State Distributing Co., Inc.

National Labor Relations Board - Board Decisions

Feb 5, 1987

282 N.L.R.B. 1048 (N.L.R.B. 1987)

1048 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
State Distributing Co., Inc . and Teamsters , Chauf-
feurs , Warehousemen and Helpers Union Local
313, affiliated with International Brotherhood of
Teamsters , Chauffeurs, Warehousemen and
Helpers of America. Case 19-CA-14352
5 February 1987
DECISION AND ORDER
BY MEMBERS JOHANSEN, BABSON, AND
STEPHENS
On 8 December 1983 Administrative Law Judge
Richard J. Boyce issued the attached decision. The
Respondent filed exceptions and a supporting brief
and the General Counsel filed a brief in support of
the judge's decision.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the decision and the
record in light of the exceptions and briefs and has
decided to affirm the judge's rulings, findings, I and
conclusions and to adopt the recommended Order
as modified.
We agree with the judge, for the reasons stated
by him, that the Respondent's operation of a wine
distributorship continued the same employing in-
dustry formerly operated by Allstate Distributing
Co. Because, as explained below, the evidence also
shows that it was the Respondent's hiring discrimi-
nation that prevented the Union from actually es-
tablishing a majority in the Respondent's work
force, we find that the Respondent was the succes-
sor to Allstate with respect to the latter's bargain-
ing obligation.
The record supports the judge's finding that the
Respondent unlawfully refused to offer employ-
ment to, or to hire, nine employees laid off by All-
state in order to avoid employing a work force
with a majority represented by the Union, with
which Allstate had a collective-bargaining agree-
ment. We agree with the judge that the Respond-
ent's remarks to several employees and to their
union representatives engendered a "climate of fu-
tility" excusing the failure of some employees to
submit applications. The Union's presumption of
majority status would have continued had the laid-
off Allstate employees been hired. Because the un-
certainty concerning whether they would have ap-
plied and been hired under lawful hiring practices
I The Respondent has excepted to some of the judge's credibility find-
ings The Board's established policy is not to overrule an administrative
law ,fudge'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
is created by the Respondent's own wrongful acts
under Section 8(a)(3) and (1), we must resolve that
uncertainty against -the Respondent. Therefore, we
find that the Union's majority status presumptively
would have continued. Since all elements of
successorship are present, the Respondent addition-
ally violated Section 8(a)(5) and (1) by refusing to
recognize the Union and by failing to hire the nine
employees. The Respondent further violated Sec-
tion 8(a)(5) and (1) by unilaterally departing from
certain existing terms and conditions reflected in
the collective-bargaining agreement between All-
state and the Union. The Respondent was not free
to fix initial terms of employment without first con-
sulting with the Union. Potter's Drug Enterprises,
233 NLRB 15 (1977), enfd. mem. 99 LRRM 3327
(9th Cir. 1978); Love's Barbeque Restaurant No. 62,
245 NLRB 78 (1979), enfd. in pertinent part sub
nom. Kallman v. NLRB, 640 F.2d 1094, 1102-1103
(9th Cir. 1981).
In fashioning our remedy we bear in mind that it
should restore as nearly as possible the situation
that would have prevailed but for the unfair labor
practices. We shall order the Respondent to cease
and desist from the unfair labor practices found; to
bargain, on request, with the Union; and to offer
the nine employees reinstatement to the positions
denied them, or to substantially equivalent ones,
without prejudice to their seniority and other
rights previously enjoyed, discharging if necessary
employees hired from sources other than Allstate.
In addition, we shall order the Respondent to make
the employees whole for any losses suffered as a
result of the Respondent's unfair labor practices.
Specifically, we shall order the Respondent to
cancel, on request by the Union, any departures
from terms and conditions of employment, includ-
ing rates of pay and benefits, unilaterally effectuat-
ed and make whole the employees by remitting all
wages and benefits2 that would have been paid,
absent the Respondent's unlawful conduct, from I
February 1982 until the Respondent negotiates in
good faith to agreement or to impasse.
With respect to the make-whole provision, this is
in accord with the remedy the Board entered in
Love's Barbeque after a similar finding that the suc-
cessor employer there had violated the Act when it
unilaterally reduced wages. The court in that case
enforced the 8(a)(5) finding but denied enforcement
to that portion of the Order requiring backpay at
the contract rate until agreement or impasse. The
court held that the Board's Order bound the suc-
2 As part of our make-whole remedy we shall order the Respondent to
remit any payments it owes the benefit funds and to reimburse unit em-
ployees for any expenses resulting from its failure to make such pay-
ments
282 NLRB No. 151
STATE DISTRIBUTING CO. 1049
cessor to its predecessor 's collective-bargaining
agreement when its duty under NLRB Y. Burns-Se-
curity Services, 406 U.S. 272 (1972), was only to
consult with the union before altering terms and
conditions of employment . In denying enforcement,
the court also held that the Board's backpay
remedy acted as a penalty. The court suggested
that an appropriate backpay remedy might require
a successor employer only to pay the higher con-
tract rates for "a reasonable time of bargaining"
since "in all probability" bargaining "would have
led to an impasse" allowing the employer unilater-
ally to reduce wages.
With respect, we continue to adhere to our view'
that, in circumstances like those here and in Love's
Barbeque, it is appropriate to calculate backpay on
the basis of the contractual rates paid by the prede-
cessor (in other words, the existing terms and con-
ditions of employment) because the successor's un-
lawful failure to recognize and bargain with the
union has left us without an adequate or reasonable
alternative basis for calculating what rates would
have been arrived at through lawful bargaining. As
noted above in connection with the uncertainties
regarding hiring, it is ' proper to resolve uncertain-
ties against the one whose unlawful acts have cre-
ated those uncertainties.
In our view, the uncertainties here are even
greater than they were in Love's Barbeque, at least
in light of the limited task the court assigned the
Board in that case . There the court viewed the
record as indicating that the union would ; have in-
sisted on the existing contract rates and that the
successor employer "would not have agreed to
union demands" to pay those rates , but rather
would have insisted on wage reductions equivalent
to those that it actually imposed. 640 F.2d at 1103.
It appears that the only finding the court believed
the Board was required to make on remand was
the date of such an impasse . 3 Here, however, the
Board would be required to speculate about which
of two different possibilities might have taken place
and the outcome ' 'of the more probable course of
events . This is . so because it is entirely possible
that, had the parties 'bargained, they very well
might have ' reached a compromise rather than
foundering on an impasse . Thus, in meetings in Jan-
uary between the Respondent's attorney and repre-
sentatives of the Union, before the Allstate layoffs
and before the Respondent used its discriminatory
hiring process to resist recognizing the Union, the
3 In fact, the court expressed two different views on this point It
stated, on the one hand ,' that "After a reasonable time for bargaining,
Kaltman [the successor] would be required to pay only at the rate he set"
Id at 1103 (footnote omitted, emphasis added). But in remanding the
case, the court directed the Board in broader terms "to determine the ap-
propriate rate of pay "
Union indicated that it was "flexible" concerning
wage rates and would consider wages lower than
those in the existing agreement , if financial data
showed a need for that . Based ' on such a factual
record, however, it is virtually impossible to deter-
mine whether this flexibility would have made it
possible for the parties to have agreed on wage
rates lower than those in the contract but higher
than those which the Respondent set in the absence
of bargaining . Added to that initial uncertainty are
the questions about when such an agreement might
have been reached and what the rates would have
been . The question , as in Love 's Barbeque, of the
probable date of an impasse , if that were the out-
come of bargaining , is simply an alternative conun-
drum.
