St. Marys Foundry Co.

National Labor Relations Board - Board Decisions

Aug 7, 1991

303 N.L.R.B. 1032 (N.L.R.B. 1991)

1032
303 NLRB No. 166
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 Lawrence Fisher is a former officer of the Respondent. Fisher objects to
any implication in the judge’s decision that Fisher is a proper party to this
proceeding or that he is individually liable for backpay. We do not construe
the judge’s decision as making either of these findings.
2 The General Counsel has excepted to some of the judge’s credibility find-
ings. The Board’s established policy is not to overrule an administrative law
judge’s credibility resolutions unless the clear preponderance of all the relevant
evidence convinces us that they are incorrect. Standard Dry Wall Products,
91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully
examined the record and find no basis for reversing the findings.
3 The judge found, and we agree, that after July 25, 1986, when the bank-
ruptcy court issued an order approving the trustee’s report of no assets and
closing the estate, the Respondent was a defunct corporation incapable of en-
gaging in the collective bargaining contemplated by the Board’s Transmarine
remedy (Transmarine Corp., 170 NLRB 389 (1968)) in the underlying unfair
labor practice proceeding. 284 NLRB 221 (1987), enfd. 860 F.2d 679 (6th Cir.
1988). Accordingly, we adopt the judge’s conclusion that the Respondent and
the Party in Interest are jointly and severally liable only for the 2-week min-
imum backpay obligation under the Transmarine remedy.
The judge further found that he was bound by the compliance specification,
which commenced the backpay period 5 days after the the issuance of the
court of appeals’ revised judgment. We note in this connection that the
Board’s decision issued after the critical July 25, 1986 date when the Respond-
ent was no longer capable of engaging in collective bargaining. Therefore, the
result in this case would remain the same even if backpay were calculated 5
days after the Board’s decision instead of the court’s decision.
We also find it unnecessary to adopt any implication in the judge’s decision
that the Union should have requested bargaining with the Chapter 7 trustee.
Any such request would have been made prior to both the Board and court
decisions and thus would have had no effect on the calculation of backpay
under the Transmarine remedy.
Finally, we find it unnecessary to pass on what the judge himself described
as his ‘‘alternative findings.’’ 1 Error in the transcript is noted and corrected.
St. Marys Foundry Company and United Electrical,
Radio and Machine Workers of America, and
its Local 763 and St. Marys Foundry, Inc.,
Party in Interest. Case 8–CA–17369
August 7, 1991
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND OVIATT
On December 24, 1990, Administrative Law Judge
Marvin Roth issued the attached decision. The General
Counsel, the Charging Party, the Party in Interest, and
Lawrence Fisher, an individual,1 filed exceptions and
supporting briefs. The General Counsel, the Charging
Party, and the Party in Interest filed answering briefs.
The Charging Party filed a reply brief.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and the
record in light of the exceptions and briefs and has de-
cided to affirm the judge’s rulings, findings,2 and con-
clusions3 and to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, St. Marys Foundry Com-
pany, St. Marys, Ohio, its officers, agents, successors,
and assigns, and Party in interest, St. Marys Foundry,
Inc., St. Marys, Ohio, its officers, agents, successors,
and assigns, shall take the action set forth in the Order.
Charles Z. Adamson, Esq., for the General Counsel.
Robin Alexander, Esq., of Pittsburgh, Pennsylvania, for the
Charging Party.
Robert J. Brown, Esq., of Dayton, Ohio, for Party in Interest.
DECISION
STATEMENT OF THE CASE
MARVIN ROTH, Administrative Law Judge. This case was
heard at Lima, Ohio, on July 25, 1990, based on a compli-
ance specification issued on September 27, 1989, for pur-
poses of resolving a controversy over the amounts of back-
pay due claimants under the terms of the Board’s Decision
and Order in St. Mary’s Foundry, 284 NLRB 221 (1987),
enfd. 860 F.2d 679 (6th Cir. 1988). The specification indi-
cates a controversy concerning the number and identity of
claimants. However these matters have now been resolved. It
is undisputed that as alleged in the specification, there are 30
claimants, whose names are those set forth in the specifica-
tion. However the amounts of backpay remain in dispute, the
principal issue being the period of time for which backpay
is due and owing.
Respondent St. Marys Foundry Company (Respondent)
and Party in Interest St. Marys Foundry, Inc. (SMF Inc.)
filed answers to the specification in which they raised certain
affirmative defenses, which will be discussed. However Re-
spondent did not appear at the hearing. All parties were af-
forded full opportunity to participate, to present relevant evi-
dence, to examine and cross-examine witnesses, to argue
orally, and to file briefs. General Counsel, the Charging
Party (the Union) and SMF Inc. each filed a brief.
On the entire record in this case1 and from my observation
of the demeanor of the witnesses, and having considered the
briefs submitted by the parties, I make the following
FINDINGS OF FACT
I. DECISION AND ORDER IN THE UNFAIR LABOR
PRACTICE PROCEEDING
Until about December 23, 1983, Respondent operated a fa-
cility at St. Marys, Ohio, where it was engaged in the manu-
facture of iron castings. The Union was the bargaining rep-
resentative of Respondent’s production and maintenance em-
ployees, who were covered by a collective-bargaining con-
tract between the Union and Respondent. On December 23,
1983, Respondent closed its facility and terminated the unit
employees. On December 28, 1983, Respondent and St.
