate the coercive nature of a re-
sponse that threatens loss of employment for the employ-
ees if they continue in their support of a union. I also
find that the evidence is substantial that Hewlett was a
supervisor within the meaning of Section 2(11) of the
Act and an agent of Respondent within the meaning of
Section 2(13) of the Act, as he supervised several sales-
persons, was involved in the decision to contract out the
work to the cartage agent, and was assigned the respon-
sibility of carrying out the decision by finding a cartage
agent in Memphis to take over the operation.
I thus conclude that Respondent violated Section
8(a)(1) of the Act by the threat issued to its employee
Lee Thompson by Jim Hewlett in March or April 1985.
C. The Alleged 8(a)(3) Violation
I find that the General Counsel has established a prima
facie case that the Respondent violated Section 8(a)(3)
and (1) of the Act by discharging its employees James
Dickson, Robert Tate, Robert Holloway, Charles Parks,
Lee Thompson, and Cottrill Crutcher, and subcontract-
ing their work to a cartage agent and to owner-operator
drivers. I find that the evidence presented by the Gener-
al Counsel is sufficient to warrant the inference that the
Respondent closed its Memphis terminal, subcontracted
out the work, and discharged the above employees be-
cause of their support for the Union. In making this de-
termination I find that the General Counsel has estab-
lished animus on the part of the Respondent against the
Union and its supporters as evidenced by the violation of
Section 8(a)(1) as found above. I also consider and rely
on the Respondent's positions taken against entering into
the national master agreements with the Union, its threat
of an offensive lockout, and the temporary contracting
out of the bargaining unit work should the Union refuse
to agree to the contract proposed by the Respondent, the
suddenness of the Respondent's i inal contract proposal
after only two meetings, the reference to the Union's re-
fusal to change its position in the Respondent's 11 Febru-
ary letter to the Union notifying the Union of the Re-
spondent's decision to close the Memphis facility as well
as the reference by Respondent's counsel to "uncertainty
over labor negotiations" as a reason for closing the
Memphis facility. I have also considered the raise given
2 In its brief the General Counsel withdrew the complaint allegation
concerning interrogation of employee Lee Thompson by Vice President
Parker and this allegation is not herein considered
to the Decatur, Alabama employees, who had voted to
reject the Union, and the favorable comparison of cost-
profit ratios of the Memphis terminal operations as com-
pared with other terminal operations as set out in the
General Counsel's brief.
Having found that the General Counsel has established
a prima facie case of a violation of Section 8(a)(3) and
(1) of the Act by Respondent's discharge of its employ-
ees, I now consider Respondent's defenses. At the outset,
Respondent contends that its decision to shut down its
Memphis terminal by failing to renew its lease at the ter-
minal , and discharging its employees and contracting
with a cartage company for local delivery and with
owner operators to handle its over-the-road business, was
occasioned by several factors: the overall losses of RCA
corporatewide and a general need to cut costs; losses in-
curred by GS in Memphis; and the loss of the Southern
States account in Memphis. That Respondent RCA in-
curred a subtantial loss in its overall operations in De-
cember 1984 and the first quarter of 1985 has not been
disputed by the General Counsel. These losses for the 4-
month period from December 1984 to March 1985 were
estimated by Respondent at $165,000. However, corpor-
atewide the Respondent, through RCA or GS, operated
10 terminals with its Atlanta, Georgia terminal constitut-
ing the largest operation. A comparison of the terminals'
profit-cost ratios and contribution to overhead (net
income) as set out by the General Counsel in his brief
discloses that the Memphis terminal compared favorably
with the other terminals. Respondent points to the loss of
the major customer (Southern States), which allegedly
accounted for 60 percent of its outbound revenue. How-
ever, as contended by the General Counsel, this was a
highly labor-intensive account and its profitability and
the effects of its loss were not demonstrated by the Re-
spondent, notwithstanding the assertion of Parker that
Respondent had made money servicing the account.
I thus do not find convincing the Respondent's defense
that it closed the Memphis terminal to reduce overall op-
erating expenditures. Although at first impression this ar-
gument has appeal because of the reduction of the termi-
nal costs and other costs of maintaining the trucks, it
does not withstand close scrutiny. It may well be that
the loss of the major customer in Memphis was a moti-
vating factor for Respondent to close its terminal in
Memphis and lay off its employees, and that Respondent
considered the closure of the Memphis terminal as one
means of cutting costs, but I find that the Respondent
has failed to demonstrate that these were the real reasons
for its decision, rather than to rid itself of troublesome
contract negotiations with the Union.