In sum, we acknowledge that the make-whole
remedy that the Board imposes incases such as this
is not invulnerable to all criticism. We are, howev-
er, faced with a set of less-than-perfect remedial
choices. The remedy the Board has chosen has the
drawback of retroactively imposing on the Re-
spondent terms and , conditions of employment' that
had been set by the contract negotiated by its pred-
ecessor, but it has the advantage of giving some
recompense to the victims of the discrimination
and preventing the Respondent from enjoying a fi-
nancial position that is quite possibly more advanta-
geous , than the one it would occupy had it behaved
lawfully . A remedy that allowed to stand the re-
duced terms and conditions of employment that the
Respondent imposed unilaterally would give, full
effect to the right of a Burns successor to set its
own terms , but this would quite possibly leave vic-
tims uncompensated and it would confer Burns
rights on an employer that has not conducted itself
like a lawful Burns successor because it has unlaw-
fully blocked, the process by which the, obligations
and rights of such a successor are incurred. A
remedy such as the court suggested in Love 's Bar-
beque, as we have explained above , is virtually im-
possible to calculate, and to the extent that it in-
volves imposing contractual terms based ' on' this
Agency's conjecture without an adequate factual
basis, it seems hardly preferable to impo sing on the
Respondent the terms under which the Allstate em-
ployees had worked just before the Respondent
took over the enterprise.
Finally, it must be noted that the Board faces
this set of less-than-perfect remedial choices be-
cause of the uncertainties created by the Respond-
ent's misconduct . The Board makes such choices
pursuant to the congressional delegation of "power
to determine when the policies of the Act would
be effectuated by a particular remedy," and it
makes those choices subject only to a test of rea-
1050 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
sonableness. Shepard v. NLRB, 459 U.S. 348 (1983).
Accord: Fibreboard Paper Products v. NLRB, 379
U.S. 203,, 215-216 (1964). For all the reasons set
forth above, we believe that the Love's Barbeque
remedy meets that test.4
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge as modified and set forth in full below and
orders that the Respondent, State Distributing Co.,
Inc., Tacoma, Washington, its officers, agents, suc-
cessors, and assigns, shall
1. Cease and desist from
(a) Refusing to recognize and bargain collective-
ly with Teamsters, Chauffeurs, Warehousemen and
Helpers Union, Local 313, affiliated with the Inter-
national Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America, as the rep-
resentative of the Respondent's employees in 'the
appropriate unit of regular drivers, driver-salesmen,
warehousemen, helpers, bull-lift drivers, semi-driv-
ers, and extra men (excluding all other employees,
guards, and supervisors as defined in the Act) with
respect, to rates of pay, wages, hours of employ-
ment, and other terms and conditions of employ-
ment. '
(b) Changing any term or condition of employ-
ment ' of its employees in the above unit, including
wages and pension and health and welfare cover-
ages, without first giving the Union a chance to
bargain over such change.
(c) Withholding offers from, failing to hire, or
otherwise discriminating against employees to
avoid having to recognize and bargain with the
Union or any other labor organization.
(d) Telling union-represented employees of a
predecessor employer that it has been advised not
to hire or to restrict its hiring of them.
(e) In any like or related manner interfering
with, restraining, or coercing employees in the ex-
ercise of the rights guaranteed them by Section 7
of the' Act.
2. Take the following affirmative action neces-
sary to effectuate the policies of the Act.
(a) Recognize and, on 'request, bargain collec-
tively ' with the Union as the exclusive representa-
tive of the Respondent's employees in the above
unit, with respect to ,rates of pay, wages, hours of
employment, and other terms and conditions of em-
4 As explained above, the circumstances in this case are somewhat dif-
ferent from those in Love's Barbeque, in which the Ninth Circuit declined
to accept the remedy, in full. We also note that a similar order in a case
subsequent to Love's Barbeque was enforced in full by the court, although
it appears that the remedial issue was not argued in the case Stone Boat
Yard, 264 NLRB 981, 983 (1983), enfd. 715 F.2d 441 (9th Cir 1983)
ployment; and, if an understanding is reached,
embody it in a signed document.
(b) On request of the Union, cancel any depar-
tures from terms and conditions of employment
that existed immediately before its takeover of All-
state Distributing Co.'s wine division, retroactively
restoring preexisting terms and conditions of em-
ployment, including wage rates and benefit plans,
and make the employees whole by remitting all
wages and benefits that would have been paid
absent such departures from 1 February 1982 until
it negotiates in good faith with the Union to agree-
ment or to impasse. The remission of wages shall
be computed as in Ogle Protection Service, 182
NLRB 682 (1970), enfd. 444 F.2d 502 (6th Cir.
1971), plus interest as prescribed in Florida Steel
Corp., `231 NLRB 651 (1977). The Respondent shall
remit all payments it owes to the employee benefit
funds and reimburse its employees in the manner
set forth in Kraft Plumbing & Heating, -252 NLRB
891 fn. 2 (1980), enfd. 661 F.2d 940 (9th Cir. 1981),
for any expenses resulting from the Respondent's
failure to make these payments. Any amounts that
the Respondent must pay into the benefit funds
shall be determined in the manner set forth in
Merryweather Optical Co., 240 NLRB 1213 (1979).
(c) Offer to the nine bargaining unit employees
laid off by Allstate Distributing Co. that it failed-to
hire as of 1 February 1982 immediate and full em-
ployment in the positions denied them or, if such
positions no longer exist, in substantially equivalent
positions, without prejudice to seniority or other
rights and privileges previously enjoyed, discharg-
ing if necessary employees hired from sources
other, than Allstate Distributing Co. to make room
for them, and make them whole for any losses, of
earnings they may have suffered by reason of the
discrimination against them. Backpay, shall be com-
puted as in F. W.. -Woolworth Co., 90 NLRB 289
(1950), plus interest as prescribed in Florida Steel
Corp., 231 NLRB 651 (1977). The nine employees
are Richard Arneberg, James Balcom, Richard
Harris, William Johnson, David Manning, Lyle
Mattson, Alfred Parsons, Robert Taft, and Richard
Vlahovich.
(d),-Preserve and, on request, make available to
the Board or its agents for examination and copy-
ing, all payroll records, social security payment
records, timecards, personnel records and reports,
and all other records necessary to analyze the
amount of backpay due under the terms of this
Order.
STATE DISTRIBUTING CO. 1051
(e) Post at its facility in Tacoma , Washington,
copies of the attached notice marked "Appendix."'
Copies of the notice, on forms provided by the Re-
gional Director for Region 19, after being signed
by the Respondent 's authorized representative,
shall be posted by the Respondent immediately
upon receipt and maintained for 60 consecutive
days in conspicuous places including all places
where notices to employees are customarily posted.
Reasonable steps shall be taken by the Respondent
to ensure that the notices are not altered , defaced,
or covered by any other material.
(f) Notify the Regional Director in writing
within 20 days from the date of this Order what
steps the Respondent has taken to comply.
S If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading "Posted by Order of the Nation-
al Labor Relations Board" shall read "Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board"
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.
WE WILL NOT refuse to recognize and bargain
collectively with Teamsters , Chauffeurs, Warehou-
semen and Helpers Union , Local 313, affiliated
with the International Brotherhood of Teamsters,
Chauffeurs , Warehousemen and Helpers of Amer-
ica, as the representative of our employees in the
appropriate unit of regular drivers , driver-salesmen,
warehousemen , helpers, bull-lift ' drivers , semi-driv-
ers, and extra men (excluding all other employees,
guards and supervisors as defined in the Act) with
respect to rates of pay, Wages, hours of employ-
ment, and other terms and conditions of employ-
ment.
WE WILL NOT change any term or condition of
employment of our employees in the aforemen-
tioned unit, including wages and pension and
health-and-welfare coverages , without first giving
the Union a chance to bargain over such change.
WE WILL NOT withhold offers from, fail to hire,
or otherwise discriminate against , employees to
avoid having to recognize and bargain with the
Union or any other labor organization.
WE WILL NOT tell union -represented employees
of a predecessor employer that we have been ad-
vised not to hire or to restrict our hiring of them.
