Smyth Mfg., Co.

National Labor Relations Board - Board Decisions

Feb 19, 1980

247 N.L.R.B. 1139 (N.L.R.B. 1980)

SMYTH MANUFACTURING COMPANY
Smyth Manufacturing Company Inc.; Beacon Indus-
tries and District 26, LL 354, International Associ-
ation of Machinists and Aerospace Workers, AFL-
CIO. Cases 1-CA-12643, 1-CA-12812, 1-CA-
13497, and 1-CA-13913
February 19, 1980
DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS JENKINS
AND TRUESDALE
On August 31, 1979, Administrative Law Judge
Thomas R. Wilks issued the attached Decision in this
proceeding. Thereafter, Respondent, the Charging
Party, and the General Counsel filed exceptions and
supporting briefs.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the record and the
attached Decision in light of the exceptions and briefs
and has decided to affirm the rulings, findings,' and
conclusions2 of the Administrative Law Judge, as
modified herein, and to adopt his recommended
Order.
The General Counsel excepts to the Administrative
Law Judge's failure to conclude that Respondent
bargained in bad faith in violation of Section 8(a)(5) of
the Act after February 3, 1977. We find merit in this
exception.
The Administrative Law Judge found that Respon-
dent engaged in bad-faith bargaining until February 3,
1977, by rigidly insisting on (1) an open shop
provision, (2) a grievance procedure that severely
limited the Union's role, and (3) a merit wage increase
system which completely excluded the Union from
any participation in its operation. There is no evidence
that Respondent ceased adhering to its unlawful
bargaining position after February 3. In fact, the
evidence is to the contrary. For example, just 2 weeks
after the February 3 negotiating session, Respondent
again told assembled employees that the plant would
close unless there was an open shop and indicated that
the open shop issue was the only matter preventing the
parties from reaching agreement. Thus, we find that
Respondent's bad-faith bargaining continued beyond
February 3 to July 13, 1977, when the parties
reopened negotiations pursuant to their settlement
agreement. Since this finding does not affect the
remedy, however, we find it unnecessary to expand on
the Administrative Law Judge's recommended Order.
247 NLRB No. 164
AMENDED CONCLUSION OF LAW
Based on the foregoing, the Board adopts the
Administrative Law Judge's Conclusions of Law, as
modified below:
1. Delete paragraph 5 and substitute the following:
"5. Respondents by engaging in an overall course of
bad-faith bargaining from on or about December 17,
1976, until on or about July 13, 1977, have engaged in
unfair labor practices affecting commerce within the
meaning of Section 8(a)(5) and (1) of the Act."
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the Respondent, Smyth Manufacturing
Company, Inc., Beacon Industries, Bloomfield and
East Hartford, Connecticut, its officers, agents, suc-
cessors, and assigns, shall take the action set forth in
the said recommended Order.
' The Charging Party has filed a motion to amend the complaint to allege
that Respondent's layoff of employees in January and March 1977 violated
Sec. 8(a)X3) of the Act. The complaint alleged that Respondent's failure to
bargain about its decision to lay off employees in March violated Sec. 8(aX5)
only, and did not mention the January layoffs. Since we cannot find, based on
the record, that either the January or March 1977 layoffs were fully litigated
as 8(aX3) violations, we deny the Charging Party's motion. We also note that
the General Counsel did not join in this motion.
Respondent has excepted to certain credibility findings made by the
Administrative Law Judge. It is the Board's established policy not to overrule
an administrative law judge's resolutions with respect to credibility unless the
clear preponderance of all of the relevant evidence convinces us that the
resolutions are incorrect. Standard Dry Wall Products Inc.. 91 NLRB 544
(1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully examined the
record and find no basis for reversing his findings.
In adopting the Administrative Law Judge's finding that Respondent
violated Sec. (aX3) and (5) of the Act by closing Smyth's manufacturing
operations on September 30. 1977. and subcontracting the bargaining unit
work, we do not rely, as the Administrative Law Judge did, on the fact
Respondent merged Harvard Company with Beacon Industries instead of
Smyth.
Both the General Counsel and the Charging Party except to the
Administrative Law Judge's failure to find that Gordon was discharged
and/or constructively discharged on August 1, 1977. in violation of Sec.
8(aX 3) of the Act. While we find the circumstances surrounding Gordon's
departure from work on August I suspicious, we are constrained to agree with
the Administrative Law Judge and dismiss this allegation of the complaint. In
this regard, we note that, according to the credited testimony. Gordon did not
receive his backpay check immediately upon his return to work because he
failed to give Respondent an itemized statement of his interim earnings as he
was obligated to do under the settlement agreement; Gordon woluntaril left
work that day, telling his supervisor, Hernes, he would not return until the
backpay matter was settled; and after Gordon departed on August I he never
again contacted Respondent about either his backpay or returning to work.
We also cannot agree with the General Counsel's contention that the alleged
surveillance of Gordon by his supervisor. Hernes, supports a finding that
Gordon was constructively discharged on August I. Not only was there no
evidence of actual surveillance or harassment by Hernes occurring at this
time, but Hernes' statement to Gordon allegedly implying the resumption of
surveillance was at best vague and ambiguous.
1139
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
DECISION
STATEMENT OF THE CASE
THOMAS R. WILKS, Administrative Law Judge: Pursuant
to unfair labor practice charges filed by District 26, LL 354,
International Association of Machinists and Aerospace
Workers, AFL-CIO, a consolidated amended complaint
issued by the Regional Director for Region , and an answer
filed by Smyth Manufacturing Company, Inc., and Beacon
Industries, a hearing was held in Hartford, Connecticut, on
January 30 and 31 and February and 2, 1978. The issues
litigated were whether Smyth Manufacturing Company,
Inc., and Beacon Industries as a single or joint employer
violated Section 8(a)(1), (3), (4), and (5) of the National
Relations Act, as amended, by the following conduct:
i. Interference with the rights guaranteed to employees by
Section 7 of the Act by certain activities, including interro-
gation of employees and threats of plant closure if the Union
did not agree to an open shop during the course of collective-
bargaining negotiations.
2. Refusal to bargain in good faith with the Union during
the course of contract negotiations, and unilateral changes
with respect to hours, work assignments, layoffs, and
subcontracting, and a refusal to bargain about the effects of a
decision to close down manufacturing operations at the
facility operated by Smyth Manufacturing Company, Inc., at
Bloomfield, Connecticut, including the subsequent layoff of
all bargaining unit employees at that facility.
3. The discharge of employee George Gordon because of
his activities on behalf of the Union and the subsequent
failure to reinstate Gordon to his former or a substantially
equivalent position pursuant to an orally agreed upon, but
unexecuted and unapproved, proposed settlement agree-
ment.
After the submission of briefs, the Charging Party and the
General Counsel filed motions to reopen the hearing and to
amend the complaint to allege that the July 30, 1977,
cessation of manufacturing operations at the Bloomfield,
Connecticut, location of Smyth Manufacturing Company,
Inc., constituted a violation of Section 8(a)(3) of the Act. On
November 22, 1978, I granted those motions pursuant to the
discretion granted me under the National Labor Relations
Board Rules and Regulations, Series 8, as amended, Section
102.35(h), inasmuch as they were grounded upon allegations
of newly discovered evidence of post-hearing conduct, and
that said conduct was alleged to have constituted unfair
labor practices integral to and related to the litigated
allegations and were thus not barred by Section 10(b) of the
Act. N.LR.B. v. Jack La Lanne Management Corp., 539
F.2d 292 (5th Cir., 1976); U.S. Postal Service, 203 NLRB
916 (1973); N.L.R.B. v. International Union of Operating
Engineers, Local 925, AFL-CIO, et al.[J. L. Manta, Inc.] 460
F.2d 589 (5th Cir., 1972). Furthermore, said motions raised
matters relevant to credibility issues litigated and are
material to the scope of the remedy.
' Counsel for the General Counsel's motion to correct the transcript of the
first hearing is granted except that p. 6,1. 12 will remain unchanged and p. 20,
i. 10 will be corrected only to add a period after the word "one" and to
capitalize the next word.
The findings of fact herein are based upon the credibility resolutions
resulting from my evaluation of the demeanor of all the witnesses, which
The hearing was therefore resumed on December 19 and
20, 1978. At the hearing, the General Counsel further moved
to amend the complaint to allege that since on or about
March 1, 1978, Respondent had bargained with individual
employees and had effected unilateral changes in wages and
working conditions in further derogation of its bargaining
obligations with the Union, thus violating Section 8(a)(5) of
the Act. I granted said motions as they raised issues integral
to and related to previously litigated issues.
Subsequently, all parties filed briefs. On the entire record'
in this case, including my observation of the witnesses and
their demeanor and consideration of the briefs, I make the
following:2
FINDINGS OF FACT
1. THE BUSINESS OF THE EMPLOYER
Smyth Manufacturing Company, Inc., a Connecticut
corporation (hereinafter referred to as Smyth), has main-
tained its principal office and place of business at 85 Granby
Street, Bloomfield, Connecticut, where it has been engaged
in the manufacture, sale, and servicing of bookbinding
machinery and parts; Beacon Industries, a Connecticut
corporation (hereinafter referred to as Beacon), has main-
tained its office and principal place of business at 24 Leggett
Street, East Hartford, Connecticut, where it is now and
continuously has been engaged in the manufacture, sale, and
servicing of winches, aircraft parts, and other tooled metal
products.
In the course and conduct of their individual business
operation, Smyth and Beacon have each caused large
quantities of machine parts used for the manufacture of
bookbinding machines, winches, aircraft parts, and related
tooled metal products to be purchased and transported in
interstate commerce from and through various States of the
United States other than the State of Connecticut.
It is admitted that in the course and conduct of their
business operations Smyth and Beacon received at their
Bloomfield and East Hartford, Connecticut locations goods
valued in excess of $50,000 directly from points outside the
State of Connecticut and that Smyth and Beacon annually
shipped goods valued in excess of $50,000 to enterprises
located outside the State of Connecticut.
On the basis of the pleading and record it is clear that
Symth and Beacon individually are engaged in commerce
within the meaning of the Act. Whether they together
constituted a single employer or joint employer will be
resolved below. The General Counsel contends that they do
whereas Respondent denies such contention.
II. THE LABOR ORGANIZATION INVOLVED
The Union is a labor organization within the meaning of
Section 2(5) of the Act.
included all factors such as the witnesses' ability to recall events with
certitude, to testify with responsiveness and lack of apparent artificiality, and
to testify with candor in a convincing and coherent manner. The entire
testimony of all witnesses was considered in light of consistency and inherent
probability. In the last analysis, however, the demeanor of the witnesses
proved to be a determinative factor in the credibility resolutions made herein.
1140
SMYTH MANUFACTURING COMPANY
III. THE UNFAIR LABOR PRACTICES
A. Background
Smyth has engaged in the manufacture, sale, and installa-
tion of bookbinding machinery for nearly a century at its
location in Bloomfield, Connecticut. In recent times, Smyth
has encountered economic difficulties caused in part by
changes in the market place and its failure to accommodate
itself to such changes. Because of its financial difficulties
assistance was rendered to it by the Connecticut Bank and
Trust Company (hereinafter referred to as the Bank). By
early 1976, Smyth was in default on a loan of $2.3 million.
The Bank thereafter sought a buyer for the purpose of
reorganizing Smyth and avoiding bankruptcy proceedings.
The Bank had engaged in discussions with Smyth's main
competitor, the Kolbus Corporation of Germany, with
respect to a possible sale. However, Kolbus made an offer at
a price lower than what the Bank considered a fair economic
return. Prior to that time, Beacon Industries had been a
customer of Smyth. Beacon stock was owned 100 percent by
Norman Sarkisian, its chief executive officer and member of
a three-man board of directors, including Mr. Ives and Mr.
Hastings. Beacon's principal product is jet engine parts. It
also produced a line of winches. In February 1976, Beacon
had purchased the rights to a centrifugal pump, otherwise
known as the Richter pump, which was named after its
inventor then employed by the prior owners of Smyth; i.e.,
the Tech Group. The pump had been developed at the
Smyth facility.
The Bank turned to Beacon as a potential buyer for
Smyth. In May 1976, the Bank introduced Norman Sarki-
sian to Smyth. Beacon offered to purchase 82 percent of the
stock of Smyth and invest $500,000 of working capital which
was not to be used for the payment of debts, but rather was
to be used for operational purposes. A condition of this offer
was that Beacon could exercise an option to purchase the
remaining 18 percent of stock between March and Septem-
ber 1978 based on either a flat sum of $452,000, the book
value of Smyth, or an arbitrated figure. The deal was closed
on June 19, 1976. The 18-percent minority stock interest was
represented by one member on Smyth's board of directors.
The two other members of Smyth's board of directors were
Norman Sarkisian and Hastings, also of the Beacon board of
directors. Sarkisian became the chief executive officer of
Smyth. Hastings became the corporate secretary. At the
time of the closing of the sale of Smyth to Beacon, a financial
audit was submitted to Sarkisian. Smyth's sales for the full
year ending June 30, 1976, including the sales of its
subsidiary corporation in England, amounted to $4.2 mil-
lion. Its net loss was $140,000. Its total assets were estimated
at $4.6 million. Becon was also faced with a $3.2 million
liability due to the Bank under an arrangement whereby
payments were due for principal only after the lapse of a 2-
year grace period. However, monthly interest payments were
due. Due also was the liability for a mortgage of $1 million
to a savings and loan association. Other liabilities included
potential lawsuits, trade accounts payable, and deferred
compensation to former officers from 1968. Sarkisian con-
strued the amount of deferred compensation to have been
unwarranted and he therefore stopped payment and encoun-
tered a lawsuit over this debt. He further encountered liens
on certain equipment and debts to a former Italian subsid-
iary and a breach of contract suit.
Sarkisian testified that after the sale his immediate
objective was to reduce the overhead and to cut out the
"fat." He concluded that his product lines at Smyth were
insufficient and would not support a viability of the
Company in the market place. After a couple of months he
reduced the operating overhead of Smyth by $326,000. He
did this by phasing out certain nonunit jobs and reducing
other cost items. Whereas 12 to 13 managers had been
retained by Smyth, Beacon now brought in personnel from
its East Hartford facility to constitute the management at no
cost to Smyth. Thus, the following Beacon personnel served
in a dual capacity as managers at Beacon and Smyth:
Norman Sarkisian, president and chief executive officer of
both corporations; Larry Schwartz, manufacturing manager
of Beacon and general manager of Smyth; Robert Bourett,
quality control manager of Smyth and Beacon manager; and
Sandra London a personnel manager and personal secretary
to Norman Sarkisian. Beacon also provided office mainte-
nance personnel and others from its East Hartford location
to service the Granby Street facility in Bloomingfield. Thus,
according to Sarkisian, he saved several hundreds of thou-
sands of dollars annually through such interchange of
managerial and office maintenance personnel.
The period from August through December witnessed
various other cost-cutting techniques used by Sarkisian.
Sarkisian also analyzed the Smyth inventory which was
estimated to have a paper value in excess of $2 million. He
came to the conclusion that of that amount $991,724 was to
be written off as a "loss" because that portion of the
inventory was no longer salable. The basis for his conclu-
sions was that certain parts had not been sold over several
years. Therefore, he took such parts and placed them in
what he termed a "write-down inventory." He also found
that there were inventories of machines that were sold only
once or twice and not thereafter. In reality what Sarkisian
did was to segregate the write-down inventory into a closed
room in the back of the shop. He did not dispose of it as he
testified that the minority interest in the stock ownership
have an ongoing concern as to the disposition of the assets of
Smyth. Thus, the entire inventory was still in tact as of
December 31, 1976. However, as of December 31, 1976, the
value of the active inventory was placed at $850,764.
In July 1976, Sarkisian finalized his product line. Smyth
had made many lines of bookbinding machines in its 100-
year history. The prior management had decided to elimi-
nate the conventional or low-speed line of machinery which
in effect eliminated 99 percent of Smyth's old customers.
What was left was a line of high-speed machines. The
potential market for such machines was reduced to a few
customers which included such enterprises as Rand McNal-
ly, the Donnelly Corporation, the Government Printing
Office, and others. Smyth was therefore reduced to 7 or 8
basic machines of a total of 22 machines that are necessary
to manufacture a complete book. For the 12-month period
ending June 30, 1976, the total sales volume of both Smyth
and its English subsidiary, Smyth Horne, was $4,169,000. Of
that amount only 15 percent was attributable to the "new
machine business." The total sales were distriuted approxi-
1141
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
mately equally between Smyth and his English subsidiary,
according to Sarkisian's rather vague testimony.
On July 1, 1976, Smyth had a sales backlog of $432,000.
Sarkisian testified that as of December 31, 1976, the sales
backlog was $204,000. For the last 6-month period there
were $1,404,000 delivered in Smyth's sales. With respect to
Smyth's sale during the summer of 1976 the greatest portion
of its sales and the foundation of its business according to
Sarkisian was the manufacturing of spare parts. The spare
parts production was therefore the life blood of the Compa-
ny. Thus, according to Sarkisian, if the spare parts business
ceased to be viable, the Company was "dead." Accordingly,
he decided, after 2 months of spending his time cutting
expenses, that further moves were necessary beyond pure
cost cutting. He decided that Smyth must build up a new
product line, or that another company or enterprise with
products related to Smyth's products, the geographic arts
industry, or even some other related or allied type of
business must be acquired or merged with the Smyth
ope'ation.
One move that Sarkisian immediately made was in regard
to gear cutting work. Four of five employees employed by
Smyth had previous work experience in such production at a
time Smyth had been owned by the Tech Group. Beacon had
been supplying a substantial amount of gear cutting business
to area companies for its supply of gears used in winches
that it produced. Beacon then ceased subcontracting this
work to anybody other than to Smyth. This immediately
added hundreds of hours of work at a guaranteed rate of $20
per hour for Smyth. This commenced in August 1976.
Schwartz testified that at first 3 to 4 Smyth employees were
employed on gear cutting, but ultimately that amount
reached a maximum of 15 Smyth employees. This work was
done in the Smyth plant.
Sarkisian testified that Smyth's machines were old and
slowly deteriorating and had difficulty in keeping tolerances.
He decided that the replacement of these machines was
necessary and that the projected cost of such a replacement
would amount to approximately $1.2 million.
In September 1976, Sarkisian addressed an assemblage of
employees. This speech was the result of a meeting that he
had held previously with the managers of Smyth and Smyth
Horne. The earlier meeting included the engineering depart-
ment as well as the lower management levels of both entities.
Approximately 25 managers and engineers attended that
first meeting. At that managerial and engineering meeting, it
was decided that Smyth should introduce a totally new
concept in bookbinding. The concept was embodied in an
invention which was patented by Smyth's chief engineer.
The introduction of this new high-speed liner was planned to
take place in June 1977. The prototype of that high-speed
liner was to be displayed at a trade show in Germany and it
was necessary that it be shipped out in the middle of March.
Accordingly, Sarkisian summoned all the Smyth unit em-
ployees and addressed them in the plant in September 1976.
At the meeting he displayed a chart indicating the floor
space area of Smyth and how it was to be revised in
accordance with his plan for Smyth's survival. He outlined
the objectives and what he had in mind; i.e., the replacement
of all or substantially all of the manufacturing equipment
with new contemporary "numerical control machines." He
told the employees that it was his intention to reduce
inventory which at that time took up one-third of the floor
space at the Granby Street shop, and to use former inventory
space for assembly lines "for the kinds of things we were
planning to do in the near future as regard building up the
business." Sarkisian also announced his plan for the increase
of the hours of employment from 35 or 40 to 50 hours per
week.
According to Sarkisian, such a move was not justified by
the existing backlog of orders, but was undertaken to instill a
higher morale among the Smyth employees. In Sarkisian's
own words: "I wanted everybody to understand that it was
our intention to take this business and bring it from the
trouble that it was [in] to a level of profitability as quickly as
possible and I didn't want anybody to feel that we weren't
trying to do this."
According to Schwartz, laid-off employees of Smyth were
recalled in October 1976. The increase of hours to 50 per
week affected a total of about 28 employees. Accordingly,
the Union was notified and expressed enthusiasm about
these moves.
B. The Relationship With the Union
At the time that Smyth was acquired by Beacon, a
collective-bargaining agreement was in effect between the
Union and Smyth. The expiration date for the collective-
bargaining agreement was February 5, 1977. Sarkisian was
aware of the existence of the contract at the time of the
purchase. Shortly thereafter, he met with the union-shop
committee which consisted of George Gordon, Henry
Mereschuck, and Clifford Boyle. In that meeting he ex-
plained the terms of the purchase and, according to him,
they discussed 14 grievances and resolved all those outstand-
ing grievances. Scheduled arbitration hearings were canceled
and the Union, having been satisfied with the response by
Sarkisian, withdrew all pending grievances. This testimony
is not contradicted except to the extent of the number of
grievances which Gordon testified amounted to only six.
Essentially, however, there is no contradiction that the shop
committee and Sarkisian as well as Schwartz met and
resolved outstanding grievances.
Sarkisian testified that during the summer of 1976, as he
encountered employees in the shop, he was presented with a
wide variety of questions as to the future of the Smyth
Company. Employees also offered such suggestions as
moving the entire Beacon operation to Smyth. Sarkisian
testified that, although he would have been delighted to do
that with the excess of space available at Smyth, he was
precluded from doing so by the necessity of the automated
Beacon machinery to operate in an air-conditioned atmo-
sphere which was not to be found at Granby Street in
Bloomingfield. Other employees presented Sarkisian with
questions about the potential of the centrifugal pump.
Although the Richter pump was 12 years old at the time, it
was still in the prototype state and only a few pumps had
been sold at the time of the first hearing in the matter.
Richter had been hired as a consultant at Beacon in
February 1976. After Beacon had acquired Smyth, it used
the Granby Street facility and its employees to build a test-
stage area at the site of the Smyth plant. Two Beacon
1142
SMYTH MANUFACTURING COMPANY
employees were used in the endeavor, including a market
representative and a Beacon laborer. One Smyth bargaining
unit employee was used full time on pump assembly work at
Smyth. As of the first hearing in this matter the Smyth
pump had shown a $14,000 return on an investment of
$347,000. However, the Smyth employees during the sum-
mer of 1976 continually inquired of Sarkisian as to why
Smyth could not build more pumps. Sarkisian responded
that as soon as the business was there "we would build
them." At the hearing, however, Sarkisian testified that a
substantial amount of the machinery required to build the
pumps was not to be found at Smyth. He also explained that
that was one of the reasons that he had intended to purchase
new machinery at Smyth. However, during the summer of
1976, this was still a speculative matter, but he apparently
entertained the plausibility of such a move.
During that period, Sarkisian engaged in numerous
conversations with George Gordon, a union-shop committee
chairman. Some of the talks were casual while other talks
concerned union business. However, Gordon had filed no
formal grievances.
Subsequent to the aforementioned September general
employee meeting, the union-shop committee met with
Sarkisian. According to Sarkisian, Gordon again inquired
about the status of the Richter pump business and particu-
larly when would it commence. In Sarkisian's own words, he
responded: "George get off my ass about the pump. It has
nothing to do with Smyth." He pointed out to Gordon that
half of the employees working on the prototype pump were
Beacon employees and that the matter would be discussed
when it became a reality. Inasmuch as the test stand was not
constructed until October, it is more likely that the meeting
occurred when Gordon testified it did, in November or
October.
The occasion for the foregoing discussion between Gor-
don and Sarkisian was Gordon's confrontation with
Schwartz with respect to pump assembly work. Gordon
having observed a Beacon employee engaged in assembly of
the prototype pump questioned Schwartz as to whether
Smyth's employees might be assigned to that project.
Schwartz indicated that he would consult with Sarkisian.
