Stafford's Restaurant

National Labor Relations Board - Board Decisions

Jul 31, 1984

271 N.L.R.B. 734 (N.L.R.B. 1984)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Stafford's Restaurant, Inc.; Stafford's Seven Mile,
Inc.; and Dan T. Vatsis and Hotel, Motel, Res-
taurant Employees and Bartenders Union, Local
24. Case 7-CA-17901
31 July 1984
DECISION AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
ZIMMERMAN AND DENNIS
On 20 June 1983 Administrative Law Judge
George Norman issued the attached decision. The
Respondent filed exceptions and a supporting brief.
The Board has considered the decision and the
record in light of the exceptions and brief and has
decided to affirm the judge's rulings, findings, and
conclusions and to adopt the recommended Order,
which is modified to reflect our amended remedy.
We agree with the judge's finding that the Re-
spondent' violated Section 8(a)(5) and (1) of the
Act by failing and refusing to pay the contractually
required health and welfare and pension contribu-
tions to the appropriate trust funds on behalf of its
employees. 2 We also agree that the Respondent
i As the answer to the complaint admitted that the corporate Respond-
ents were alter egos and as we agree with the judge's finding that Dan T.
Vatsis is an alter ego of the corporate Respondents, we shall refer jointly
to all Respondents as "Respondent."
Unlike our dissenting colleague, we agree with the judge's imposition
of personal liability on named Respondent Dan T. Vatsis. We find that
Contris Packing Co., 268 NLRB 193 (1983), is distinguishable since there
we specifically found that the corporate officer involved was not the
alter ego of the corporate respondent. Here it is clear that Vatsis is the
alter ego of the corporate respondents-as the judge found-and his per-
sonal liability flows from that finding. Our dissenting colleague would
distinguish Carpet City Mechanical Co., 244 NLRB 1031 (1979), on the
ground that there the individual held personally liable sought to evade
liability by petitioning the State for dissolution of the corporation and
falsely stating in that petition that no lawsuits were pending. Here too,
however, Vatsis sought to avoid liability and thereby frustrate the
Board's fashioning of an effective remedy for the Respondent's unfair
labor practices by avoiding service of the amended complaint and a sub-
poena issued by the Board. Vatsis refused to accept service of these doc-
uments by certified mail and evaded personal service by a U.S. marshal
by refusing to open his door. When the marshal telephoned Vatsis, Vatsis
informed him that Vatsis was avoiding service on the advice of his attor-
ney.
Contrary to her colleagues, Member Dennis would not find that Dan
r. Vatsis is the alter ego of the Respondent corporations and would not
hold him personally liable for the unfair labor practices committed. See
Contris Packing Co., supra, finding that an individual's status as corporate
officer, his ownership of the corporation, and his participation in the
commission of unfair labor practices were insufficient to justify an alter
ego finding or imposing personal liability Carpet City Mechanical Co.,
244 NLRB at 1034, which the judge cites, is distinguishable because there
the individual held personally responsible attempted to evade the corpo-
ration's backpay liability by petitioning the State for dissolution of the
business and falsely representing that no lawsuits were pending. Here, by
contrast, the facts show only that Vatsis resisted service of documents on
himself as an individually named Respondent, and there was no attempt
to evade service on the Respondent corporations Under these circum-
stanlces, Member Dennis rejects her colleagues' circular reasoning that
Vatsis must be held personally liable because he sought to avoid personal
liability in a case in which such liability is not warranted under ConIris
Packing Co.
2 Contrary to his colleagues Chairman Dotson would not find at this
time that Respondent violated Sec. 8(a)(5) and (1) by failing to make the
271 NLRB No. 117
further violated Section 8(a)(5) and (1) by failing
and refusing to deduct union dues from the wages
of those employees who had executed valid dues-
checkoff authorizations. The judge recommended
that the Respondent be ordered to cease and desist
from its illegal conduct, make the fringe benefit
fund payments mandated by the collective-bargain-
ing agreement, and remit union dues to the Union
in accordance with employee authorizations. 3
While neither the General Counsel nor the Union
has filed exceptions to this recommended remedy,
we have decided sua sponte that the judge's
remedy is deficient in that it fails to provide for the
possibility of interest or other additional amounts
beyond the sum of the past due contributions,
which might be necessary in order to satisfy a
make-whole remedy.4 Similarly, we have decided
that in order to remedy completely the Respond-
ent's failure to check off and remit dues to the
Union, the Respondent must be ordered to make
the Union whole for any loss it may have suffered
as a result of the Respondent's unlawful conduct. 5
Accordingly, we shall modify the recommended
Order to require that the Respondent make whole
its employees by making the contractually required
payments to the health and welfare and pension
funds,6 and by reimbursing employees for any ex-
penses ensuing from the Respondent's unlawful
failure to make such required payments, as provid-
ed in Kraft Plumbing & Heating, 252 NLRB 891 fn.