Marys Acquisition Corp. (Acquisition Corp.) entered into an
agreement whereby Acquisition Corp. agreed to purchase the
assets of Respondent and to assume certain of Respondent’s
liabilities and obligations, but not its obligations under the
collective-bargaining contract. In February 1984, SMF Inc.,
a newly formed corporation, having completed the purchase,
1033ST. MARYS FOUNDRY CO.
commenced operations at Respondent’s former facility, con-
tinuing the same type of business and work, serving the same
customers in the same geographic area, using the same
equipment, and employing 6 or 7 management and super-
visory personnel and 26 or 27 employees who previously
worked for Respondent. Larry Dine, Respondent’s former
president and plant manager, became majority stockholder,
president, and general manager of SMF Inc. The Board
found that Respondent violated Section 8(a)(5) and (1) of the
Act by failing and refusing to afford the Union an oppor-
tunity to bargain about the effects on the unit employees of
ceasing its operations and closing the facility, by refusing to
furnish the Union with certain information relating to the sale
of the business, and by refusing to arbitrate certain griev-
ances concerning termination and sale of the business. With
respect to the failure and refusal to bargain, the Board found
that SMF Inc. was the successor of Respondent for the pur-
pose of remedying such unfair labor practices, under the
principles of Perma Vinyl Corp., 164 NLRB 968 (1967),
enfd. 398 F. 2d 544 (5th Cir. 1968), and Golden State Bot-
tling Co. v. NLRB, 414 U.S. 168 (1973). General Counsel
did not allege, and the Board did not find, that SMF Inc. was
either an alter ego of Respondent or a successor of Respond-
ent for the purpose of assuming Respondent’s bargaining ob-
ligations, under the principles of NLRB v. Burns Security
Services, 406 U.S. 272 (1972). The Board, in pertinent part,
ordered the following remedy:
Respondent shall be ordered to bargain with the
Union, on request, concerning the effects of closing its
operations on its unit employees and jointly and sever-
ally with St. Marys, Inc. to pay backpay to Respond-
ent’s employees in the manner similar to that required
in Transmarine Navigation Corp., 170 NLRB 389
(1968). Thus, Respondent and St. Marys, Inc. jointly
and severally shall pay the unit employees, who were
employed at the time of the cessation of operations on
23 December 1983, amounts at the rates of their normal
wages when last in Respondent’s employ, from 5 days
after the date of this decision until the occurrence of the
earliest of the following conditions: (1) the date Re-
spondent bargains to an agreement with the Union on
those subjects pertaining to the effects of the closing of
Respondent’s operations on its unit employees; (2) a
bona fide impasse in bargaining; (3) the failure of the
Union to request bargaining within 5 days of this deci-
sion, or to commence negotiations within 5 days of Re-
spondent’s notice of its desire to bargain with the
Union; or (4) the subsequent failure of the Union to
bargain in good faith. In no event shall the sum paid
to any of these employees exceed the amount the em-
ployee would have earned as wages from 23 December
1983, the date on which Respondent ceased its oper-
ations, to the time the employee secured equivalent em-
ployment elsewhere, or the date on which Respondent
shall have offered to bargain, whichever occurs sooner;
provided, however, that in no event shall this sum be
less than these employees would have earned for a 2-
week period at the rate of their normal wages when last
in Respondent’s employ. . . . [backpay with interest]
Further, to protect the rights of St. Marys, Inc., which
will be liable with Respondent for backpay arising from
the bargaining over the effects on the unit employees
of closing Respondent’s facility, it shall be notified by
Respondent of such effects bargaining and at its option
have the right to participate in that bargaining between
the Respondent and the Union.
The Board further explained as follows:
Golden State holds that if the purchaser does not hire
a majority of the predecessor’s employees and is thus
not a successor within the meaning of NLRB v. Burns
Security Services, 406 U.S. 272 (1972), it ‘‘will not be
bound by an outstanding order to bargain issued by the
Board against the predecessor nor by any order tied to
the continuance of the bargaining agent in the unit in-
volved.’’ Golden State, supra, 414 U.S. at 184 fn. 6.
We do not believe our order here runs afoul of that pro-
hibition. Only the Respondent is ordered to bargain
over the effects of its shutdown; SMF, Inc. is made
jointly and severally liable only for the backpay that
would be owed under the formula set out in
Transmarine Navigation Corp., 170 NLRB 389 (1968).
This purely monetary obligation does not ‘‘bind’’ SMF,
Inc. to the order to bargain nor is it ‘‘tied to the con-
tinuance’’ of the Union as a bargaining agent in SMF,
Inc.’s operation. Cf. Bellingham Frozen Foods v.
NLRB, supra, 626 F. 2d at 681. Should the Respond-
ent’s bargaining over effects obligate the Respondent to
actions other than monetary relief, SMF, Inc. would not
be bound.