Later, Schwartz told Gordon that actual assembly of the
pump would not be started for some time. Gordon asked for
a meeting with Sarkisian. Subsequently, he and Henry
Mereschuck met with Sarkisian and at that point Gordon
asked when assembly work for the pump would begin
inasmuch as business was slow at Smyth and employees at
Beacon were working 10 hours a day. According to
Gordon's more convincing and credible testimony, Sarkisian
banged his hand on the table and told him that if they put
any pressure on him that he would lay off 15 of the Smyth
assemblers. Gordon retorted that there was no need to
threaten anybody and Sarkisian further responded: "I'm just
telling you the way it is and it had better be done my way or
else." At that time there were no employees at Smyth on
layoff status.
Subsequently, in November, Gordon engaged in another
conversation with Larry Schwartz concerning an instance of
a foreman's having been engaged in bargaining unit work
contrary to the collective-bargaining agreement at a time
when there was a unit employee on a layoff status.
According to Gordon, Schwartz became infuriated and told
Gordon that he had a message for him from Sarkisian to the
effect that if he were to put any more "chicken shit
grievances in, he would close down Smyth." When Gordon
attempted to explain that a foreman had indicated to him
that there was enough unit work to recall a laid-off employee
and that all he had to do to become convinced was to
telephone the foreman, Schwartz picked up the phone and
telephoned a foreman. Upon receiving a response on the
telephone, Schwartz immediately thereafter hung up the
phone and kicked a chair into a wall and said to Gordon, "I
don't see how we can continue like this. If you put in a
grievance-and sooner or later you are going to do that-
and Norman is going to close the place down."
Schwartz testified that the discussion with respect to a
foreman doing unit work did in fact occur, but it involved a
different foreman from the one testified to by Gordon.
Otherwise and more importantly, Schwartz testified that he
did indeed become upset and that he did, in fact, tell Gordon
"these chicken shit grievances have got to stop or there's
going to be some changes around here." He conceded that
he did not explain to Gordon what he meant by "some
changes around here." According to him, he invited Gordon
to sit down and discuss grievances of substance, but not to
waste his time about a few hours of work performed by a
foreman. Schwartz conceded that up to that point Gordon
had not actually filed any grievances. Schwartz clearly had
evidenced a low boiling point with respect to grievance
activity by Gordon despite the Union's low grievance profile
during the early months of Sarkisian's management. Even
under Schwartz' version of the conversation there is an
implication of some retaliation in economic form. However,
I found Gordon to be the more credible witness. Schwartz
when testifying became visibly upset in recounting the
audacity of Gordon to present a grievance which Schwartz
considered trifling. Schwartz showed a remarkable lack of
candor throughout his testimony, particular with respect to
bargaining positions taken by Respondent which will be
discussed below in more detail. I credit Gordon's testimony
in its entirety with respect to his confrontation with
Schwartz. Indeed, Schwartz' hypersensitivity to Gordon's
minimal grievance activity is in accord with Sarkisian's own
hypersensitivity to Gordon's prior questions about the
Richter pump and its effect upon unit work.
Subsequent to the Schwartz confrontation, Gordon had
met with Sarkisian at the Smyth office. He questioned
Sarkisian as to whether the message given to him by
Schwartz was accurate and, according to Gordon, Sarkisian
responded, "Yes, I got to have things my way. . . for me to
turn this plant around I got to do these things, I got to have
freedom and you are restricting me." Gordon protested that
the employees were working hard and Sarkisian responded
that he was aware that they were making efforts. The only
conversation Sarkisian recalled with respect to Gordon on or
about this time related to the aforementioned one which
Sarkisian placed immediately following the September gen-
eral meeting with employees. I conclude that Sarkisian was
in error as to the date of this confrontation, Schwartz placed
his confrontation with Gordon about the foreman perform-
ing unit work in November. I do not consider Sarkisian's
testimony to constitute an effective or convincing contradic-
1143
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tion of Gordon. I credit the detailed, convincing, and certain
testimony of Gordon with respect to his confrontation with
Sarkisian.
C. Contract Negotiations
1. The December 17, 1976, meeting
On November 15, 1976, Union Business Representative
Jack Ferreira notified Smyth of an intention to commence
negotiations for a new contract. The first negotiation
meeting was held on December 17, 1976, at Smyth's
premises. The Union was represented by Ferreira, Gordon,
Mereschuck, and Boyle. Smyth was represented by Sarki-
sian, Schwartz, Bob Bourett, and Sandra London. The
Union's initial proposal was presented. Several additions
were sought to the existing collective-bargaining agreement,
including (I) a morning coffeebreak, (2) an additional
holiday, (3) replacement of the contract reference to depart-
mental seniority with a plantwide seniority system, (4) an
increase in the night-shift premium, (5) changes in labor
grades, (6) additional vacations, (7) a 14-percent increase in
the pension contribution, (8) life insurance coverage for
spouses, and (9) a profit-sharing plan. According to Gordon,
Schwartz asked for changes in the seniority system to allow
the employer greater flexibility with respect to the termina-
tion of employees of high tenure. Very little was accom-
plished in that meeting. Sarkisian agreed to provide written
proposals for the next negotiating meeting. Sarkisian testi-
fied that his objectives for a collective-bargaining agreement
at the onset of negotiations was to achieve an agreement that
"took into consideration Smyth's problems and goals for the
. . . ensuing years." He stated that the Company's objective
was a 15-percent economic increase for the employees and a
"suitable contract" for the Employer. Schwartz testified that
tentative agreement was reached on some of the Union's
proposals such as the coffeebreak; a one-half paid lunch for
the second shift; a 10-minute coffeebreak after 9 hours of
work; a birthday holiday; an increase in the night-shift
premium from 7 percent to 10 percent; a retention of
seniority upon promotion of an employee out of the unit for
a period of I year, not for 3 years as previously provided; a
removal of training progession; vacations after 20 years; and
bereavement for siblings. He testified that all this occurred at
the December 17 meeting. Gordon testified that the only
resolution obtained at the December 17 meeting was a minor
agreement in the change in title of the job classification.
However, there is no contradiction to Schwartz' testimony
that at some point Respondent agreed to the foregoing.
Subsequent to the December 17 negotiating meeting,
Gordon and Mereschuck were summoned to Smyth's office
where they were confronted by Sarkisian, Bourett, Schwartz,
and London. Sarkisian asked Gordon and Mereschuck what
their feelings were with respect to an open shop. The
expiring contract had provided for a union shop. Gordon
asked the purpose of the question and Sarkisian indicated
that he had a potential business deal to acquire another
enterprise and would like to know whether he would have
the freedom to have an open shop or not. Gordon instructed
him to bring it up at the next negotiation session in the
presence of Union Representative Ferreira. Sarkisian did not
specifically contradict Gordon about this encounter and
merely testified that he had friendly conversations with
Gordon concerning an acquisition of a "Canadian subsidiary
in Montreal which was nonunion." Schwartz was silent
concerning this encounter. I credit Gordon.
2. The December 21, 1976, meeting
The next negotiating meeting was held on December 21.
At that time Smyth presented its first proposal. Members of
the union negotiating committee expressed dismay as the
proposal had the words "delete" in place of the old
contractual provisions with respect to seniority, subcontract-
ing, grievance procedure, hourly rates, and foremen's perfor-
mance of unit work. With respect to union security, the
proposal indicated the following addition: "It shall be a
condition of employment that all employees may choose
whether or not they wish to be members of the bargaining
unit."
Schwartz, who acted as chief employee spokesman at this
meeting, said that the Company's proposals were in compli-
ance with its objective to "look to a clean slate." With
respect to the deletion of seniority, union security, and
supervisors performing union work, Gordon exclaimed,
"Are you serious?" According to Schwartz he apologized for
using the word "delete." He testified that he meant that it
should be construed as "review" because he considered the
old contract to be "like a role of spaghetti." In cross-
examination, however, he conceded that he had antipathy
toward job structures, which he considered too complicated,
and further had antipathy toward any restrictions toward
subcontracting which he wanted to totally eliminate. With
respect to his use of the word "delete" in that regard, clearly
he meant what he said according to his cross-examination.
Yet, with respect to the use of the word "delete" regarding
the seniority provisions he testified in cross-examination that
he intended another meaning. Schwartz' testimony in this
regard is confusing and unconvincing. I credit Gordon that
Schwartz did in fact insist upon actual deletion at that
meeting.
3. The January 5, 1977, meeting
The next negotiation meeting was held on January 5,
1977. All parties were in attendance except Sarkisian.
Gordon testified that Schwartz and the employer team
insisted on a deletion of the seniority provision to the
contract and that the Union was adamantly opposed to such
elimination. According to Gordon, London stated that it
was too bad that the Union had not indicated their position
prior to the meeting of January 5. Ferreira asked her what
she meant and London responded that Sarkisian wanted an
open shop and if he did not get it he would not agree to a
seniority clause in the new contract. Ferreira responded,
"No way." According to Gordon, Schwartz retorted, "re-
member after February 5, you have nothing, a big zero." At
that point Ferreira picked up his briefcase and the union
committee walked out without agreement. A meeting was
held afterwards with employees on the management propos-
al. It was rejected by the employees, who also voted for a
1144
SMYTH MANUFACTURING COMPANY
strike sanction. This meeting occurred in the cafeteria in the
employer's facility.
Although London testified, she did not contradict Gor-
don's testimony. Schwartz merely testified that on January 5
he did not tell an employee that the plant would close down
if the Union did not agree to an open shop. In no other way
did he testify in any manner inconsistently with that of
Gordon as to the January 5 meeting. Ferreira's testimony
corroborates Gordon with respect to the comments of
London, but his testimony did not recall the same statement
attributed by Gordon to Schwartz. However, in the absence
of specific, explicit contradictions, I credit the detailed and
certain testimony of Gordon.
4. The January 7 interrogation
On January 7, Sarkisian spoke with Gordon in the plant in
the shop area. Sarkisian approached Gordon and asked him
for the identity of an employee who allegedly made certain
statements about Sarkisian at the union meeting. Gordon
told him that what was said about him was none of his
concern, but what should concern him was that the
employees voted 100 percent in favor of a strike sanction.
According to Gordon, Sarkisian persisted, but Gordon
refused. Sarkisian then attempted to solicit from Gordon
what it was that the employees wanted.
Sarkisian testified that he was told by employee Bob
Wood, that someone at the union meeting had told him that
he was trying to eliminate all employees over the age of 50.
He became very concerned about it. Wood did not know the
identity of the employee who made the statement at the
union meeting. Sarkisian testified that at the next negotia-
tion meeting he asked who had made the statement that he
was interested in terminating employees over the age of 50,
and that Ferreira responded that he made that statement,
laughed, and said that it was only a joke. Sarkisian testified
that that subject did not come up at any further meetings.
He was not corroborated in his testimony by Schwartz or
London. He did not specifically deny having a conversation
with Gordon in the shop as set forth in Gordon's testimony.
I credit the far more certain testimony of Gordon. Ferreira,
however, did not contradict Sarkisian as to what was
discussed in this regard at a union meeting. Therefore, I
credit Sarkisian that the matter was also discussed at a union
meeting, as he testified.
5. The January 1977 layoffs
On January II, the union negotiating committee was
summoned to Sarkisian's office where, according to Gordon,
they were told that Sarkisian had intended to lay off 12
assemblers at Smyth. He was aware that a strike sanction
vote was taken and that business was slow at Smyth, and he
did not intend to "carry these people if they didn't
appreciate him and they turned around and they strike
against him." Sarkisian further stated that there would be
additional layoffs or cutbacks in hours in the future. Gordon
asked if the Union would be notified of layoffs and Sarkisian
responded that it would. Gordon attempted to question
Sarkisian further about the layoffs, but Sarkisian walked out
of the room.
Sarkisian testified that in January he decided that there
was insufficient work for assemblers. Indeed, as noted
earlier, Gordon acknowledged such a state of affairs with
respect to his pump work testimony. Sarkisian had also
concluded that the assemblers were not moving quickly
enough in moving the inventory to provide space for new
production machinery. Therefore, he testified, he simply
decided that he could not afford to keep the employees on
the payroll and he called a meeting with the union
committee on or about January 17. He testified that he did
indeed tell them that a layoff would occur because there was
no work for 11 employees. He told them that there was work
for three employees and they discussed the matter. The
committee and Sarkisian agreed to retain Gordon despite
his lack of seniority because he was chairman of the
committee, as well as two most seniored employees. The
layoffs were effective as of January 14. Sarkisian did not
deny the comment attributed to him by Gordon's testimony,
and Gordon did not deny that discussion about employees
would be retained took place. I therefore conclude that
Sarkisian did not in fact convey his decision in the manner
described by Gordon and that discussion did take place as to
which three employees would be retained. Sarkisian testified
that his resentment with the attitude of the employees,
manifested by the slow movement in rearranging inventory,
occurred substantially prior to this event. It seems clear that
the inventory had not been moved by January 7. Sarkisian,
however, did not testify that he had formulated any definite
plans to abandon his objective of acquisition of the produc-
tion machinery as of January 7. However, he started
"readjusting" his "thinking" in December when he began to
realize that he had not "shown proper seeds." With respect
to the date of the meeting with the shop committee, Gordon
testified with great certainty and confidence that it occurred
on January I 11. Sarkisian, however, was uncertain as to
whether the meeting occurred 7 or 10 days prior to the the
January 14 layoffs. Because of his general uncertainty as to
dates, and his uncertainty in demeanor particularly with
respect to this defense, I credit Gordon that the meeting
actually occurred on January 11 and not a week to 10 days
before the layoffs.
6. The January 13 meeting
The next negotiating meeting was held on January 13.
Gordon testified that, although Smyth did not present its
seniority proposal in writing, it was discussed at this
meeting. According to Gordon, the Company took the
position that it wanted the right to lay off whom they
wanted to with "complete freedom." The Company also
expressed the desire to alter the grievance procedure to the
point where it would constitute mere discussion between the
employee and the foreman at the first stage without the
presence of a union representative. The Company further
proposed to eliminate arbitration. A discussion ensued about
payment of the arbitrator, but no agreement was reached on
which party would pay for the arbitrator. According to
Gordon, Schwartz stated that in the event of a layoff he
wanted the right to retain employees whom he considered
more qualified. The Union rejected that. Schwartz then
suggested that maybe his proposal would make better sense
1145
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
if he formulated it in writing. Agreement was reached with
respect to vacations and maternity benefits. Gordon's
testimony was not specifically denied and I credit him.
7. The January 21, 1977, meeting
On January 21, the negotiation meeting included a new
party to the proceedings, Thomas Carroll of the Federal
Mediation and Conciliation Service. John Gallagher, a grand
lodge representative of the Union, also joined the union
bargaining committee. At this meeting, Smyth presented its
written seniority proposal, which contained the following
language:
Section 2. An employee shall be deemed a probation-
ary during the first 60 working days of his continuous
employment. During the probationary period such
employee may be laid off or terminated without any
obligation upon the Company to reemploy him. After
such employee shall have completed the probationary
period, and if he elects to become a union member, his
name shall be placed upon the seniority list, and his
seniority shall be counted from his latest date of hiring.
[Emphasis supplied.]
The seniority clause as proposed by the Company set forth
how employees would lose their seniority and described the
application of seniority with respect to layoffs. Section 5
provided that:
The Company may exempt from the . . . effects of
the seniority provisions employees who possess special-
ized training or experience or who are performing
specialized work which no other employee in the
department is qualified to perform.
Thus, at least, by the submission of the Company's written
proposals it is clear that Respondent formally withdrew
from a position calling for total abrogation of seniority rights
and complete freedom with respect to layoff termination.
Departmental seniority was proposed by the Employer
with respect to layoffs. In the event of a layoff, the least
senior employees were to be laid off first "based upon
management needs." If there were jobs in other departments
for which the employees were qualified, they would be
offered transfer rights in lieu of a layoff. It seems that the
Union's main objective to the Employer's proposal centered
about the apparent discriminatory effect which made senior-
ity rights contingent upon union membership. More basic, of
course, is the additional premise of this seniority clause that
was based upon an open shop; i.e., "If he (employee) elects
to become a union member," he obtains seniority rights.
However, Gallagher expressed his objections to the patently
discriminatory effect of the language and asked that it be
removed. Sarkisian agreed to eliminate it.
Gordon testified, however, that the union committee
totally rejected the Company's written contract proposal not
only because of the discriminatory language in the seniority
proviso, but also because it deleted the union shop. Accord-
ing to Gordon, Sarkisian responded that he was insistent
upon the open shop because of the possibility of acquiring
another business to merge with Smyth; i.e., a nonunion shop.
According to Gordon, Ferreira offered to exempt any newly
acquired employees from union membership in the event of a
purchase or merger of a new plant, but Sarkisian rejected the
offer and insisted upon an open shop.
Discussion further ensued as to Respondent's insistence
upon the need to eliminate the subcontracting clause to have
work performed by outside subcontractors which would be
faster, quicker, and of better quality. The committee insisted
that the work had always been done at Smyth and had been
done well in the past. Ferreira rejected the Company's
request for elimination of the subcontracting clause. the old
subcontracting clause in the preexisting contract set forth
under article xxi, "Subcontract," the following:
The Company shall not subcontract work which can
be economically performed with available Company
equipment and be of the same quantity and quality by
bargaining union employees if such subcontracting
either (1) results in the layoff of employees or (2) results
in a reduction in the workweek below forty (40) hours
per week.
The record is somewhat unclear as to whether a meeting
was held on January 20. Gordon refers to a January 20
meeting and a January 21 meeting. Gallagher testified that
the first meeting at which he and Carroll were present
occurred on January 21. From the total context of Gordon's
testimony, I conclude that his reference to January 20 was
inadvertent and that the meeting actually occurred on
January 21 when the Company submitted its entire written
proposal to the Union. That proposal, of course, eliminated
the union shop.
The Company also offered a new wage structure which
had an impact on newly hired employees by reducting their
wage rates from the current or the expired contractual rates.
However, Schwartz argued that those rates did not apply to
the then-employed employees and that there were no new
probationary employees on board at the time. The Union
found the offer unacceptable, but presented no counteroffer
at that time. The next item discussed was the Company's
wage proposal which consisted of a 15-cent-per-hour in-
crease after 6 months. According to Gordon, Schwartz
stated that an employee would be entitled to a higher rate of
increase under a merit system; i.e., if an employee were
punctual, he would get more than his 15-cent increase.
When Gordon asked how much of a raise it would be,
Schwartz responded that that would not be revealed because
it was "none of [your] business." Gordon responded that it
was their business as long as a union was certified as
bargaining representative, but Schwartz remained adamant.
They adjourned without agreement.
Sarkisian and Schwartz both testified in general terms
about negotiations that transpired in January and thereafter.
They did not make reference to specific meetings. Thus,
there was no specific denial or contradiction of Gordon's
testimony about the January 20 meeting. Sarkisian, however,
testified that at sometime in the January negotiations, when
the merit pay proposal was suggested by the Employer, a
member of the union bargaining committee raised the
question as to what was "meant" by the merit program,
Sarkisian responded that "the merit program would be a
matter of the foreman of that department with the discussion
with the employee at the end of every 6 months; and the
determination would be made by the foreman as to the
man's merit depending upon the service time, depending
1146
SMYTH MANUFACTURING COMPANY
upon his attendance and his ability, and depending upon his
quality of work." However, he admitted that he had not
"spelled that out," but rather he merely argued that the
system had worked out "very well in our other company,
Beacon Industry, and we explained exactly how it works
there. And we showed them a number of examples of people
who got the raises and how much they got. But we did not
make any specific terms at that time."
I gather that from this testimony that it was Respondent's
intent to request a merit raise program based upon the
discretion of the foreman, which in turn was to be guided by
various ad hoc factors, including the subjective evaluation of
the line foreman. There was no specific denial that at some
point in the January 21 negotiation Schwartz had taken a
position that the factors relied on by the foreman in any
specific situation would be a matter of no concern to the
Union. I therefore credit Gordon's testimony in this regard.
Sarkisian, however, further indicated in his testimony that
after he had given the general explanation of his merit pay
proposal the "Union" responded "okay" by which he
assumed agreement. I find, however, that Gordon's testimo-
ny to the effect that the Union was insistent upon precise
information upon which raises were determined was more
probable than Sarkisian's testimony that the Union meekly
agreed to accept a wage progression system that depended
upon subjective determinative factors.
Sarkisian testified that he told the Union, when it offered
the January company proposal, that the Employer was
willing to negotiate and discuss the seniority proviso and
would be willing to remove any illegal provision. He further
testified that he offered to negotiate any other area that the
Union desired. However, he also told the Union that they
were running against a time limit; i.e., the "strike deadline"
which had been set for February 5. Although at numerous
points in his testimony he referred to this January proposal
as a "final proposal" he corrected himself to insist that that
is not what he told the union committee.
Sarkisian conceded that, at some point in the negotiations
after he had made an argument on behalf of the crucial
nature of an open shop to his plan to acquire an additional
enterprise, Ferreira asked how many new employees the
Employer had in mind. Sarkisian indicated that he had no
idea. Sarkisian then conceded that Ferreira stated that if
Sarkisian would give him a figure or an estimate of the
number of employees the Union might consider exempting
those employees from the Union. Sarkisian further conceded
that there was "good conversation about the possibility of
that happening." Yet, it is clear from Sarkisian's testimony
that neither at that point or at any point thereafter did he
withdraw from his position of seeking and insisting upon an
open shop for all employees. It is also clear that he did not
respond to the Union's offer of a concession of exempting
new employees from the union-shop proviso on condition
that the union shop remain extant for all old employees.
8. The reduction of shift hours
On January 23, a notice was posted on the bulletin board
in the plant indicating that the hours of employment were to
' Sarkisian conceded that he was unaware as to how the announcement of
the cutback in hours was made or whether the Union received prior notice
about the timing and method of the cutback.
be cut from 8 hours a day to 7. The designated hours were
also indicated thereon. Gordon testified that he and Meres-
chuck immediately confronted Schwartz and asked why the
notice had been posted. According to Gordon, Schwartz
responded that Sarkisian had warned him "way back" when
the assemblers were laid off that if things kept going "the
way they were" this might happen. Gordon protested that
Sarkisian had promised him that he would notify the Union
of any layoff or a reduction in hours. Schwartz responded,
"That's all I got to say." Schwartz then allegedly told
Gordon that his only concern was that he was included in
the reduction of hours like everyone else. No prior notice
had been served upon the Union, according to Gordon. The
cut was to take effect at the end of the month. The cut in
hours at this time was from 40 hours a week to 35 hours a
week. According to Sarkisian, a cut had taken place from 50
to 40 hours several months before this. The General
Counsel's witnesses are silent on this earlier reduction.
Sarkisian testified that his determination to reduce the hours
was made because of the paucity of work available and after
a confrontation with Schwartz upon a review of the labor
hours required by the backlog. Sarkisian offered no defini-
tive evidence other than this generalized statement. Further-
more, it is unclear whether there is any specific economic
event that occurred on or about January 23 to precipitate
this action or whether it was a result of a review of a
longstanding condition. From the total context of Sarkisian's
testimony and the record as a whole it would appear that the
lack of work to justify a full 40 to 50 hours a week had been
an ongoing matter. Certainly, according to Sarkisian's
unchallenged testimony, the increase in hours to 50 hours a
week was unjustified by the actual work on hand. Sarkisian
further testified that he had given prior notice of the
reduction of hours at some point in negotiations during
January. He was very vague and uncertain in his demeanor.
He testified in a general fashion that he merely explained to
the union negotiating committee that there was a lack of
work to which the committee responded, "We understand."
He testified that he had further talked to Gordon about the
necessity either for a layoff or a reduction in hours and asked
Gordon his preference. Gordon had responded that he
would communicate his preference at a future meeting.
According to Sarkisian, Gordon, however, approached him
the next day and indicated that the employees would prefer
to work fewer hours. He testified that this occurred
approximately I week before the actual change. Sarkisian's
testimony was particularly clouded as to how the announce-
ment was made.' Sarkisian further testified that the only
discussion about the change concerned the particular hours
that were to be worked, and this occurred at a later
negotiating meeting. If Sarkisian is to be believed, Gordon
was therefore taking a position which was contrary to the
one he allegedly took earlier with respect to the January
layoffs. Sarkisian had testified that with respect to the
January layoffs he had communicated with Gordon and at
that time Gordon had taken a position in favor of a layoff.
