The Denham Co.

National Labor Relations Board - Board Decisions

May 29, 1975

218 N.L.R.B. 30 (N.L.R.B. 1975)

30 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
No H . Denham and Geraldine A. Denham, d/b/a'The
Denham Company and Creamery, Condensery
Employees & Drivers Union, Local 517, Interna-
tional Brotherhood of Teamsters, Chauffeurs,
Warehousemen & Helpers of America. Case 20-
CA-5734
May 29, 1975
SECOND SUPPLEMENTAL DECISION
AND ORDER
BY CHAIRMAN MURPHY AND MEMBERS
FANNING AND JENKINS
On December 24, 1970, the National Labor
Relations Board issued its Decision and Order' in
the above-entitled proceeding, finding that Respon-
dent had engaged in unfair labor practices in
violation of Section 8(a)(5) and (1) of the Act, and
ordering that it cease and desist therefrom and, upon
request, bargain collectively with the Union as the
exclusive representative of all the employees in the
appropriate unit, and honor and abide by the
collective-bargaining agreement executed by the
Union and Respondent's predecessor. The Board
also ordered Respondent to make restitution to
employees for any losses suffered by virtue of
Respondent's failure to abide by the collective-
bargaining agreement or by its institution of certain
unilateral changes. In light of the Supreme Court's
opinion in N.L.R.B. v. Burns International Security
Services, Inc., 406 U.S. 272 (1972), enforcement of the
Board's Order, except insofar as it required Respon-
dent to abide by the collective-bargaining agreement
executed between Respondent's predecessor and the
Union, was granted on November 3, 1972, by the
United States Court of Appeals for the Ninth
Circuit.2 Subsequently, Respondent petitioned the
Supreme Court of the United States for certiorari,
and, on April 23, 1973, the Supreme Court granted
Respondent's petition, vacated the court of appeals'
judgment, and remanded the proceeding to that
court with instructions to remand the case to the
Board for such further proceedings as may be
appropriate, in light ofN.L.R.B. v. Burns Internation-
al Security Services, Inc., supra; Federal Trade
Commission v. Sperry & Hutchinson Co., 405 U.S. 233,
245-250 (1972); and Securities and Exchange Com-
mission v. Chenery Corp., 318 U.S. 80, 87-88 (1943).
On June 6, 1973, the court of appeals issued an
order remanding the case to the Board. Thereafter,
the Board, on October 29, 1973, issued its Supple-
mental Decision and Order,3 rescinding its finding
that Respondent had violated Section 8(a)(5) and (1)
1 187 NLRB 434.
2 469 F.2d 239.
of the Act by refusing to adhere to its predecessor's
collective-bargaining agreement, but adhering to its
other findings that Respondent had violated Section
8(a)(5) by refusing to bargain with the Union on or
about July 28, 1969, and thereafter, and by making
certain unilateral changes in working conditions on
or after July 28, 1969. The Board accordingly
reaffirmed that portion of its original Order which
included requiring Respondent to bargain with the
Union and make restitution for any benefits which
may have been lost by virtue of the unilateral
changes in the terms of employment. However,
subsequent to its filing of a petition in the Ninth
Circuit Court of Appeals for summary entry of a
judgment enforcing its Order, the Board, sua sponte,
petitioned the court of appeals to remand the
proceeding to the Board so that all parties might
submit statements of position to the Board with
respect to the issues raised by the Supreme Court's
decision in N.L.R.B. v. Burns, supra. On November
18, 1974, the court of appeals remanded the case to
the Board for further proceedings. Subsequent
thereto, both Respondent and General Counsel filed
statements of position.
Pursuant to the provisions of Section 3(b), of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has reviewed the entire record in this
case, including the decisions of the court of appeals
and the Supreme Court, and the statements of
position filed by Respondent and General Counsel,
and, for the reasons set forth below, adheres to its
original Supplemental Decision and Order wherein it
found that Respondent violated Section 8(a)(5) by
unilaterally setting initial terms and conditions of
employment on July 28, 1969, without bargaining
with the Union.
Respondent argues that the Supreme Court's
holding in Burns precludes a finding that Respondent
violated Section 8(a)(5). Specifically, Respondent
points to the Court's reasoning that in ordinary
circumstances of successorship a successor is free,
upon takeover, to set initial terms of employment
unilaterally without violating Section 8(a)(5) because
the absence of a prior bargaining relationship
between a successor and the employees' bargaining
representative precludes the finding that the succes-
sor has unilaterally changed any preexisting term and
condition of employment. However, the Court went
on to describe a specific instance in which the
successor was obligated to consult with and bargain
with the union before setting initial terms, i.e., where
3 206 NLRB 659.
218 NLRB No. 8
THE DENHAM COMPANY
"it is perfectly clear that the new employer plans to
retain all the employees in the unit,"4 and it is thus
evident that the bargaining representative represents
the majority of unit employees. Respondent acknow-
leges the "perfectly clear" exception to the general
rule that a successor is free to fix terms of
employment unilaterally, but argues vigorously that
the facts of the instant case do not fall within it.
This is the nub of the matter. In our prior
Supplemental Decision, we concluded, after analyz-
ing all the facts surrounding the takeover of the
operations of predecessor-employer Swift & Co.
(herein Swift) by Respondent, that as of July 28,
1969, the day of takeover, it was indeed "perfectly
clear" that Respondent planned to retain all of the
unit employees previously employed by Swift, and an
obligation to bargain with the Union therefore
attached as of that date. After a careful consideration
of the sequence of events prior to and subsequent to
the takeover, especially in light of the arguments set
forth in Respondent's statement of position, we fmd