II. SEQUENCE OF EVENTS
A. The Unfair Labor Practice and Bankruptcy
Proceedings, Union Requests for Bargaining, and
Contacts Leading to the March 8, 1989 Meeting
Administrative Law Judge Thomas D. Johnston conducted
a hearing in the unfair labor practice case in July and Octo-
ber 1985. On December 16, 1985, Judge Johnston issued his
decision and recommended Order, which was received by the
Union on December 19, 1985. Judge Johnston’s rec-
ommended remedy and Order provided for joint and several
payment by Respondent and SMF Inc. in accordance with
Transmarine, as set forth above, including the condition that
the Union ‘‘request bargaining within 5 days of this deci-
sion.’’ By mailgram dated Monday, December 23, 1985, to
Respondent Vice President Lawrence Fischer, with a copy to
SMF Inc. President Dine, the Union requested ‘‘bargaining
in accord with Decision of ALJ,’’ and asked for a convenient
date after January 1, 1986. (After the December 23 closure,
Fischer functioned as Respondent’s chief operating officer.)
Fischer replied by letter that he received the mailgram on
December 24, 1985, that Respondent filed a bankruptcy peti-
tion with the Federal court in Cleveland, and he was no
longer an officer or agent of Respondent, and he would not
make any arrangements or decisions concerning any meet-
ings. However by letter dated February 3, 1986, to the Re-
gion’s compliance officer, Attorney James Carolin stated that
he represented the Company. Carolin asserted that the back-
pay obligation, if any, was limited to a 2-week period, be-
cause the Union did not request bargaining within 5 days of
the judge’s decision. Carolin stated that Respondent, while
not admitting a duty to bargain, stood ready to do so on the
Union’s request. By letter dated February 5, the compliance
1034 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
officer stated that in the Region’s view the Union’s request
was timely, because the 5-day deadline allowed an additional
3 days for service. He asserted that Respondent should
promptly respond to the Union’s request. By letter dated
February 7, Carolin again asserted that Respondent was will-
ing to bargain with the Union, without admitting a duty to
do so, but preferred to hear from the Union. Carolin sent
copies of his correspondence to the Union’s attorney. SMF
Inc. and General Counsel filed exceptions to Judge John-
ston’s decision, and no bargaining took place at this time. On
June 12, 1987, the Board issued its Decision and Order, sub-
stantially affirming Judge Johnston’s decision and adopting
his recommended Order. The Board found it unnecessary to
decide whether Respondent gave timely notice of its decision
to close (as distinguished from the obligation to bargain), and
revised the interest remedy to conform with New Horizons
for the Retarded, 283 NLRB 1173 (1987), but in other re-
spects approved the recommended remedy and adopted the
recommended Order, including the condition that ‘‘the Union
request bargaining within 5 days of this decision.’’
In the meantime, on December 18, 1985, Respondent filed
a voluntary Chapter 7 bankruptcy petition with the United
States Bankruptcy Court in Cleveland, Ohio. On December
19, 1985, the court appointed an interim trustee. On January
24, 1986, the Board filed its claim, and on April 10, 1986,
the Union filed a claim for damages. On January 24, 1986,
Judge Johnston’s decision was filed with the court. On Feb-
ruary 5, 1986, the trustee filed a report of no distribution. On
July 25, 1986, the bankruptcy court issued an Order approv-
ing trustee’s report of no assets and closing estate. The evi-
dence fails to indicate that Respondent corporation was ever
dissolved in accordance with the laws of its State of incorpo-
ration.
The Union received the Board’s Decision and Order on
June 17, 1987. By mailgrams dated Tuesday, June 23, 1987,
to Fischer and Dine, the Union requested bargaining ‘‘in ac-
cord with the Board’s Decision,’’ and communication for a
mutually agreeable arrangement. The mailgrams were re-
ceived respectively by Dine on June 23, 1987, and Fischer
on June 24, 1987. By letter dated July 14, 1987, Attorney
Carolin informed then Director of Organization John Hovis
that Respondent was ‘‘willing to bargain collectively with
[the Union] with respect to the effects on the unit employees
of the cessation of operations and closing of the facility.’’
Carolin requested Hovis to contact him to make the nec-
essary arrangements. However by letter dated August 27,
1987, to then Union International Representative Donald
Agler, Carolin asserted there were no proceeds from the sale
because SMF Inc. agreed to assume liabilities in consider-
ation of the asset values, and that Respondent was declining
to meet with the Union, because the Board sought judicial
enforcement of its decision.
On November 3, 1988, the United States Court of Appeals
for the Sixth Circuit issued its opinion and judgment enforc-
ing the Board’s Order. This opinion and judgment, but not
subsequent court papers, were served on the Union. The
court issued its mandate on November 28, 1988. However by
letter dated November 14, 1988, the Board requested the
court to revise its judgment to delete reference to failure to
give timely notice, i.e. to reflect the Board’s Decision. The
court granted the Board’s request, withdrew its mandate and
issued a revised judgment on December 30, 1988, and a new
mandate on January 23, 1989. The Union received the new
mandate and revised judgment on March 15, 1989. Mean-
while, by letter dated December 12, 1988, International Rep-
resentative Agler informed SMF Inc. Attorney Robert Brown
that he was available to meet in December 1988 and January
1989 to negotiate a settlement concerning the unfair labor
practice case. Attorney Allen Grotke testified in sum as fol-
lows: From July 1988 to March 25, 1989, he was associated
with the law firm which represented Respondent. About Feb-
ruary 1, 1989, Attorney Carolin requested him to handle the
matter. Grotke reviewed the case file, and learned that Re-
spondent went through bankruptcy proceedings, had no as-
sets, and ‘‘there was no Company.’’ Grotke also contacted
the Board’s compliance officer (SMF Inc. offered to prove,
and correspondence from the compliance officer so indicates,
that the officer threatened contempt proceedings unless Re-
spondent and SMF Inc. undertook to negotiate a settlement
with the Union). On February 1, Grotke spoke to Agler about
setting up a meeting. Agler said he did not know the issues.