Schwartz was silent as to his participation in the decision
to cut back hours. He did not contradict the testimony of
Gordon. I credit the testimony of Gordon which was
1147
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
certain, straightforward, responsive, and definitive. I discre-
dit Sarkisian, whose testimony was generalized, vague,
uncertain, and superficially glib. I conclude that no advance
notice was given about posting the cut in hours and that the
possibility of negotiations was cut short by Schwartz' refusal
to discuss the matter further with Gordon and his allusion to
Sarkisian's prior warnings.
9. The January 26, 1977, meeting
The next negotiation meeting was held on January 26.
Gallagher was also present. Gordon testified that he asked
Sarkisian to rescind his decision to cut the hours and that
Sarkisian refused to restore the cut, but did agree to
reschedule the work shift to 7 a.m. through 2:30 p.m.
Sarkisian then repeated his request for an open shop.
When asked whether that was because of the Company's
intention to acquire a new plant for merger purposes,
Sarkisian responded, "No, that fell through." Gordon then
inquired why it was that the Employer was insisting upon an
open shop if those plans fell through. Sarkisian responded
that he was still looking for another plant and it was
necessary for him to have an open shop and that without an
open shop he could not get another plant and without
another plant he would close. He insisted that he was still
looking for another prospect and that he had a "right" to
bring in new employees and that they did not have to join
the Union. He repeated the necessity to have an open shop,
and then stated that he would close down if he did not have
an open shop. Ferreira testified that this threat occurred at
the January 13 meeting. Gallagher was silent as to any
threat to close the shop during the January 26 meeting.
According to Gallagher, the Union presented its proposal on
seniority which was rejected by the Employer because it did
not enable it to have enough flexibility to transfer employees.
According to Gallagher, the Employer did not respond to
the Union's grievance and arbitration proposal, but re-
mained adamant on its position that arbitration should be
eliminated as a step in the grievance procedure.
Sarkisian was quite explicit and vivid in his testimony
about the necessity for an open shop as an essential factor for
Smyth's survival. Sarkisian was particularly elusive about
what he exactly said at the negotiations about the necessity
for an open shop. He denied that at any time that he
threatened to close down the plant if he did not get an open
shop. It is clear that he did not consider the Union's
suggestion of something less than a union shop; i.e., the
exemption of new employees from the Union's security
proviso. Supposedly, according to Sarkisian, the urgency for
the inclusion of an open shop in the negotiations originated
during his search for the acquisition of or merger with
another enterprise. He testified very generally about an
enterprise in New Jersey, the name of which he could not
recall in his direct testimony, but for which he was
negotiating or at least had engaged in some discussion about
acquiring its Canadian subsidiary.
Sarkisian testified that his ability to merge with some
other company was the key to the survival of Smyth. This
' Schwartz' testimony was even less persuasive as his demeanor was unsure,
vague, and vacillating. For example, he testified that although an open shop
was not a sine qua non for agreement it was characterized as "essential" for
was somehow jeopardized by the prospect of his retaining
the open shop. Supposedly in his discussion with Donald
McKay, a representative of the parent Corporation in New
Jersey, he was asked by McKay whether he had a union
shop. Sarkisian then testified that he told McKay that he
was in the process of negotiations and would present it as a
matter to be negotiated. According to Sarkisian, although
there were other matters in the contract negotiations, none
were "hardly" as important as the open shop. When asked
under direct-examination to recount what his negotiation
objectives were, he stated that in addition to an open shop he
desired a reclassification of job classifications and a reduc-
tion of the number of jobs, but then he had no further
recollection of any other bargaining objectives.
Sarkisian explained that his absence at the January 5
meeting was because he was in New Jersey. He testified that
when he returned to the bargaining table, he explained to the
Union's negotiation committee his hopes for acquisition and
its importance for the survival of Smyth. He testified that he
told the committee that he was "close to a deal" and that the
"only problem" was that of an open shop. He then reviewed
for the committee all his efforts to try to build up business.
He testified that he had individual conversations with
Gordon about the importance of the open shop. Sarkisian
explained that when he described the need for an open shop
that he tried to be as candid as he possibly could about the
serious financial condition of the Company and its "bleak"
future. He testified that they knew and he knew it. Although
he testified that he did not "tie any failure to agree on an
open shop with the plant shutdown," he conceded that he
did indeed tie it in with the success of the enterprise. It is
clear from the overall context of Sarkisian's testimony that if
he did not explicitly state that he would close the plant
without an open shop, he certainly conveyed to the Union's
negotiating committee the message that an open shop was a
condition precedent to any possible success of the Smyth
Company. Indeed, he characterized it in his testimony as a
"condition leading to agreement," although not a sine qua
non nor an "absolute condition." I found Sarkisian's candor
to be less than impressive in this regard. I am convinced that
Ferreira and Gordon are more credible and that on January
13 or 26 Sarkisian threatened to close the plant if he did not
get a union shop. I conclude that the threat was actually
made on January 26 as I rely on the certitude of Gordon,
who was more impressive than either Ferreira, Gallagher, or
Sarkisian.'
Sarkisian's emphasis on the importance of an open shop to
the acquisition of another company becomes highly suspect
in light of his admissions on cross-examination. For exam-
ple, he conceded that there were many other impediments to
the acquisition of or merger with the Canadian subsidiary.
Furthermore, he conceded that McKay suggested that the
union shop was only a possible problem, and that Sarkisian
"may" have trouble "if" the Canadians do not want to
become union members. At that point, the two agreed to
meet again at which time Sarkisian was to present the
financial statements of Smyth. Curiously, Sarkisian testified
that in the process of negotiations with the Union he referred
the continued success of the Company. Furthermore, Schwartz, himself, was
not too certain whether he threatened to close down the plant if the open shop
were not obtained, as he did not "recall" making the threat.
1148
SMYTH MANUFACTURING COMPANY
to his discussions with the New Jersey representative and
told the Union that if the Union could convince them (either
McKay or the Canadians) to accept a union shop, it was
"okay with me" and "no problem." Sarkisian insisted that
there was no relationship between the January layoffs and
his Canadian discussions. He testified that, when he met
again with McKay and disclosed the condition of Smyth,
McKay looked aghast at the financial position of Smyth and
concluded that it would be of no possible benefit to merge
the Canadian subsidiary with Smyth. Thus, the collapse of
the plan was not related to the union-shop issue.
Sarkisian then testified that the December 21 negotiation
meeting was significant because he was in discussions with
McKay at that time. However, in view of his testimony that
the negotiations with McKay did not proceed beyond one
more meeting, at which time McKay withdrew interest
because of the poor financial condition of Smyth, it is indeed
highly improbable that the urgency for an open shop, as a
key to the Canadian merger, persisted at the time of the
January 26 negotiating meeting or thereafter.' But even if
that merger prospect did indeed exist as late as January 26,
there certainly was no justifiable reason for Sarkisian to
consider the open shop a possible impediment to his merger
or acquisition plans. Furthermore, Sarkisian did not contra-
dict Gordon's testimony to the effect that Sarkisian told the
Union's negotiating committee on January 26 that the New
Jersey deal had fallen through. Nor did he contradict
Gordon's testimony that he also told the committee that he
was continuing his search for the acquisition or merger of
another enterprise. Although Sarkisian testified that there
were other companies with whom he had discussions, he did
not name them nor did he testify that any of those prospects
raised the factor of a union shop as a possible impediment.
10. The February 2, 1977, meeting
The same representatives of the parties and the mediator
met on February 2. At that meeting Respondent submitted a
written contract proposal which was introduced by
Schwartz in the following manner: "This is our final
proposal; and if there are any minor things that you would
like to bring to our attention, we would be glad to make
those changes." The contract contained the same objection-
able discriminatory union-security language previously dis-
cussed. Gallagher and Gordon testified that they objected to
its continued inclusion in the contract. Schwartz testified
that he reviewed the contract prior to the meeting. However,
he testified that he was not aware of the continued insertion
of the objectionable language until the date of the unfair
labor practice hearing. He testified it was his intention to
have removed that language and that it must have remained
through neglect. London also testified that despite her
participation at all the negotiation sessions, and despite the
fact that she presumably should have been aware of the
significance of the issues discussed at the bargaining table,
she nevertheless inadvertently failed to remove the objection-
able discriminatory language. She testified that she was not
aware that the objectionable language remained in the
contract until the unfair labor practice hearing. However,
' Sarkisian testified that as of December 21 he was already in discussions
with the New Jersey Company, which he identified as the "How" company in
she did not recall whether Gallagher objected to it at the
February 2 meeting. Sarkisian similarly testified that it was a
"clerical error" that such language remained in the Employ-
er's final contract proposal. In his testimony he dismissed
that matter as insignificant and stated that the big negotiat-
ing problem was the failure in not "closing the gap" on the
open-shop issue. It is startling that three members of the
Smyth bargaining committee, two of whom were responsible
for reviewing and composing the final proposal, were
unaware of the contents of that proposal. However, even
more significantly, it is incredible that the Union would have
failed to raise a second objection having previously objected
to the language. In this regard I therefore credit Gordon and
Gallagher.
With respect to the balance of the February 2 final
proposal of the Company, Gallagher informed Respondent
that such a proposal was unacceptable. The Union's objec-
tions related to: () seniority; (2) grievance and arbitration;
(3) subcontracting; (4) performance by foremen of bargain-
ing unit work; and (5) open labor grades. Of course, the
company proposal continued to contain an open-shop
provision. With respect to seniority, the Union's apparent
objection was the retention of some flexibility by manage-
ment about transfering employees, based upon their qualifi-
cations, to avoid a layoff pursuant to departmental seniority.
Additionally, the Company sought to exempt from any
layoff "employees who possess specialized training or
experience, or who are performing specialized work which
no other employee in the department is qualified to
perform." However, Respondent inserted a provision that, in
the event that the Union disagreed with such exemption, the
matter would be submitted for binding arbitration to the
Federal Mediation and Conciliation Service, whose decision
would be binding. The fee and expense of the arbitration
would be borne equally by the Company and the Union. A
similar proviso was also found in its contract proposal of
January 21. The January 21 contract included the final
language on the grievance procedure:
An employee with a grievance shall first discuss it and
attempt to resolve it with his immediate supervisor. If
the grievance is not settled to the employee's satisfac-
tion, it may then be taken by him to his department
manager for discussion and resolution. If then not
settled, either party may submit the dispute to the
Connecticut State Board of Mediation and Arbitration
for a final and binding decision.
Essentially the same language remained in the final
proposal of the Company on February 2. With respect to
work done by supervisors, the final proposal precluded
nonunit employees from performing bargaining unit work
except for a "brief period of time (2 to 3 days)," for "training
purposes, or to investigate technical problems." The January
21 employer proposal had excluded supervisors from unit
work "except for training purposes or to investigate techni-
cal problems." The February 2 contract provided that "with
respect to prototype machine assembly special machine
modification, or machine demonstrations, supervisory per-
sonnel may instruct provided an assembler is also present
his cross-examination, and that he had hoped to consummate a deal very
quickly within the "next several weeks."
1149
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and working." The same language was contained in the prior
company submission of January 21.
Finally, the last proposal of the Company included a
prohibitionary clause on subcontracting. Both the expired
contract and the Company's proposed contract contained a
management-rights clause which set forth, inter alia, the
right to "extend, limit, or curtail its operation."
Up to the February 2 meeting the union-security proposal
was in the form of a union shop. Its grievance proposal,
similar to that of the expired contract, provided for
participation of the shop steward at the first and second step;
participation by the shop committee and business represen-
tative at a third step; the reduction of grievances to writing
with a detailed description of the processing of the grievance
within certain timeframes; and a proviso that in the event of
nonagreement of resolution by the Company and the Union
a reference of the grievance to the Federal Mediation and
Conciliation Service with a request for the nomination of a
panel of seven arbitrators from which the parties would
thereafter select a single arbitrator. The expired contract
differed to some extent particularly with respect to the
source for the selection of an arbitrator; i.e., it provided for
the designation of an arbitrator under the rules of the
American Arbitration Association. Both the old contract
and the Union's proposal provided for joint sharing of
expenses of the arbitrator. With respect to seniority, the
Union's proposal attempted to change the old contract from
departmental seniority to plantwide seniority.
The Union's response to the Company's February 2
proposal was to make an offer to extend the old contract
with a 30-cent-per-hour across-the-board raise. This was
rejected and the committee caucused, came back, and
requested a meeting for the following day, February 3.
11. The February 3, 1977, meeting
The parties again met on February 3. The meeting was
brief. The mediator was not present at this meeting.
Gallagher testified that he informed Sarkisian at the meeting
that the company proposal had been rejected and that the
bargaining unit was prepared to take a strike vote. He then
repeated his offer to extend the same contract with the 30-
cent wage increase, but Sarkisian again offered his 15-cent
raise after 6 months. Gallagher rejected this and demanded a
30 percent raise "up front" to which, according to him,
Sarkisian responded, "that's it"; i.e., that was his proposal.
At that point, Gallagher announced his intention to seek a
strike vote from the unit employees. Sarkisian asked how he
would know the results of the vote and Gallaher indicated
that Gordon would telephone Sarkisian afterwards with the
results. Thereafter the employees voted and gave the Union
a strike sanction. However, the employees voted to continue
working on a day-to-day basis until the negotiations were
resolved. No strike was called.
Gallagher had also testified that part of his rejection of the
Employer's final proposal was based upon the stated
objection that "some things" in that proposal were illegal;
i.e., an apparent reference to the discriminatory seniority
clause language. He failed to testify that Sarkisian or anyone
else insisted upon inclusion of that language in the final
contract. Gordon's testimony about the February 2 and 3
meetings does not clearly reveal that Respondent insisted
upon inclusion of the discriminatory language in its final
contract.
D. Griffin's Reassignment
Hubert Griffin had been an employee for Smyth since
1949 with a slight hiatus between 1971 and 1977. He was a
special assembler who provided special repair service on
machinery that had been sold to customers or service on the
installation of new equipment. In the course of his duties he
traveled throughout the United States and Canada and at
various time abroad. He had been scheduled to install
machinery for an old customer of Smyth in Australia which
would have involved a 6-week tour of duty commencing
February 13. This was the first job for that particular
customer since Beacon acquired Smyth. The cost of that
particular machine was $330,000. The Company's expenses
for Griffin amounted to about $7,000.
On February 7, subsequent to Respondent's being in-
formed of the employee strike sanction vote, Service Manag-
er Moffa approached Griffin and asked him to sign a paper
which contained a declaration that it was his intention to
complete the Australian job even if a strike of Smyth
employees occurred. Moffa told him that he would not be
sent to Australia unless he signed the paper. Griffin, upon
the advice of Gordon, refused to sign the paper. He was
reassigned to other domestic work and his Australian trip
was cancelled. Managerial employees were assigned to the
Australian job. Subsequently, Griffin was laid off in a
general layoff on March 4.
When Moffa requested that Griffin sign the disclaimer,
Moffa explained that Respondent could not afford to send
him to Australia and then fly him back if he decided to
engage in a strike before the Australian job was completed.
Respondent used only one other erector, Neal Jorgenson,
who was senior to Griffin. Jorgenson was also laid off in
March. Griffin testified that the special erection of machine-
ry had been declining over the years. At one time Smyth had
used four erectors. In July 1976, Smyth used only two. Less
than one-half of Griffin's time was actually spent in field trip
work. His other tasks involved the rebuilding of machines in
the shop.
The job Griffin was to have performed in Australia was
critical to Respondent's need to maintain a cash flow. It was
also critical for Respondent to retain good relations with its
longstanding Australian customer. Furthermore, the job was
to have been performed under a strict schedule. As of
January 7, Respondent was already tardy.
E. Employee Meetings
1. The February 15 committee meeting with Sarkisian
Gordon testified that the union committee was summoned
to Sarkisian's office on February 15. London, Bourett, and
Schwartz also were present. According to Gordon, Sarkisian
told the union committee that since he could not get his way
with the committee he was now "going to go public," and go
directly to the employees and tell his side of the story.
Sarkisian did not directly contradict Gordon's version.
1150
SMYTH MANUFACTURING COMPANY
However, he did testify that he made this move because of
his sheer "frustration," and that he thought the air had to be
cleared. He said that he told Gordon that he intended to tell
all employees of what was "going on" and to answer
questions. He said that he was unable to contact his
attorneys and that out of "sheer frustration" he thought the
air had to be cleared. I credit Gordon that Sarkisian also
stated that he was going to go directly to the employees
because he could not get what he wanted out of the Union's
negotiating committee.
2. The February 16 general plant meeting
On February 16, Sarkisian addressed all the assembled
employees at a meeting in the plant. According to Gordon,
he told the employees that he wanted to "clear the air" and
he invited questions and offered to supply answers. He stated
that he knew what he was doing was wrong, but that he had
to get his message across. He told the employees that all
Beacon employees were earning $16,000 a year and that he
was willing to pay Smyth employees 15 cents every 6 months
until the day they died and all he needed for that benefit was
a handshake. The Beacon employees are not represented by
a union. According to Gordon, Sarkisian further stated that
he needed an open shop and in the absence of an open shop
Smyth would close, and that if it did close only 10 or 12
Smyth employees would be able to get other jobs. He
stressed the necessity of an open shop for his acquisition of
another plant. An employee asked him why he would not
accept the Union's offer of an exemption from the union-
security proviso for all new employees. Sarkisian then
responded that he had to have it his way or he would close
down. He explained the company-proposed wage structure
for new hires. At the close of the meeting, Sarkisian engaged
in an individual conversation with Boyle. Sarkisian told
Boyle that a lot of the Symth employees were not working as
hard as they should. When Boyle withdrew to the locker
room, Sarkisian followed him and told him that he knew he
was doing wrong, but he had to win the people over and,
referring to Gordon who was standing nearby, stated that
Gordon would try to "cut my throat."
According to Sarkisian, he commenced the meeting with
the employees by explaining to them "what was happening
to the Company in terms of its position in the marketplace,
why we had to lay off people, why we had to reduce hours,
why our future was not bright." He testified that he told the
employees nothing different from what he told the Union's
bargaining committee during negotiations. He testified that
an employee asked why a contract had not yet been
negotiated and he responded, "We were hung up with the
idea of whether we were going to have an open shop or not."
He also told the employees that "there were probably three
or four other conditions that I felt would be resolved in 20
minutes if we could get over the problem of the open-shop
arrangement." He stated that an employee asked him how
they were sure they were going to be paid 15 cents an hour
every 6 months, to which he responded that it would be
reduced to writing. He conceded that he told employees that,
if things did not "turn around very quickly," there were
going to be further layoffs. He related this to a discussion of
a lack of business. He denied telling the employees that if he
could not operate without an open shop he would lay off 10
or more employees. His denial, however, was couched in
terms that, since he did not know the number of employees
he would lay off, ergo, he did not make such a statement. His
denial therefore was not completely straightforward. He
denied conditioning a 15-cent increase every 6 months upon
an open-shop proviso. However, he did make it clear to the
employees that the 15-cent provision as written in the
contract was part of the Company's February 5 proposal.
However, he had already conceded that he told the employ-
ees that the agreement on that proposal was hung up because
of the union shop. Although he made an obscure reference
to the employees about other issues that would be cleared up
in 20 minutes he made no specific reference to the employees
of what those issues were.
It is apparent that, even under Sarkisian's version of his
speech to the employees, the message was essentially clear;
i.e., as far as the employees were concerned there was only
one issue preventing the employees from obtaining a 15-cent
wage increase every 6 months and from obtaining a
contract-the elimination of the union-shop provision in the
old contract. Also he made it clear to them even under his
own version that the economic viability and the continued
existence of the Company depended upon the union-shop
provision. I found Sarkisian's demeanor evasive and uncon-
vincing. I credit Gordon that Sarkisian's version was much
more blunt than Sarkisian's version. I find that he actually
made the statements attributed to him by Gordon.
F. The Offer To Visit Beacon and Compare Conditions
On February 17, Sarkisian offered to take Boyle and
several other employees to Beacon Industries, a nonunion
shop, to observe its operation. According to Gordon, he
approached other individuals and stated that he would or
could bring five employees over to the Beacon plant to show
them what the working conditions there. Gordon interjected
that if Sarkisian wanted to engage in the discussion he could
call the committee. At that point Sarkisian became angry.
Later, Sarkisian was seen by Gordon talking to Boyle.
Gordon walked up to them and asked why he, Gordon,
could not join them and suggested that all the Smyth
employees accompany Sarkisian. Thereupon Sarkisian an-
swered that everyone should come and observe that Beacon
employees are earning $16,000 a year and are all "happy."
Sarkisian then said to Gordon, "I don't know whether I
should talk to you . . everytime I talk to you you go to the
Federal Board. I don't trust you." Gordon responded that
he could not trust Sarkisian as well, and made references to
the negotiations. Sarkisian thereupon asked him if he were
the one that made the statement at a strike vote meeting "if
you take a walk with Norman Sarkisian through the woods
you can't even see a tree."
Sarkisian's version does not essentially contradict the
detailed account of Gordon. However, Sarkisian testified
that he did indeed offer to take employees to Beacon, not for
the purpose of demonstrating how an open shop worked, but
"because there was a tone with certain employees. . . Cliff
Boyle for one, George Gordon for another." Sarkisian
explained that what he meant by this "tone" was that these
employees felt that conditions at Beacon were not as good as
1151
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
at Smyth. Therefore he testified that he wanted to dispell
this "tone" by introducing Smyth employees to the Beacon
plant and its conditions. Sarkisian, however, did not deny
Gordon's testimony that this incident occurred the day
following the February 16 meeting of employees, nor did he
explicitly deny the comments attributed to him by Gordon,
whom I credit.
G. Events Leading to the Announcement of Plant
Closure
Following the February 16 meeting, Sarkisian testified
that he came to "further conclusions" about the state of the
business of Smyth. He testified that these conclusions were
based upon an accountant's information of a loss of
$1,200,000 as of February 16. He testified that at that point
it became clear to him that Smyth's viability as an ongoing
enterprise had no hope because there was no foreseeable
prospect of an acquisition of another allied enterprise. As to
the latter conclusion, Sarkisian testified to no specific event
or nonevent that occurred on February 16. The effort to
obtain the Canadian subsidiary of the New Jersey enterprise
had failed prior to the January 26 meeting. Sarkisian himself
had testified that there were several other prospects with
whom he had engaged in embryonic discussions. He failed to
give any specific testimony as to the identity of those
prospects and just why they were no longer viable on
February 16.
With respect to the accountant's report of the $1,200,000
loss, Sarkisian testified that he met with his accountants in
mid-February and at that time decided to phase out the
business. He testified that he reviewed the reduction in the
backlog of orders at that time. He did not receive the actual
accountant's report until March 11, but he knew what the
figures were because of his meetings with accountants in
February 1977. The accountant's report revealed from July I
through December 31, 1976. Net sales of $1,404,396 with
net losses of $1,280,552; however, the loss is not as startling
as it may seem inasmuch as Sarkisian explained that of that
figure $991,724 was actually an inventory write down
previously described above and also included $237,018 as a
write down in the investment of the English subsidiaries, i.e.,
Smyth Horne Company, and writeoff of the investment of
the Tech Group of $134,619. The loss of sales, however, was
substantial and not disputed by the General Counsel. Nor is
the testimony disputed with respect to the lack of a
substantial backlog of orders; i.e., a reduction of 50% in 6
months time from $432,000 to $204,000 on December 31.
The prior ownership, by suicidal moves, had impaired
Smyth's sales potential of new machinery by eliminating 99
percent of the customers. However, because the prior
ownership had "loaded down" its regular customers with
various types of machinery there was little prospect of new
machine sales, but there was a demand for replacement
parts. The part's replacement business constituted the
essence of Smyth's business, yet, according to Sarkisian's
uncontradicted and unimpeached testimony, the downward
plunge in sales occurred in the sales of parts.
