Sparkle Mills, Inc.

National Labor Relations Board - Board Decisions

Nov 15, 1979

246 N.L.R.B. 473 (N.L.R.B. 1979)

Sparkle Mills, Inc. and District 65, Distributive Work-
ers of America. Case 2-CA 14203
November 15, 1979
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS JENKINS
AND MURPHY
On August 21, 1979, Administrative Law Judge
Walter H. Maloney, Jr., issued the attached Supple-
mental Decision' in this proceeding. Thereafter, Re-
spondent filed exceptions and a supporting brief, and
the General Counsel filed a brief in opposition to Re-
spondent's exceptions.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has considered the record and the at-
tached Supplemental Decision in light of the excep-
tions and briefs and has decided to affirm the rulings,
findings, and conclusions of the Administrative Law
Judge and to adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended Or-
der of the Administrative Law Judge and hereby or-
ders that the Respondent, Sparkle Mills, Inc., New
York, New York, its officers, agents, successors, and
assigns, shall pay the employees listed below the sums
opposite their names, with interest thereon as com-
puted in the Administrative Law Judge's Supplemen-
tal Decision, with appropriate deductions for taxes
required to be withheld by Respondent under Federal
and state laws:
Francis Velez $9,828
Elias Solorzano 9,828
The original Decision in this proceeding is reported at 227 NI.RB 1981
(1977).
SUPPLEMENTAL DECISION
A. Statement of the Supplemental Proceedings
WALTER H. MALONEY, JR., Administrative Law Judge:
On January 31, 1977, the Board issued a Decision and Or-
der in which it found that Respondent Sparkle Mills, Inc.,
violated Section 8(a)(1), (3), and (5) of the National Labor
Relations Act, herein called the Act (227 NLRB 1981).
Among its findings was a determination that, on April 6,
1976, Respondent discriminatorily discharged Francis Ve-
SPARKLE MILLS. INC.
lez and Elias Solorzano. The Board, inter alia, ordered Re-
spondent to reinstate Velez and Solorzano and to compen-
sate them for loss of earnings suffered by reason of the
discriminations found, with interest at 6 percent.' On May
9, 1977. the Board sought enforcement of its order in the
United States Court of Appeals for the Second Circuit
(Case 77-4101). On July 18. 1977. while the case was pend-
ing before the court of appeals, the parties filed a formal
stipulation with the court pursuant to which the Board
agreed to dismiss its petition for enforcement and to pro-
ceed to a determination of the amount of backpay due and
owing to Velez and Solorzano, with permission granted to
Respondent to litigate in a backpay proceeding "all the
usual defenses in mitigation.... including that Solorzano
and/or Velez. had they not been unlawfully discharged on
April 6, 1975, would have been laid off for economic rea-
sons sometime after that date." Respondent further agreed
that, should it thereafter appeal the Board's backpay deter-
mination, it would waive any challenge to the correctness of
the original decision relating to the discriminations.
On January 27. 1978, the Regional Director for Region 2
issued a backpay specification in this case, alleging that
both discriminatees were entitled to identical sums, namely
$9,548, plus 2 weeks' vacation at $140 per week and interest
on the aggregate amount. Respondent filed two answers,
the net effect of which was to admit that the backpay pe-
riod ran from April 6. 1976. until August I, 1977.J and to
admit the appropriateness of the General Counsel's formula
and her mathematical computations. Respondent urged as
an affirmative defense that, regardless of these ftactors, both
discriminatees would have been laid off on April 6. 1976.
irrespective of discriminatory motivation, because its eco-
nomic posture was poor, so no backpay is actually due to
either person. In light of these answers, the General Coun-
sel filed with the Board a Motion for Summary Judgment.
claiming that in the backpay proceeding Respondent was
attempting to relitigate the merits of the discrimination
cases which had been determined adversely to it on the
Board's earlier decision. The Board denied the Motion for
Summary Judgment. In an Order, dated September 20,
1978, the Board remanded the case for a hearing "limiting
such proceeding to a determination of the economic condi-
tion of Respondent on and after April 6, 1975."' It was for
such a hearing and initial determination of that issue that
the case came on before me in New York, New York, on
March 15, 1979.
The Decision in this case was issued before the Board revised the manner
of computing interest on backpay in Florida Seel Corporation, 231 NRB
651 (1977).