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 recognize and, on request , bargain col-
lectively with the Union, as the exclusive repre-
sentative of our employees in the above unit, with
respect to rates of pay, wages , hours of employ-
ment, and other terms and conditions of employ-
ment; , and , if an understanding is reached , embody
it in a signed document.
WE WILL, on request of the Union , cancel any
departures from terms and conditions of employ-
ment that existed immediately before our takeover
of Allstate Distributing Co.'s wine division , retro-
actively restoring preexisting terms and conditions
of employment , including wage rates and benefit
plans.
WE WILL make the employees in the above, unit
whole by remitting all wages and benefits that
would have been paid absent such departures from
1 February 1982 until we negotiate in good faith
with the Union to agreement or to impasse, with
interest . WE WILL remit any payments we owe to
benefit funds and reimburse our employees for any
expenses resulting from our failure to make the re-
quired payments.
WE WILL offer to the nine bargaining unit em-
ployees laid off by Allstate Distributing Co. that
we failed to hire as of 1 February 1982 , immediate
and full employment in the positions denied them
or, if such positions no longer exist , in substantially
equivalent positions , without prejudice to seniority
or other rights and privileges previously enjoyed,
discharging if necessary employees hired from
sources other than: Allstate Distributing, Co.; and
WE WILL make them whole with interest .' fo r any
loss of earnings they may have suffered because of
the discrimination against them . The nine employ-
ees are: Richard Arneberg , James Balcorn , Richard
Harris, William Johnson , David Manning, Lyle
Mattson , Alfred Parsons , Robert ' Taft , and Richard
Vlahovich.
STATE DISTRIBUTING CO., INC.
S. Renei Cottrell and Sheila , M. Burnstin, Esqs., for the
General Counsel.
Kathleen A. Anamosa, Esq. (Davis, Wright, Todd, Riese &
Jones), of Seattle, Washington, for the Respondent.
Kenneth S. Kessler, Esq., of Tacoma, Washington , for the
Charging Party.
1052 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
DECISION
STATEMENT OF THE CASE
RICHARD J. BOYCE, Administrative Law Judge. This
matter was tried in Tacoma, Washington, November 2
and 3, 1982. The charge was filed March 1, 1982, by
Teamsters, Chauffeurs, Warehousemen and Helpers
Union, Local 313, affiliated with the International Broth-
erhood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America (the Union). A complaint issued
April 16, alleging that Allstate Distributing Co., Inc.
(Allstate) and State Distributing Co., Inc. (Respondent),
as alter egos, committed certain violations of Section
8(a)(5), (3), and (1) of the National Labor Relations Act
(the Act); and, alternatively, that Respondent, as'a suc-
cessor to Allstate, committed certain such violations.
By order dated September 30, the Regional Director
approved the Union's request, that the charge be with-
drawn as concerns Allstate, noting that the two had "ad-
justed certain matters raised by the charge."
The present amended complaint accordingly issued
October 5, alleging that Respondent, as Allstate's alter
ego:
(a) Has been in violation of Section 8(a)(5) and (1)
since its purported acquisition of Allstate's wine division
February 1, 1982, by failing to apply Allstate's collec-
tive-bargaining agreement to drivers, driver-salesmen,
warehousemen, etc., nominally employed by Respondent.
(b) Violated Section 8(a)(5), (3), and (1) by the dis-
charge, effective February 1, of 11 named bargaining
unit employees nominally employed by Allstate, the pur-
pose being to' escape the coverage of Allstate's bargain-
ing agreement and any obligation to bargain with the
Union.
The amended complaint also alleges that Respondent,
whether or not Allstate's alter ego, has been in violation
of Section 8(a)(5), (3), and (1) since February 1 by failing
to hire all but 2 of the 11 improperly discharged employ-
ees, instead hiring from other sources, the purpose again
being to escape the coverage of Allstate's bargaining
agreement and any obligation to bargain with the Union;
and that Respondent, as Allstate's successor if not its
alter ego, has been in violation of Section 8(a)(5) and (1)
since that date by refusing the Union's requests for rec-
ognition.
The amended complaint alleges, finally, that Respond-
ent violated Section 8(a)(1) on January 19 and 28, 1982,
when its vice president and general manager, Dean Ham-
ilton, "told employees that, on advice of counsel, only
two of the terminated employees of Allstate would be re-
hired by Respondent, and [that] no wine salesmen would
be rehired."
I. JURISDICTION
Respondent is a Washington corporation engaged in
the nonretail distribution of wine in and around Tacoma.
It is undisputed, based on projected purchases of goods,
supplies, and materials from outside the State of Wash-
ington, directly and indirectly , that it is an employer en-
gaged in and affecting commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
II. LABOR ORGANIZATION
The Union is a labor organization within the meaning
of Section 2(5) of the Act.
III. THE ALLEGED MISCONDUCT
A. Evidence
Overview. In February 1980, recently having been cre-
ated for the purpose, Allstate acquired a wholesale beer
and wine distributorship serving Tacoma and environs.
So doing, it assumed an existing collective-bargaining,
agreement between the Union and Allied Employers,
Inc. (Allied), a multiemployer association to which the
previous distributor had belonged. The agreement con-
tained a more or less conventional union-security provi-
sion and bore an expiration date of May 1, 1982. The
principal classifications covered by it were drivers,
driver-salesmen, and warehousemen."
Effective February 1, 1982, pursuant to a buy-sell
agreement entered into December 8, 1981, and amended
January 30, Respondent acquired the wine portion of the
distributorship.2 Coincident with that development, All-
state laid off its 11 least senior bargaining unit employ-
ees, of whom only 2 were carried over by Respondent.
The 11 were Richard Arneberg, James Balcom, William
Boman, Richard Harris, William Johnson, David Man-
ning, Lyle Mattson, Alfred Parsons, Charles Spoelstra,
Robert Taft, and Richard Vlahovich. The two carried
over were Boman and Spoelstra. In addition to them,
Respondent began business with nine hired from other
sources to do what had been unit tasks.3
Respondent departed at the beginning from certain of
the terms and conditions of employment observed by
Allstate, as dictated by the bargaining agreement,4 and at
all times has denied both the applicability of that agree-
merit to its employees and the Union's status as their bar-
gaining representative.
The makeup of Respondent and Allstate. Respondent
was incorporated in October 1981 in anticipation of the
transaction in question. Its shareholders are James Sasse
and his wife (90 percent) and Dean Hamilton (10 per-
cent). They also are its officers and directors. Paul Wall-
strom, an attorney practicing in Seattle, was an officer
and a director, as well as corporate counsel, until April
1 The unit description, as stipulated by the parties, was "All regular
drivers, driver-salesmen, warehousemen, helpers, bull-lift drivers, semi-
drivers, and extra men employed by the employer-members of Allied
Employers, Inc., but excluding all other employees, guards, and supervi-
sors as defined in the Act." It is concluded that this is an appropriate unit
for the purposes of the Act. It also is concluded that a unit comprised of
the same inclusions and exclusions, confined to Respondent, is appropri-
ate.
2 The designated purchasers under the buy-sell agreement were James
Sasse and his wife, the Sasses being conduits fqr Respondent's acquisition
of the wine division
8 One,of whom a warehouseman named William Holland may have
been a statutory supervisor. He had once worked for Allstate Another,
Jay Peterson, had occupied a nonumt position with Allstate to the time
of'his hire by Respondent.
4 E.g., by reducing wages, forgoing a pension plan, and instituting a
different health and welfare plan, funded in part by employee contribu-
tions
STATE DISTRIBUTING CO. 1053
1982.5 He did the legal work incidental-to incorporation.
Sasse, as president, and Hamilton, as vice president and
general manager, were and are in charge of the day-to-
day management of the enterprise. Hamilton had been
Allstate's wine sales manager, as such managing its wine
division, from the firm's inception until takeover of the
division by Respondent. Respondent's other personnel, at
the February 1 outset, aside from the 11 doing'-what had
been unit work, were Dianna Madison, office manager,
who had been a bookkeeper with Allstate; Ronald James,
sales manager, who had been in a nonunit capacity with
Allstate; and Sasse's wife, Lynne.