Sarkisian testified that on the weekend preceding Febru-
ary 21 he evaluated the economic position of Smyth. During
that time he stated that he worked with his accountants on
the weekend. He testified that after the receipt of the
accountant's report earlier given to him on February 16, it
had become "crystal clear" to him that he could no longer
continue "to operate the way they were operating." He
decided that the operation would have to cease completely
and that he would make every effort to sell off the inventory.
He did not discuss his intentions with any managerial person
or with any employee and made his announcement to all
employees and managers at a meeting with them in the
cafeteria on February 21, 1977, at 11:30 a.m. According to
Gordon's uncorroborated testimony, Sarkisian made the
following announcement:
This is the end. I am closing Smyth. You people
wouldn't let me have what I wanted, and even if you did
now I don't think I can turn this place around. I'm
sorry. Smyth will be closing starting as of today, we
won't take any more orders. There will be an auctioneer
in here and the building will be gone in 2 months.
Having made that statement, Sarkisian departed from the
cafeteria.
Sarkisian testified in somewhat more detailed terms. He
stated that he had announced to the employees that the
manufacturing operation was to cease "as quickly as I could
make it cease within the realm of what was real in terms of
selling my assets as best I could in that we were not going to
take any more orders for new machines unless we had the
parts substantially in hand so that I could [dispose of] my
inventory, and that within a certain period of time which I
couldn't tell them at that time what it would be, but within a
reasonable period of time the manufacturing operation
would end at Smyth." He testified that an employee asked
him for a prediction of a time and that he responded that it
would be 6 or 7 months, but that it could be longer. He
denied telling the employees that he would accept no new
orders, but testified that rather he told them that he would
accept no more orders for new machines for which Smyth
did not have a substantial inventory of parts on hand
because it was his intention not to manufacture new parts,
but rather to dissipate the inventory. I credit the more
certain, definitive, and vivid testimony of Sarkisian and
discredit the hesitant and uncertain testimony of Gordon. In
light of Sarkisian's actual subsequent conduct, his version is
also more probable.
Sarkisian testified without impeachment that when he
made his announcement the work on hand was minimal,
that there was a backlog of $125,000 to $130,000, that one
machine was ready to finish, and that the parts replacement
business remained depressed.
Respondent offered into evidence the consolidated finan-
cial statement of Smyth Manufacturing Company for De-
cember 31, 1976, covering 6-months. The sales indicated
were $1,404,396 inclusive of the English subsidiary. This
compares to the net sales of $4,169,039 set forth in the
financial statement for the 12-month period ending June 30,
1976. As of June 30, the income from the foreign subsidiary
was set at $78,506, accompanied by a loss on a translation of
foreign currency of $162,878 for a total expense rather that
income from the foreign subsidiary of $84,372. With respect
to the December 31 financial statement it sets a loss from
foreign subsidiary of $5,509 as well as "a write down" of
investment in Smyth-Home of $237,018. The gross profit
1152
SMYTH MANUFACTURING COMPANY
for the year ending June 30 was set as $1,106,225 whereas
the gross profit for the 6-month period ending December 31
was $409,887. More significantly, the total income from
"operations" for the year ending June 30 was set at $216,903
whereas for the 6-month period ending December 31 it was
$64,071.
Sarkisian testified that he had formed an opinion upon
acquiring the business that for it to continue to be viable it
must attain at least approximately $4,000,000 in sales in
1976 and 1977; i.e., that it must at least retain its prior level
of sales. In view of the financial distress of the Smyth
Company at the time of its sales, this appears to be a
reasonable expectation for economic survival. However,
maintenance of the status quo ante was not enough. Thus,
Sarkisian had to come to the conclusion that Smyth's
product line was not sufficient to keep it afloat. That is the
very reason why he sought an acquisition of another allied
company and why he desired to acquire new machinery and
why he desired to promote the new high speed liner. The
downturn in sales of replacement parts, if anything, en-
hanced the accuracy of his judgment that an expanded
product line was necessary.
H. Events Following the Notice of Business Cessation
1. The March 1977 employee layoffs
On February 21, Gordon and Boyle approached Schwartz
and asked him about the prospect of the layoff of employees.
According to Bogle, Schwartz answered that indeed there
would be a layoff, but that he would meet with the union
committee to discuss the matter as soon as he could. Gordon
testified that he and Boyle received no list of employees to be
laid off and no dates were set to meet. About this time
Gordon observed some employees circulating a petition to
give Sarkisian everything he wanted. Gordon approached
Foreman Hernes and complained, but received no response.
Sarkisian testified that on February 21 he consulted with
Schwartz and they reviewed the work backlog and discussed
the need for layoffs. He asked Schwartz to consult with the
foreman and come up with his recommendations as to how
many employees were to be laid off and who should be laid
off. Thereafter, groups of employees were laid off on March
4 and 11. According to Sarkisian's uncontradicted testimo-
ny, a notice was posted of such layoff between 10 to 14 days
prior to the actual layoffs. He testified that he had no
conversation with Gordon or the union committee about the
layoffs and no conversation with them closing of the plant as
he had received no such request. Schwartz testified that the
announcement of the closing of the plant on February 21
was a complete surprise to him. He testified that he came up
with a list of employees to be laid off pursuant to Sarkisian's
instructions by evaluating the work load on hand and the
seniority of the employees. As a result, he drafted two lists of
eight employees on each list, one of which was posted on
February 24 for an effective layoff on March 4 and another
which was posted on March 4 for an effective layoff of
March 11.
Schwartz testified that he spoke with Gordon and Meres-
chuck on the date that the first notice of employees was
posted. According to Schwartz, all that was asked of him
was whether that was the list of employees, and, upon being
given a positive response, they merely turned, departed, and
made no subsequent request to discuss the matter.
Mereschuck testified that as soon as he discovered the
posting of the layoff he and Boyle approached Schwartz and
asked him whether bumping procedures would be observed
according to the expired contract. Mereschuck testified that
Schwartz told him that the bumping procedures would not
be observed and further that the Company did not recognize
the Union. Mereschuck testified that he again approached
Schwartz a week later to discuss his own personal bumping
rights and Schwartz again refused to honor the seniority
provisions of the expired agreement, claiming that the
Company did not recognize the Union. I found his testimony
most uncertain and hesitant. He was not corroborated by
Boyle. Such a statement by Schwartz was not in accord with
the conduct of Respondent, which at all time extended
formal recognition to the Union's representational status. I
credit Schwartz on this regard.
On March 4 eight employees were laid off, and on March
11 another eight employees were laid off. Section 6 of article
4 entitled "Seniority" of the expired contract provides:
The Company will endeavor whenever possible to give 3
days' notice to an employee who is laid off for lack of
work. A list of employees to be laid off will be given to
the departments steward before layoff.
I credit the testimony of Sarkisian and Schwartz which was
not effectively contradicted to the effect that notices were
posted in excess of 3 days' time prior to the actual layoffs. I
also credit Schwartz's testimony that Gordon was provided
with a list of the layoffs at time of the posting.
2. The pre-February 1977 subcontracting of unit work
The General Counsel's evidence of the commencement of
the subcontracting of unit work is general and confusing.
Mereschuck testified, for example, that prior to the expira-
tion of the old contract on February 5 there was no work
subcontracted out at the shop, whereas after February 5
there was subcontracting. He gave no specifics other than
this general testimony. It seems fairly clear however, from
other evidence in the record including General Counsel's
witnesses, that certain parts were indeed subcontracted
previously inasmuch as Respondent did not have the facility
to make all the parts used in manufacturing, for example,
electrical part and castings. Thus, there is no probative
evidence of subcontracting of unit work immediately after
the expiration of the union contract but prior to the
February announcement of the shutdown at the plant.
3. The discharge of George Gordon
Following Gordon's February 7 conversation with Griffin
about the Australian trip, according to Gordon's
uncontradicted testimony, on the same day admitted Super-
visor George Hernes approached him subsequent to the
Griffin conversation and instructed Gordon not to leave his
machine without obtaining prior approval from higher
management through line supervision. Previously Gordon
was permitted to leave his work station and engage in union
activities by merely notifying the line foreman who routinely
1153
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and immediately gave him permission. Also Gordon's
incoming telephone calls were restricted in that messages
were taken for him on incoming telephone calls whereas in
the past he was free to leave the station to answer the
telephone. Gordon also testified without contradiction that
Hernes began following him whenever Gordon's routine
made it necessary for him to leave his work station. Not only
did Hernes follow him, but he took notes apparently
recording what he observed even when Gordon went to the
restrooms.
Subsequent to the February 21 speech to employees by
Sarkisian, Gordon and Boyle attempted to discuss the
impending layoffs with Sarkisian. On February 23, Gordon
requested permission from Hernes to leave the plant at 10
a.m. to meet with Union Representative Gallagher and to
present unfair labor practice charges at the Federal Board.
Hernes gave him permission. Gordon's testimony in this
regard is not contradicted.
On February 24, Gordon began work as usual at 7 a.m. At
8 a.m. he was summoned by Hernes to meet with Larry
Schwartz in Schwartz' office. Schwartz told him he was
terminated and refused to explain it indicating that the "blue
slip says it all." The blue slip referred to is his termination
notice. That notice stated "not available to apply himself to
his assigned work, due to other activities." During the
processing of Gordon's claim for unemployment compensa-
tion under the State Department of Labor, Respondent
submitted a "fact-finding supplement" which was signed by
Sandra London and which stated: "As stated in Mr.
Gordon's blue slip, he was warned repeatedly to stay at his
work area, but continually wondered around the shop
conducting union business."
Schwartz testified that preceding Gordon's discharge on
or about February 18 he had occasion to walk through the
plant accompanied by London. As they approached Gor-
don's machine, Schwartz noticed that Gordon was away
from his machine talking to employees in a group. Gordon
saw Schwartz and returned to his machine. Schwartz asked
Gordon what the meeting was about. Gordon gave an
evasive answer and Schwartz told him that his machine is
where he belonged and that was where he wanted him to
stay. Gordon protested that "this is my department," an
apparent reference to the union activities that he had freely
engaged in the past. Schwartz however, responded "Mr.
Gordon you are wrong you work in this department this is
not your department." He thereupon told Gordon he was to
stay at his machine. Although Schwartz testified that
Gordon did not tell him that he was engaged in union
activities or that Hernes had given him permission, Schwartz
did not ask Hernes whether Gordon had been given
permission to leave his machine. Schwartz denied that he
ever restricted Gordon's union activities. However, he did
testify that he instructed Hernes that if Gordon wished to
leave his department, Hernes must ascertain whom Gordon
was to see and where he was to see that person and then an
appointment was to be set up which was convenient for both
parties including the unit employees. Schwartz testified that
the reason he did this was because Gordon was working on a
machine that was past its delivery date. Schwartz denied
that Hernes was ever instructed to surveil all the activities of
Gordon; however, as indicated earlier, Hernes was not called
to testify in contradiction of Gordon, whose testimony I
accordingly credit. Schwartz testified that his instructions or
restriction of Gordon did not apply to any other employee
because of the overdue delivery date of the machine upon
which Gordon was working.
Schwartz also testified that he observed Gordon away
from his work station on occasions despite Sarkisian's
request during negotiations that Gordon spend as much time
as possible working on his machine. Schwartz did not ask
Gordon what he was doing when he was observed away
from his work station. Accordingly, Schwartz did not
endeavor to ascertain whether or not Gordon had been
engaged in union activity as had been his practice in prior
years. Schwartz also conceded that he did not discuss this
matter later with Gordon. Accordingly, up to the time that
Hernes instructed Gordon to stay at his machine, Gordon
had not been reprimanded by Schwartz. Thus, there appears
to be no basis in the record to support Respondent's
representation to the State Department of Labor that
Gordon was "warned repeatedly to stay in his work area."
Furthermore, Schwartz did not specify the circumstances,
the details, or the dates when he observed Gordon away
from his work station. He merely testified with the general
conclusion that there was "no real reason" for Gordon's not
being at his work station. Respondent made no attempt to
adduce any evidence about the basis for this conclusion.
Sarkisian testified that in January the work force had been
reduced "down to" Gordon; that the machine upon which
Gordon was working was the only machine being assembled;
and that Respondent was having difficulties meeting the
deadline delivery date. He testified without any foundation
or context that Gordon had spent "minimal time" on the
machine. He also testified somewhat confusedly that there
were two other assemblers who were working on another
machine. Sarkisian testified that he made the decision to
discharge Gordon as a matter of "economics." He explained
that it was cheaper to replace Gordon than to supplement
him by hiring another employee. He did not explain why it
was not possible to use one of the other employees who had
not been laid off to assist Gordon. He did not testify that he
or anyone else warned Gordon that he was in jeopardy of
discipline. Although Sarkisian testified that there were
certain work standards attached to the assembly of a
machine he was unaware of what the standards were with
respect to the machine Gordon was on. Thus, Respondent's
evidence about the basis for its discharge of Gordon rests
upon the very generalized impressions of Schwartz and
Sarkisian that Gordon's performance of his duties somehow
threatened to impede the delivery of a machine, the due date
for delivery of which was either behind schedule or in
jeopardy of becoming behind schedule. Although Sarkisian
testified that he was dissatisfied with the low performance of
employees, particularly the moving of inventory, there is no
evidence that Sarkisian or anyone else had ever discharged
an employee for slow performance or had ever threatened to
discharge an employee for poor work performance.
4. Gordon's reinstatement
On July 13, after the complaint had issued in Cases 1-
CA-12643 and 1-CA-12812, the parties met prior to the
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SMYTH MANUFACTURING COMPANY
opening of a formal hearing and arrived at a proposed
settlement agreement which included reinstatement and
backpay for Gordon, Mereschuck, and Boyle; resumption of
contract negotiations; vacation pay for laid-off employees;
and the posting of the standard Board notice. At the July 13
meeting a return date of August I for Gordon was agreed
upon as well as backpay based upon an average earning of
three other employees. Gordon was obliged to supply
Respondent with interim earnings and to repay the State of
Connecticut unemployment compensation that he had re-
ceived. Sarkisian testified that Gordon was to have presented
a certified statement of his interim earnings. Thereafter
Respondent was to have issued a paycheck, less social
security and withholding tax. Furthermore, Respondent had
agreed to reimburse Gordon for any medical expenses he
may have incurred. Sarkisian testified it was his understand-
ing that Gordon was to supply a letter addressed to the State
Unemployment Compensation Commission setting forth his
interim earnings; however, the letter was to be handed to
Respondent who, in turn, would put it the mail.
Gordon, however, testified that it was his understanding
that he was to receive a check for backpay immediately;
therefore, after he returned to work on August I at 8 a.m.,
he asked Hernes for his backpay check. Inasmuch as it is
clear that Gordon had supplied no information about his
interim earnings up to that point, I find it incredible that
Respondent would have had the obligation to immediately
issue him a backpay check upon Gordon's return to work.
Later in the day on August 1, Gordon met with Schwartz
and asked him for his backpay check. Schwartz asked for a
statement addressed to the Unemployment Compensation
Commission, but Gordon insisted that it was not part of the
settlement agreement. Gordon told Schwartz that it was his
own obligation to repay unemployment compensation.
Schwartz, however, asked Gordon to disclose his interim
earnings. Gordon testified that he did give Schwartz a piece
of paper setting forth his interim earnings, but that Schwartz
rejected it stating "that's not good enough." Gordon then,
according to his testimony, protested that the settlement
agreement notice had not yet been posted. Schwartz re-
sponded that the National Labor Relations Board had not
indicated that it ought to be posted immediately. Schwartz
indicated that he was waiting for a posting date from the
National Labor Relations Board. According to Gordon, he
then told Schwartz that he would have to talk to the
National Labor Relations Board.
According to Gordon at approximately noon he was
summoned to Sarkisian's office. Sarkisian asked for a written
commitment of reimbursement to the state agency before he
would pay it. Gordon then asserted to Sarkisian that it was
his obligation to compute the backpay. Gordon testified that
he told Sarkisian that he was confused and would have to
contact the Union's attorney and have him settle it. Gordon
referred to the agreement to compute backpay according to
the work history of three employees in the assembly
department who had been employed. Gordon insisted that
he had written down his interim earnings on a piece of paper
and that he had presented it to Sarkisian, who refused to
look at it. Gordon testified that Schwartz, who was present,
looked at the paper and returned it to Gordon.
According to Gordon, after lunch he again saw Sarkisian,
who was talking to Foreman Hernes. Gordon then ap-
proached Hernes and asked if Hernes was being told to
observe him and Hernes responded that it was the "same old
horse shit." This testimony was not contradicted by Hernes.
Gordon told Hernes that it was his intention to go to the
National Labor Relations Board and that he would not
return until the matter was settled, but he would only return
at that time. He asked Hernes to escort him to his car in the
parking lot. Hernes asked if Gordon intended to return when
the matter was settled and Gordon indicated yes. Gordon
never actually returned. Gordon testified that he talked to
Gallagher the next day or several days later and that
Gallagher, the union representative, told him that he was
terminated for leaving the plant without permission.
According to Sarkisian and Schwartz, Gordon's backpay
check could not be prepared because the Employer was
unaware of his interim earnings and as part of the agreement
interim earnings were to be deducted. This testimony is not
contradicted and I credit them. According to Schwartz and
Sarkisian, Gordon did not present them with a statement
setting forth his definitve interim earnings. For this reason
they did not have a check ready to reimburse him for his
backpay. Gordon, of course, testified that he set forth
specific figures as to his interim earnings and wrote them on
the paper. He did not have that paper in his possesion when
he testified. According to Schwartz and Sarkisian, Gordon
merely had written down on a piece of paper in handwriting,
a general assertion of Respondent's obligation to pay him
backpay for 6 weeks plus 2 weeks' vacation. I find
Sarkisian's and Schwartz' testimony more probable and
convincing than that of Gordon's testimony. Moreover, their
demeanor in this regard was more confident, detailed, and
responsive than that of Gordon. I therefore credit their
version with respect to the events of August 1.
According to Sarkisian on August I Gordon had left the
plant, returned later in the day but then left again without
ever having been heard from at any subsequent date. There
is no evidence that Gordon and Respondent communicated
with one another after August 1.
Sarkisian testified without contradiction that he talked
with his attorney and the attorney wrote a letter to the
Board's Regional Director setting forth the gross earnings
due Gordon and reasserting the commitment of Respondent
to pay Gordon full backpay in the event the other conditions
were met, but that Respondent did not hear from the
Regional Director thereafter. Article 4, section iii(d), of the
expired contract provides for loss of seniority in the event an
employee absents himself for "3 consecutive work days
without notifying the Company."
5. The July 1977 Mereschuck encounter
Mereschuck testified that on July 27 he engaged in a
discussion with Sarkisian in which Sarkisian informed him
that he had been unlawfully laid off and would therefore be
recalled pursuant to the settlement agreement. However,
according to Mereschuck, Sarkisian also told him that if he
had found another job that he ought to stay there because he
had no future at Smyth. Sankisian further told him to call a
few days prior to his return and give notice of his
1155
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
availability. Mereschuck testified that he told Sarkisian that
he would indeed return, but gave no definite date. The plant
was on vacation on July 27. Vacations ended August 1.
Mereschuck never submitted any notice of an intention to
return to work. Mereschuck testified that he had told
Sarkisian that he had intended to go on vacation. Sarkisian
told him to take his time and to give an advance notice of 3
days of an intention to return to work. He testified that he
gave no such notice. He testified that he received a letter
from Respondent at the end of August asking why he had
not returned on August I pursuant to an agreement between
himself and Sarkisian. He testified that he called London
and told her that there had been no such agreement as to a
specific day between himself and Sarkisian. Mereschuck also
testified that the letter had indicated that unless he had
another conversation, presumably with Sarkisian, he could
not return to work. He testified that there was no contract
subsequently signed; a settlement agreement had not been
executed; and therefore he told her, "I had no security. By
going back I would be in same boat without any coverage at
all." He testified that he talked to London after receiving the
letter. He testified that he told her that he would return after
Labor Day or a few weeks after Labor Day, but that in the
meantime he had found that the plant was going to close
down. He heard this through rumors in the plant.
On cross-examination Mereschuck conceded that in his
conversation with Sarkisian on July 27 he had told Sarkisian
that he had employment elsewhere; and that at no time in
August did he communicate to Respondent his intention or
desire to return on a specific date.
Sarkisian testified that when he spoke with Mereschuck
about his return to work he made it "clear" that the future
of Smyth was a month or two from coming to an end. He
told him that since he had a good position elsewhere he
"strongly recommended" that Mereschuck not leave it to
return to Smyth, but that if he wanted to come back it was
"O.K." with him. I find Sarkisian's testimony in this regard
far more convincing and probable. There is no indication
that Sarkisian had directed any specific animus toward
Mereschuck. Rather he told Mereschuck what the future
held for all employees.
6. The refusal to bargain on July 13 and 27 and
thereafter
Respondent concedes that it had an obligation to pay
vacation pay to certain former employees. Those employees
who were employed throughout the summer of 1977 were
granted such vacation pay. Those who were laid off during
the winter of 1977 were due such vacation pay in accordance
with article VI of the expired contract and past practice, and
were unilaterally denied same. Respondent concedes its
obligation and debt. Sarkisian did not make those employees
whole for the vacation pay because of his confusion in
interpreting the language of article VI of the contract.
Therefore, at a meeting between the parties on July 13, at the
plant after the aborted oral settlement agreement, Sarkisian
refused to discuss the vacation pay.
* With respect to the July 13 meeting Gordon's testimony is also silent as to
any reference to contract negotiations.
However, with respect to the balance of that meeting, it
was Gallagher's testimony that the meeting was held to
discuss contract negotiations, and to come to an agreement
on the number and identity of employees who were laid off
in alleged violation of seniority rights under the expired
contract because of a failure to honor "bumping" rights as
well as the failure to pay vacation pay to laid-off employees.
Gallagher took the position that all three items were
supposed to be discussed. According to Gallagher, Sarkisian
presented him with a list of employees and asked the Union
to indicate which employees were supposed to have bumped
whom. No agreement was reached. The union committee
caucused and decided that they did not have time to come
properly to conclusions, but did agree to present subsequent-
ly a list of employees to the Employer. The parties agreed at
that time to meet on July 27. Gallagher's testimony is silent
on whether the Union actually raised the subject of contract
negotiations. Sarkisian's testimony acknowledged that it was
indeed part of the settlement agreement to negotiate a new
collective-bargaining agreement. However, he testified that
the only subjects talked about on July 13 were the recall of
employees and vacation pay, which arose when somebody
asked whether Respondent intended to pay vacation pay for
those employees who had been laid off during that summer.
Sarkisian testified that there was no reference to any
specifics of negotiating a new collective-bargaining agree-
ment on July 13. In view of Gallagher's very generalized
testimony and his uncertain demeanor, I credit Sarkisian.6
Following the meeting of Thursday, July 13, Sarkisian
received a list of employees from the Union which indicated
the Union's position on the proper and appropriate bumping
procedure that should have been followed when the March
layoffs were originally made.
On July 27, Sarkisian, Gallagher, Ferreira, Gordon,
Boyle, and Mereschuck met. The meeting was held at the
Smyth plant.
Gallagher testified that at the July 27 meeting, Ferreira
acted as the chief spokesman for the Union. Gallagher
testified that Ferreira requested a discussion of the new
collective-bargaining agreement, but that Sarkisian stated
that he was not prepared to negotiate at that meeting.
According to Gallagher, no date was proposed or agreed
upon for a negotiation meeting. Ferreira did not testify on
this point. Gordon testified that at the July 27 meeting a
discussion was held about the recall of certain employees
including Mereschuck and himself as of August 1 pursuant
to the July 13 settlement agreement. Backpay was also
discussed. He made no reference to a discussion about.
negotiations. I credit the more detailed testimony of Sarki-
sian who testified with far more assuredness and certainty
than Gallagher about the events of July 27. According to
Sarkisian, the Union's proposed list of employees and its
indication of the proper layoff order according to past
seniority practice was fully discussed by the parties.