2 Pursuant to the Board's order. Respondent recognized the Charging
Union and entered into an agreement under which it reinstated Velez. the
senior discriminatee. and was permitted to la) off Solorzano permanently
Velez was still employed by Respondent at the time of the hackpay hearing
on March 15, 1979.
'The discriminatees were th discharged on April 6, 1976, not April 6.
1975. Both the stipulation before the Second Circuit and the Board's Sep-
tember 20 order recite 1975. I take the recitation of 1975 in both documents
to be inadvertent errors and I will confine m inquir) to the econmic con-
ditions of Respondent after the discharges of Velez and Solorzano, although
some reference to pre-Apnl 6. 1976 conditions may become necessary tbr
background purposes
246 NLRB No. 78
473
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
B. The Respondent's Defense4
Respondent is a jobber of knitwear, principally of men's
shirts. For the past 10 years, it has maintained a warehouse
and office in midtown Manhattan. When it receives an or-
der from a customer for a given number of shirts, it subcon-
tracts to others the actual manufacturing of the shirts, re-
ceives the finished product at its warehouse, packs the shirts
for shipping, and sends them out. Local deliveries are often
made by its own employees. Most deliveries are made by
three carriers or delivery services, United Parcel Service
(UPS). Mestler, and Katz.
Respondent is owned by four stockholders, each of
whom hold 25 percent of the stock. They are Henry
Schein,' Bert Beick, Emanuel Letterman, and his son. Sam-
uel Letterman. Respondent's 1977 Federal income tax re-
turn, which is in evidence, indicates that each of these indi-
viduals received during the year ending September 30,
1978, compensation for services rendered to Respondent
corporation in amounts ranging from $18,200 to $33,800
per annum. Velez and Solorzano were Respondent's only
other employees. According to Emanuel Letterman, busi-
ness was so bad they could not even afford a bookkeeper,
although Respondent could afford a certified public ac-
countant who appeared at the hearing to authenticate the
unaudited profit and loss statements his firm prepared for
Respondent's fiscal years ending in September 1975,
through September 1978.
These statements show net sales for the four fiscal years
ending September 30 as follows:
1975
1976
1977
1978
$1,243,837
890,546
870,751
889,328
August
September
October
November
December
155,312
52,026
96,904
128,548
52,206
A self-described partner and outside man, Emanuel Letter-
man, testified that Respondent always experienced a sea-
sonal business and had two peak seasons, a spring season,
which ran from February until late April or early May, and
a fall season, which ran from the end of July until Decem-
ber.
In support of its position that the discriminatees would
have been discharged irrespective of the union effort be-
cause of the poor economic position in which it found itself,
Respondent invited attention to the portions of its profit
and loss statements relative to net profit. The net profit or
(loss) after Federal taxes entries are as follows:
1975
1976
1977
1978
$5,973
(21,694)
(81,809)
2,064
When asked if Respondent was still in business, Letterman
acknowledged that "we're still in business. We shouldn't be,
but we are." One reason that Respondent has been able to
stay in business despite the above-recited profit and loss
figures is that those figures were only derived after deduct-
ing from Respondent's annual gross profit the following
amounts, which represent compensation to officers who are
also the operating principals of the firm:
1975
1976
1977
1978
$149,175
149,500
152,375
112.700
Respondent placed in evidence figures on its net sales which
were broken down on a monthly basis and appear as fol-
lows:
January 1976
February
March
April
May
June
July
August
September
October
November
December
January 1977
February
March
April
May
June
$56.494
57,333
104,795
39,271
30.372
30,291
165.819
54,369
49,340
8.516
48,508
25,984
36.154
18.706
124,870
136,801
109,956
52,922
July 27,996
4 Respondent originally claimed as offsets amounts which the discrimi-
natees received as unemployment compensation. It later abandoned this de-
fense. Both discriminatees testified that they had no interim earnings during
the backpay period, and Respondent was unable to adduce any evidence to
refute these assertions.
Henry Schein died a week before the hearing in this case.
Both discriminatees were employed as packers and
earned $140 per week at the time of their discharges. The
General Counsel insists that a critical fact to be used in
determining whether there was work available for the dis-
criminatees during the backpay period is the number of
packages shipped by Respondent during that time by UPS,
its principal delivery agent. In support of that position, she
placed into evidence a monthly compilation of packages
shipped by UPS during 1976 and 1977. The figures do not
include additional shipments handled from time to time by
Mestler. Katz, or employees and principals of the Com-
pany:
1976 Packages 1977 Packages
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
89
151
51
86
201
194
85
91
47
67
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
71
97
419
541
350
138
89
280
117
165
474
SPARKLE MILLS. INC.