Grotke asked for a list of issues before they set up a meet-
ing. Agler said he would provide a list, and get back to
Grotke by February 3 (Grotke had to give the compliance of-
ficer a status report by February 13). Agler never furnished
the list, and did not get back to Grotke by February 3.
Grotke tried unsuccessfully several times to contact Agler,
who eventually called back on February 10 or 13. They dis-
cussed Respondent’s status. Grotke said Respondent was
bankrupt and had no assets. Agler questioned why then they
were meeting. A few days later (mid-February) Agler or
Union International President John Hovis called to inform
Grotke that a meeting would be held on March 8, 1989, at
10:30 a.m. at the Holiday Inn in Wapakoneta, Ohio. Al-
though Agler and Hovis were presented as General Counsel
witnesses, they did not dispute Grotke’s testimony con-
cerning the contacts leading to the March 8 meeting. I credit
Grotke’s testimony in this regard.
B. The March 8 Meeting
The parties met as agreed on March 8, 1989, at the Holi-
day Inn in Wapakoneta. They met in two sessions, from
10:30 a.m. to about 12:45 p.m. and from 2 p.m. to about
4:30 p.m., with an interim luncheon recess. International
President Hovis and International Representative Agler, ac-
companied by five individual claimants, including Local
President Jerry McEldowney, represented the Union. Attor-
ney Grotke represented Respondent, or more accurately, the
interests of Lawrence Fischer. Attorney Brown represented
SMF Inc. Hovis and Agler testified as General Counsel wit-
nesses and Grotke and Brown as witnesses for SMF Inc.
Hovis, General Counsel’s principal witness, testified in
sum as follows: When they convened, Grotke said he was
not sure why they were there. He said Respondent filed
bankruptcy, had no assets, and he was there to comply with
the court decision. He did not know how many employees
were involved or their rates of pay at the time of plant clo-
sure. Hovis said the Union was there to bargain over the ef-
fects of closure and possible settlement of the unfair labor
practice case. They discussed calculation of backpay, but
never agreed on this. Brown said the Union misunderstood
the Board’s remedy. Hovis suggested they recess while
Hovis called the Board’s compliance officer. This was done.
When Hovis returned, he explained the compliance officer’s
1035ST. MARYS FOUNDRY CO.
understanding of the remedy. The Board agent calculated that
backpay for an 8-week period with interest could range from
$125,000 to $170,000, and that backpay for the minimum 2-
week period under Transmarine would amount to $36,500.
Brown said this was incorrect. At this point the parties re-
cessed for lunch. When they resumed, Grotke said that al-
though Respondent filed bankruptcy and had no assets, he
was authorized to make a proposal. Grotke proposed settle-
ment for 80 percent of the $32,500 figure or alternatively (if
the Region’s calculations were incorrect), 2 weeks’ pay for
each of the 30 or 31 laid-off unit employees, at their rate of
pay of $9 per hour, with interest if the total was less than
the Region’s calculation. Hovis said this was grossly unfair.
Grotke said he did not know how to pay for the proposal,
and did not know whether he himself would be paid. Brown
said that SMF Inc. would guarantee payment. Grotke said
there was an issue as to whether the Union made a timely
request for bargaining, and he was not sure Respondent owed
anything. The Union caucused. At some point Hovis, Grotke,
Brown, and McEldowney held a side bar discussion. How-
ever Hovis could not recall what they said. When they re-
turned to the table, Hovis proceeded to recite the Union’s
claims. Hovis calculated Respondent was liable for backpay
at about $100,000, underfunding of the pension plan result-
ing in reduced pensions, for a loss of about $250,000, loss
of life insurance benefits for two employees who died,
amounting to $40,000, hospital bills of at least $70,000 for
employees and their dependents who lost their health insur-
ance, loss of vacation pay, and failure to arbitrate grievances
(Hovis proposed to settle the grievances for $3000). Hovis
also proposed 4 weeks severance pay, amounting to $45,000.
Hovis proposed a total package settlement of $170,000.