Sarkisian testified without effective contradiction that
Gordon asked whether Sarkisian still intended to ultimately
close the plant. When Sarkisian responded that he did,
Gordon expressed disbelief. A discussion ensued over
whether or not Sarkisian really meant to close down the
1156
SMYTH MANUFACTURING COMPANY
plant. At that point Gallagher and Sarkisian engaged in an
exchange of insulting remarks. The Union did not attempt to
bargain over the causes of the shutdown, nor did it seek to
discuss alternatives. Thereafter the parties discussed the
appropriate layoff procedure that should have been used in
the preceding layoff. Sarkisian argued that ability should be
considered as a factor in addition to seniority. The Union
insisted upon seniority as the sole criterion. Sarkisian then
went on to explain on an individual basis why certain people
were laid off and others were retained in the March layoffs.
Agreement was reached on three or four individuals.
Sarkisian suggested that if there was no resolution to the
remainders that the parties ought to proceed to arbitration
pursuant to the verbal settlement agreement. This was
rejected by Gallagher out of hand, i.e., the Union did not
wish to proceed to arbitration with respect to eight or nine
employees. At that point, Sarkisian was about to leave the
meeting.
As Sarkisian was about to leave, Gallagher proposed that
Respondent accept the expired contract on the basis of 30-
cent-per-hour raise for I year. According to Sarkisian,
whom I credit, this was the first mention of a contract
subsequent to the aborted oral settlement agreement of July
13. Sarkisian responded that he was obligated to make a trip
to Oklahoma the following day, but would return the next
night and on the following Friday he would be prepared to
discuss a new collective-bargaining agreement. Gallagher
instructed Ferreira to contact the mediator and tell him to
prepare for a resumption of negotiation and Ferreira agreed.
No dates were set as all were agreed that this would be
contingent upon the mediator's schedule. There was no
further reference at the meeting to a discussion of collective-
bargaining negotiations. The meeting ended at 6:30 p.m.
After the July 27 meeting, Sarkisian received no further
contact in 1977 from the Union about contract negotiations.
Sarkisian testified that prior to the end of the July 27
meeting backpay of the employees was discussed as well as
the formula. Mereschuck was not aware of the formula to be
used and disagreed about that formula. Gallagher explained
the formula, the subtraction of interim earnings from
backpay, to Mereschuck, Mereschuck expressed displeasure
over that formula and left at 6 p.m. Sarkisian testified that
20 minutes later, Mereschuck telephoned him. Sarkisian
excused himself to leave the meeting to talk to Mereschuck.
According to Sarkisian, Mereschuck asked him on the
phone, for 2 weeks' vacation pay and in receipt thereof, he
would call it "quits." Sarkisian explained that the backpay
formula was not understandable to him and it was also a
problem for him, but that it could be ironed out quickly after
the "lawyers" explained the terminology. Sarkisian refused
to give Mereschuck backpay and told him if he wanted to he
could leave immediately. At that point Mereschuck hung up
and Sarkisian returned to the meeting.
Mereschuck's testimony related to a conversation that he
had with Sarkisian at the July 27 meeting. Mereschuck made
no reference to a telephone conversation with Sarkisian after
he had departed from the meeting. Mereschuck was not
called, however, to rebut or contradict the testimony of
Sarkisian, whom I credit.
7. The layoff of James Foley
Gallagher testified that the layoff of James Foley was
discussed at the July 27 meeting. He did not set forth the
details. He confusedly testified that Foley had been laid off
during "negotiations," was later recalled, and then "we were
told he was going to be laid off." Yet he testified that no
prior notice was given the layoff of James Foley. Respondent
admits that Foley was laid off on July 15 without advance
notice to the Union. There is no evidence to establish that
the Union was not afforded a full opportunity to discuss
Foley's layoffon July 27.
8. The September layoffs and plant shutdown
In September 1977 Boyle was the only remaining member
of the union committee. Gordon had since departed and
Mereschuck, as conceded by the General Counsel, had
agreed not to exercise his reinstatement rights. Boyle had
been recalled on August 1. On September 13 he engaged in a
conversation with Sarkisian in the plant conference room in
the presence of Schwartz. The conversation was precipitated
by Boyle's notice of his intention to quit which he had just
given to Schwartz. Sarkisian told Boyle that he planned to
tranfer the gear cutting machinery from the Smyth plant to
the Beacon plant. According to Boyle, Schwartz stated that
Beacon had purchased the machinery. Furthermore, accord-
ing to Boyle, when he asked Sarkisian about plans to transfer
the Smyth employees, Sarkisian responded that he had no
such intention, but that he would advertise in the papers for
new employees and that the target date for complete closure
of the Smyth plant was October 31, 1977. Boyle testified that
he was told that an auction for the balance of the machinery
was set for November 15.
Sarkisian testified that he engaged in one or two conversa-
tions with Boyle between August and September 1977,
wherein Boyle had asked about Sarkisian's plan to fill Smyth
work orders after the plant shutdown. According to Sarki-
sian, he responded that the Smyth work would be subcon-
tracted. Clearly Boyle did not make a request to negotiate
nor did he give any indication to Sarkisian that he would or
would not communicate with Gallagher or Ferreira. Sarki-
sian received no subsequent request to negotiate concerning
his intention to close down. On cross-examination, Boyle
could recall no conversations prior to Labor Day about plant
closure, but he conceded that Sarkisian referred to the plant
shutdown at least at 2 or 3 other meetings. Boyle could not
recall what Sarkisian said, but did recall a reference to the
October 31 target date. On redirect examination, Boyle
again insisted that at a meeting Sarkisian had referred to
closing of the plant.
Sarkisian testified that earlier notice was indeed given to
Boyle shortly after Labor Day, September 1. He testified
that he called Boyle to his office because Boyle was the only
committee member actively employed. According to Sarki-
sian he told Boyle to discuss it with whomever he had to
within the Union, but it was Sarkisian's intent to lay off all
employees and to close down the manufacturing functions as
of September 30. According to Sarkisian, Boyle represented
himself as having been "elected" as president of the Union
and that he would notify the unit members. Boyle expressed
1157
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
appreciation for I month's notice. Boyle expressed no
intention of contacting anybody in particular and requested
no negotiations about the effects of the plant shutdown. He
told Sarkisian that he was aware that it was coming. He
asked Sarkisian's plans for the gear department inasmuch as
he had heard rumors that it would move to Beacon.
Sarkisian told him that Beacon had plans to purchase the
gear machines. He then told Boyle that he had spoken to the
gear department foreman, Henry Samola, and told him that
he wanted Samola to be employed at Beacon, but that
Samola was not to speak to anybody at Smyth regarding a
job at Beacon. Further, Sarkisian told Boyle that he had
spoken to Schwartz and Samola to the effect that Beacon
would advertise for employees to be employed in new gear
cutting department at Beacon. Sarkisian testified that he had
told Samola that he should not discriminate against former
Smyth employees who may apply for work at Beacon.
Several former Smyth employees were thereafter hired by
Beacon at the Beacon plant as nonunion employees. Sarki-
sian testified that in these conversations Boyle had no
questions or objections other than stating that this is what he
had heard as a rumor.
According to Sarkisian he had a second conversation with
Boyle on September 13 or 14. Sarkisian testified that he
initiated the second meeting because he had not heard
anything from the Union about the September 30 shutdown.
Sarkisian, Schwartz, and Boyle were at the second meeting.
According to Sarkisian he told Boyle that the September 30
date was advancing quickly and that if there were any
discussions that needed to be had with the Union "we should
be having it." However, Boyle merely responded that it was
his intention to terminate his employment on the next
Friday, and that he had obtained another job for himself.
According to Sarkisian, Boyle stated that he had attempted
to contact Gordon and Mereschuck as to whether Meres-
chuck was going to return to work, but that he could not
make contact with these two individuals. Thereafter, Boyle
had no questions and no further communication was had
from him or anyone else with respect to negotiations of the
final plant shutdown.
Boyle was called as a rebuttal witness. However, his
testimony was extremely limited and consisted of a state-
ment that he had told Sarkisian that he had been elected as a
shop chairman, but not as the union president, and that this
conversation occurred in 1976. That was the extent of
Boyle's rebuttal. In comparing the testimony of Sarkisian
and Boyle, the General Counsel urges that much should be
made of the fact that the Union did not have elections at that
time and that Boyle did not serve as "president" and that
there was no "presidency." Although this is a factor to be
considered, I do not find it to have overwhelming signifi-
cance that Sarkisian recalled Boyle's self-designation as a
"president" or "shop committee chairman" or as the only
remaining member of the shop committee. I am more
persuaded by the actual full context of the testimony of
Boyle and Sarkisian and their relative demeanor. Boyle was
not a very impressive witness. He exhibited a very poor
ability to recall and narrate events. He was not called to
corroborate Gordon with respect to contract negotiations.
With respect to his conversations with Sarkisian, he was
extremely hesitant and uncertain of himself and his testimo-
ny. Although he testified that he was sure that the initial
target date given him was October 31, his demeanor belied
his spoken assurances. His testimony about prior meetings
with Sarkisian about Sarkisian's statement of the plant
shutdown is very generalized and unclear. Thus, he testified
at first, "I mean he had been talking about the shutdown at 2
or 3 other meetings that he had. But I can't recall any
specified meeting that we had when he said that." On
redirect examination, he explained that this had occurred at
a meeting early in the year and during the period of
negotiations at which all employees were present.
Schwartz corroborated Sarkisian to the extent that he
recalled that he attended a meeting with Boyle and Sarkisian
on two occasions. During the first Boyle was notified as a
member of the union committee that the plant would be
closing and during the second, which occurred in mid-
September, Boyle notified Respondent of his departure
because he had found another job.
I have found Boyle's testimony so unpersuasive and
unconvincing that I am constrained to credit that of
Sarkisian about the conversations with Boyle on or about
September 1 and September 13.
On September 14, Sarkisian announced to all the employ-
ees that they would be laid off on that date and that the plant
would close on September 30. Boyle testified that the date
announced was September 30 and not the date of October 31
as he had recalled Sarkisian setting in a meeting only 24
hours earlier. I credit Sarkisian.
9. The status of business immediately preceding the
September 30 closure announcement
Sarkisian testified that after the February 1977 notice of
eventual plant closure Smyth engaged in the process of
slowly winding down. Smyth continued to process orders for
replacement parts in order that the highest possible rate of
return could be achieved from a disposition of the inventory.
He contended that immediate dissolution would result in a
tremendous monetary loss of the inventory. However, by
slowly phasing out and accepting orders for which the
greater portion could be filled from existing inventory the
value of the firm as a possible salable business was
maintained and the highest return was received on the
disposition of the inventory.
From April through June, Smyth received a rush of orders
for parts. A surge of S60,000 of sales of parts resulted.
Consequently, eight employees were recalled from the
March layoffs. Those employees were recalled pursuant to a
notice which stated that they were being recalled on a
temporary basis.
In August, Sarkisian engaged in another meeting with his
accountants after which he decided that even with a
minimum work force it was still "too costly" to continue the
business much further. A year had elapsed since the
agreement with the bank, but a full year remained under the
grace period. Pursuant to Beacon's obligations to the bank,
Sarkisian testified vaguely that it was necessary to sell off all
of the assets. Sarkisian did not fully explain why he needed
to raise cash at that particular time. What machines were
left were thereafter sold except those that were still under
attachment pursuant to an outstanding lawsuit. The sale and
1158
SMYTH MANUFACTURING COMPANY
disposition of the production machines commenced immedi-
ately subsequent to the March 1977 layoff. It continued on a
piecemeal basis and was determined on an ad hoc basis. By
the time of the first hearing in this case, two-thirds of all of
the machinery was sold for approximately $463,000. Sarki-
sian expected to recoup $250,000 on the remaining unsold
machines, i.e., those remaining under attachment. The sales
of machines occurred all through the summer and resulted
from advertisements placed in the media and with machine-
ry dealers. By July 31, about $300,000 was received from
sales. None of those sales were made directly to Beacon.
However, following the plant's closure on September 30, all
of the gear cutting machinery was sold to Beacon. Accord-
ing to Sarkisian the sale was an "arm's length transaction"
because of the minority stockholders' interest in Smyth.
That is to say appraisers were appointed for 9 to 10
machines used for gear production and a price was set at the
highest appraisel for each machine. The sale effected $93,450
in proceeds. According to Sarkisian's testimony at the first
hearing, following a shutdown, virtually no production
machinery was assembled at Smyth. One machine, which
had been completed by the time of the first hearing,
however, was assembled by a recalled machinist with the
assistance of Foreman Hernes.
The inventory subsequent to Smyth's closure on Septem-
ber 30 was sold off on a piecemeal basis. Between September
30 and December 31, 1977, $100,000 of inventory in spare
parts were sold. The orders that came i for parts varied
from I piece to 25 different parts. After September 30,
Smyth subcontracted to local area machine shops, the work
for parts that were not on the "shelf," i.e., in inventory.
During the early days of post-closure subcontracting, every-
thing was subcontracted to Beacon. Sarkisian testified that
as time proceeded and a network of outside vendors was
selected the work shifted to those outside vendors. Sarkisian
testified it was disadvantageous to Beacon to continue
performing the manufacturing of parts of Smyth, inasmuch
as Beacon had promised to charge no more than one-third of
the cost that Smyth had charged its customer for the part.
Therefore, Smyth was guaranteed 66-2/3% profit, which
was costly to Beacon. Sarkisian testified at the first hearing
that he expected to end Beacon's subcontracting work for
Smyth within a "reasonable time"; i.e., a couple of months.
Sarkisian testified that after his announcement of com-
plete closure as of September 30 he received numerous
telephone calls from customers who expressed concern over
future parts replacements. He readily assured these custom-
ers that he would still meet their demands for parts, and
they, in turn, agreed to send him more parts orders.
Sarkisian testified at the first hearing that he had no plans
to return to the manufacturing of bookbinding machinery,
but that, in the event there came about a possibility of
substantial machine assembly upon which he could make a
profit, he would follow the collective-bargaining agreement
that had expired and he would recall employees and resume
production.
' Although Sarkisian admitted to subcontracting certain work to Eastern
Tool prior to February 28, it is not clear whether the nature of that
subcontracting work consisted of castings or other materials that had
historically been subcontracted. Sarkisian testified that he did not negotiate
Sarkisian testified also at the first hearing that there had
been some negotiations with prospective buyers with respect
to selling the English subsidiary, but that because potential
customers were aware of the possibilities of Smyth going out
of business they demanded an unacceptably low price. Thus,
rather than sell at a loss, Sarkisian did not dispose of the
English subsidiary.
Sarkisian's testimony was somewhat clouded and confus-
ing at the first hearing about exactly when Beacon com-
menced subcontracting work for Smyth. At one point he
testified that it followed the March layoffs. At another point
he testified that it occurred in September. However, he had
earlier testified that the sales of machinery started in March
and continued throughout the summer. At another point,
Sarkisian testified that he began the subcontracting work to
Beacon in April 1977. He testified that he had several
discussions with the "Union" about subcontracting, but he
could not recall the dates or the circumstances. He testified
as follows:
Q. Did you ever have any discussions with the Union
about subcontracting this work?
A. We had a number of discussions about this sort of
thing back in the early stages.
Q. When?
A. I can't recall the dates. Early 1977.
Q. Prior to February 1977?
A. I told them that particular-I don't recall I really
don't recall when we talked about it. I told them after-
I knew specifically after we had our layoffs and we
started selling machines that we were going to subcon-
tract.'
Sarkisian testified that from August through September
1977 he had "one or two" discussions with Boyle about
subcontracting. This occurred, according to Sarkisian, after
Boyle had asked what Sarkisian's plans were for filling
orders after the cessation of Smyth manufacturing. Sarkisian
told Boyle that it was his intention to subcontract work. At
that point Boyle asked him about the possibility of using a
particular subcontractor which was located adjacent to the
plant. Neither Boyle nor any other representative of the
Union requested an opportunity to bargain about the
subcontracting. Boyle's testimony related solely to the issue
of plant closure. He did not deny or contradict Sarkisian's
testimony of the discussion with respect to subcontracting.
Accordingly, I credit Sarkisian's testimony that he did have
such conversations with Boyle. However, according to
Sarkisian, the earliest this occurred was between August and
September 1977. I conclude that no earlier notice of
subcontracting of work was given by Sarkisian to the Union,
but that the Union was notified by the end of August of
Sarkisian's intent to use subcontractors for work that he
considered could be more economically produced outside of
the Smyth plant. Furthermore, the Union was given advance
notice of Sarkisian's final decision to sell all assets and
totally cease production and to completely convert to the use
of subcontractor and Beacon facilities.
with the Union or give notice to the Union about the Eastern subcontracting
work because that had been a continuing historical subcontracting arrange-
ment. He was not contradicted.
1159
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
10. Events transpiring subsequent to the closing of the
first hearing
At the second hearing in this case, the General Counsel
and the Charging Party adduced evidence allegedly demon-
strating continued violations of Section 8(a)(5) in the nature
of unilateral conduct with respect to wages and conditions of
employment, but more significantly additional evidence
which it is argued demonstrates that Respondent was not
motivated by economic considerations in closing the plant
on September 30, 1977, but rather was motivated by union
animus. At the first hearing counsel for the General Counsel
did not challenge Respondent's contention that its Septem-
ber 30 cessation of business was economically motivated.
The evidence adduced at the second hearing was offered to
demonstrate either that Smyth in reality did not go out of
business, but was covertly maintaining its operations at
Beacon, or that, if it did in fact go out of business, it had
resumed the operations at Smyth and at Beacon, thus
revealing a lack of intent to ever cease operations perma-
nently.
Although Sarkisian did resume limited operations at
Smyth it was not done clandestinely. On February 20, 1978,
Sarkisian notified union representative Ferreira by letter that
Smyth had received orders for two new bookbinding
machines. Sarkisian indicated that the acceptance of such
orders would help Respondent's plan to reduce its inventory.
Therefore, he indicated the need of two to four assemblers
"for a period of approximately 6 to 8 weeks."' Sarkisian
suggested that if it was acceptable to Ferreira that Smyth
recall the employees from a seniority list starting from "the
top." He solicited comments and suggestions from Ferreira.
By letter dated February 25, Ferreira responded that "the
Union is in agreement with your request as stated." Ferreira
also requested a list of the employees to be recalled.
Sarkisian testified that for recall purposes he used a seniority
roster of assemblers with electrician qualifications, which
was necessary for the new work, and who had in his opinion,
retained seniority standing pursuant to article IV, section
III(c) of the expired collective-bargaining agreement.' He
also did not send a recall notice to George Gordon because it
was his position that Gordon voluntarily walked off the job
on August I and, thus, quit. Thus, letters were sent to the
following assemblers: Edward Richards, Lawrence Wilson,
Leo Jorgenson, and Earl P. Wilder on or about March 1. On
or about March 8, recall letters were also sent to Vasil Zihal
and Hubert Griffin. No letters were sent to the remainder of
the employees whom Sarkisian considered to have lost their
seniority status pursuant to the terms of the expired
contract. Of the six employees recalled, Wilder and Wilson
responded affirmatively and reported for work.
Ferreira also contacted certain employees in an effort to
determine whether they desired reinstatement. Ferreira
communicated with Sarkisian about one of the employees,
Richards, and, during the course of the discussion on or
" Sarkisian conceded in his testimony that this was a gross underestimate of
time.
That section makes reference to the loss of seniority pursuant to years of
service and the amount of time in layoff status.
'" Ferreira testified that he paid a visit to the Smyth plant in July 1978
pursuant to information he had received from Gordon to the effect that the
plant was operating and the parking lot was filled with cars. He visited the
about March 1, Ferreira inquired whether there was any
possibility that the recall might last beyond the 6 to 8 weeks
mentioned in the letter, inasmuch as Richards was not
willing to give up his newly found employment to return
only on a temporary basis. Sarkisian in that conversation
stated, "Smyth and is dead and I keep telling you people that
Smyth is dead and no one wants to believe me."'"
The recalls continued through March and April. On
March 30, Ferreira was notified that James Foley had
received a recall letter and that he had declined reinstate-
ment. Allen Griffin was recalled on April 20. He was the
least senior assembler. Ray Derench, a former shop steward,
testified that when he learned of Griffin's recall he reported
it to Smyth and requested employment, but was not rehired.
Under the expired contract he had possessed superseniority
as a shop steward."
Lou Moffa was recalled in 1978, but had left the employ
of Smyth voluntarily on September 15. Thus, Smyth sent
recall letters to some employees whom it considered not
eligible for recall under the terms of the expired collective-
bargaining agreement, but not to other employees. There is
no allegation that Sarkisian acted discriminatorily in viola-
tion of the Act with respect to the recall of employees.
It was stipulated that the following persons were em-
ployed on the Smyth payroll as of December 18, 1978: Allen
Griffin, Robert Perkins, Earl Wilder, Lawrence Wilson,
Gene Dion, Lee Rhodes, Peter Rhodes, Gy Kneeland,
Robert Thompson, Charles Dameron, George Hernes, Mar-
garet Chartier, Judith Crabb, Barbara Bonzoni, Susan
Barnes, Leslie Williams, Roy Roberts, Janet Jefferson,
Patricia Shea, John Shea, Antonio de Silva, Daniel Streeter,
Norman Sarkisian, Robert Bourett, Sandra London, Larry
Schwartz, and Richard Spavare.
Of those it was also stipulated that the following provided
managerial services for Smyth and were paid by Beacon:
Norman Sarkisian, Robert Bourett, Sandra London, Larry
Schwartz, Richard Spavare, and David Smith. In December
1978, the following bargaining unit employees were engaged
in production work at Smyth: Griffin, Robert Perkins,
Wilder, and Wilson. They were recalled to assemble book-
binding machines. Also engaged in that work were Ray-
mond Perkins, Eugene Dion, Gy Kneeland, and Sam St.
Amand. Gene Dion is an assembler who was laid off on
September 30, 1977. Kneeland's status is unclear. Ray
Perkins was hired as a new employee and is a brother of
Robert Perkins. Ray Perkins works on assembly and entered
on duty August 21, 1978, and was hired because of his past
work experience. Respondent also employs a Russell Perkins
who is employed by Beacon as an inspector, but who
inspects Smyth work although he is paid by Beacon. His
work concededly was prior Smyth work. He also inspects
both Beacon and Smyth work at the Smyth plant although
Sarkisian considers him a Beacon employee. Russell Perkins
had worked at the Beacon plant for several months and it
plant unannounced and observed four employees inside the facility and a
relatively vacant parking lot.
"Derench had agreed to take an initial layoff rather than exercise
superseniority in order that a more senior employer would continue to work. I
discredit Sarkisian's unpersuasive testimony that he was unaware of this
arrangement and unaware of Derench's status.
1160
SMYTH MANUFACTURING COMPANY
was Sarkisian's stated intention at the hearing to move him
back to the Beacon plant sometime after the hearing.
Beacon's winch production department was transferred
from Beacon's plant to Smyth's plant in early 1978.
Approximately 3 or 4 employees are used by Beacon in
assembling winches in a separate area at the Smyth plant. St.
Amand was one of those Beacon employees normally
engaged in winch production, but who was assigned tempo-
rarily to Smyth work. Sarkisian explained that this was
effectuated to eliminate friction between St. Amand and
another winch assembler at the Smyth plant.
No former bargaining unit employees were recalled to
perform work done by Perkins and St. Amand.
In addition to the assemblers referred to above, the
present Smyth work force is engaged in customer service,
sales, spare parts inventory, research and testing, and
managerial functions.
In August 1978, Beacon purchased the Harvard Precision
Components Company. That company produces jet engine
parts which differ from the jet engine parts produced by
Beacon because of the diameter size of the parts. Harvard
employs 40 employees and Beacon employs 139 employees.
Harvard also employs 19 to 20 machinists whereas Beacon
employs 75 machinists. Beacon presently has a 3-year lease
for the plant in which Harvard performs its function.