Allstate's shareholders and directors from its beginning
until February 1, 1982, were Sasse, (25 percent), Dennis
Wise (50 percent), and John Sparr (10 percent, increasing
in 5-percent annual, increments to 25 percent). They, plus
Wallstrom, who as its corporate counsel had done the
legal work in connection with Allstate's incorporation,
were its officers. Sasse surrendered his stock and ceased
being an officer and a director as of February 1. Sparr,
as president and general manager, was and is responsible
for day-to-day management. Sasse, residing and working
for a bank in San Diego, California, until shortly before
Respondent became operational,, had little if any part in
Allstate's day-to-day affairs. Nor did, Wise, also living in
San Diego.
Until February 1, 1982, Allstate was located at 480
East 19th Street, Tacoma. Effective February 1, it and
Respondent ; moved into separate facilities, about a block
apart, in the Lakewood-Tacoma Industrial Park. Since
that time, they have shared neither equipment nor space,
nor has there been any interchange of personnel or com-
munity of management; indeed, the only overlapping ele-
ment, apparently, was Wallstrom, and the weight of evi-
dence indicates that he was without policy-making au-
thority with either.
Respondent inherited all of Allstate's wine suppliers,"
and also retained a large number of Allstate's wine. cus-
tomers. a As earlier mentioned, Respondent departed
from certain of Allstate's practices, dictated by the bar-
gaining agreement, by lowering ,wages,. forgoing a pen-
sion plan, and instituting a different health and welfare
plan for those doing what had been unit work. Respond-
ent made other changes, as well-conducting weekly
sales meetings, whereas Allstate had such meetings on an
irregular basis; permanently assigning drivers to given
accounts, rather than shuffling them among accounts as
Allstate had done; separating sales and driving functions;
instituting driver trip logs to monitor' driver efficiency;
creating the position of wine merchandiser, whose occu-
pant fashions displays at customer premises; and concen-
trating the sales manager's activities on sales work, as
5 Wallstrom, also an officer in Allstate and its corporate counsel, sev-
ered all connection with Respondent in April 1982 when the onset of liti-
gation between Respondent and Allstate created a conflict of interest.
8 To which Respondent added a number of new suppliers starting in
July 1982.
' In evidence is a customer list-beer and wine-supplied by Allstate
to Respondent as an incident of the transaction. It lists 1018 "licensed ac-
counts," of which about one-half became customers of Respondent Of
the noncustomers, an unspecified but apparently substantial number either
dealt only in beer or no longer were in business.
compared with Hamilton's having had a broader range
of responsibilities while wine sales manager 'for Allstate.
The buy-sell agreement summarized. The buy-sell agree-
ment provided that Allstate convey all tangible and in-
tangible assets of its wine division, including sales and
route records and account lists, all rights under agree-
ments with 4 named wineries/wine suppliers, wine inven-
tory, and 13 specified vehicles of sundry type. On clos-
ing, Sasse in return was to surrender his shares in All-
state together with , a $200,000 promissory note held by
him against Allstate, and was to pay 50 percent of the
value of the wine inventory 'and 75 percent of the value
of the vehicles, the balance to be paid 10 months later.
The agreement also contained several "conditions to
closing," among them that Respondent obtain "evi-
dence" from at least three of the four named wineries/-
wine suppliers of a "present intention to continue with
[it] the prior relationship ... with Seller"; that Re-
spondent receive "the 'necessary approval from the
Washington Alcoholic Beverage Control Board and the
Federal Bureau of Alcohol, Tobacco & Firearms"; that
Respondent obtain a line of bank credit "in an amount
satisfactory, for reasonable operation of the wine divi-
sion"; that Respondent enter "into a ,written agreement
with Dean Hamilton, the current wine division manager
for Seller, for the operation of the wine division after
sale."s and that Wallstrom, as "Seller's legal counsel,"
present an "opinion" to Respondent "as to the legal im-
plications . . . of the sale of Seller's wine division ... in
connection with Seller's present union contracts."5'
The agreement further contained mutual covenants not
to compete for 5 years, and this representation by All-
state: -
Except for the collective bargaining agreement with
Teamsters Local Union No. 313, there are no other
contracts or commitments relating to Seller's busi-
ness . . . which will extend ' or have any effect
beyond the closing,date . . . . With reference to
the aforesaid bargaining agreement . . . Seller
makes no representations of any kind as to the
effect of said agreement upon Buyer . .. .
Finally, the buy-sell agreement contained a declaration
that, despite Sasse's interest in Allstate as a director,
shareholder, and officer; "this transaction has been nego-
tiated and consummated on an arm's length basis .. .
and the parties . . . should be deemed independent of
each for purposes of this sale transaction."
Preliminaries to the transaction. Sparr testified that the
idea of Allstate's doing something about its wine division
originated with him, based on straitened economic cir-
cumstances. Those circumstances had come about, he
averred, because interest rates were "at an all-time high,"
8 Sparr testified that "it was felt by both parties that Dean's [Hamil-
ton's] experience in being the wine sales manager was important for the
continuity of running and training of a wine division, running the day-to-
day wine sale."
9 In addition to the bargaining agreement covering drivers, driver-
salesmen, warehousemen, etc, Allstate was subject to an agreement be-
tween Allied and the Union covering office employees That agreement
is of no moment in this proceeding.
1054 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
beyond which Allstate had been hit with "one large
labor [wage]. increase" under the bargaining agreement
shortly after acquiring the business, and was "facing an-
other huge one." Distribution of wine being less profita-
ble than that of beer, Sparr continued, the wine division
became the target of his concern.
Sparr testified that he first went to the Union, trying
"several times" without success to prevail on it "to give
us [wage] relief," 10 after which he and Sasse had discus-
sions in March 1981 about "running" the beer and wine
divisions separately, each having its own warehouse,
with Sasse leaving his position in San Diego to manage
the latter. That notion was rejected, according to Sasse,
because:
by splitting into different warehouses, we weren't
really saving any money, plus, if I came up and
took over the wine division and ran it . . . I would
have had to have been paid a salary.
So it was, according to Sparr and Sasse, that after nu-
merous discussions involving themselves and Wise, the
decision was reached in April that Allstate should dis-
pose of its wine division. Negotiations presently began
between Sasse on the one hand and Allstate on the other
leading to the transaction in question. Sasse was repre-
sented at the outset by Philip Altfest, a San Diego attor-
ney, while Wallstrom represented Allstate. In September,
negotiations having bogged down after an exchange of
formal proposals, Sasse dismissed Altfest and agreed to
Allstate's terms: From then on, Sparr related, Wallstrom
"handled the Sale for both parties." That included the
drafting of the original buy-sell agreement, finally exe-
cuted December 8, and its later amendment . And, as ear-
lier mentioned, Wallstrom handled Respondent's October
incorporation in anticipation of the transaction. I'
The implications of Allstate's -relationship with the
Union plainly were of prime concern to buyer and seller
as the transaction was being put together. Thus:
(a) Sasse testified that in April and May and "through-
out the whole proceedings" leading to the buy-sell agree-
ment, Sparr had assured him that Respondent would not
be bound by Allstate's bargaining agreement. Sasse
added that there was "no way" Respondent could have
10 Span elaborated that he "ran into" an official of the Union, Jim
Reynolds, in a Tacoma restaurant in February 1981; that, during the
course of "at least four or five hours" there, he appealed to Reynolds
that Allstate was "severely hurting, losing a lot of money," and needed
"some relief on wages", and that Reynolds said "there was just nothing
he could do " Span did not particularize concerning other of the "sever-
al times" he allegedly sought relief from the Union
ii Sasse testified that he removed Altfest because the deal had been
"on-again and off-again a number of times," and it seemed that the at-
torneys , on either side did not seem to comprehend the transaction " In
agreement with Sparr, he testified that Wallstrom handled the transaction
for both after Altfest's dismissal-"I asked him . if it presented a con-
flict for him to handle the affairs of myself so that it could get resolved,
and he indicated . . it was no conflict and he'd be happy to." Wall-
strom testified, on the other hand, that he told Sasse he "could not repre-
sent him in the sale transaction itself, but would be happy to form the
corporation and, after the sale transaction, represent him as corporate
counsel ." Sasse testified that he asked Wallstrom to represent him
because Span "seemed to have a lot of confidence in" Wallstrom, and so,
Sasse knowing no lawyers in the Seattle-Tacoma area , "it seemed logi-
cal."
afforded the agreement,, and that the deal would not
have gone through had Respondent been bound by it.