Grotke said the proposal was out of the question, the Union
was well aware Respondent had no money and the Union
should reconsider his proposal. He said the pension plan was
terminated and out of his hands. (In the unfair labor practice
proceeding, the Board found that Respondent did not violate
the Act by unilaterally terminating the pension plan on Octo-
ber 31, 1984, after the expiration date of its collective-bar-
gaining contract.) Grotke said that it was too bad that the
employees lost their life and health and welfare insurance,
but the Union had his proposal. At about 4:10 p.m. Grotke
said he considered the parties to be at impasse. Hovis said
there was no impasse, the Union was prepared to bargain and
amend its proposal, and ‘‘They should make a counter-
proposal.’’ Grotke said the Board and its compliance officer
created the problem by not conveying the actual remedy, and
the Union did not understand what the case involved. Hovis
suggested that Grotke talk to the Board’s compliance officer,
and then the parties could meet again. The meeting ended at
about 4:30 p.m. They did not meet again, although Hovis,
Grotke and Brown each presented their positions in writing
to the Board’s compliance officer. International Representa-
tive Agler testified in sum as follows: At the morning ses-
sion they discussed the enforcement decision, but could not
agree on its meaning. Agler himself did not understand the
decision, and the ‘‘discussion left me in bad shape.’’ They
discussed the backpay period and what was owed. At this
point Agler left the meeting. After Hovis talked to the com-
pliance officer, Agler returned to the meeting. Hovis reported
his conversation with the compliance officer. No other issues
were discussed at the morning session. At the afternoon ses-
sion Grotke made his proposal, Brown said SMF Inc would
guarantee the proposal, and Hovis said the proposal was
‘‘awful short.’’ The Union caucused. After they returned
Hovis explained the Union’s claims, and asserted that in light
of these claims, his proposal of $170,000 was a fair offer.
Grotke was upset about the figure, but ‘‘I can’t remember
exactly what he said.’’ Shortly after 4 p.m. Grotke said he
thought they had reached an impasse. Hovis disagreed. He
said the Union made a proposal and had room to move, and
could be ready to move. He said he thought Grotke did not
understand what was involved, and should talk to the compli-
ance officer, and then they could meet again. The parties re-
stated their positions in this regard, but there was no agree-
ment, and they adjourned.
Attorney Grotke, SMF Inc.’s principal witness, testified in
sum as follows: He acted as chief spokesman. He said they
were there under pressure, because they were threatened with
contempt, and told they had better meet and ‘‘better talk
money.’’ Grotke said he felt awkward acting as representa-
tive of Respondent, meaning Fischer. Hovis said the Union
understood. The Union raised issues concerning computation
and period of backpay, severance pay, grievances, pension
plan, medical benefits and life insurance (referring to two de-
ceased employees). The parties were confused about com-
putation and running of backpay. Hovis said the amount due
and owing ranged from a high of $170,000 to a low of
$110–125,000. Brown and Grotke were amazed. Grotke said
Respondent had no assets, and the Union said they were well
aware of that. Grotke said he was not sure he would be paid,
as Fischer told him there was no longer any (Respondent)
Company. At the luncheon recess Brown and Grotke con-
sulted with SMF Inc. President Dine. At the afternoon ses-
sion they proposed to pay 80 percent of the $36,500 amount,
i.e., the 2-week minimum as calculated by the compliance
officer or an amount based on the parties’ calculation of 2
weeks pay with interest. Brown said SMF Inc. would guar-
antee the offer. The parties again discussed the matters they
discussed in the morning, and there was continued confusion
over calculation of severance pay or backpay. The Union
said the compliance officer said they were entitled to
$170,000. Hovis, Grotke, Brown and McEldowney then held
their side bar conference. Grotke and Brown said they were
there to negotiate in good faith, although they questioned
whether they owed any money, because they believed that
the Union did not give timely notice in accordance with the
Board decision. They restated their offer, and returned to the
table. The Union again asserted that the compliance officer
told them they were entitled to $170,000, and stated that they
would be doing an injustice to the employees if they did not
go for that full amount. Grotke did not respond or inquire
into the specifics of the Union’s claims. He said they were
apparently at impasse, and Hovis agreed. Hovis said he
would discuss the meeting with the Union’s attorneys and get
back to Grotke and Brown. The meeting broke up at about
4:30 p.m., but the Union never got back to them. Attorney
Brown testified in sum as follows: He attended the meeting
as SFM Inc.’s representative, at Grotke’s request, in order to
comply with the court order, because the Board was threat-
ening Respondent with contempt. Brown also attended the
meeting for informational purposes, and because the court
order provided for joint and several liability. Grotke said Re-
spondent was bankrupt, had no assets and could not pay any-
1036 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2 The Union (Br. 5) moves for summary judgment, on the ground that Re-
spondent’s answer fails to comply with Sec. 102.56(a) of the Board’s Rules.
However SMF Inc. filed an answer to the compliance specification, and its
form is not questioned by General Counsel or the Union. Therefore the allega-
tions of the specification are in issue. Moreover the Union’s motion begs the
question. There is an issue in this case as to whether Respondent corporation
is an entity which is even capable of filing an answer in the form specified
by Sec. 102.56(a). The Union’s motion is denied. As Respondent’s answer af-
firmatively alleges that the Union failed to commence negotiations within 5
days of Respondent’s notice of its desire to bargain, I find that the matter is
properly in litigation.
thing. The parties discussed calculation of backpay. There
was confusion. Grotke and Brown said they could not under-
stand the compliance officer’s minimum figure of $36,500,
and questioned its accuracy. His calculation was explained
after Hovis called the compliance officer. Hovis then pre-
sented the Union’s claims, item by item, with amounts. At
the afternoon session Grotke and Brown presented their pro-
posal, with Brown stating that SMF Inc. would guarantee the
amount. Later the Union presented its proposal to settle for
$170,000, saying that ‘‘we can’t take anything less.’’ Grotke
said that Respondent could not pay anything, would leave its
offer on the table, and if the Union would not take less than
$170,000, they would not offer anything more, and therefore
it appeared the parties were at impasse. Hovis said yes, and
the meeting broke up.