As of December 1978, five machines were being assembled
on the production floor at Smyth. No production has started
on the high speed integrated liner and it remains in the
prototype stage. The single prototype which had been
displayed at a show in Germany was thereafter shipped to
London for display there and then returned to the Smyth
plant. However, the chief engineer, Peter Savich, still works
on the machine making improvements of a minor nature.
Smyth maintains engineering personnel in addition to the
chief engineer in the form of an electrical engineer and a
draftsman. They tend to customers' problems with machines
which have been sold and installed at the customer's plant.
They also work on improvements in the entire Smyth
product line. Sarkisian explained that the business will be
more salable with updated improvements in the Company's
product line.
The Richter pump, which Sarkisian characterizes as a
Beacon product, is still at the testing stage at the Smyth
plant. In 1977 two Richter pumps were constructed and
there was a total sales of $12,000 in pumps. In 1978, none
were built for sale and there were no sales of pumps. Smyth
continues to make efforts to display the pumps at the trade
shows and continues efforts in soliciting sales for the pump.
In August 1978, a newsletter was published by Beacon
entitled "Beacon News" and circulated to employees of
Smyth, Beacon, and Harvard Precision components. This
newsletter, and a subsequent issue, speaks glowingly of the
future of Beacon and Smyth. A front page article in the
August issue refers to the transfer of eight machines from
the Smyth plant to the Beacon plant. The article states that
"primarily, these changes will handle the Smyth spare parts
business and should be in full swing by the end of August,
with approximately 15-20 new employees added." A similar
,' On March 25, 1978, an ad was placed in the local newspaper, the
Hartford Courant. in which Beacon Industnries "at Bloomfield, Connecticut,"
announced immediate openings for various engineers in the research and
front page article refers to the "spare parts problem" and
states that "Smyth has been under great pressure in meeting
machine deliveries scheduled for July and August . . . we
are all concentrating on the spare parts situation, and with
the increased machine facilities our spare parts delivery
problem will, in time, be solved." Another article refers to
the continuing research and development of the Smyth
product line as follows:
New Integrater Liner
The Smyth M 762
Engineering, with restrained excitement, reports the
completion of design of the M 762, a brand new
integrated liner. This is the second phase of the project
now under way and is part of Smyth's concentrated
program to penetrate the perfect binding field ...
engineering is also actively working on several R & D
products to simplify and improve our existing machine
lines. Part of their R & D includes the next phase in the
development of the perfect binder. Competors [sic]
Beware! 2
The newsletter also announced the celebration of Smyth's
centennial year in 1980. The August I issue is self-identified
as the initial issue of a "regular in-house publication." The
second issue appeared in November 1978. The front page
article refers to the acquisition by Beacon of Harvard
Precision Components and the top logo was changed to
reflect the letter "H" as representative of Harvard. An
article refers to the Beacon pump division's exhibition of the
Richter pump in Boston from October 25-28, 1978.
Sarkisian described the in-house newsletter as the concoc-
tion of Beacon employee Taffy Tavitian, who came on duty
in February 1978 at Beacon, but who maintains an office at
the Smyth plant. She suggested the institution of a newsletter
to increase employee morale. According to Sarkisian, he has
no idea of where she obtains her information; and the
printed information was issued without his knowledge or
authorization. The newsletter is dismissed by Sarkisian as
merely a bit of puffery and exaggeration by Tavitian to
inflate employee morale. No retractions, however, were
issued.
Sarkisian testified about the state of the business subse-
quent to the shutdown of September 30. At the shutdown,
$250,000 worth of Smyth machinery was sold. As of the
time of the second hearing, $300,000 worth of machinery
had been sold. Of that total amount $92,775 worth of
machines were sold to Beacon. This was accomplished in
September 1977. The reference in the newsletter to the
transfers of machines to Beacon refers, according to Sarki-
sian, not to those machines sold in September 1977, but
rather to the machines which were referred to in the first
hearing as being under a writ of attachment in another
lawsuit. The attachment had been lifted and the sale of those
machines will result in proceeds that will be assigned to the
sheriff until the final decision in the court case. Sarkisian
testified that when the machines are moved to Beacon, they
development area to be engaged in prototype and production machine design.
The ad was signed by "Mr. Peter Savich, V. P. Engineering" at the Smyth
plant address.
1161
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
will become part of the machinery operation of Beacon,
Sarkisian testified that he had made no decision about
whether they would produce Smyth parts or Beacon aircraft
parts. Sarkisian denied that the transfer of machines was
designed to enable Beacon to handle the Smyth subcontract-
ing work. He testified that since 1976 Beacon has purchased
almost $3.2 million worth of new machines; that Beacon was
continuously purchasing new machinery; and that the
machines were not to be purchased specifically to produce
Smyth parts. Sarkisian explained that the Beacon Industries
will undoubtedly hire 40 additional employees and that it is
now experiencing a huge backlog of aircraft engine work and
in the winch division.
A reference in the newsletter about the pressure that
Smyth was experiencing to meet the machine deliveries for
July and August relates to the new order for the assembly of
machines placed by a regular customer, i.e., the Donnelly
Company, which necessitated the recall of the assemblers
referred to above. The assembly of the two Donnelly
machine orders had also necessitated the continuation of the
work of those recalled assemblers far beyond the estimated 6
to 8 weeks.
With respect to the newsletter's reference to the spare
parts situation, Sarkisian conceded that it is a "problem" of
longstanding duration, inasmuch as Smyth had not been able
to have spare parts made "fast enough and delivered to the
customers fast enough so that he is satisfied.""
Sarkisian testified that, despite the announcement in the
August edition of the Beacon newsletter, the eight machines
were not moved from Smyth to Beacon in August. (Subse-
quent to the newsletter, the Union communicated to
Sarkisian its continued interest in representing the Smyth
unit.) Sarkisian testified that such a move would not take
place if Smyth did not obtain a certain new order from the
Donnelly Company despite his testimony that they were not
necessarily intended for Smyth work. He also testified that
even if such a new order were not to come through, Smyth
might still not necessarily immediately close down complete-
ly. A prospective sale to Donnelly involves a hoped for
additional order of six machines of the old variety and not
the new high-speed liner. Such a sale is still in the
negotiation stage with Donnelly and the manufacture of
such machines will take place in 1980 or early 1981 for a
delivery price of $1,650,000.
At the time of the second hearing, Smyth backlog sales
climbed back to the level of $400,000 scheduled to be
completed in March 1979. However, Sarkisian testified that
the dollar value of the backlog is not completely reflective of
the amount of work of man hours available. The gross sales
for Smyth for the year of 1977 was $1,887,547. The
estimated total sales for 1978 was estimated at the record
hearing to be $1,800,000 in both spare parts and machines.
However, that latter figure includes two price increases
effectuated by Smyth. The first was effective in February
1978, and was of the amount of 25 percent. The second price
increase was instituted in October of an amount varying
from 40 to 60 percent. Smyth was able to effectuate the price
" Of the total hours in 1978, Sarkisian estimated that 180,000 hours of
machining would be completed at Beacon of which 10,000 or 12,000 hours
would be run on Smyth parts. In 1977, 160,000 hours were run of which
20,000 were run on Smyth parts.
increases because of the upward demand in the market.
Because the sales, in part, were satisfied by the use of outside
contractors, the sales margin was not as great as it would
otherwise had been had inventory parts been used. However,
a substantial profit was concededly made upon those items
which used the remaining and dwindling inventory." Sarki-
sian conceded that his competitive position vis-a-vis the
German competitors has improved because of the relevant
position of the German mark and the American dollar on
the international market place. The total 1978 sales for new
machines was estimated to be $350,000. Sarkisian estimated
that Smyth paid $400,000 for subcontracting of which a
rough estimate of probably one-third went to Beacon.
Furthermore, the guidelines for the purchase of parts used
by Smyth has changed. Now Smyth is required to purchase
parts for no more than 50 percent of the selling price.
Sarkisian testified that Beacon's work for Smyth continues
to be unprofitable for Beacon. Sarkisian, however, testified
that the present arrangement including the method of
subcontracting "pays for itself"; that is to say, in 1978 the
Smyth operation was expected to have a loss of less than
$40,000 to $50,000.
Sarkisian testified that it is not economically feasible for
Smyth to recreate machine shop operations in its plant to
produce its own parts. For this to be done a capital
investment from $1,800,000 up to $2 million in new
machinery is required. With respect to reinstitution of
20,000 hours of work being subcontracted to Beacon, with
an estimate of 2,500 hours per year per individual worker,
the work force would amount to approximately eight
persons. However, according to Sarkisian's testimony, if
Respondent were to operate 30,000 hours of machinery at
Smyth as of the first week of January 1977, the cost per hour
would have amounted to $58 per hour. This figure is a result
of the continuing inherent overhead expense in maintaining
a machine shop. The reason Sarkisian stated that he closed
the machine shop in the first place was that Smyth was not
receiving enough machine hours to even obtain a 30,000-
hour level. Clearly, the figure did not encompass gear
cutting work. The total cost on a subcontracted part
including overhead is $25 an hour, but when that part is
subcontracted to Beacon the actual cost to Smyth is less than
$15 per hour. Finally, it is Sarkisian's conclusionary testimo-
ny that the market place will not support price increases to
justify or bear a cost level in excess of $50 per hour. Thus, he
argued, a new order from the Donnelly Company for $1.5
million worth of machinery would not in itself provide the
economic feasibility to enable the reinstitution of a machine
shop nor would a backlog of $6 million to $8 million.
The consolidated financial statement for the Smyth
Manufacturing Company as of December 31, 1977, was
submitted by Respondent. Unlike the prior financial state-
ment, the accounting firm which prepared the statement
stated that they did not include and examine the financial
statement of Smyth Home, the English subsidiary, inasmuch
as a different method of accounting was used for this period
for the foreign subsidiary. In the December 31, 1977,
" The inventory as of December 31, 1976, was $850.764. As of December
31, 1978, the estimated inventory was $S50,000. Respondent has not added to
its inventory of parts.
1162
SMYTH MANUFACTURING COMPANY
financial statement a net sales of $1,887,547 is set forth.
Subtracting a "cost of sales" of $914,507, a gross profit of
$973,040 is indicated. From that figure operating expenses
of $973,435 are subtracted to arrive at a loss from operations
of $395. Coupled with a gain of sale of machinery of
$140,192, the net income was set forth as $139,797. This
compares with the December 31, 1976, financial statement
of net sales of $1,404,396 and a net loss of income of
$1,280,552.
The addendum to the December 31, 1977, financial
statement provided by the accounting firm contains the
balance sheet of December 31, 1977, and a statement of
operations for that year ended of the foreign subsidiary,
Smyth Horne. That document indicates a net sales of
$2,284,963. The net gain for the Smyth Horne subsidiary for
that period was $171,603. The combined net sales of both,
Smyth Manufacturing Company and subsidiary Smyth
Horne would appear to be in excess of $4 million for the
period ending December 31, 1977. The figure approximates
the net sales for the 12-month period ending June 30, 1976;
i.e., figures in excess of $4 million. Sarkisian testified that the
$4 million figure for the period ending June 30, 1976, was
inclusive of the sales of both, Smyth Manufacturing Compa-
ny and its English subsidiary. Considering that the net sales
given in a financial statement for the 6-month period ending
December 31, 1976, was inclusive of the foreign subsidiary
sales, that $1,404,396 represents sales for the last half of
1976, a decline in sales in excess of 25 percent. Again the
financial report for the 6-month period ending December 31,
1976, does not breakdown sales as between Smyth Manufac-
turing Company and its English subsidiary. The compara-
tive igures for 1977 and 1976 submitted with the financial
statement of December 31, 1977, do not set forth compara-
tive sales figures. Sarkisian in his testimony compared the
December 31, 1977, gross sales of $1.88 million with the
estimated 1978 $1.80 million gross sales on an equivalent
basis: i.e., of Smyth sales. Thus, he excluded the gross sales
of Smyth Horne. He further explained their equivalence in
terms of an increase in the price charged to the customer.
Thus, although dollar sales were equivalent, the amount of
actual work decreased. Of the 1978 sales figure, $1,450,000
was derived from the sale of Smyth parts and $350,000
derived from the sales of machinery. With respect to the
Smyth parts sales figures, $400,000 of that had been
attributed to parts produced under a subcontract with other
machine shops, including Beacon. Comparing the 1.8 mil-
lion dollar expected gross sales for 1978 with the combined
gross sales of in excess of 4 million of Smyth and Smyth
Horne with the 12-month period ending at June 30, 1976, of
which a rough estimate of one-half is attributed to Smyth, it
would appear that gross sales are indeed on a downward
trend. A definitive analysis cannot be made because of the
lack of precise data as to what specific percentage of the
1978 figure is due to a markup in prices. Overall, it would
therefore appear that there was a substantial down turn in
sales in the latter half of 1976, and that there was an upward
turn during the entire year of 1977, at least to almost the
" Subsequent to the close or the second hearing, Respondent moved to
submit into the record a copy of a contract negotiated and executed by all
parties convering the unit employees of Smyth subsequent to the close of the
second hearing. The General Counsel and Charging Party object to receipt of
pre-June 1976 level. Although here, it is seen that Smyth
Horne's sales exceeded Smyth's by about $400,000. This is in
accord with Sarkisian's testimony of a surge in business that
summer.
Sarkisian testified that he is engaging in continuing efforts
to locate a buyer for Smyth and was at the time of the second
hearing in negotiation with two potential purchasers, but he
conceded that he has no immediate or foreseeable target
dates.
By letter dated August 16, Gordon Sawyer, whose title is
directing business respresentive of the Union, wrote a letter
to Sarkisian wherein he asserted that the Union had evidence
that Smyth had never ceased operations, but rather was in
the process of expanding its Smyth plant operations.
Accordingly, Sawyer requested that Sarkisian bargain with
the Union concerning wages, hours, and other terms and
conditions of employment. By letter dated August 30, 1978,
Sarkisian responded and offered to meet with the Union and
bargain collectively. Sarkisian suggested that prior to meet-
ing. however, that Sawyer ought to call upon him at the
Smyth plant and view the plant. Sarkisian offered to give
Sawyer a first hand view and to demonstrate that Smyth was
merely in the process of attempting to liquidate its remaining
inventory. By letter, dated September 22, Sawyer responded
and thanked Sarkisian for his offer to negotiate and
requested certain information: i.e., names and addresses of
bargaining unit employees, job titles, description of insur-
ance coverage, and hours of work and shift premium
schedules. He also indicated that as soon as he reviewed the
requested information he would accept Sarkisian's offer of a
personal visit. By letter dated October 10, Sarkisian
responded with the requested information. Subsequently, the
Union did not make a further request to negotiate or bargain
with Smyth.'
11. Unilateral changes after the first hearing
With the respect to the alleged unilateral changes in
working conditions this refers to two specific areas: (1) The
General Counsel alleges that in 1978 Sarkisian rehired
Smyth employees at rates higher than the wage rate they had
received upon their 1977 layoff: and (2) there is
uncontradicted evidence that Respondent changed its insur-
ance program and did so without notice or bargaining with
the Union.
With respect to the changes in wage rates, the issue must
be resolved upon a credibility evaluation between Sarkisian
and Business Representative Ferreira. Sarkisian claims that,
during telephone conversations with Ferreira after the initial
letter had been sent to the Union in 1978 about possible
recall, Rerreira gave him carte blanche to set the wage rates
only conditioning such act upon the receipt by the employ-
ees of at least the amount they were receiving when they
were laid off. Sarkisian thereefore sought from him authority
to adjust wage rates to reflect inflation. He took the
foregoing sanction to mean that he could adjust wage rates
thereafter. Thus, certain employees were given increases not
said document. I conclude that the substance of a post-hearing contract is not
relevant and material to the issues before me, and, accordingly, Respondent's
motion is denied.
1163
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
only upon their rehire but thereafter. Ferreira denied any
conversation about wages and denied giving Sarkisian carte
blanche to grant wage increases. I credit Ferreira. His
demeanor in this regard was far more certain, responsive,
and fluent than was Sarkisian's. Moreover, I find Ferreira's
testimony more probable. For example, Sarkisian insisted
that the conversation with Ferreira about wages occurred
before receipt of Ferreira's letter of February 25. The
February 25 letter opens by stating that it is a response to
the February 20 letter of Sarkisian. It makes no reference to
any telephone conversations and certainly no reference to
any discussion or understanding about wages. It is highly
improbable that if any agreement had been reached on wages
that Ferreira would not have made some reference to it in
his February 25 letter. It is also unlikely that if any
telephone conversation had taken place on any matter of
substance that Ferreira would not have referred to it in the
February 25 letter, and that he would have narrowly
restricted that letter to a mere reference to prior correspon-
dence. In any event, Sarkisian's testimony, if it were to be
credited, still cannot be construed to have provided him with
a carte blanche discretion to rehire some employees at their
old rate and other employees at a higher rate. According to
his version of the conversation, the most he suggested was
accommodation for inflation. I therefore conclude that
Sarkisian acted unilaterally by recalling employees to higher
wage rates and newer wage rates that are not set forth under
the prior practice.
IV. ANALYSIS AND CONCLUSIONS
A. 8(a)() Allegations
I. The threat regarding unit work by Foremen
Schwartz' November threat to Gordon that Norman
would close down the plant if he filed any grievance
constitutes clear coercion of an employee's right to engage in
protected activity and, thus, is violative of Section 8(a)(1) of
the Act. The context in which the threat was uttered reveals
that it was intended as a message that Sarkisian and
Schwartz would not tolerate any grievances.
2. Threats to lay off employees with respect to
grievances concerning the prototype pump
In the November 1976 conversation between Gordon and
Sarkisian, about Gordon's suggestion that a Smyth employee
might be assigned work on the prototype pump, Sarkisian's
response went beyond a merely hasty, intemperate rejection
of that suggestion. Rather, Sarkisian responded with an
ultimatum that Gordon as union committeeman would
incur Sarkisian's wrath if he filed any grievance or made any
complaint or inquiry about working conditions of the unit
employees, and that wrath would manifest itself in the layoff
of 15 assemblers. Such conduct is clearly coercive of
Gordon's right to engage in union and concerted protected
activity as guaranteed by the Act, and therefore is violative
of Section 8(a)(1) of the Act.
3. The threat to close in the absence of an open shop
The complaint alleges that on or about January 5,
Schwartz told an employee that the plant would close down
if the Union did not agree to an open shop. This is an
apparent reference to the January 5 negotiating meeting at
which London stated that Sarkisian would not agree to the
Union's seniority proposal unless he received an open-shop
proviso in exchange. At that point, Ferreira rejected the
suggestion and Schwartz stated, "After February 5 you have
nothing, a big zero." This was an apparent reference to the
expiration of the existing contract on January 5. 1 conclude
that it was an exaggerated and incorrect statement made in
negotiations on the impact of the termination of a collective-
bargaining agreement. I do not construe it as a threat of a
plant shutdown on January 5. I1 conclude that this allegation
is not sustained by the evidence.
4. Interrogation as to identity of an employee who
made certain remarks at a union meeting
Essentially, Sarkisian admitted interrogating employees
about statements made at a union meeting. Although it is
understandable that Sarkisian would want to rebut a
mischaracterization of his bargaining position, I find that
there is no legitimate basis for his inquiry as to the identity
of persons who may have made statements at a union
meeting. Participation at a union meeting and the right to
freely express opinions cannot be inhibited by permitting an
employer the right to seek out the identity of the speakers at
such a meeting when, as here, other methods of rebuttal
were clearly available to the employer. No legitimate reason
was demonstrated why it was necessary for Sarkisian to
obtain the identity of the speaker. I therefore find that such
conduct clearly tends to interfere with employees' free
exercise of their rights guaranteed by the Act and is
therefore violative of Section 8(a)(l) of the Act.
5. The threat to close the plant during the negotiations
of January 13
The complaint alleges that this threat was made on
January 13, during negotiations in the presence of employee
participants. I have concluded above that the threat was
made on January 26 during a negotiation meeting wherein
Sarkisian stated that if he did not obtain an open shop he
would close down the plant. Certainly an employer has the
right to set forth economically foreseeable consequences of
the Union's bargaining position or demands, as long as he
does so on the basis of demonstrably probable consequences
beyond his control. N.L.R.B. v. Gissel Packing Co., Inc., 395
U.S. 575, 516 (1969). However, the statement made by
Sarkisian was not a prediction of a reasonable foreseeable
event. His efforts to acquire another enterprise were not
reasonably contingent solely or either partially upon the
ability to negotiate an open shop. An open shop was
proposed merely as a speculative problem by a representa-
tive of a parent corporation of a subsidiary that was either
sought for acquisition or merger. Moreover, the threat was
uttered after the proposed merger had collapsed as the result
of other impediments. Furthermore, the statement was made
1164
SMYTH MANUFACTURING COMPANY
within the context of past expressions of animosity and
hostility to union activity and union representation by
Smyth employees. Coupled with the fact that there is no
rational basis to conclude that an acquisition or merger
could not have been obtained with the presence of a union
shop, such a position was clearly intended to coerce the
Union with respect to its bargaining position by outright
intimidation. I therefore conclude that such a statement
constituted a threat of an economic reprisal intended purely
for the purpose of undermining the Union's bargaining
position. I therefore conclude that it violated Section 8(a)(1)
of the Act.
6. Surveillance of an employee engaged in union
business
The complaint alleges that on or about February 7, and
continuing thereafter, Supervisor Hernes engaged in surveil-
lance of an employee while said employee was engaged in
union business. Gordon's testimony with respect to surveil-
lance is too obscure to support this allegation of the
complaint. He testified that Hernes followed him around
and took notes even while he was on his way to the toilet.
However, it is not clear that Gordon engaged in any union
activities at which time Hernes engaged in his so-called
surveillance. Furthermore, it is not clear that whether
Hernes' walking around the plant taking notes is an unusual
occurrence. Clearly as a supervisor he is charged with the
duties of overseeing functions in the shop. Furthermore,
even under past practice, Gordon was not completely free to
leave his machine without prior approval of the foreman. I
therefore, cannot conclude that Hernes engaged in surveil-
lance of Gordon's union activities, i.e., grievance adjustment
or other union business. Furthermore, Gordon testified that
when he engaged in union business it occurred on his own
time, such as coffee break, lunch time, and at night. There is
no suggestion that he was surveilled on those occasions. In
any event, Gordon's work station was located 10 feet from
Hernes' glass enclosed office. Therefore, the visibility of
Gordon with respect to his union activity was hardly
increased by Hernes' following him to the toilet.
7. The February 16 meeting, threat to close, promise of
a wage increase, and misrepresentation of negotiations
As discussed above, on February 16 Sarkisian addressed
his employees in the cafeteria and, in effect, cited the benefits
of Beacon Industries, the nonunion shop, where employees
earned $16,000 a year. He told them that all that was
separating them from a 15-cent raise every 6 months until
the day they died was a mere handshake. Implicit in such
offer is the suggestion that they would be better off without a
union contract or the formality of representation by a union.
An additional statement indicated that all that separated
the parties from agreement was the Union's failure to give
him an open shop and that if he did not get an open shop he
would close down the plant. Clearly, other substantive issues
separated the parties from full agreement. Sarkisian's state-
ment thus constituted a misrepresentation of what had
transpired at the bargaining table. Such a statement plainly
tended to erode and undermine the support of the employees
for their bargaining representative. Finally, the threat to
close the plant, unless he obtained an open shop, was
grounded on no objective economic factors. The time had
long elapsed since the Canadian deal fell through. There is
no evidence that any other prospective business acquisition
depended upon Sarkisian's negotiation of an open shop at
Smyth. The whole context of Sarkisian's speech obviously
conveyed the message to the employees that they, like the
Beacon employees, would be better off without union
representation and that their adherence to the Union's
bargaining position with respect to a union shop proviso
would result in economic reprisal. I therefore conclude that
Respondent violated Section 8(a)(l) of the Act by the
conduct of its agent, Sarkisian, on February 16, by threaten-
ing to lay off employees and close the shop unless the
collective-bargaining representative agreed to an open-shop
proviso in the contract; by misrepresenting the nature of the
negotiations in asserting that the open-shop issue was the
only issue separating the parties from contractual agreement,
and finally by promising employees a 15-cent wage increase
every 6 months in the event their bargaining representative
agreed to the open-shop proviso.