2 (1980), enfd. 661 F.2d 940 (9th Cir. 1981). 7 We
required fringe benefit fund payments. The Chairman would defer this
issue to a pending state court proceeding brought by the real party in
interest, the fund trustees, to recover the past due payments. In his view,
the Board is not the proper forum for parties seeking to remedy an al-
leged breach of contract or to obtain specific performance of a contract.
Cf. United Telephone Co., 112 NLRB 779 (1955).
3 Of course, the Respondent's duty to check off union dues was extin-
guished upon expiration of the collective-bargaining agreement which
created that duty See Robbins Door & Sash Co., 260 NLRB 659 (1982),
and cases cited therein.
See M'erryweather Optical Co., 240 NLRB 1213 (1979). We note that
the Respondent's restaurants have ceased operation. Hence, the Respond-
ent's liability for continuing trust fund contributions stopped accruing at
the time of the closures.
5 J F. Swick Insulation Co., 247 NLRB 626 (1980); Fitzpatrick Electric,
242 NLRB 739 (1979); Shen-.Mar Food Products, 221 NLRB 1329 (1976).
6 Because the provisions of employee benefit fund agreements are vari-
able and complex, the Board does not provide at the adjudicatory stage
of a proceeding for the addition of interest at a fixed rate on unlawfully
withheld fund payments. We leave to the compliance stage the question
of whether the Respondent must pay any additional amounts into the
benefit funds in order to satisfy our "make-whole" remedy. These addi-
tional amounts may be determined, pending upon the circumstances of
each case, by reference to provisions in the documents governing the
funds at issue and, where there are no governing provisions, to evidence
of any loss directly attributable to the unlawful withholding action,
which might include the loss of return on investment of the portion of
funds withheld, additional administrative costs, etc., but not collateral
losses. Merryweather Optical Co., supra.
7 See also F Landon Cartage Co., 265 NLRB No. 177 (Dec. 16, 1982)
(not published in Board volumes).
734
STAFFORD'S RESTAURANT
shall further modify the recommended Order by
requiring the Respondent to make the Union whole
by payment to it for any loss of dues suffered as a
result of the Respondent's failure to comply with
the collective-bargaining agreement, with interest
thereon computed in the manner set forth in Flori-
da Steel Corp., 231 NLRB 651 (1977).
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge as modified below and orders that the Re-
spondent, Stafford's Restaurant, Inc.; Stafford's
Seven Mile, Inc.; and Dan T. Vatsis, Detroit and
Oak Park, Michigan, its officers, agents, successors,
and assigns, shall take the action set forth in the
Order as modified.
1. Substitute the following for paragraph 2(a).
"(a) Make whole the unit employees by making
all payments to the health and welfare and pension
funds required by the collective-bargaining agree-
ment, and further make them whole by reimbursing
them for any expenses ensuing from the Respond-
ent's unlawful failure to make such required pay-
ments, in the manner set forth in this Decision and
Order."
2. Substitute the following for paragraph 2(b).
"(b) Honor the collective-bargaining agreement's
checkoff provisions and the valid dues-checkoff au-
thorizations filed with the Respondent, and remit
to the Union all dues the Respondent should have
checked off pursuant to that collective-bargaining
agreement, together with interest on such sums
computed in the manner set forth in this Decision
and Order."
3. Substitute the attached notice for that of the
administrative law judge.
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found
that we violated the National Labor Relations Act
and has ordered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representa-
tives of their own choice
To act together for other mutual aid or pro-
tection
To choose not to engage in any of these
protected concerted activities.
WE WILL NOT refuse to recognize and bargain
collectively with Hotel, Motel, Restaurant Em-
ployees and Bartenders Union, Local 24 as the ex-
clusive collective-bargaining representative of the
unit of our employees described below. The appro-
priate collective-bargaining unit is:
All employees employed by Stafford's Restau-
rant, Inc. and Stafford's Seven Mile, Inc., in-
cluding head cooks, short order cooks, pastry
employees, pantry employees, utility employ-
ees, hosts, hostesses, waiters, waitresses and
bus employees, but excluding guards and su-
pervisors as defined in the Act.