(b) Similarly, Sparr testified that there was "no way"
Respondent "could afford that particular contract that
we [Allstate] were under"; and that, explaining to Sasse
that Respondent would have the same choice that All-
state had had "of going union or nonunion," he "urged"
Sasse "that hiring new employees would be the best way
to go." Sasse agreed with him, Sparr recounted, that
`"'the only way" he would "have a chance of making it"
would be to "set up a new company and hire new em-
ployees at a lower wage scale."
(c) Wallstrom testified that, during a conversation with
Sasse's then-attorney, Altfest, in June 1981, Altfest "indi-
cated . . . very clearly . . . that the only way that this
new company could operate on a profitable basis would
be if [it] were not bound to pay the wage rates . . . in
Allstate's present union contracts."
(d) Wallstrom, in a letter to Sparr, copy to Altfest,
dated July 6, 1981, 'addressed a question raised by Altfest
whether Allstate's formation of "a subsidiary corpora-
tion" to be run by Sasse, as Wallstrom had proposed by
previous letter, would "adversely affect . . . Sasse's new
company's plan to go nonunion." Wallstrom concluded,
as revealed by the letter, that such a "split-off plan"
indeed would carry that adverse effect, consequently
recommending that the initial proposal be revised in
favor of Sasse's forming "his own corporation."
(e) Elsewhere in the letter just mentioned, Wallstrom
discussed the implications of the so-called successorship
clause in Allstate's bargaining agreement, given that "the
new corporation (the successor company) does not want
to be unionized."12 He wrote:
The courts will impose a duty to bargain if the
same work is being performed by the same employ-
ees. If the employees of the predecessor company
became a majority of employees of the successor
company, then there will clearly be a duty to bar-
gain . Thus, it is absolutely critical that as few truck
drivers from Allstate be hired by the new company
as possible. It would be desirable not to employ any
of the predecessor's truck drivers. However, great
care must be taken in hiring. An employee cannot
refuse to hire a person because he, or she is a
member of a union . . . . The new workforce must
be hired without any semblance of discrimination
against truck drivers of Allstate.
(f) Later in the same letter, Wallstrom wrote:
i
To avoid the duty to bargain . . . it is imperative
that the workforce, supervisory personnel and
working conditions be changed to the maximum
extent possible. Further, the transaction should be
structured to make as many changes in the business
as possible.
iz The bargaining agreement provided : "In the event an operation
covered by this Agreement is sold such operation shall continue to
be subject to the terms and conditions of this Agreement "
STATE DISTRIBUTING CO. 1055
(g) Finally, still in the same letter', Wallstrom stated:
Allstate will, of course, desire to avoid any charges
by the union for breach of contract arising by
reason of its sale of assets. Al Baird of Allied Em-
ployers has suggested that the union be advised of
the sale (not in detail), and that the union be given
an opportunity to raise any questions which it might
have as to rights of employees of Allstate who will
be terminated, as well as other questions. The
timing of this discussion with the union should be
set with great care. The union will obviously want
the new corporation to hire employees of Allstate
who will be discharged. In order to avoid this
demand, and the problems which this could raise, it
would be desirable for the new corporation to hire
most of its truck drivers before discussions with the
union commence.
(h) Altfest, by proposal letter to Sparr dated August 6,
1981, stated that Sasse's agreement to acquire the wine
division would be subject to several contingencies,
among them this:
An unqualified, opinion from Paul Wallstrom's firm,
to the effect that the new wine division may legally
separate its ties from the present union contract.
(i) As earlier noted, one of the "conditions to closing"
in the buy-sell agreement was that Wallstrom provide
Respondent with an "opinion" concerning "the legal im-
plications" to Respondent "in connection with Seller's
present union contracts."
(j) In fulfillment of the condition just stated, Wallstrom
sent a four-page letter to Sasse, dated January 14, 1982,
which contained this final paragraph:
In conclusion . . . I can say with a fair degree of
certainty that if a majority of the employees of
State are not prior employees of Allstate, State will
not be bound by Allstate's present union contracts,
State will not be obligated to recognize those
unions, and State will riot be obligated to arbitrate
the question of to what extent the prior contracts
may be binding upon State. . . . If State hires a ma-
jority of Allstate's employees covered by either
contract, State may be forced to recognize that
union and to arbitrate the extent to which that con-
tract is binding upon State.
Preparations for the transfer. Agreement in principle
having been reached between Sasse and Allstate, Sasse
joined Sparr at the Washington State Beer and Wine
Convention in Reno, Nevada, in mid-September 1981.
During the convention, Sparr introduced Sasse to Bob
Stevens, the general manager of one of Allstate's main
wine suppliers, told Stevens about the impending trans-
fer, and asked his help in "moving the approval proc-
ess." 13 This was in reference to the standard requirement
13 Sparr testified that, during this encounter, Stevens asked if the new
company was "going to go union," and he replied that "it was going to
be a nonunion, a new company " Sasse testified that he remarked, in the
in the industry, incorporated in the buy-sell agreement,
that the sale of a distributorship have substantial supplier
approval.
Following the convention, still in September, Sasse
went with Sparr to Tacoma, whereupon they met with
Wallstrom and some accountants and, in Sasse's words,
described "exactly how the sale was to be done." They
also met with the manager of the Lakewood-Tacoma In-
dustrial, Park, arranging for "separate warehousing." In
October, as earlier stated, Respondent was incorporated
in anticipation of the transaction, with Wallstrom doing
the legal work.14
In October, as well:
(a) Wallstrom came up with the first draft of the buy-
sell agreement. 1 s
(b) Sparr accompanied Sasse to the Federal building in
Seattle and to confer with Wallstrom about Respondent's
obtaining licensing from the Federal Bureau of Alcohol,
Tobacco' & Firearms,16 after which Hamilton caused
"personal financial statements and work experience
forms" to be submitted to- that bureau and to 'the Wash-
ington Alcoholic Beverage Control Board on behalf of
Respondent.
(c) Span assisted Hamilton in setting up a budget for
Respondent, in which they projected wage and fringe
benefit outlays;17 and in preparing pro forrnas, so called,
to describe the transfer to, Allstate's suppliers and solicit
their approval.18
On December 8, as previously mentioned, the buy-sell
agreement was executed. About the same time, the pro
formas were circulated among the suppliers. With them
was a To-Whom-It-May-Concern cover letter- signed by
Hamilton, identified as wine sales manager, Allstate Dis-
tributing: This letter, after stating that Allstate "is dispos-
ing of [its] wine division" and that Sasse "will be trading
his equity in the , current Allstate distributorship for the
wine division," proclaimed:
The ownership and management will remain intact,
i.e., Mr. James Sasse is a current owner at Allstate.
I have been sales manager of the wine division for
over seven years.19
same conversation, that there was "no way we could akfford the current
[union] contract."