Thus, analyzing this case under Wright Line, 251
NLRB 1083 (1980), I have found that the General Coun-
sel has made a prima facie case that antiunion animus
was a motivating factor in the subcontracting out of this
work and the discharge of Respondent's employees. I
find that the Respondent has not carved its burden to
demonstrate by the preponderance of the evidence that it
would have taken these actions even in the absence of
the support of the employees for the Union. Roure Ber-
trand Dupont, Inc., 271 NLRB 443 (1984); NLRB v.
1302 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Transportation Management Corp., 462 U.S. 393 (1983);
Hunter Douglas, Inc., 277 NLRB 1179 (1985).
D. The Alleged 8(a)(5) Violations
1. Alleged failure to furnish information to the
Union
This allegation is based on the testimony of Union
Representative Duria Jones, that he asked Respondent's
representative David Vaughan and Arthur Parker,
whether they had any proof to substantiate their claim
made at the April meeting that Respondent was losing
money and that either Vaughan or Parker stated it was
not available. Both Vaughan and Parker denied that such
a request was made by Jones and the detailed notes taken
by Vaughan at this meeting and those taken by Parker
and by Jones do not make any reference to such a re-
quest. Moreover, there is no reference to this request in
the exchange of letters between Respondent and the
Union subsequent to this meeting. Accordingly, I credit
Vaughan and Parker that no request was made by Jones
for proof. Assuming arguendo that Jones did request
proof and was told it was unavailable, I nonetheless
would not find a violation of the Act on this basis alone,
as Jones' own testimony indicated he accepted this reply
and did not further press for this information, as he was
primarily concerned about negotiating concerning the ef-
fects of this decision because he regarded the decision as
final. I would thus find that this inquiry and reply did
not constitute a refusal to furnish information by Re-
spondent so as to give rise to a violation of the Act.
2. Alleged refusal to bargain concerning decision to
close Respondent's Memphis terminal
As both parties point out in their briefs, it is well es-
tablished that employers are not required to bargain con-
cerning contemplated changes in the direction of the
business that are at the core of entrepreneurial control
and that do not turn on labor costs. However, contract-
ing out of work has not been held to be such a funda-
mental decision such as to excuse the Employer's obliga-
tion to bargain.
In the instant case the Employer continued its pres-
ence and operations in Memphis but contracted out its
local delivery work to a cartage agent and contracted
with an owner-operator to replace its line-haul drivers.
This did not constitute a fundamental change in the busi-
ness, but rather constituted contracting out of bargaining
unit work, which is a mandatory subject of bargaining. I
thus find that Respondent had an obligation to bargain
with the Union concerning this decision. The testimony
of Duria Jones, which I credit in this regard, demon-
strates that Respondent presented him with a fait accom-
pli that the terminal would be closed and the employees
laid off. There was no evidence that the Respondent did
other than announce this decision to the Union and made
some minimal effort to go through the motions of bar-
gaining on the single occasion of their 30 April meeting
with Jones after which they finalized their decision
through the letter of Vaughan sent to the Union on the
same afternoon of this meeting. I thus fmd that the Re-
spondent failed to bargain concerning this decision and
accordingly violated Section 8(a)(5) and (1) of the Act.
First National Maintenance Corp. v. NLRB, 452 U.S. 666
(1981) (re : obligation to bargain over a partial closing);
Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964) (wherein
subcontracting was held to be a mandatory subject of
bargaining); Otis Elevator Co., 269 NLRB 891 (1984);
Oak Rubber Co., 277 NLRB 1322 (1985); Griffith-Hope
Co., 275 NLRB 487 (1985); Clinton's Ditch Co., 274
NLRB 728 (1985).
I further credit the unrebutted testimony of Jones that
when he requested severance pay for the employees the
retort of Respondent's representative Parker was "bull-
shit." I have reviewed the testimony of Vaughan and
Parker and see no evidence therein that they engaged in
bargaining with the Union concerning the effects on the
employees. I further note Jones' unrebutted testimony
that he was told to obtain the employees a union job and
that employee Parks' chief interest was in retirement. I
thus find that Respondent further violated Section 8(a)(5)
and (1) of the Act by refusing to bargain with the Union
concerning the effects on its employees of its decision to
close its terminal . See P. J. Hamill Transfer Co., 277
NLRB 462, 463 (1985).
3. Alleged withdrawal of recognition and refusal to
bargain
I further fmd that the Respondent withdrew recogni-
tion from the Union in violation of Section 8(a)(5) and
(1) of the Act when it refused to meet further with the
Union to negotiate and contended that there was nothing
to negotiate with a unit that would no longer exist after
the discharge of its employees, which discharge I have
found to be violative of the Act.