WE WILL NOT repudiate and fail to honor, abide
by, and apply the terms of our collective-bargain-
ing agreement with the Union.
WE WILL NOT unilaterally discontinue contribu-
tions to the health and welfare and pension funds
provided for in the applicable collective-bargaining
agreement.
WE WILL NOT fail to honor the dues-deduction
authorizations of unit employees and fail to dis-
burse such dues to the Union in accordance with
the terms of the applicable collective-bargaining
agreement.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce you in the exer-
cise of the rights guaranteed you by Section 7 of
the Act.
WE WILL reimburse the Union for the losses due
to our failure to honor the union dues-deduction
authorizations of unit employees with interest.
WE WILL make whole our unit employees by
transmitting the contributions owed to the Union's
health and welfare and pension funds pursuant to
the terms of our collective-bargaining agreement
with the Union, and by reimbursing unit employees
for any medical or other expenses ensuing from our
unlawful failure to make such required contribu-
tions. This shall include reimbursing employees for
any contributions they themselves may have made
for the maintenance of the Union's health and wel-
fare and pension funds after we unlawfully discon-
tinued contributions to those funds; for any premi-
ums they may have paid to third-party insurance
companies to continue medical coverage in the ab-
sence of our required contributions to such funds;
and for any medical bills they have paid directly to
735
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
health care providers that the contractual policies
would have covered.
STAFFORD'S RESTAURANT, INC.;
STAFFORD'S SEVEN MILE, INC.; AND
DAN T. VATSIS
DECISION
STATEMENT OF THE CASE
GEORGE NORMAN, Administrative Law Judge. This
case was heard in Detroit, Michigan, on May 2, 1983. On
July 31, 1980, the Regional Director for Region 7 of the
National Labor Relations Board issued a complaint and
notice of hearing against Stafford's Restaurant, Inc. and
Stafford's Seven Mile, Inc., based on a charge filed by
Hotel, Motel, Restaurant Employees, Cooks and bartend-
ers Union, Local 24, on June 18, 1980, alleging that the
Employer has refused to bargain collectively with the
Union; sought to terminate the collective-bargaining
agreement contrary to the provisions of Section 8(d) of
the National Labor Relations Act; and has failed and re-
fused to contribute to the health-welfare fund and pen-
sion fund on behalf of its employees in an effort to termi-
nate the bargaining relationship with the Union in viola-
tion of Section 8(a)(1) and (5) of the Act.
Thereafter, an informal settlement agreement was en-
tered into by the Respondent and the Charging Party
and approved by the Regional Director on December 3,
1980. The Respondent, however, failed and refused to
comply with the terms of the settlement agreement. The
Regional Director on April 29, 1982, set aside the settle-
ment agreement and ordered that the complaint be re-
issued pursuant to Section 102.15 of the Board's Rules
and Regulations. On February 9, 1983, the Regional Di-
rector issued an amended complaint and notice of hear-
ing naming Dan T. Vatsis as an additional Respondent.
All parties were given full opportunity to participate,
to introduce relevant evidence, to examine and cross-ex-
amine witnesses, to argue orally, and to file briefs. Briefs
filed on behalf of the General Counsel and the Respond-
ent were thoroughly considered.
On the entire record of the case and on my observa-
tion of the witnesses and their demeanor, I make the fol-
lowing
FINDINGS OF FACT
I. THE BUSINESS OF THE COMPANY
Stafford's Restaurant, Inc., also referred to as Re-
spondent Nine Mile, and Stafford's Seven Mile, Inc.,
each is a Michigan corporation. Respondent Nine Mile
has maintained its principal office and place of business
in the city of Oak Park, Michigan. Respondent Seven
Mile, Inc. has maintained its principal office and place of
business in Detroit, Michigan. Each Respondent is and
has been at all times material herein, engaged in the retail
sale of food and beverages. The Respondent admits, and
I find, that Respondent Nine Mile and Respondent Seven
Mile, Inc., as a single integrated enterprise, is now and
has been at all times material herein an employer en-
gaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Hotel, Motel, Restaurant Employees and Bartenders
Union, Local 24, is a labor organization within the mean-
ing of Section 2(5) of the Act.