14 The original corporate name as Sasse Distributing Company. The
present name was adopted by action of the directors taken December 8,
1981. Wallstrom testified that this was done "because'they thought that
the [new] name had some familiarity in the area," Allstate's predecessor
having been known as State Distributing
is Sasse testified that the first draft "seemed fine with the exception of
two items," and was readily revised to his satisfaction. The delay in sign-
ing, he testified, was because of adeath in his family.
is Sasse testified that Sparr went along because Sasso: "was totally un-
familiar with any place or anybody," and Sparr "was interested in help-
ing . . because everything affected everything
17 Sparr testified that Hamilton had asked for his help in going over
Allstate's profit and loss books "to get some ideas of payroll taxes, what
general costs would be in setting up, a projection [of] what real costs
might be."
is The pro forrnas included projections of Respondent's volume,
profit, and loss, and manpower needs, along with job descriptions for
those to be performing its several tasks, and a description of its ware-
house facility.
19 The 7 years included Hamilton's service with Allstate's predecessor.
1056 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Asked the reason for saying ownership and management
would remain intact, Hamilton testified:
The wineries . . . get very nervous when there are
sales, and the more continuity, the more experience,
and the more knowledge, experience that you have
with wine, the more comfortable they feel?
The layoffs and related notices to and discussions with the
Union. The Union first learned about the pending trans-
action, at least officially, by letter from Allied dated Jan-
uary 6, 1982. The letter stated that Allstate was "corn-
templating the sale of its wine operation on approximate-
ly February 1," adding:
[A]ssuming that you are interested in discussing the
matter, we suggest a meeting to be held as soon as
possible in Tacoma subject to your availability.
A meeting followed at Allstate's facility January 15.
Present were two union representatives, John Coucett
and Ron Schilling; an Allied official, Al Baird; and
Sparr. It was agreed that layoffs occasioned by the trans-
action should be from "one integrated, dovetailed senior-
ity list" embracing both the beer and wine divisions.
Otherwise, there was little accord. To Doucett's asking
about severance pay under the bargaining agreement for
those losing their jobs, Sparr responded that that "would
'be silly"; that the employees "weren't [being] severed,
they were only [being] laid off." And, to Doucett's nti-
merous questions concerning the nature of the relation-
ship between Allstate and Respondent, and to his insist-
ence that the Union would be entitled under the succes-
sorship clause to represent the employees succeeding to
the tasks then being done by Allstate's unit employees,
Baird and Sparr generally refrained from substantive re-
sponse, instead suggesting that the Union meet with Re-
spondent's attorney, Wallstrom.
At one point, however, Sparr did give a direct answer.
Asked by Doucett what percentage of the laid-off All-
state employees were to be hired by Respondent, he an-
swered 40 percent. Doucett rejoined: "Not 51 percent,
right?" Sparr replied: "Yes."20
Also, on January 15, Sparr posted a notice near the
timeclock at Allstate's facility, and sent a copy to the
Union stating:
To All Concerned:
As a matter of information, we are selling our wine
division effective 2-1-82.
The purchaser has advised us that they will
accept applications from any employee who is inter-
ested in pursuing a position with the new company.
If interested, you may apply in person by con-
tacting Jim Sasse at 584-2318 for an appointment.
If you have any questions, please see me person-
ally.
20 Doucett, a forthright and convincing witness, is credited that the
exchange was as set forth. Sparr did not deny the words attributed to
him, testifying only that he could not recall. Doucett elaborated that
Baird, "a little upset" over Sparr's revelation, instructed him that all
questions were to go through Baird. Neither Baird nor Schilling testified
The notice was followed by letter dated January 18
from Allstate to each of those to be laid off. The letters,
most of which were hand-delivered by Sparr during
face-to-face meetings with the affected employees, some
of which were mailed, stated:
Due to economic conditions, we have been
forced into negotiations to sell our wine division. It
now appears that sale will be effective 2-1-82.
the loss of the wine division will result in the re-
duction of 11 positions. As a result of this reduc-
tion, you will go on an indefinite layoff as of 2-1-
82.
A copy of each letter was sent to the Union.
On January 22, Doucett and Schilling, and perhaps the
Union's attorney, Kenneth Kessler, met with Wallstrom
and Sparr in Wallstrom's Seattle office. Doucett demand-
ed that Respondent retain those to be laid off; and, ten-
dering a copy of Allstate's labor agreement, that Re-
spondent' be a party to it. Wallstrom replied that Re-
spondent "couldn't afford the union rates" and "wasn't
going to be a union shop." Doucett countered that the
Union was prepared to impose pressures in that event
that would prevent Respondent from doing business,
then temporized that the Union did not want to "kill the
goose that lays the golden egg" and would consider ne-
gotiating a lesser wage rate if relief were needed. During
the meeting, as well, Doucett asked an assortment of
questions about the relationship between Respondent and
Allstate, eliciting, as he recalled, only "very, very
vague" answers from Wallstrom. The meeting closed
with Wallstrom saying he would convey its substance to
Respondent and report back to the Union.
A second meeting was held in Wallstrom's office Janu-
ary 28. Present, in addition to Doucett, Schilling,
Kessler, and Wallstrom, were Sasse and Dean Hamilton
for Respondent. The meeting followed much the same
pattern as that of January 22. Doucett again demanded
the carryover of those to be laid off and that Respondent
submit to the labor agreement, raised the prospect of
picketing and other sanctions should Respondent flout
the Union, voiced a willingness to be "somewhat flexi-
ble" concerning wage rates if Respondent could show by
means of Allstate's books why it would 'be unable to pay
pursuant to the agreement, and asked if Respondent's ac-
quisition of the wine operation was "a legitimate sale or
a paper sham."
Wallstrom and/or Sasse replied variously that, hiring
commitments already had been made and nothing could
be done about that, Respondent having hired the best
people available; that the wage rates under the labor
agreement were too high, but that, if the Union would
submit "a specific proposal" of a lesser scale, Respondent
would see.if it "could live with" it; that Sasse, no longer
being connected with Allstate, did not have access to its
books as a means of showing Respondent's inability to
pay contract scale; and that the transaction indeed was
"legitimate."
The meeting closed with Doucett offering to meet
"any time day or night" should Respondent change its
mind over the coming weekend and decide to deal with
STATE DISTRIBUTING CO. 1057
the Union. That never materialized, nor did the Union
later submit any substantive proposal to Respondent.
Hiring by Respondent. Respondent's "final hiring deci-
sions" were made by Sasse "in consultation with" Hamil-
ton. The decisions, were made January 24, according to
Sasse, with offers being "extended" to January 25. As
earlier mentioned, only two of those hired-Boman and
Spoelstra-were among the bargaining unit employees to
be laid off by Allstate. Five of those hired for what had
been unit work had responded to a blind advertisement
in the October 18, 1981 Tacoma News Tribute- inviting
applications for a wine salesman position. The advertise-
ment, which drew 107 responses, was placed by Hamil-
ton and paid for by Allstate.2 t
Hamilton testified that he did the preliminary "screen-
ing" of applicants between January 5 and 15. This was
done by interviews, after hours, in Allstate's offices.22 A
second round of interviews, involving about 20 appli-
cants, was conducted by Hamilton and Sasse, in Sasse's
newly acquired Tacoma-area home, from January 20 to
23.
Sasse testified that he "was looking for the best possi-
ble people [he] could find," and that he made his'hiring
decisions "through the interviews, the personal inter-
views, and also looking over applications and resumes."
He expressly denied that Wallstrom's January 14 letter,
previously mentioned, "in any way affect[ed] [his] hiring
decisions."23 Indeed, Sasse averred that, although mind-
ful that he "could not have afforded the contract that
Allstate was under," he "didn't have any thoughts
about" having a nonunion as opposed to a union oper-
ation. Asked why Respondent hired only two of those to
be laid off by Allstate, Sasse testified: "I didn't have any
applications."