C. A4 nalvsis and Conclusions
The proper standard to be applied in determining
whether Respondent incurred backpay liability in the 16
months following the discharges which occurred on April 6.
1976, is whether the two backpay claimants would have
been terminated on that date or thereafter as a result of
Respondent's normal nondiscriminatory business practices.
Standard Printing Company of Canton. 151 NLRB 963
(1965). It is well settled that the burden of proving this
affirmative defense rests upon Respondent. N.L.R.B. v.
Mastro Plastics Corporation and French American Reeds
Manufacturing Company, 354 F.2d 170 (2d Cir. 1965). cert.
denied 384 U.S. 972 (1966); Atlantic .Marine, Inc.. 211
NLRB 230 (1974). If there is any uncertainty as to whether
the defense has been established, the uncertainty must be
resolved in favor of the discriminatee and against the
wrongdoer whose conduct made certainty impossible. Fi-
breboard Paper Products Corporation, 180 NLRB 142
(1969); J. H. Rutter-Rex Manufacturing Company, Inc., 194
NLRB 19 (1971).
Both Solorzano and Velez worked for Respondent as
packers since 1970. Respondent admits that at no time dur-
ing their employment were they ever laid off for lack of
work or for any other reason. Respondent also placed in the
record testimony that its business during those years was
seasonal and that there were periods when there was noth-
ing for them to do. Despite these lulls in packing activity,
both men were kept on the payroll and were permitted to
occupy their time playing cards or otherwise amusing them-
selves. Even when business was reportedly bad during the
winter prior to their discharge, they were kept on the pay-
roll. Letterman explained that he suggested to the late Mr.
Schein that the men be sent home because they had nothing
to do, but Schein refused, "Mr. Schein said to me, should he
rest in peace, he died, let's keep them and see how the show
is going to be .... Now, our show was a disaster, which was
in March and April of 1976." Thereafter, the Union ap-
peared on the scene and Velez and Solorzano were termi-
nated. When asked to contrast the policy of keeping Velez
and Solorzano on the payroll during slack periods through-
out 1970-76 and the claim that they were not needed dur-
ing the backpay period because of poor business conditions.
Letterman replied, "We didn't lay them off because we felt
that they were with us and we did business and felt sorry a
little bit-."
While Respondent's sales were off during 1976 and 1977
by about 25 percent below its 1975 volume. Respondent
was very much in business during that time and continues
to be very much in business. The number of packages
shipped and which presumably had to be packed before
shipment was substantial and varied widely. depending
upon whether Respondent was in a traditionally slow or
traditionally busy season of the year. There was work at the
warehouse which the discriminatees previously performed
and. during the backpa period, it was performed bh the
principals of the firm in addition to their other duties.
The economy measure instituted b Respondent at the
expense of Velez and Solorzano in the 16 months following
April 6. 1976, was not the result of Respondent's normal
nondiscriminatory business practice. Its normal nondis-
criminatory business practice the one it followed for sev-
eral years before the advent of the Union was to retain its
two packers on the payroll during busy seasons and slow
seasons as well, to occupy them with work when work was
available, and to permit them to occupy themselves when
business was slow. Respondent failed to follow this practice
during the time here in issue and it is therefore precluded
from relying upon its new and discriminatorily motivated
practice in defending against the provisions of the backpay
specification.
In light of the foregoing findings and conclusions and
upon the entire record herein considered as a whole, I make
the following recommended:
ORDER 6
The Respondent. Sparkle Mills, Inc., New York. New
York. its officers, agents. successors, and assigns. shall pay
backpay to the individuals hereinafter named, in the
amounts set forth respectively after their names, with inter-
est thereon accured to the date of payment at the rate of 6
percent per annum, less FICA. state, local. and Federal
income taxes which are required to be deducted:
Francis Velez
Elias Solorzano
$9.828
9.828:
I In the event no exceptions are filed as provided hb Sec 10246 of he
Rules and Regulations of the National Labor Relations Board, the findings.
conclusions. and recommended Order herein shall. as prov ided n Sec. 102.48
of the Rules and Regulations, be adopted by the Board and become its
findings, conclusions. and Order, and all ohjections thereto shall be deemed
waived for all purposes.
? In each instance this figure includes $9,548 in regular salar) and 2 weeks'
vacation at $140 per week.
475