111. THE ALLEGED UNFAIR LABOR PRACTICE
All the material facts herein are either admitted by the
Respondent or are uncontroverted. The Respondent
admits that the Charging Party has since approximately
1952 been the exclusive representative for the purpose of
collective bargaining for its employees at both its Seven
Mile, Inc. and Nine Mile restaurant. The Respondent's
answer further admits that the Respondent, as a single
employer, was party to a collective-bargaining agree-
ment with the Charging Party effective from June 1,
1978, to January 1, 1981, which provided for the pay-
ment by the Respondent of moneys into various fringe
benefits funds on behalf of its employees and also for the
deduction of union dues from the wage of employees
who had given the Respondent authorization to do so.
The affidavit of Dan Theodore Vatsis, which has been
received in evidence, contains admissions that the Re-
spondent has not, as of July 1980, made any of the con-
tractually required health and welfare or pension pay-
ments for approximately 6 months for the employees at
the Respondent's Seven Mile, Inc. restaurant and 2
months for the Nine Mile employees. Vatsis' affidavit
further admits that the Respondent has not, for months,
deducted any dues from the paychecks of the Seven
Mile, Inc. employees even though the employees had au-
thorized the Respondent to make said deduction. Vatsis'
affidavit also admits that he owns 50 percent of the stock
of both the Seven Mile, Inc. and Nine Mile, Inc. and
Nine Mile restaurants with his brother and mother each
owning the remaining 50 percent in equal portions.
The Respondent's failure to pay the contractual fringe
benefits on behalf of its employees continued through
1980 and 1981. The Respondent stipulated that its Nine
mile restaurant terminated business operations on De-
cember 15, 1981, and that it ceased doing business at its
Seven Mile, Inc. facility about January 29, 1982.'
A. Analysis and Conclusions
A refusal to make contributions to fringe benefits
funds on behalf of its employees, as required by a collec-
tive-bargaining agreement, is a change in the terms and
conditions of employment for the employees covered
thereunder and is therefore a violation of Section 8(a)(1)
and (5) of the Act, in that it deprives the employees of
their statutory right to have their union as their collec-
tive-bargaining agent to bargain about any changes in the
terms and conditions of employment. C & C Plywood
At a time unknown, the pension fund instituted a lawsuit in the 36th
District Court of Michigan to collect moneys owned by the Respondent
corporations. A trial date is scheduled sometime in Febuary 1984. The
lawsuit does not name Respondent Daniel T. Vatsis as a party and the
period of time for the completion of the suit is unknown.
736
STAFFORD'S RESTAURANT
Corp, 148 NLRB 414, 415 (1964); affirmed 305 U.S. 421
(1967). Inasmuch as the Respondent presented no evi-
dence in its defense, there is no explanation for its failure
to make the contractually required fringe benefits pay-
ments on behalf of its employees. Respondent Dan
Vatsis' affidavit contains the following reason for the Re-
spondent's nonpayment of fringe benefits:
I haven't made the health welfare pension and pay-
ments because we don't have the money .... The
main reason I don't send in the pension payments is
because it takes a lot of time-4-5 hours a month.2
Thus, there is no credible record evidence that the Re-
spondent failed to pay the contractually required fringe
benefits for any reason other than Dan Vatsis thought it
took too much time to remit the money to the funds.
The Respondent's failure to deduct membership dues
from its employees paychecks at its Seven Mile, Inc. res-
taurant violated Section 8(a)(5) and (1) of the Act. Inde-
pendent Stave Co., 248 NLRB 219 (1980).
B. The State Court Proceeding
The Respondent did not raise the issue of the state
court proceeding at the trial and, although it did not
present a defense, the Respondent was represented by
counsel and had full opportunity to fully litigate the
unfair labor practice allegations. The Respondent, how-
ever, did raise it in its posthearing brief.
The state court proceeding will not provide the
remedy of the Respondent's failure to deduct union dues
from its employees' paychecks and names only the Re-
spondent corporation and not Dan T. Vatsis as defend-
ants. Therefore, that action cannot provide a full remedy
for all the unfair labor practices alleged. Moreover, the
United States Supreme Court has recognized that the
Board is vested with primary jurisdiction to determine
what is or what is not an unfair labor practice. Kaiser
Steel Corp. v. Mullens, 642 F.2d 1302 (DC Cir. 1980),
affd. 109 LRRM 2268 (1982).
Both Respondent corporations were small, closely held
entities owned entirely by the Vatsis family with Dan T.