Hamilton testified that he stated during "many inter-
views" that those "submitting applications from Allstate
would be given prior consideration due to their experi-
ence";24 and, largely, echoing Sasse, that two laid off by
Allstate-Richard Arneberg and Alfred Parsons-were
not hired because they failed to submit applications
"until after the hiring process had been completed," i.e.,
after January 25; and that another six laid off-James
Balcom, Richard Harris, William Johnson, David Man-
21 Hamilton testified that he placed the advertisement with Sparr's ad-
vance approval ; that it was placed in anticipation of the firing of one of
Allstate's driver-salesmen, Richard Arneberg; and that, when it was de-
cided not to take that action, the responses were filed away for future
reference Sparr testified, on the other hand, that, while he and Hamilton
had discussed Arneberg's firing about that time,' instead issuing a warning
letter dated October 15, he did not know about the advertisement until
Hamilton showed him "a stack of applications that he had received "
Sparr further testified that those applications were "for the new compa-
ny,"
22 Hamilton testified that Sparr had consented to the use of Allstate's
facilities inasmuch as Respondent as yet had none of its own. Sparr testi-
fied: "I didn't like it, but there wasn't much I could do "
23 The letter, it will be recalled, included this passage: "If State hires a
majority of Allstate's [union-represented] employees . . State may be
forced to recognize that union and to arbitrate the extent to which [its]
contract is binding upon State."
24 Hamilton specifically recounted making such a remark to Duane
Unkrur. Unkrur, hired as a sales representative, testified that Hamilton
told' him the Allstate employees "had first crack at the jobs." The testi-
mony of both Hamilton and Unkrur came across as palpably contrived in
this regard, and is not credited.
ning, Robert Taft, and Richard Vlahovich--were not
hired because they submitted no applications at all. Ham-
ilton testified that another of those laid off, Lyle Matt-
son, was not hired, even though he, along with Boman
and Spoelstra; - had- submitted a timely application be-
cause Hamilton "did not like his work habits."25
Hamilton admittedly did not'solicit applications from
anyone laid off by Allstate, however "outstanding" as an
employee. He explained that the notice had been posted
at the timeclock saying that Respondent would be taking
applications; and he "figured if they weren't interested
enough to submit an application, that it certainly wasn't
[his] place to go ask them to come and do it."
There is substantial evidence, however, that one of
Hamilton's obvious acuity had to have known that at
least some of those submitting applications belatedly or
not at all were interested in being carried over. He con-
ceded that, during a January conversation, Balcom had
"repeatedly emphasized" his need for work; and that,
during a conversation with Taft in early January, they
discussed the "good job" Taft had done for Allstate and
Taft "kept saying over and over again" that. he had "no
idea" what was in store for him.26 Hamilton also re-
called Arneberg's talking to him January 19 about job
-prospects with Respondent. Moreover, Hamilton solicit-
ed applications from two nonunit personnel working for
Allstate.27
There is substantial evidence, as well, that Hamilton
exerted dampening influence on the filing of applications
by Allstate's unit employees. Balcom testified that Hamil-
ton told him in one January conversation that there was
"no way that [Respondent] could hire union help," and
in another that Respondent had been advised not to hire
any of" the Allstate employees.28 Hamilton admittedly
did not encourage Balcom to apply, his asserted reasons
being that Balcom "had no wine experience" and was
not "the kind of employee [he] wanted to hire."29 In the
25 Hamilton enlarged that Mattson "was a poor merchandiser of wine,
a poor warehouseman, a poor deliveryman"; that "repeatedly as much as
six different times, he would fail to put [display material] on the truck."
There is no evidence these alleged deficiencies had put Mattson's job
with Allstate in jeopardy. He did receive a written warning in December
1980, however, for failing to load the proper quantities of beer on his
truck.
25 As if standing on precise verbal ritual, Hamilton nevertheless testi-
fied that he could not recall Balcom's making "a request for employ-
ment," and that "never in the course of' his conversation with Taft "was
there any request for employment at the new State Distributing"
27 Diana Madison and Mike Bucholtz. Hamilton testified that he ap-
proached 'Madison to be Respondent's office manager because there had
been no qualified applicants. He approached Bucholtz to be sales supervi-
sor. Madison accepted, Bucholtz did not.
28 Hamilton„ questioned about this testimony, testified "1 can't respond
to that I don't know what-he [Balcom] was referring to." He denied gen-
erally, however, that he ever said Respondent had been advised to re-
strict its hiring of Allstate employees. Balcom, more convincing than
Hamilton on the point, is credited that Hamilton made the remarks attrib-
uted to him. Balcom testified that there consequently "was absolutely no
sense of even putting in an application "
29 Regarding the latter reason; Hamilton testified that he "had wit-
nessed . times when [Balcom] was delivering where there were many,
many minutes, half hours, and could have been even longer, where
[Balcom] was playing cribbage on company time' Hamilton, who was
not Balcom's supervisor, never spoke to Balcom about this
1058 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
same vein, Arneberg testified that Hamilton informed
him January 19 that Respondent had been "advised by
... counsel not to hire any of [the] present wine sales-
people";30 and Taft testified that, when he asked about
job prospects at the end of January, Hamilton replied
that Respondent had been "advised to hire just two of
the ex-employees," and that those positions had been
taken by Boman and Spoelstra.31
As mentioned above, Hamilton testified that Respond-
ent did not hire Mattson, despite a timely application, be-
cause Hamilton "did not like his work habits"; and that
he did not encourage Balcom to apply in part because
Balcom was not "the kind of employee [he] wanted to
hire." Hamilton also testified of the shortcomings of
some of the others laid off by Allstate, his ostensible
point being that Respondent would not have hired them,
for proper reasons, even if they had submitted on-time
applications. Thus:
(a) Hamilton, corroborated by Span, testified that he
and Span had considered firing Arneberg in October
1981, Hamilton further testified, as earlier noted, that the
October 18 advertisement in the Tacoma News Tribune
was in anticipation of that development.32 Also, as pre-
viously noted,33 Allstate instead issued a warning letter
to Arneberg, dated October 15. That letter, rebuking Ar-
neberg for his failure to get a certain supplier's wines on
the shelves of the Safeway stores he serviced, closed:
This warning letter is to alert you that your ,appar-
ent ability to execute is below acceptable levels and
must improve immediately . Failure to improve to
acceptable levels will result in your dismissal.
Hamilton conceded that Arneberg 's performance im-
proved after this letter . Allstate recalled Arneberg some-
time following his layoff.
(b) Hamilton testified that Johnson had not been a
good employee for Allstate , adding that he "had person-
ally received several customer complaints " about John-
son and that "it took [Johnson] too long to deliver
(c) Hamilton testified that Parson's production with
Allstate "was so much lower" than the others and conse-
quently involved "so much more overtime" that he had
occasion to discuss Parsons with Sparr "about everytime
Mr. Sparr would do the payroll."34 Allstate nevertheless
recalled Parsons in April 1982.
30 Hamilton's version of this conversation was that he told Arneberg
to "turn in an application," at the same time cautioning that he "could
not guarantee anybody any certain positions." As noted two footnotes
ago, Hamilton denied generally (and unconvincingly) ever saying Re-
spondent had been advised to limit the hire of Allstate employees
31 Taft, a most believable witness, is credited that Hamilton spoke as
set forth. Hamilton concededly told Taft not to bother submitting an ap-
plication, his professed reason being that "hiring had already been done."
32 See fn 21, supra. As also indicated in the footnote, Sparr credibly
testified that the responses to the advertisement were "for the new com-
-pany," the implication being that the advertisement had nothing to do
with Arneberg.
33 In fn 21, supra
$4 Sparr testified, without particularizing, that he and Hamilton had
discussed Parson's "problems."
Further concerning the deficiencies of those laid off by
Allstate, Respondent placed in evidence a December 23,
1980 written warning to Mattson for, failing to load
proper quantities of beer on his truck; an April 4, 1981
warning letter to Taft,for "failure to follow rotation poli-
cies";35 memoranda,of various discussions between su-
pervision and Taft and Mattson regarding weaknesses in
their performance; a June 1, 1981 warning letter to
Harris for failure to show up at starting time in several
instances; an April 9, 1981 evaluation of Arneberg by
Hamilton in which he was rated "below requirements of
the job" in two of nine categories and as "partially
meet[ing] requirements of the job" in another five; and a
May 7, 1981 warning letter to Arneberg citing four
known instances of his having spent substantial periods
of time in a noncustomer restaurant during working time.