The testimony of the witnesses presents questions of fact
as to (1) whether the Union discussed the specifics of its
claim both at the morning and afternoon session, (2) whether
the Union indicated that it would not take less than its pro-
posal to settle for $170,000, (3) whether the Union agreed
they were at impasse, and (4) whether Hovis said he would
get back to Grotke and Brown after talking to the Union’s
attorneys. In other respects I find that the testimony of the
witnesses together substantially reflects what transpired at the
meeting. Agler substantially corroborated portions of Hovis’
testimony, and Brown substantially corroborated portions of
Grotke’s testimony. The corroborative witnesses were not
cross-examined. As between General Counsel’s and SMF
Inc.’s witnesses, I credit the testimony of Grotke and Brown
where it conflicts with that of Hovis and Agler. The testi-
mony of Grotke and Brown demonstrated a clearer and more
specific recollection of the meeting than that of the union of-
ficials. The testimony of Agler was particularly weak. Agler
frankly admitted that he did not understand the discussion at
the morning session, he was not present during part of the
session (when there is an issue of whether the Union dis-
cussed its specific claims), he could not remember Grotke’s
response to the Union’s proposal, and he testified that Hovis
said that Grotke did not understand what was involved, al-
though Hovis testified that Grotke made this remark to him.
Grotke, although more specific and accurate in his testimony,
testified that he could not recall what was said at the side
bar discussion. I do not agree with General Counsel’s argu-
ment (Br. 8–9), that it is unlikely that Hovis would agree
with Grotke that the parties were at impasse. Hovis believed,
on the basis of the compliance officer’s calculations, that the
claimants were entitled to $170,000 from Respondent and
SMF Inc. as a matter of law under the Transmarine remedy,
regardless of what transpired at the bargaining table. He
knew that it was not realistic to expect more, and that further
talk was useless. Therefore he felt free and in full confidence
to agree that the parties had reached an impasse.
C. Analysis, Concluding Findings, and
Conclusions of Law
As indicated, Judge Johnston’s recommended Order, the
order as adopted by the Board, and the enforcement judg-
ment, each adopt by reference the recommended
Transmarine remedy, including commencement of backpay
‘‘from 5 days after the date of this decision.’’ General Coun-
sel takes the position (Br. 3–4), that the backpay period com-
menced to run on January 5, 1989, i.e., 5 days after issuance
of the court’s revised judgment. The Union contends (Br. 3),
that the potential backpay period began to run on December
21, 1985, i.e., 5 days after Judge Johnston’s decision. I have
no authority to expand on the compliance specification. I
find that the specification represents the limits of potential
backpay, and therefore the backpay period cannot be deemed
to commence at an earlier date than that pleaded by General
Counsel. I find, as asserted by General Counsel, that the
backpay period commences on January 5, 1989.
The next question presented is whether and if so at what
point backpay should be tolled. General Counsel and the
Union contend that none of the Transmarine conditions have
been met, and therefore the backpay period continues to run.
SMF Inc. contends that all Transmarine conditions have been
met, and for this and other reasons, SMF Inc. and Respond-
ent are jointly and severally liable for no more than 2 weeks
backpay. SMF Inc. and Respondent assert in sum in their an-
swers to the specification that the Union did not make a
timely request for bargaining, the Union failed to commence
negotiations within 5 days of Respondent’s notice of its de-
sire to bargain, the Union failed to bargain in good faith, the
parties reached a bona fide impasse in bargaining, liability
and any bargaining obligation was voided by Respondent’s
bankruptcy, Respondent does not exist, the actions of the
Board and its compliance officer were responsible for any al-
leged failure of compliance (I rejected this defense at the
hearing), SMF Inc. and Respondent complied with the
Board’s Order and the court’s judgment, the calculation of
backpay is erroneous and contrary to law, and no contribu-
tions to the terminated pension plan are mandated.2
I find that Respondent and SMF Inc. are jointly and sever-
ally liable for the minimum backpay obligation under the
Transmarine remedy, namely, to pay, with interest, the
wages which the claimants would have earned for a 2-week
period at the rate of their normal wages when last in Re-
spondent’s employ. I make this finding because a corpse (in
this case a defunct corporation), is incapable of bargaining.
From December 18, 1985, when Respondent filed its Chapter
7 petition, until July 25, 1986, when the estate was closed,
only the interim trustee could bargain on Respondent’s be-
half. However the Union never requested such bargaining.
Thereafter Respondent ceased to exist, except as a piece of
paper on file in its state of incorporation. Respondent con-
ducted no business, had no assets, and had no officers who
could act on its behalf. Indeed the parties recognized as
much when they met on March 8, 1989. I credit the asser-
tions of Attorneys Grotke and Brown that they met with the
Union because they and their clients SMF Inc. and Respond-
ent (meaning Lawrence Fischer) were threatened with con-
tempt proceedings and SMF Inc. with continuing liability, if
they did not meet with the Union. I find that Respondent and
SMF Inc. did not waive their rights or positions by meeting
1037ST. MARYS FOUNDRY CO.