8. The announcement of plant closure of February 21
Sarkisian's statement to assembled employees on February
21 that he was closing the plant, in the context of his past
statements and conduct, amounted to an announcement to
them that they would be inflicted with an economic reprisal
because of their support of the Union's bargaining position,
particularly since he did not explain to the employees the
economic basis for his decision.
9. The February 24 statement of nonrecognition
Inasmuch as I discredit the testimony of Mereschuck
about the alleged incident of February 24, 1 find no violation
thereon. I find that Schwartz did not tell Boyle that
Respondent no longer recognized the Union.
10. Sarkisian's July 22 encounter with Mereschuck
The complaint alleges that Sarkisian told a prounion
employee, Mereschuck, that he had no future with the
Company and he should not return to work with Respon-
dent. I did not credit the testimony of Mereschuck. I
conclude that at most, Sarkisian's statement was in the
nature of a fair warning to Mereschuck that if he did accept
reinstatement to Respondent that such employment might
be temporary in light of Sarkisian's intention to reduce or
eliminate production. Therefore, if Mereschuck had ob-
tained other employment, indeed it would have been wise for
him to consider whether or not he desired to remain at that
other employment. I construe no coercive intent in Sarki-
sian's comments directed to Mereschuck personally. I
therefore find this allegation of the complaint to be without
merit.
1165
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
11. The discharge of George Gordon on February 24,
1977
The findings of fact above indicate and reveal that
Respondent, by its agents, Sarkisian and Schwartz, manifest-
ed a hostility to union representation in general and in
particular to the efforts of Gordon in performing his role as
union representative. Gordon was discharged at a time when
Smyth's union negotiations had come to the critical apex.
Respondent's proffered reason for the discharge of Gordon
is based essentially upon the subjective conclusion of
Sarkisian that Gordon was not performing his work func-
tions assiduously. This was supported by general testimony
that Respondent was behind on delivery of a certain
machine. Specifics were not given as how late or tardy that
delivery was, or just in what specific manner Gordon's work
caused such tardiness. There is no demonstration that
Gordon failed to live up to established work procedures or
standards for that particular job. There is no demonstration
that Gordon's immediate Supervisor Hernes had any specific
complaint about Gordon's work performance or that line
supervision was consulted prior to the actual decision to
discharge Gordon. Furthermore, there is no cogent explana-
tion as to why another employee could not have been
assigned to assist Gordon. Although Sarkisian's testimony is
confusing about the state of work in the shop at the time, at
one point he did testify that other work was being performed
by other employees. I conclude, therefore, that the proffered
reason for the discharge of Gordon on the bases of
"economics" is merely a pretext and in light of the full
context of this case and the expression of animosity toward
the Union and toward Gordon in particular, because of his
union activities, that Gordon was discharged because of
those union activities and that Respondent therefore violated
Section 8(a)(l) and (3) of the Act by such conduct.
However, I conclude that Gordon was reinstated on August
1, 1977, pursuant to verbal settlement agreement. I conclude
that Gordon voluntarily left the employ of Respondent and
did not return thereafter. As indicated above, I have credited
Respondent's account of the encounters between Sarkisian,
Schwartz, and Gordon about the issue of backpay. However,
even had I found that Respondent was reneging on the
amount of backpay due Gordon, I still would not have
concluded that such a circumstance would have amounted
to a constructive discharge of Gordon. Accordingly, I do not
find merit to the allegation that Gordon was constructively
discharged on August 1.
B. 8(a)(5) Allegations
1. The course of conduct of bad-faith bargaining
The complaint alleges that Smyth engaged in an overall
course of bad-faith bargaining, including the submission of
proposals that no self-respecting union could accept, such as
reducing the starting rates of new employees, abandonment
of the Union's right to information affecting employees'
wage rates, a seniority clause based on union membership,
and also that the Union give up certain contractual rights
that it had previously negotiated, such as the prohibition of
supervisors doing unit work.
There is no contention herein that Respondent engaged in
conduct whereby it refused to meet and negotiate with the
Union or that it engaged in dilatory tactics. I do not find the
General Counsel's argument that Respondent engaged in
bad-faith bargaining by making demands which no self-
respecting union could accept to be supported completely by
the record in this case. During the course of bargaining,
Respondent did in fact make certain concessions to the
Union. For example, Respondent initially desired complete
freedom to subcontract and permit foremen to perform unit
work. However, in its last proposal to the Union, Respon-
dent backed off from that position and requested contractual
language which was not starkly different from that of the
old, expired contract. With respect to merit raises, it should
be noted that the expired contract itself provided for the
granting of merit raises. The record is silent about the
manner to which those raises were implemented in prior
years. However, the old contract itself seems to suggest some
discretion by management. With respect to the contention
that a request for a reduction in starting wages for new
employees was an outrageous proposition, I find such an
assertion to be unsupported by the record.
Respondent was in economic difficulties. It was certainly
not unreasonable to have expected Respondent to have
requested some concessions. The actual monetary offer of
Respondent to those employees presently on duty was not so
far from that which the Union at one point offered. That is
to say, the Union wanted 30 cents "up forward" whereas
Respondent offered 15 cents now and 15 cents after 6
months. Certainly, with respect to the economic package in
regard to wages of those on board, it cannot be said that
Respondent had taken such an outrageous position as to be
indicative of bad faith.
The record does support, however, a conclusion that
Respondent did engage in bargaining with an intention of
maneuvering the Union into a position so that there would
be no agreement, or, if there were an agreement, it would be
under such terms as to have eroded the bargaining position
and representational role of the Union. This was indicated
by the position taken by Respondent in regard to the open
shop and with respect to its position on the merit wages as
stated by Schwartz in negotiations and its position on a
grievance procedure.
With respect to the grievance procedure, it clearly sought
to reduce the participation of the representational role of the
steward during the first stages of the grievance procedure.
With respect to merit wages, the position taken by
Schwartz that the ad hoc decisional factors to be applied by
Respondent in regard to merit wages were none of the
Union's business reenforces that conclusion. It is one thing
for the employer to take a position that merit raises may be a
valuable managerial tool and that some discretion is in
order, but to exclude the Union from total participation in
that mechanism is clearly indicative of a desire to conduct
business in a completely unfettered fashion. Nothing can be
more important to the position of an employee than the
receipt of wage increases. To demand that future wage
increases be subject totally to the discretion of the employer
precludes the union representational function from a most
vital area.
1166
SMYTH MANUFACTURING COMPANY
Perhaps the factor most indicative of the employer's
attitude with respect to the representational role of the
Union and toward the bargaining process is the position it
took on the open-shop issue. Certainly, an employer that
takes a position in favor of an open-shop proviso does not
necessarily do so in bad faith. In this particular case,
however, Sarkisian never took the position at the bargaining
table that an open shop ought to be negotiated to serve some
higher principle, such as the right of employees to freely
decide whether or not they wish to join a union. Schwartz
suggested that this was his attitude, but at no point did
Sarkisian indicate the same. Sarkisian rather premised his
position with respect to the open shop solely on his ability to
acquire another enterprise and to keep the business viable.
Thus, Sarkisian told the union negotiators in the course of
negotiations that if they could convince the subjects of the
acquisition to go along with a union shop then it was alright
with him. Clearly, at that point, he was advancing solely an
economic argument. However, Sarkisian's own testimony
thoroughly undercuts this economic premise.
The union-shop proviso as an impediment to the acquisi-
tion or merger was based on purely conjectural grounds.
Many other possible impediments were involved at that most
embryonic stage of discussions with the New Jersey How
Corporation. Indeed, Sarkisian's testimony suggests that the
discussion about the Canadian acquisition did not even
reach the stage of substantive negotiations. Furthermore, he
testified that there were other prospects that he had in mind,
but he failed to testify that any of the other prospects
suggested that the retention of a union-shop proviso in the
contract would constitute an impediment. Finally, at no
point did Sarkisian respond affirmatively to the Union's
suggestion that something less than a union shop be
negotiated with respect to newly hired employees. Clearly,
Sarkisian's interjection of the union-shop proviso into the
negotiations as a matter of economic necessity was an act of
disingenuous misrepresentation.
What, therefore, was the basis for Sarkisian's reasons for
insisting on the open shop? In view of his and Schwartz's
prior coercive statements which are indicative of a desire to
be unrestricted by the necessity to deal with grievances and
to deal with representatives of the Union, and his desire to
have a completely free hand in the management of the
Company, it can only be concluded that he did so either to
render contractual agreement an impossibility or to erode
the support of the Union among the employees by being able
to argue to the employees that the Union was preventing
them from obtaining economic benefits and putting them in
jeopardy of economic reprisals because of the Union's refusal
to accept an open shop. I therefore conclude that Respon-
dent, by its agent Sarkisian, did, indeed, engage in a course
of bad-faith bargaining in violation of Section 8(aX)(5) and (1)
of the Act. '"
'' The General Counsel contends that Respondent's insistence upon a
discriminatory seniority clause is further evidence of bad faith. I find this
argument unconvincing. The language on its face would seem to encourage
union membership. It would hardly seem reasonable to conclude that an
insistence upon such a clause was indicative of a desire to avoid reaching
2. Unilateral changes in working hours of January 24
It is axiomatic that an employer is obligated to timely
notify the employees' collective-bargaining agent and bar-
gain with it upon request on any changes of wages, hours, or
other terms and conditions of employment. I have concluded
above that Respondent on or about January 24, reduced the
hours of employment from 40 hours per week. In doing so
no advance notice was given to the Union with respect to the
decision or effects of the cut in hours. I have further
concluded that any possibility of meaningful negotiations
was made futile by Schwartz' refusal to discuss the matter
with Gordon and by Schwartz' reminder to Gordon of
Sarkisian's prior warnings. The decision was an accom-
plished fact and fully implemented despite the fact that
certain limited discussions took place as to shift commence-
ment time. Accordingly, I conclude that Respondent violat-
ed Section 8(a)(5) and (1) of the Act as alleged in the
complaint in this regard.
I also conclude that a full opportunity to bargain with the
Union was afforded to the Union on July 27, 1977, at which
time Respondent met and agreed to bargain with the Union
under the terms of a verbal settlement agreement. At that
time the Union could have requested, but failed to request,
bargaining.
3. Unilateral changes in the work assignment of
employee Griffin
The complaint alleges that Respondent violated Section
8(a)(5) of the Act by the change in Griffin's work assign-
ment. It is argued that the transfer of the Australian trip to
supervisory personnel constituted a unilateral change in
working conditions. It can hardly be contended, however,
that engaging in field work in Australia was a condition of
Griffin's employment. He had never made such a trip in the
past, but was rather limited to domestic excursions. In any
event, the action taken by Respondent arose in the context in
which it was faced with the prospect of sending an employee
at great expense to a crucial assignment at a great distance in
a foreign country at a time when it feared that the employee
might interrupt the critical work to engage in a strike. It
would seem that a more colorable theory of interference with
employees' protected activities could be argued here than
one of a unilateral change in working conditions. However,
under any theory I do not believe that it would best
effectuate the policies of the Act to conclude that a violation
of either Section 8(a)(l) or 8(a)(5) occurred. Respondent was
motivated by preeminent financial and business consider-
ations. Its need for assurance that its work in Australia
would not be interrupted was clearly justified under this
peculiar situation. Griffin was reassigned to work which he
had similarly engaged in prior to this incident. Accordingly,
I find that this allegation of the complaint is without merit.
contractual agreement. I conclude that Respondent's insertion of such a
clause was a result of its ignorance of the law. I conclude that the fact that
such language was left in the contractual proposals was a result not so much
of a desire to insist upon outrageous demands, but rather was inserted through
sheer negligence and a cavalier attitude.
1167
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
4. Unilateral changes with respect to the working
conditions of George Gordon
From the above findings of fact, it is clear that George
Gordon's representational function was circumscribed from
the manner in which he had permitted to engage in said
function in the past. The imposition of restrictions as to his
movements in the plant and his access to the telephone
deviated from past practice and were imposed as the result
of the unilateral action by the Employer. I therefore
conclude that Respondent violated Section 8(a)(5) and (1) of
the Act as alleged in paragraph 20(e) of the complaint.
5. The March 1977 layoffs
The complaint alleges that on or about February 24 and
March 2 Respondent notified employees of layoffs and
refused to bargain with the Union regarding its decision to
lay off employees.
The General Counsel does not contend and neither does
the complaint nor the amended complaint allege that the
layoffs of February and March 1977 were motivated by
union animus, or that they were violative of Section 8(a)(3)
of the Act. Clearly however, Respondent was obliged to
provide the Union with advance notice and sufficient
opportunity to bargain about such a basic action affecting
the employee's tenure. From the facts found above, I
conclude that the Union did, indeed, have advance notice of
the impending layoffs. On February 21, Gordon and Boyle
were apprised by Schwartz that a layoff of employees was to
occur. Schwartz indicated that he was amenable to meet
with the Union committee and discuss the matter as soon as
he could. However, no union representative requested a
subsequent meeting with Schwartz or with Sarkisian. On
February 24, a notice of layoff was posted for certain
employees to be effective on March 4 and on March 4 a
second list was posted which comprised a list of employees
to be laid off effective as of March 11. The expired contract
provided that laid off employees were to be given a 3-day
advance notice prior to layoff.
Even after the. posting of the notices, no request was made
of Respondent to bargain concerning the layoffs. The
General Counsel contends that the failure by the Union to
respond does not constitute a waiver inasmuch as a waiver
must be "clear and unequivocal." The General Counsel cites
Metlox Manufacturing Company, 225 NLRB 1317 (1976).
That case, however, involved a somewhat different factual
situation. The Employer therein unilaterally instituted his
most recent contractual proposal in the absence of an
impasse in bargaining. I do not agree with the suggestion in
the General Counsel's argument that a union may fail to
respond to advance notice of an impending change in
working conditions by the employer and yet assert a breach
of the Act by the employer. The Board has held that a union
that has had notice of an employer's change in a term or
condition of employment must timely request bargaining if it
wishes to preserve its right to bargain on that subject.
American Buslines, Inc., 164 NLRB 1055 (1967); The City
Hospital of East Liverpool, Ohio, 234 NLRB 58 (1978).
" As will be discussed more fully below, I conclude that the March layoffs
were motivated solely by economic factors.
Inasmuch as the General Counsel has not alleged that the
actual layoffs of March were motivated by discriminatory
reasons, I conclude that Respondent did not breach an
obligation to bargain with the Union concerning these
layoffs."
6. The refusal to bargain in good faith since
July 13, 1977
The complaint alleges that since on or about July 13,
1977, Smyth has refused to bargain in good faith regarding
the recall of laid-off employees, a collective-bargaining
agreement, and vacation pay.
In the July 27 meetings between the parties, Sarkisian
admittedly took the position that employees laid off in
March were not entitled to vacation pay. In essence,
therefore, he refused to negotiate concerning the vacation
pay of those laid off employees. Respondent concedes that
those employees were in fact entitled to vacation pay
inasmuch as employees who had not been laid off that
summer received such pay. Respondent concedes that
Sarkisian misinterpreted the collective-bargaining agree-
ment. Respondent takes the position that a remedial order is
appropriate with respect to vacation pay for those employees
who were laid off in the March layoffs of 1977.
The General Counsel does not explicate his theory as to
how Respondent refused to bargain subsequent to July 13,
1977, with respect to the recall of employees or a new
collective-bargaining agreement. In view of the factual
findings set forth above, I cannot conclude that the General
Counsel has proven the allegation of the complaint in this
regard. With respect to the subject matter of the appropriate
manner of recall, the Union clearly was not prepared in the
first meeting to discuss the matter. When the Union finally
arrived at what it considered to be an appropriate position
on the issue, the matter was discussed, but agreement could
not be reached. Sarkisian suggested that the unresolved area
be submitted to arbitration, but the Union rejected this
position. With respect to the matter of contractual negotia-
tions, I do not conclude that the Union made a clear request
to meet at a specific time to negotiate and discuss a new
collective-bargaining agreement. Accordingly, I do not
conclude that after July 13, 1977, Respondent breached its
obligations with respect to good-faith bargaining with the
Union about negotiations on a new contract or the manner
to which it effectuated the March 1977 layoffs. It should be
noted that the General Counsel did not specifically allege or
argue that Respondent unilaterally changed working condi-
tions by disregarding bumping rights as they existed under
the expired contract.
7. The refusal to bargain with respect to the layoff of
James Foley
The complaint simply alleges that on or about July 15,
1977, Smyth laid off James Foley "without bargaining with
the Union." In view of the confusing testimony of Union
Representative Gallagher about the discussions in regard to
the layoff of Foley, I cannot conclude that the Union was
1168
SMYTH MANUFACTURING COMPANY
deprived of a meaningful opportunity to negotiate the matter
of Foley's layoff at the July 27 meeting. However, the Union
did, indeed, fail to have advance notice of such layoff. I
therefore find that Respondent violated Section 8(a)(5) and
(1) of the Act by failing to give the Union advance notice of
Foley's July 15 layoff and by failing to bargain about his
layoff until July 27, 1977.
8. The unilateral subcontracting and cessation of
manufacturing operations
The complaint alleges that on or about July 15 Smyth
refused to bargain with the Union about the effects of a
decision to subcontract the production of "$100,000 worth
of parts no longer in Smyth's inventory." The complaint also
alleges that on or about September 15 Smyth refused to
bargain with the Union about a unilateral decision to cease
manufacturing operations at its facility in Bloomfield,
Connecticut. The complaint further alleges that since on or
about September 15, 1977, Smyth has refused to bargain
with the Union about its decision to lay off all employees
engaged in production work. There is no allegation that
Smyth violated Section 8(a)(5) of the Act with respect to
subcontracting prior to those dates.
The amendments to the complaint following the first
hearing allege, in part:
That Respondent Smyth ceased manufacturing oper-
ations at its Granby Street location on or about
September 30, 1977, and began subcontracting bargain-
ing unit work and laying off unit employees because of
the union activities of those employees, thus violating
Section 8(a)(3) of the Act.
I conclude that the Union had sufficient advance notice of
Respondent's intention to slowly phase out its production
facility at the Smyth plant. As early as February 21, 1977,
the Union should have been on notice of such intent
inasmuch as the bargaining committeemen were in atten-
dance at the meeting of employees where the announcement
was made. Implicitly the Union should also have been on
notice that subcontracting of work was one of many possible
avenues available to the Employer as a means of achieving
that goal. Mereschuck testified that he was aware of
subcontracting of work as it occurred. Yet, the Union never
protested the Employer's decision to cease production
activities and to transfer bargaining unit work to subcontrac-
tees. The Union had never requested of the Employer an
opportunity to bargain about the effects of such conduct.
When the last member of the union shop bargaining
committee was notified a month in advance of the final
target date and explicitly told of plans for subcontracting, no
request for bargaining was made by him. Thus, assuming the
absence of discriminatory motivation, there is no basis upon
which to conclude that Respondent violated its duties to
bargain with the Union by failing to give the Union
sufficient advance notice or to give the Union adequate
opportunity to bargain over the effects of the decision.
American Buslines, Inc., supra. The City Hospital of East
Liverpool, Ohio. supra.
' There is no allegation that any prior subcontracting was in violation of
Sec. 8(a)(3) of the Act.
It is contended, however, that Respondent did, in fact, act
pursuant to a discriminatory motivation. If it did so, then
any attempt to bargain with the Employer would have been
an act of futility. Further analysis of the 8(a)(5) issue must
therefore be made in conjunction with a resolution of the
8(a)(3) allegation in regard to the cessation of production
and the subsequent contracting of unit work.
Normally a determination of whether Section 8(a)(3) has
been violated must turn upon a resolution of motivation. The
Supreme Court has stated in N.L.R.B. v. Great Dane
Trailers, Inc.:
Some conduct, however, is so "inherently destructive of
employee interest" that it may be deemed proscribed
without need for proof of an underlying improper
motive. Labor Board v. Brown, supra, at 287; American
Ship Building Co., v. Labor Board, supra, at 311. That
is, some conduct carries with it "unavoidable conse-
quences which the employer not only forsaw but which
he must have intended" and thus bears "its own indicia
of intent." Labor Board v. Erie Resistor Corp., supra, at
228, 231. If the conduct in question falls within this
"inherently destructive" category, the employer has the
burden of explaining away, justifying or characterizing
"his actions as something different than they appear on
their face," and if he fails "an unfair labor practice
charge is made out." Id., at 228. And even if the
employer does come forward with counter explanations
for his conduct in this situation, the Board may
nevertheless draw an inference of improper motive from
the conduct itself and exercise its duty to strike the
proper balance between the asserted business justifica-
tions and the evasion of employee rights in light of the
Act and its policy.'
The Court further stated that, "If it can reasonably be
concluded that the employer's discriminatory conduct was
'inherently destructive' of important employee rights, no
proof of an antiunion motivation is needed and the Board
can find an unfair labor practice even if an employer
introduces evidence that the conduct was motivated by
business considerations." °
In this particular case, by its conduct Respondent has
intentionally given its employees the impression that it has
decided to terminate its operations at Smyth because of the
Smyth's employees continued support of the Union's bar-
gaining position. By its own words and deeds Respondent
has created a situation whereby, regardless of actual motiva-
tion, the transfer of unit work has necessarily become
inherently destructive of employee rights. Under such
circumstances, the burden of providing that the sole motiva-
tion for its conduct was economic must rest upon Respon-
dent. Saginaw Aggregates, Inc., 191 NLRB 553, 555 (1971);
Allied Mills. Inc., 218 NLRB 281, 289 (1975).
There is abundant evidence that economic factors existed
which made a course of action such as Respondent's seem
superficially appropriate. In February 1977, Respondent had
encountered a downturn in sales which dictated the need for
some immediate action to prevent a tenuous economic
I 388 U.S. 26, 33-34 (1967).
b" Id. at 34.
1169
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
situation from becoming a castastrophe. The March layoffs
were clearly economically motivated.
However, instead of deteriorating the situation improved.
Almost half of the employees who were laid off in March
were recalled during the summer of 1977. The sales levels of
1977 and 1978 approached the level of sales at the time of
the acquisition of Smyth by Beacon, despite the fact that
Smyth was supposedly operating only in a "holding pat-
tern." Yet in August, Sarkisian decided that it was still "too
costly" to continue the business. It is argued that Sarkisian
was justified because of factors existing in 1977. Yet the
situation was not economically fundamentally different than
it had been when Smyth was purchased by Sarkisian a year
earlier. In 1976 he realized that merely maintaining the
status quo was insufficient. In 1976 he was willing to plunge
ahead with an unprofitable operation as part of an invest-
ment necessary to achieve an ultimately profitable venture.
In 1976 he was willing to assume the inherently high
overhead of the Smyth machine shop. In 1976 Sarkisian was
willing to carry the losses while seeking an expansion of
Smyth's product line, while replacing old worn machinery
with new machinery, and while he acquired or merged other
enterprises with Smyth.
In 1977 Sarkisian was no longer willing to carry Smyth.
What economic factors had occurred since 1976 that caused
him to abandon what he originally considered to be a viable
and potentially successfully venture? After the dip in sales in
the last half of 1976 there occurred a marked resurgence in
sales. In 1977 and 1978 customers sought reassurance from
Sarkisian that he would provide them with a continued
source of parts. Therefore, a deterioration of a demand for
Smyth's replacement parts did not prevail. Indeed, in 1978
Sarkisian admitted that there was a pressing demand for
Smyth parts and that he encountered difficulties in timely
meeting those orders because of the need to use subcontrac-
tees.
With respect to the acquisition of another company with
Smyth, although Sarkisian described the aborted effort with
the New Jersey-Canadian entity, he gave no explanation of
why he did not pursue negotiations with several other
prospects that he had considered in early 1977. Ultimately
Harvard was acquired, but was merged with Beacon and not
with Smyth. Why was there no merger or acquisition of
either Harvard or another entity with Smyth? This was not
explained.