B. Conclusions
Without re-regurgitating its manifold particulars so
showing, the credible evidence is overwhelming that All-
state and Respondent were engaged in a collaboration
meant to ensure that Respondent not inherit Allstate's
bargaining obligation. Central to the scenario, as also is
overwhelmingly' evident without need for recapitulation
of salient detail, was to be Respondent's replacement of
most of the unit employees laid off by Allstate. The con-
clusions therefore are 'unavoidable that Respondent's
withholding of offers from 9 of the 11 laid off was in fur-
therance of this scheme,36 and that the nonhire of each
accordingly violated Section 8(a)(3) and (1).37 As the
Supreme Court observed in Howard Johnson Co. v. Hotel
Employees Union, 417 U.S. 249, 262 fn. 8 (1974):
Of course, it is an unfair labor practice for an em-
ployer to discriminate in hiring or retention of em-
ployees on the basis of union membership or activi-
ty . . . . Thus, a new owner could not refuse to
hire the employees of his predecessor solely because
they were union members or to avoid having to rec-
ognize the union. [Emphasis, added.]
Had Respondent not unlawfully withheld hire from
the nine-all of whom were union-represented, as were
the two hired from among those laid off-instead substi-
tuting nine obtained elsewhere, the Union's majority
as Whatever Taft's failings, Respondent hired hun in May 1982.
36 Even ignoring the cornucopic evidence of a wrongly motivated pre-
determination not to hire the nine, Hamilton's and Sasse's professed rea-
sons for not hiring this one or that one-no application, belated applica-
tion, poor performance with Allstate-were hollowly rendered and
devoid of persuasive thrust
37 A presumption of unlawful job deprivation necessarily follows from
the wrongful withholding of offers. Otherwise, the policies of the Act
would be ill-served, rewarding Respondent for its wrongdoing More-
over, it is inferable in the circumstances, most notably the absence of a
hiatus and the continuation of much the same type of work, that each of
the nine laid off by Allstate would have accepted an offer if tendered.
That some of the nine did not submit applications, even though the
Union encouraged them to do so, cannot be deemed tantamount to the
refusal of offers if tendered, particularly given the climate of futility en-
gendered by Hamilton's remarks to the effect that Respondent had been
advised to hire few or no Allstate employees, and by Wallstrom's com-
ment in the January 22 meeting that Respondent "wasn't going to be a
union shop"
STATE DISTRIBUTING CO 1059
would, have survived Respondent's takeover of the wine
division . That, together with Respondent's continued op-
eration of the division in largely the same fashion as All-
state had run it, necessitates the conclusion that Re-
spondent was a "successor" of Allstate with respect to
Allstate's bargaining obligation . 38 Respondent therefore
violated Section 8(a)(5) and (1) by disavowing that obli-
gation , 39 and by failing to hire the,nine in aid of that dis-
avowal . Quoting from NLRB v. Burns Security Services,
406 U.S. 272, 279-280 (1972):
It goes without saying , of course, that Burns was
not entitled to upset what it should have accepted
as an established majority by . . . committing the
unfair labor practice of which it was found guilty
by the Board.
Respondent also violated Section 8(a)(5) and (1) by
unilaterally departing from certain of Allstate's terms and
conditions of employment , as established by the bargain-
ing agreement between Allied and the Union . Again, ex-
tracting from the Supreme Court's Burns decision at 406
U.S. 294-295:
Although a successor employer is ordinarily free to
set initial terms on which it will hire the employees
of a predecessor , there will be instances in which it is
perfectly clear that the new employer plans to retain
all of the employees in the unit and in which it will
be appropriate to have him initially consult with the
employees ' bargaining representative before he fixes
terms . [Emphasis added.]
The emphasized portion of this passage is not descriptive
of the present situation only because of Respondent's un-
lawful predisposition to hire less than a majority of the
laid-off Allstate ' employees . Consequently , to "prevent
Respondent from reaping financial gain from its unlawful
conduct,"40 the principle must obtain. Respondent's
successorship status was never sufficiently inchoate in
point of law to entitle it to set initial terms of employ-
ment. Potter's Chalet Drug , 233 NLRB 15 , 20 (1977).
In light of that just stated, Respondent is under a
present obligation to bargain with the Union , on request,
38 The differences in operation as between Respondent and Allstate,
including the change in physical location, were not a magnitude defeating
successorship Nor was Respondent's failure to acquire, intact , Allstate's
total beer and wine operation . See generally Contract Carrier, 258 NLRB
353 (1981); Mondovi Foods Corp., 235-NLRB 1080 (1978); First Food Ven-
tures, 229 NLRB 1228 (1977); G. T. & E. Data Service Corp, 194 NLRB
719 (1971)
39 Respondent, to the contrary, did not fulfill its bargaining obligation
in the course of the meetings in Wallstrom's office January 22 and 29.
While the Union was invited to submit "a specific proposal" during the
January 29 meeting, Respondent plainly "was not committed to bargain-
ing as a legal duty, but only as it might suit its convenience and advan-
tage " Bellwood General Hospital, 243 NLRB 88, 90 (1979).
40 Ellis Tacke Co, 229 NLRB 1296 (1977)
concerning any terms and conditions of employment
over which it would have been required to bargain had
the Union's rightful status been acknowledged when Re-
spondent assumed operation of the wine division . Potter's
Chalet Drug, supra at 233 NLRB 15; Bachrodt Chevrolet
Co., 205 NLRB 784 (1973).
It is concluded, additionally , that Respondent violated
Section 8(a)(1) in those instances in January 1982 when
Hamilton told Balcom, Arneberg, and Taft, in effect,
that Respondent had been advised to restrict its hiring of
Allstate's employees . The likely purpose and unavoidable
effect of those remarks was to abet Respondent's union-
avoidance plan by discouraging Allstate's union -repre-
sented employees from making application.
Finally, it is concluded that Respondent did not vio-
late the Act as alleged by virtue of Allstate's layoff of
the 11 unit employees , or by failing to honor the Allstate
bargaining agreement . The General Counsel's underlying
contention-that Respondent was Allstate's alter ego-is
rejected. Although Respondent grew out of Allstate and
enjoyed Allstate's most solicitous cooperation during the
gestation period, even to the point of the aforementioned
collaboration so Respondent might evade the Union,
there is scant evidence that Respondent has been, since
becoming operational, "a disguised continuance" of All-
state. See generally Shellmaker, Inc., 265 NLRB 749 at
753 (1982).
CONCLUSIONS OF LAW
Respondent, as a "successor" to Allstate on taking
over the operation of what had been Allstate's wine divi-
sion effective February 1 , 1982, violated Section 8(a)(5)
and (1) of the Act by: ,
1. Refusing to recognize the Union as the collective-
bargaining representative of its employees in the appro-
priate unit.
2. Departing from existing terms and conditions of em-
ployment , as established by the collective-bargaining
agreement between Allied and the Union and binding on
Allstate, in various respects-including but not necessari-
ly limited to reducing wage rates, instituting a different
health and welfare program , and discontinuing pension
benefits-without first giving the Union a legally ade-
quate chance to bargain over the changes.
Respondent additionally violated Section 8(a)(5) and
(1), as well as 8(a)(3), by failing to hire 9 of the I1, unit
employees laid off by Allstate, its purpose being to
escape successorship and the attendant obligation to rec-
ognize and bargain with the Union.
Respondent also violated Section 8(a)(1) in those in-
stances in January 1982 when Hamilton told Balcom, Ar-
neberg, and Taft in effect that Respondent had been ad-
vised to restrict its hiring of Allstate's employees.
Respondent did not otherwise violate the Act as al-
leged.
[Recommended Order omitted from publication.]