3 The Supreme Court distinguished a situation in which the union’s demand
was based on a matter peculiarly within the union’s knowledge. Such is not
the situation in the present case.
with the Union. International President Hovis tipped the
Union’s hand when he testified that he told Grotke and
Brown that ‘‘they,’’ meaning both of them, should make a
counterproposal. Hovis knew Respondent had no assets and
was defunct. He sought to enmesh SMF Inc. into the bar-
gaining, although it had no obligation to bargain with the
Union, holding over its head the threat of continuing liability
if SMF Inc. and Respondent did not come forward with a
better offer.
This is an appropriate proceeding for application of the
principle set forth in Southport Petroleum Co. v. NLRB, 315
U.S. 100, 106 (1942), that bona fide discontinuance and a
true change of ownership of a business, may operate to ter-
minate nonmonetary obligations (in that case, reinstatement)
created by the Board’s Order. See also Johnson v. England,
356 F.2d 44, 49 (9th Cir. 1966). The matter is properly de-
cided, as here, in compliance or contempt proceedings.
Ahrens Aircraft v. NLRB, 703 F.2d 23 (1st Cir. 1983); NLRB
v. West Coast Casket Co., 469 F.2d 871, 873 (9th Cir. 1972).
Reliance by General Counsel and the Union on NLRB v. Bet-
ter Building Supply Corp., 837 F.2d 377 (9th Cir. 1987), and
In re: Goodman, 873 F.2d 598 (2d Cir. 1989), is misplaced.
Those decisions stand for the principle that a Chapter 7
bankruptcy proceeding does not operate to dissolve the debt-
or corporation or discharge its debts. In each case, there was
either an alleged or actual alter ego which stood liable for
the debtor corporation’s backpay obligations. I have no prob-
lem with finding that as Respondent Corporation was never
dissolved, its backpay obligations were not discharged by the
bankruptcy proceeding. The question here presented, which
was not presented in Better Building Supply or Goodman, is
whether a defunct corporation is capable of engaging in col-
lective bargaining. Here there is no alter ego. The Board has
determined that SMF Inc. is a successor only for the purpose
of remedying Respondent’s obligations under the
Transmarine formula and has no obligation to bargain with
the Union. As Respondent is incapable of engaging in collec-
tive bargaining, it follows that Respondent and SMF Inc. are
jointly and severally liable for the minimum remedy of 2
weeks’ backpay.
As this case presents issues of first impression, I am mak-
ing certain alternative findings. General Counsel contends
(Br. 8) that the Union made a timely request for bargaining
on December 23, 1985, because the Board’s Rules at that
time provided an additional 3 days for service time. I agree
that the Union made a timely request for bargaining, but for
a different reason. Both the Federal Rules of Civil Procedure
and the Board’s Rules provide that in computing prescribed
or allowed times, the day of the act, event or default from
which the designated period begins to run shall not be in-
cluded. The rules also provide that the last day of the period
shall be counted unless a Saturday, Sunday, or legal holiday,
in which event the period runs until the end of the next day
which is not a Saturday, Sunday, or legal holiday. Both rules
further provide that when the period of time prescribed or al-
lowed is less than 7 days, intermediate Saturdays, Sundays,
and legal holidays shall be excluded in the computation. Ap-
plying these rules to the present case, the Union’s request for
bargaining on Monday, December 23, 1985, was timely, be-
cause it came within 5 days of Judge Johnston’s decision
(issued on December 16, 1985), as defined by the Rules. As
Judge Johnston’s recommended Order, the Board’s Order and
the court’s judgment all incorporated by reference the phrase
‘‘the failure of the Union to request bargaining within 5 days
of this decision,’’ I find that the Union’s request would be
timely if made within 5 days (as defined by the rules) of
issuance of any of the three orders. Therefore the Union’s re-
quest of December 12, 1988, for bargaining was also timely,
because the Union made that request after issuance of the
court’s opinion and initial judgment, but prior to issuance of
the revised judgment and mandate. I further find that each
of the Union’s requests should be regarded as continuing in
nature. Cf. Fall River Dyeing Corp. v. NLRB, 482 U.S. 27
2241 (1987). See also Armour & Co., 280 NLRB 824, 829
(1986). To do otherwise (assuming a bargaining obligation)
would be in effect to reward the wrongdoer by forcing the
union to renew its demand every time the respondent failed
or refused to honor that demand. As the Supreme court held
in the comparable situation in Fall River Dyeing,’’ it makes
no sense to require the union repeatedly to renew its bar-
gaining demand . . . when with little trouble the employer
can regard a previous demand as a continuing one.’’3
However I find that the Union failed to commence bar-
gaining within 5 days of Attorney Grotke’s notice of his de-
sire to bargain with the Union. Therefore, assuming there
were a bargaining obligation, backpay would be tolled as of
February 8, 1989, 7 days after Grotke requested a meeting.