Vatsis holding 50 percent of the stock in each. While
Dan T. Vatsis' official title in the corporation is not
known, his affidavit makes clear that he was the person
who performed the payroll functions for both restaurants
and it was he who decided not to make the fringe benefit
payments on behalf of employees, or to deduct the dues
from employees' paychecks. The Respondent admitted
that Vatsis was a supervisor within the meaning of Sec-
tion 2(11) of the Act and stipulated that it ceased busi-
ness operations at the two restaurants more than I year
ago.
I consider Dan T. Vatsis so closely identified with the
operation of the Respondent corporations that he is, in
2 The statements contained in Dan Vatsis' affidavit which are unfavor-
able to the Respondent's position may be considered admission of a party
opponent: any favorable statements should be excluded as heresay. Con-
solidated Accounting Systems, 225 NLRB 93, 95 (1976). and cases cited
therein A lack of funds does not justify a unilateral modification of a col-
lective-bargaining agreement. Airport Limousine Service, 231 NLRB 932
(1977)
fact, an alter ego of those corporations and subject,
therefore, to individual liability for remedying the unfair
labor practices herein. Inasmuch as Vatsis committed the
unfair labor practices and the Respondent ceased doing
business over 1 year ago, I find Vatsis individually liable.
Such a finding of liability will prevent a total frustration
of the implementation of the policies of the Act by Re-
spondent's cessation of its operations. Carpet City Me-
chanical Co., 244 NLRB 1031, 1034 (1979), and cases
cited therein.
Accordingly, based on the entire record in this matter,
I find that the Respondent's failure to pay the contrac-
tually required health and welfare pension contributions
on behalf of its employees and its failure to deduct union
dues from its employees who had given it prior permis-
sion to do so, violated Section 8(a)(l) and (5) of the Act,
and therefore I shall recommend that Stafford's Restau-
rant, Inc.; Stafford's Seven Mile, Inc.; and Dan T. Vatsis
be ordered jointly and severally to remedy the unfair
labor practices by making all fringe benefits payments
which are owed to the health and welfare and pension
funds, remitting dues deductions, and by mailing appro-
priate notices to employees at their last known addresses.
CONCLUSIONS OF LAW
1. The Respondent, Stafford's Restaurant, Inc.; Staf-
ford's Seven Mile, Inc.; and Dan T. Vatsis is engaged in
commerce within the meaning of Section 2(6) and (7) of
the Act.
2. Hotel, Motel, Restaurant Employees and Bartenders
Union, Local 24, is a labor organization within the mean-
ing of Section 2(5) of the Act.
3. All employees employed by Respondent Nine Mile
and Respondent Seven Mile, including head cooks,
short-order cooks, pastry employees, pantry employees,
utility employees, hosts, hostesses, waiters, waitresses,
and bus employees, but excluding guards and supervisors
as defined in the Act constitute a unit of employees ap-
propriate for the purpose of collective bargaining within
the meaning of Section 9(b) of the Act.
4. By refusing to pay the contractually required health
and welfare and pension contributions on behalf of its
employees and by Respondent's failure to deduct union
dues from its employees who had given it prior permis-
sion to do so, the Respondent has violated Section
8(a)(l) and (5) of the Act.
5. The foregoing unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
On these findings of fact and conclusions of law and
on the entire record, I issue the following recommend-
ed3
3 If no exceptions are filed as provided by Sec. 102.46 of the Board's
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.
737
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ORDER
The Respondent, Stafford's Restaurant, Inc.; Stafford's
Seven Mile, Inc.; and Dan T. Vatsis, Detroit and Oak
Park, Michigan, its officers, agents, successors, and as-
signs, shall
1. Cease and desist from engaging in a refusal to bar-
gain collectively with the Union as the exclusive bargain-
ing representative of all the employees in the unit de-
scribed above, or in any like or related manner interfer-
ing with, restraining, or coercing employees in the exer-
cise of the rights guaranteed them by Section 7 of the
Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Make all fringe benefit payments owed to the vari-
ous fringe benefits funds described in the collective-bar-
gaining agreement.
(b) Remit union dues to the Charging Party in accord-
ing with employee authorizations to the Respondent.
(c) Mail appropriate notices to employees at their last
known addresses. Copies of the notices on forms provid-
ed by the Regional Director for Region 7, after being
duly signed by the Respondent's representative, shall be
mailed by the Respondent immediately upon receipt
thereof to its employees at their last known addresses.
(d) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
738