With respect to the acquisition of machinery, this had
been his objective in 1976. Such acquisition then would have
entailed substantial expenditures of money at a time when
the financial prospect was not substantially better than it
was in the fall of 1977. Moreover, his intent in 1976 was not
merely to replace old and worn machines, but to add more
new machinery and actually increase the production area by
its installing more machines. Why did Sarkisian abandon
that plan? His only explanation was that Smyth employees
did not clear the floor area fast enough in the fall of 1976.
This explanation runs more to a perceived employee attitudi-
nal problem than to an economic consideration. A suspen-
sion of that plan in the light of a sales problem is
understandable, but there is no adequate explanation of why
it was not feasible after the 1977 upsurge in sales.
With respect to the development of new product lines, the
development of the high-speed liner continued as it did in
1976 as did the development of the Richter pump. In 1976,
Sarkisian concedely had come to no definite conclusion as to
the extent of employment of Smyth employees on the
Richter pump. Yet by 1977 he characterized the pump solely
as a Beacon venture.
Respondent argues that by subcontracting it was possible
to keep the Smyth enterprise in an economically viable
position in 1977. It argues that it is more profitable to
subcontract than to maintain a Smyth machine shop with
such a high overhead cost. However, such argument was
equally true in 1976. Yet in 1976, Sarkisian had no intent to
subcontract. Rather he arranged to have Beacon subcontract
work to Smyth, i.e., the gear cutting work which provided
employment for an upward of 15 Smyth employees, and
which increased the man hours worked in the Smyth
machine shop. In 1977 not only did Sarkisian eliminate the
gear cutting work at Smyth, but he removed it to the Beacon
nonunion plant intact with the same machines while hiring
new employees, some of whom turned out to be former
Smyth employees now considered to be Beacon nonunion
employees. While Respondent argues that maintaining the
equipment for manufacturing bookbinding machine parts at
Smyth would necessitate a high cost per man hour for only
20,000 man hours for eight employees, it ignores the man
hours resulting from the gear cutting work which, combined
with bookbinding parts, would greatly have exceeded the
criteria of 30,000 man hours. Respondent also ignores the
fact that the ability to accommodate the pressing demands of
customers is greatly enhanced by the elimination of inherent
delays in subcontracting.
What had in fact occurred following Sarkisian's initially
optimistic formulation of goals was his abortive attempt to
erode the representational status of the Union. He was
frustrated in his attempt to obtain an immediately favorable,
less restrictive collective-bargaining agreement. He there-
upon engaged in bad faith bargaining, and in acts of
intimidation and coercion of employees in violation of the
Act. This course of conduct culminated in the discharge of
the chief employee union spokesman. Sarkisian's problem
with the role of the Union was not based upon the economic
demands of the Union in contract negotiations. The parties
were not far apart on wages and fringe benefits. At no time
did Sarkisian present the Union with a request for economic
relief for the survival of the Smyth entity. Rather, Respon-
dent sought freedom from restraints upon managerial
discretion inherent in union representation. The major
objective raised by Sarkisian was the open-shop provision. I
have concluded that such position was not based upon any
motivation other than an effort to prevent contractual
agreement and to erode the representational status of the
Union.
In the face of employee support for the Union, Sarkisian
became infuriated and threatened employees with plant
closure. Having ceased production and having fulfilled his
threat, in having transferred work in part to nonunion
Beacon employees and in part to outside subcontractees, and
having avoided the restraints of seniority rights and other
union contractual limitations, can Sarkisian be credited in
his assertion that he acted upon economic motivations? I
1170
SMYTH MANUFACTURING COMPANY
conclude not. I conclude that Sarkisian's motivation was not
based upon economic factors, but that he was guided by the
sole objective of union animus. I conclude that the long-
standing economic difficulties of Respondent provided a
facile pretext to serve as a cover for Respondent's true
motivation.
Having concluded that Respondent was motivated by
discriminatory reasons in subcontracting unit work, and
having concluded that Respondent's ultimate motivation
was to erode the employee's support of the Union and to
evade its bargaining obligations with respect to unit employ-
ees, I find that the subcontracting of unit work on and after
September 30, 1977, also constituted a violation of Section
8(aXS5) as well as Section 8(a)(3) and (1) of the Act. Further,
in view of the discriminatory motivation it would have been
an act of futility for the Union to have requested an
opportunity to engage in meaningful bargaining concerning
subcontracting of unit work and the effects of that decision.
Saginaw Aggregates. Inc., supra; Allied Mills Inc., supra;
Great Chinese American Sewing Co.: Esprit de Corp, 227
NLRB 1670 (1977); R. & H. Masonry Supply. Inc, 238
NLRB 1044(1978).
9. The unilateral increase in wage rates and insurance
benefits
In view of the factual resolution of this issue, I conclude
that Respondent has violated Section 8 (aX5) and (I) by the
unilateral changes it made with respect to the wage rates of
employees recalled in 1978 and their insurance benefit
coverage.
C. The Relationship of Beacon and Smyth
Regardless of the distinctions that may exist with respect
to the separate corporate identity of Beacon and Smyth and
with respect to products produced, it is clear that with
respect to the employees of Smyth they constitute a single or
joint employer. As detailed above in the factual analysis they
both share the same or substantially same ownership,
managers, engineers, research staff, maintenance staff, and
office clerical staff. The space at Smyth was used at the
convenience of Beacon. Personnel were in effect inter-
changed. Resources of both were interchanged. Sarkisian
was the common repository of all managerial authority and
he was the source and direction of the labor policy of both
entities. Accordingly, I find both liable as single or joint
employers for the unfair labor practices engaged in by
Smyth. Altemose Construction Company and Energy Con-
tracting Company, 210 NLRB 138 (1974); Great Chinese
American Sewing Co., supra at 1678; Erlichs 814 Inc., et al.
231 NLRB 1237, 1242-44 (1977).
CONCLUSIONS OF LAW
1. Respondents constitute a single or joint employer
within the meaning of Section 2(6) and (7) of the Act.
2. The Union, a labor organization within the meaning of
Section 2(5) of the Act, has at all times since February 4,
1974, been the representative for purposes of collective
bargaining of a majority of the employees in the appropriate
unit consisting of all hourly rated production and mainte-
nance employees employed at Smyth Manufacturing Com-
pany, Inc.'s plant in Bloomfield, Connecticut, exclusive of
executive employees, S.M. Graffics employees, the Tech
Special Machinery Division employee research and develop-
ment employees (except hourly research and development
employees who are performing bargaining unit work), office
clerical employees, plant clerical employees, guards, and all
supervisors as defined in Section 2(11) of the Act.
3. Respondents, by threatening its employees that they
would close the plant or lay off employees if union
grievances were filed, by threatening employees that they
would close down and/or lay off employees if the Union did
not agree to an open shop, by coercively interrogating
employees about statements made at a union meeting, by
coercively promising employees wage increases if the Union
agreed to an open-shop provision in the contract, by
misrepresenting to employees the nature of negotiations, and
by implying to employees that it decided to close its
Bloomfield, Connecticut, plant because of their support of
the Union's bargaining position, have engaged in unfair
labor practices affecting commerce within the meaning of
Section 8(aX 1) of the Act.
4. Respondents, by discharging George Gordon on or
about February 24, 1977, and by refusing to reinstate George
Gordon until August 1, 1977, have engaged in unfair labor
practices affecting commerce within the meaning of Section
8(a)(3) and (1) of the Act.
5. Respondents, by engaging in an overall course of bad-
faith bargaining from on or about December 17, 1976, until
on or about February 3, 1977, have engaged in unfair labor
practices affecting commerce within the meaning of Section
8(a)(5) and (1) of the Act.
6. Respondents, by changing the working conditions of an
employee union representative, George Gordon, on or about
February 18, 1977, have engaged in unfair labor practices
affecting commerce within the meaning of Section 8(a)(5)
and (1) of the Act.
7. Respondents, by laying off employee James Foley on or
about July 15, 1977, without prior notice to or bargaining
with the Union until July 27, 1977, have engaged in unfair
labor practices affecting commerce within the meaning of
Section 8(aX5) and (1) of the Act.
8. Respondents, by unilaterally changing the hours of
employment in January 1977, and by changing the wage
rates of its employees and their insurance coverage benefits
in the summer of 1978 without providing the Union with
adequate opportunity to bargain, have engaged in unfair
labor practices affecting commerce within the meaning of
Sections 8(aX5) and (1) of the Act.
9. Respondents, by their unilateral action of terminating
manufacturing operations at the Smyth Manufacturing
Company, Bloomfield, Connecticut, plant on or about
September 30, 1977, and thereafter subcontracting said
operations to its nonunion Beacon industries plant in East
Hartford, Connecticut, and to other subcontractees without
good-faith bargaining with the Union, and in retaliation for
its employees support of the Union's bargaining position and
for the purpose of eroding the Union's representational
function, have engaged in unfair labor practices affecting
1171
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
commerce within the meaning of Section 8(a)(3), (5), and (1)
of the Act.
10. Respondents, by unilaterally rescinding the vacation
pay of employees laid off during the summer of 1977 and by
refusing to negotiate with respect to their reimbursement of
said vacation pay in July 1977, have engaged in unfair labor
practices affecting commerce within the meaning of Section
8(a)(5) and (I) of the Act.
THE REMEDY
I shall recommend that Respondents cease and desist
from their unfair labor practices and post an appropriate
notice. I shall recommend that Respondents make whole
George Gordon for any losses he may have suffered from the
date of his discriminatory discharge on February 14, 1977,
until his reinstatement on August 1, 1977, in the manner
provided in F W Woolworth Company, 90 NLRB 289
(1950), with interest thereon to be computed in the manner
prescribed in Florida Steel Corporation, 231 NLRB 651
(1977).2'
I shall further recommend that Respondents make whole
to those employees who were laid off during the summer of
1977 for the loss of vacation pay they suffered as a result of
Respondents' unlawful conduct in the manner prescribed in
F W. Woolworth Company, supra, and Florida Steel Corpo-
ration, supra; that Respondents make whole James Foley for
the loss of pay he suffered as a result of the unilateral action
of Respondents in laying him off on July 15, 1977, for the
period ending on July 27, 1977, at which time the Union was
provided with an opportunity to bargain over his layoff, in
the manner prescribed in F W. Woolworth Company, supra,
and Florida Steel Corporation, supra; and that Respondents
make whole those employees whose hours of employment
were reduced in January 1977 for any loss of pay they may
have suffered as a result thereof until July 27, 1977, at which
time the Union was provided with a bargaining opportunity,
in the manner prescribed in F. W. Woolworth Company,
supra, and Florida Steel Corporation, supra.
I have found that Respondent unlawfully terminated its
manufacturing operations at the Smyth Manufacturing
Company plant in Bloomfield, Connecticut, thereby laying
off for unlawful and discriminatory reasons its employees.
Respondent argues that a remedy emcompassing a restora-
tion of the status quo ante would be inappropriate because of
the poor economic position of Respondent Smyth Manufac-
turing Company, citing various court decisions in support of
said argument. The Board, however, has very clearly,
recently stated its position with respect to this issue in R &
H Masonry Supply, Inc. 22 The Board stated: "We continue
to adhere to the well established principle that, in cases
involving discriminatory conduct, the restoration of the
status quo ante is the proper remedy unless the wrongdoer
can demonstrate that the normal remedy would endanger its
continued viability."
The Board's statement of policy is premised on the
principle that the wrongdoer should bear the hardships of its
action rather than the victims of those unlawful actions. The
only excuse for anything less than a full status quo ante
remedy is that such remedy would threaten the very
existence of the wrongdoer. In the instant case Respondent's
argument would have some cogency if Smyth Manufactur-
ing Company were considered to be a separate and distinct
entity. However, as I have concluded, Smyth Manufacturing
Company and Beacon Industries form a single or joint
employer. The facts demonstrate that the resources and
functions of both entities are integrated. Upon the assump-
tion and acquisition of Smyth the resources of Beacon were
infused into that entity by Beacon. I have concluded that the
only reason that Beacon has not continued that policy and
course of action was because of its discriminatory and
unlawful motivations. Therefore, although superficially a
status quo ante remedy would appear to constitute an order
to a business to resume uneconomical operations, in reality it
constitutes an order to a respondent to resume a course that
it had initially considered to be ultimately a sound economic
venture.
With respect to any possible adverse economic impact of
an order requiring Respondents to resume manufacturing
operations by the reinstitution of the machine shop at the
Bloomfield, Connecticut, facility, the only evidence in the
record is Sarkisian's general testimony of the necessity to
purchase between $1.2 million and $2 million of machinery.
There is no evidence that similar machinery might not be
able to be leased from an independent lessor or perhaps
transfered from the Beacon plant. Certainly, Respondents
still retain control of those machines that were transfered to
the Beacon plant. Furthermore, the estimate of the purchase
price for new machinery is based upon the assumption that
new machinery is involved. There is no evidence that similar
used machinery might be purchased. In any event, the
purchase of new machinery was a goal that was considered
viable in 1976 at a time when Respondents were in
approximately the same financial situation. Finally, the
record is replete with evidence of Beacon's preeminently
sound financial basis and its thriving business. I therefore
conclude that the record fails to establish that a status quo
ante remedy would in any way endanger the continued
economic viability of Respondents.
Accordingly, I conclude that a status quo ante remedy is
appropriate and necessary in this case. I shall therefore
recommend that Respondents be ordered to reinstate its
manufacturing operations at its Bloomfield, Connecticut,
facility; and to reinstate those employees who were laid off
on or after September 30, 1977, because of the cessation of
manufacturing operations at said facility and the subsequent
subcontracting of said work, and to make them whole for
any loss of earnings or other benefits resulting from their
terminations by payment to them of a sum of money equal to
that each normally would have earned as wages and other
benefits from the date of their termination to the date on
which reinstatement is offered. The amount of backpay will
be computed in the manner set forth in F. W Woolworth
Company, supra, and Florida Steel Corporation, supra.
I shall further recommend that Respondents be ordered to
bargain upon request with the Union as the exclusive
representative of employees in the aforesaid appropriate
bargaining unit, including bargaining about any decision to
'' See, generally, Isis Plumbing & Heating Co.. 138 NLRB 716 (1962).
1172
" 238 NLRB at fn. 3.
SMYTH MANUFACTURING COMPANY
terminate and subcontract manufacturing operations at the
Smyth Manufacturing Company plant in Bloomfield, Con-
necticut, and the effects upon the employees of such
decision.
Upon the foregoing findings of fact, conclusions of law,
and upon the entire record, and pursuant to Section 10(c) of
the Act, I hereby issue the following recommended:
ORDER"
The Respondents, Smyth Manufacturing Company, Inc.,
Beacon Industries, Bloomfield and East Hartford, Connecti-
cut, their officers, agents, successors, and assigns shall:
1. Cease and desist from:
(a) Threatening employees with plant closure, layoffs, or
other reprisals in the event that union grievances are filed
concerning conditions of employment.
(b) Threatening employees with plant closure, layoffs or
other reprisals in the event that the Union fails to agree to an
open shop in the collective-bargaining agreement.
(c) Coercively interrogating employees concerning state-
ments made at union meetings.
(d) Coercively promising employees wage increases in
order to undermine the Union's bargaining position.
(e) Misrepresenting to employees the nature of collective-
bargaining negotiations with the Union.
(f) Implying to employees that it had decided to close its
Bloomfield, Connecticut, plant because employees supported
the Union's bargaining position.
(g) Discharging any employee because of his union
activities.
(h) Terminating any of their operations in retaliation for
employees' support of the Union or to erode the Union's
representation status.
(i) Refusing to bargain in good faith with District 26, LL
354, International Association of Machinists and Aerospace
Workers, AFL-CIO, including bargaining about changing
hours of employment, wages, and vacation benefits; bargain-
ing about the layoff of any employee; bargaining about the
changes in working conditions of employee union represen-
tatives; and bargaining about the termination of the manu-
facturing operations of their Bloomfield, Connecticut, plant
and the subcontracting of manufacturing work and the
effects of such action upon unit employees.
(j) Contracting out the bargaining unit work of their
Bloomfield, Connecticut, plant because of employees' sup-
port of the Union or to erode the Union's representational
status.
(k) In any other manner interfering with, restraining, or
coercing employees in the exercise of the rights guaranteed
them in Section 7 of the Act.
2. Take the following affirmative action to effectuate the
policies of the Act:
(a) Reestablish the manufacturing operations of Smyth
Manufacturing Company, Inc., at their Bloomfield, Con-
necticut, plant.
" In the event no exceptions are filed as provided by Sec. 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, and recommended Order herein shall, as provided in Sec. 102. 48
(b) Offer to those employees who were laid off and/or
terminated as a result of the September 30, 1977, cessation of
manufacturing operations at the Smyth Manufacturing
Company, Inc., Bloomfield, Connecticut, plant immediate
and full reinstatement to their former jobs or, if those jobs no
longer exist, to substantially equivalent positions, without
prejudice to their seniority or other rights and privileges,
and, if those positions are unavailable, place them on a
preferential hiring list and offer them positions as such
become available in accordance with their seniority rights,
and make each of them whole for any loss of earnings they
may have suffered in the manner provided in the section of
this Decision entitled "The Remedy."
(c) Make whole George Gordon for any loss of earnings
he may have suffered because of the discrimination against
him from the date of his discharge on or about February 14,
1977, to the date of his reinstatement on or about August 1,
1977, in the manner set forth in the section of this Decision
entitled "The Remedy."
(d) Make whole James Foley for any loss of earnings he
may have suffered from the date of his layoff on July 15 until
July 27, 1977, in the manner set forth in the section of this
Decision entitled "The Remedy."
(e) Make whole any employee who was laid off during the
summer of 1977 for the loss of vacation pay suffered by them
and any employee whose hours of employment were unilat-
erally reduced for any loss of pay they may have suffered as
a result until July 27, 1977, in the manner set forth in the
section of this Decision entitled "The Remedy."
(f) Upon request, bargain with District 26, LL 354,
International Association of Machinists and Aerospace
Workers, AFL-CIO, as the exclusive collective-bargaining
representative of their employees in the appropriate bargain-
ing unit with respect to wages, hours, and other terms and
conditions of employment, and, if an agreement is reached,
embody such understanding in a signed agreement. The
appropriate unit is:
All hourly rated production and maintenance employ-
ees of Smyth Manufacturing Company, Inc., employed
at its Bloomfield, Connecticut, facility, exclusive of
executive employees, S.N. Graphics Employees, Tech
Special Machinery Division employees, research and
development employees (except hourly research and
development employees who are performing bargaining
unit work), office clerical employees, plant clerical
employees, guards, and all supervisors as defined in
Section 2(1 1) of the Act.
(g) Preserve and, upon request, make available to the
Board or its agents, for examination and copying, all payroll
records, social security payment records, timecards, person-
nel records and reports, and all other records necessary to
analyze the amount of backpay due under the terms of this
Order.
of the Rules and Regulations, be adopted by the Board and become its
findings, conclusions, and Order, and all objections thereto shall be deemed
waived for all purposes.
1173
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
(h) Post at their places of business in Bloomfield and East
Hartford, Connecticut, copies of the attached notice marked
"Appendix."24 Copies of said notice, on forms provided by
the Regional Director for Region 1, after being duly signed
by their authorized representative, shall be posted by them
immediately upon receipt thereof, and be maintained by
them for 60 consecutive days thereafter, in conspicuous
places, including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by them
to insure that said notices are not altered, defaced, or
covered by any other material.
(i) Notify the Regional Director for Region 1, in writing,
within 20 days from the date of this Order, what steps
Respondents have taken to comply herewith.
" In the event that this Order is enforced by a Judgment of the United
States Court of Appeals, the words in the notice reading "Posted by Order of
the National Labor Relations Board" shall read "Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board."
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Act, as amended, gives
all employees these rights:
To engage in self-organization
To form, join, or assist labor organizations
To bargain collectively through representatives of
their own choosing
To engage in other concerted activities for the
purpose of collective bargaining or other mutual aid
or protection
To refrain from any or all such activities except as
may be required by a legal agreement between an
employer and the representative of the Employees.
WE WILL NOT threaten our employees with plant
closure, layoffs, or other reprisals in the event that
grievances are filed concerning conditions of employ-
ment.
WE WILL NOT threaten our employees with plant
closure and layoffs or other reprisals in the event that
the Union fails to agree to an open shop in the
collective-bargaining agreement.
WE WILL NOT coercively interrogate our employees
concerning statements made at union meetings.
WE WILL NOT coercively promise our employees
wage increases in order to undermine the Union's
bargaining position.
WE WILL NOT misrepresent to our employees the
nature of collective-bargaining negotiations with the
Union.
WE WILL NOT imply to our employees that we
decided to close our Bloomfield, Connecticut, plant
because they have supported the Union's bargaining
position.
WE WILL NOT discharge any employee because of his
union activities.
WE WILL NOT terminate any of our operations in
retaliation for employee support of the Union or to
erode the Union's representational status.
WE WILL NOT refuse to bargain in good faith with
District 26, LL 354, International Association of
Machinists and Aerospace Workers, AFL-CIO, includ-
ing bargaining about changing wages, hours of employ-
ment or benefits; bargaining about layoffs of any
employee; bargaining about changes in working condi-
tions of employee union representatives; bargaining
about terminating the manufacturing operations of our
Bloomfield, Connecticut, plant; and bargaining about
the subcontracting of manufacturing work and the
effects of such actions upon our unit employees.
WE WILL NOT contract out the bargaining unit work
of our Bloomfield, Connecticut, plant because of em-
ployees' support of the Union or to erode the Union's
representational status.
WE WILL NOT in any other manner interfere with,
restrain, or coerce employees in the exercise of their
rights guaranteed them in Section 7 of the Act.
WE WILL reestablish the manufacturing operations
of the Smyth Manufacturing Company Inc. at our
Bloomfield, Connecticut, plant.
WE WILL offer to the employees who were laid off or
terminated as the result of the September 30, 1977,
cessation of manufacturing operations at the Smyth
Manufacturing Company, Inc., Bloomfield plant imme-
diate and full reinstatement to their former jobs or, if
those jobs no longer exist, to substantially equivalent
positions, without prejudice to their seniority or other
rights and privileges, and, if those positions are unavail-
able, place them on a preferential hiring list and offer
them positions as such become available in accordance
with their seniority rights, and WE WILL make each of
them whole for any loss of earnings they may have
suffered, with interest.
WE WILL make whole George Gordon for any loss of
earnings he may have suffered because of the discrimi-
nation against him from the date of the discharge on or
about February 14 to the date of his reinstatement on or
about August 1, 1977, with interest.
WE WILL make whole James Foley for any loss of
earnings he may have suffered from the date of his
layoff on or about July 15 until July 27, 1977, with
interest.
WE WILL make whole any employee who was laid off
during the summer of 1977 for the loss of vacation pay
suffered by them, with interest.
WE WILL make whole any employee for any loss of
pay he may have suffered as result of the unilateral
reduction of hours of employment until July 27, 1977,
with interest.
WE WILL upon request bargain in good faith with
District 26, LL 354, International Association of
Machinists and Aerospace Workers, AFL-CIO, as the
exclusive collective-bargaining representative of our
employees in the appropriate bargaining unit with
respect to wages, hours, and other terms and conditions
1174
SMYTH MANUFACTURING COMPANY
of employment, and, if an understanding is reached,
embody such understanding in a signed agreement. The
appropriate bargaining unit is:
All hourly rated production and maintenance em-
ployees of Smyth Manufacturing Company, Inc.,
employed at our Bloomfield, Connecticut, facility
exclusive of executive employees, S.N. Graphics
employees, the Tech Special Machinery Division
employees, research and development employees
(except hourly research and development employees
who are performing bargaining unit work), office
clerical employees, plant clerical employees, guards,
and all supervisors as defined in Section 2(11) of the
Act.
SMYTH MANUFACTURING COMPANY, INC.; BEA-
CON INDUSTRIES
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