Grotke testified without contradiction that he contacted Agler
about a meeting on February 1, that Agler professed he did
not know the issues, but promised to get back to Grotke by
February 3, but did not until February 10, and never gave
Grotke the list of issues. Agler failed to explain why they
could not meet until March 8. In the meantime, assuming a
bargaining obligation, backpay would be running. I find that
assuming bargaining obligation, backpay would be tolled as
of February 8, 1989.
Assuming that Respondent were obligated to bargain with
the Union, and further assuming that the Union made a time-
ly request for bargaining and commenced negotiations in a
timely manner, I would find that the parties bargained in
good faith to an impasse on March 8, 1989. Therefore if not
tolled earlier, backpay would be tolled as of that date. Finan-
cial inability does not excuse a failure or refusal to bargain.
However financial inability is a permissible position in nego-
tiations, and a proper subject for bargaining. Hamady Bros.
Food Markets, 275 NLRB 1335 (1985); Commercial Printing
Co., 99 NLRB 469, 475–478 (1952). Here, the parties held
only one meeting. In view of the positions of the parties and
the situation of Respondent, any further discussion probably
would have been futile. Respondent was a defunct corpora-
tion, with no assets, and the Union knew this to be true. The
Union never questioned or asked for proof of Grotke’s asser-
tions. Respondent, or someone on its behalf, could offer only
as much money as SMF Inc. would guarantee, and all parties
knew this. SMF Inc. believed that it was not obligated to pay
more than the minimum Transmarine remedy of 2 weeks
backpay. The Union believed, on the basis of the compliance
officer’s calculations, that the claimants were entitled to a
total of $170,000, as a matter of law. SMF Inc., which had
no obligation to bargain, was unwilling to move from its po-
sition. In these circumstances, it would have been meaning-
1038 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
4 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules
and Regulations, the findings, conclusions, and recommended Order shall, as
provided in Sec. 102.48 of the Rules, be adopted by the Board and all objec-
tions to them shall be deemed waived for all purposes.
5 In accordance with our decision in New Horizons for the Retarded, 283
NLRB 1173 (1987), interest on and after January 1, 1987, shall be computed
at the ‘‘short-term Federal rate’’ for the underpayment of taxes as set out in
the 1986 amendment to 26 U.S.C. § 6621. Interest on amounts accrued prior
to January 1, 1987 (the effective date of the 1986 amendment to 26 U.S.C.
§ 6621), shall be computed in accordance with Florida Steel Corp., 231 NLRB
651 (1977).
less and futile for Grotke to go through the motions of dis-
cussing or questioning the particulars of the Union’s claims.
The Union knew this. The Union sought to enmesh SMF Inc.
in the bargaining, trying to get SMF Inc. to make an offer.
When its efforts proved unsuccessful, and neither the Union
nor SMF Inc. was willing to move from their positions,
Grotke and Hovis recognized and agreed that there was an
impasse. The matter could be resolved only through settle-
ment or litigation of the Board compliance proceeding. In-
deed, in the view of the parties, bargaining over the effects
of the closing of Respondent’s operations, was inseparable
from resolution of backpay obligations under the Board’s
Order.
Turning to the particulars of the compliance specification,
the Board’s remedy provides for payment to the unit employ-
ees of ‘‘amounts at the rates of their normal wages when last
in Respondent’s employ.’’ The remedy, and consequently the
Board’s Order, makes no provision for compensation for lost
benefits. Deferred, contingent compensation, such as health,
welfare and pension benefits, which employees are entitled
to receive in addition to their wages, constitute ‘‘fringe bene-
fits’’ rather than wages. Teamsters Local 449 (Universal Liq-
uor), 265 NLRB 1539, 1544, 1555 (1982), reversed on other
grounds 728 F.2d 80 (2d Cir. 1984). Therefore the claims for
loss of such benefits are disallowed.
The Region’s present compliance officer testified that the
amounts set forth for the fourth quarter of 1983 reflected 1
week’s wages. Therefore backpay shall be calculated at dou-
ble the amount of gross backpay for the fourth quarter of
1983.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended4
ORDER
The Respondent St. Marys Foundry Company and St.
Marys Foundry Inc., their officers, agents, representatives,
successors, and assigns, shall jointly and severally make
whole the following named employees for their loss of
wages, by paying each of them the amount set forth below
opposite their name, plus interest thereon accrued to the date
of payment and computed in the manner set forth in New
Horizons for the Retarded, 283 NLRB 1173 (1987),5 less tax
withholdings required by Federal and state laws:
Gerald Berry $770
Arthur R. Brewer 778
Rafe Chilcoat Sr. 770
Randy Chilcoat 840
Gilbert Cotrell 840
Lester F. Cotterman 816
Frank W. Cramer 848
Lawrence W. Davis 840
Danny Dorsten 770
Ernest England 736
Eldon Eshelman 770
Forrest Goodwin 822
Charles Greenawalt 840
Billy Hall 776
Dale Hall 770
John Hall 800
Paul Jones 790
estate of Vernon Koeper 840
Jackie Makley 766
Jerry McEldowney 800
Todd Miller 806
Verl Muter 844
Thomas Pruitt 752
Fred Reedy 872
Orin Roettger 846
Leon Schoenlein 774
Richard Schoenlein 778
Charles Slone 818
Rollen Taylor 840
James Walter 820
––––––––
$24,132