V. THE EFFECT OF THE UNFAIR LABOR PRACTICES
ON COMMERCE
The unfair labor practices as found here have a close,
intimate, and substantial relation to trade, traffic, and
commerce among the several States and tend to lead to
labor disputes burdening and obstructing commerce and
the free flow of commerce.
CONCLUSIONS OF LAW
1. The Respondent, SMCO, Inc. and its wholly owned
subsidiaries RCA Truck Lines, Inc. and Georgia South-
ern Transportation, Inc., is a single employer and is an
employer engaged in commerce within the meaning of
Section 2(6) and (7) of the Act.
2. The Union is a labor organization within the mean-
ing of Section 2(5) of the Act.
3. By the threat issued to employee Lee Thompson
about March or April 1985 that Respondent would close
its terminal and contract with a cartage agent to operate
its trucking business in Memphis , Tennessee, Respondent
violated Section 8(a)(1) of the Act.
4. By the subcontracting of bargaining unit work and
by the discharge of its employees James Dickson, Robert
Tate, Robert Holloway, Charles Parks, Lee Thompson,
and Cottrill Crutcher on 17 May 1985, Respondent vio-
lated Section 8(a)(3) and (1 ) of the Act.
SMCO, INC 1303
5. Respondent did not violate the Act by its alleged re-
fusal to furnish information for bargaining to the Union.
6. By its refusal to bargain with the Union concerning
its decision to close its terminal in Memphis , Tennessee,
and concerning the effects of the decision on its employ-
ees, Respondent violated Section 8(a)(5) and (1) of the
Act.
7. By its withdrawal of recognition from the Union,
Respondent violated Section 8(a)(5) and (1) of the Act.
8. The above violations have an effect up commerce
within the meaning of the Act.
THE REMEDY
Having found that Respondent has engaged in certain
unfair labor practices, I shall recommend that it cease
and desist therefrom and take the following affirmative
actions, including the posting of an appropriate notice,
designed to effectuate the policies of the Act.
Having found that Respondent violated Section 8(a)(5)
and (1) of the Act by withdrawing recognition from the
Union and by closing its terminal without affording the
Union an opportunity to bargain concerning the decision
and the effects on its employees„ and that Respondent
violated Section 8(a)(3) and (1) of the Act by its subcon-
tracting of bargaining unit work and the discharge of its
employees and its refusal to reinstate them, I shall rec-
ommend that Respondent restore the status quo ante to
17 May 1985, at the time of its unlawful actions, by re-
opening the Memphis terminal and restoring the employ-
ees to their former positions and make them whole for
any loss of earnings or benefits suffered as a result of Re-
spondent's discrimination against them, with interest
thereon to be computed in the manner prescribed in
F. W. Woolworth Co., 90 NLRB 289 (1950), and Florida
Steel Corp., 231 NLRB 651 (1977). See, generally, Isis
Plumbing Co., 138 NLRB 716 (1962).
I find that the requirement that Respondent reopen its
terminal is particularly appropriate in this instance as Re-
spondent has maintained its presence in the Memphis
area and has merely subcontracted its operations to
others and has not alleged or demonstrated that such a
remedy would threaten its continued viability or create
an undue hardship. A lesser remedy of reinstatement for
the employees at a terminal in another city would not
remedy the harm suffered by these employees. It is fur-
ther ordered that Respondent recognize and bargain in
good faith with the Union on request concerning terms
and conditions of employment and, if an understanding is
reached, embody the understanding in a signed agree-
ment. I do not recommend that the Order contain a visi-
tatorial clause, authorizing the Board to engage in dis-
covery pursuant to the Federal Rules of Civil Procedure,
as requested in the General Counsel's brief. I do not find
the cases set out by the General Counsel in its addendum
to its brief support its position that a visitatorial clause
should be granted in this case. I have not been referred
to a specific case by the General Counsel wherein the
Board has granted such discovery as a matter of course
as the General Counsel seeks. See O. L. Willis, Inc., 278
NLRB 203 fn. 1 (1986), wherein the Board rejected a re-
quest for a visitatorial clause under the circumstances of
that case.
On the foregoing findings of fact and conclusions of
law and on the entire record, I issue the following rec-
ommended3
ORDER
The Respondent, SMCO, Inc. and its wholly owned
subsidiaries RCA Truck Lines, Inc. and Georgia South-
ern Transportation, Inc., Memphis, Tennessee, its offi-
cers , agents, successors , and assigns, shall
1. Cease and desist from
(a) Threatening its employees with the closure of its
terminal, and the contracting out of their work and dis-
charge because of their continued support for the Union.
(b) Refusing to recognize the Union as the collective-
bargaining representative of its employees in the appro-
priate unit.
(c) Closing its Memphis terminal and contracting out
the work of its employees without first bargaining with
the Union concerning the decision to close the terminal
and the effects of the decision on the employees.
(d) Contracting out bargaining unit work and discharg-
ing its employees because of their support of the Union
or their engagement in concerted activities.
(e) In any like or related manner interfering with, re-
straining, or coercing its employees in the exercise of
their rights guaranteed them under Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Recognize and on request bargain with the Union
as the exclusive representative of the employees in the
following appropriate unit concerning terms and condi-
tions of employment and, if an understanding is reached,
embody the understanding in a signed agreement. The
appropriate unit is:
All over-the-road truck drivers, city truck drivers
and dockworkers at Respondent's Memphis, Ten-
nessee terminal, but excluding all office clerical em-
ployees, watchmen, guards, and supervisors as de-
fined in the Act.
(b) Reestablish its terminal in Memphis, Tennessee, to
the status quo ante as of 17 May 1985.
(c) Offer to James Dickson, Robert Tate, Robert
Holloway, Charles Parks, Lee Thompson, and Cottrill
Crutcher reinstatement to their former positions, or to
substantially equivalent positions with full backpay and
benefits with interest in accordance with the remedy sec-
tion of this decision with no loss of seniority or other
rights and privileges previously enjoyed, severing all
contractual relations, if necessary, with others utilized to
perform the work formerly performed by the aforesaid
employees.
(d) Remove from its files any reference to its unlawful
discharge and refusal to reinstate its employees as found
here, and notify them in writing of this, and that said
S If no exceptions are filed as provided by Sec 102 46 of the Board's
Rules and Regulations , the findings, conclusions, and recommended
Order shall, as provided in Sec 102 48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses
1304 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
action or notations on their personnel files shall not be
used as a basis for future personnel actions concerning
them.
(e) Preserve and, on request, make available to the
Board or its agents for examination and copying , all pay-
roll records, social security payment records, timecards,
personnel records and reports, and all other records nec-
essary to analyze the amount of backpay due under the
terms of this Order.
(f) Post at its facility to be reestablished in Memphis,
Tennessee, copies of the attached notice marked "Appen-
dix."4 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
maintained for 60 consecutive days in conspicuous places
including all places where notices to employees are cus-
tomarily posted. Reasonable steps shall be taken by the
Respondent to ensure that the notices are not altered, de-
faced, or covered by any other material.
(g) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
4 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."
work and with discharge because of their continued sup-
port of Highway and Local Motor Freight Employees
Local No. 667, affiliated with the International Brother-
hood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America.
WE WILL NOT refuse to recognize and bargain with
the Union in good faith.
WE WILL NOT refuse to recognize and bargain in good
faith with the Union by closing our terminal operations
in Memphis, Tennessee, without bargaining that decision
and the effects on our employees with the Union.
WE WILL NOT subcontract out bargaining unit work
and discharge and refuse to reinstate our employees be-
cause of their continued support of the Union.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
guaranteed you by Section 7 of the Act.
WE WILL recognize and, on request, bargain with the
Union and embody in a written agreement any agree-
ment reached therein concerning the terms and condi-
tions of employment for our employees in the following
bargaining unit:
All over-the-road truck drivers, city truck drivers
and dockworkers at Respondent's Memphis, Ten-
nessee terminal, but excluding all office clerical em-
ployees, watchmen, guards, and supervisors as de-
fined in the Act.
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or-
dered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protec-
tion
To choose not to engage in any of these protect-
ed concerted activities.
WE WILL NOT threaten our employees with the clo-
sure of our terminal and the contracting out of their
WE WILL reopen our terminal operation in Memphis,
Tennessee, and WE WILL offer to James Dickson, Robert
Tate, Robert Holloway, Charles Parks, Lee Thompson,
and Cottrill Crutcher reinstatement to their former posi-
tions, or to substantially equivalent positions with full
backpay and benefits, with interest, and with no loss of
seniority or other rights and benefits previously enjoyed
and if necessary will sever all contractual relations with
others utilized to perform the work formerly performed
by the aforesaid employees.
WE WILL remove from our files all references to our
unlawful discharges and notify the employees in writing
that this has been done and that the discharges will not
be used against them in any way.
Our employees have the right to join and support
Highway and Local Motor Freight Employees Local
No. 667, affiliated with International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of
America, or to refrain from doing so.
SMCO, INC. AND ITS WHOLLY OWNED
SUBSIDIARIES RCA TRUCK LINES, INC.
AND GEORGIA SOUTHERN TRANSPORTA-
TION, INC.