no reason to depart from our earlier findings and
conclusions.
On the afternoon of July 28, 1969, Swift Represent-
ative Olson distributed to all employees a leaflet
which stated that as of that date Respondent was
taking over the plant. The leaflet assured employees
that they, would be guaranteed a minimum of 30
days' employment by Respondent, in accordance
with the sales agreement between Swift and Respon-
dent. At an employee meeting held later that
evening, Respondent 's supervisor, King, announced
to unit employees a unilateral reduction in pay and
other benefits. He further informed them that
Respondent would expand its product line. Respon-
dent also arranged at this time for a presentation by
an independent insurance agent , Forsythe. Speaking
for Respondent, Forsythe informed the employees
that the union health plan would hereinafter be
supplanted by a management health plan of lesser
scope. Forsythe then proceeded to hand out insur-
ance forms that employees could sign if they were
interested in participating in the plan . In the ensuing
few days, King approached various employees on an
individual basis and advised them as to how their
wages and fringe benefits were to be adjusted
downward. Union Agents Wills and Kikkert, upon
learning of these unilateral changes approached
Respondent's president, Denham, individually, and
asked if he intended to recognize the Union and
honor its collective-bargaining agreement with Swift.
On both occasions, Denham announced ' that he
would recognize the Union only if the employees
wanted the Union to represent them. Kikkert
31
thereupon scheduled a union meeting for all employ-
ees for August 7, at which time Kikkert and Wills
informed the employees in attendance, all of whom
were union members , that Respondent would abide
by the current contract only if the employees voted
to have the Union continue to represent them. The
employees, by secret ballot, then voted unanimously
for continued representation by the Union. However,
the very next day, Denham called a meeting of
employees at which he informed them that he was
aware of the union meeting the night before and that
he would close the plant within 15 days if they "went
union"; however, if - they - rejected the Union, he
assured them of year-round work and, possibly, a
Christmas bonus. After the meeting adjourned the
employees met privately and voted unanimously to
reject the Union.
The totality of the circumstances surrounding the
transfer of ownership from Swift to Respondent
clearly evinces an intent by Respondent to retain all
the incumbent employees in the unit. The record is
devoid of any evidence indicative of a conditional
offer of employment. There was no hiatus in
operations during which Respondent interviewed
incumbent employees, or others, for the jobs to be
filled before it decided whom it would hire. On' the
contrary, the evidence indicates otherwise. One of
the express conditions of takeover imposed by Swift
was that Respondent retain Swift's employees for a
minimum period of 30 days. Pursuant thereto, all of
the unit employees remained on the plant payroll
after the takeover date without any interruption in
employment. Finally, the substance of all Respon-
dent's communications to its employees reflects its
intention to deal with them as already hired'11
employees with indefinite tenure. At the July 28
announcement of takeover, Respondent's spokes-
man, Forsythe, urged employees to sign, forms for the
new health insurance plan Respondent proposed to
initiate . And, on August 8, Respondent President
Denham assured employees of year-round work and
the possibility of a Christmas bonus, unless, of
course, they "went union."
Respondent, in its statement of position , advances
two reasons why it was not "perfectly clear" that
Respondent, as of July 28, 1969, planned to retain all
of the Swift employees, both of which we fmd totally
lacking in merit.
Respondent first argues that , owing to its obliga-
tion to retain Swift's employees for a minimum of 30
days, it could not accurately gauge the compos-
ition-and extent of union representation-of its
ultimate work force until 30 days after July 28, when
it would, ' for the first time, be free to select its
4 406 U.S . at 295.
32 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
employee complement. This 'argument necessarily
implies that Respondent regarded this span of 30
days as a probationary period for unit employees, an
assumption which we reject as not supported by the
facts of this case. As. we noted in our Supplemental
Decision,5 neither Respondent's actions nor its
communications with its employees evince such a
state of mind. Indeed, given the fact that Denham, as
the former plant manager of Swift, was undoubtedly
familiar with the relative capabilities of each of the
unit employees, it is unlikely that he would ever find
it necessary to utilize such a probationary period. In
any event, even if these employees were truly
considered by Respondent to be "probationary"
during the first 30 days, they were, nonetheless,
"employees" under the Act, for whom, we hold,
Respondent had an obligation to bargain.6
As on additional basis for arguing that it was not
"perfectly clear" that Respondent planned to retain
Swift's employees, Respondent cites "findings" by
the Administrative Law Judge that Respondent had,
at the time of takeover, contemplated radical changes
in its scope of operations, either in the form of the
closure of the Swift plant and transfer of operations
to a new location, a switchover from ice cream
production to a mere ice cream distributorship, or
the production of a different product. However, we
view these citations as taken completely out of
context. The "findings" to which Respondent refers
are not findings of fact at all but merely a summary
by the Administrative Law Judge as to what
Denham, on a number of occasions, said about the
future operations of the plant. Specifically, when
Union Agents Wills and Kikkert pressed Denham as
to whether he would recognize and bargain with the
Union, Denham began talking of the possibilities of
closing the plant or scaling down operations from ice
cream production to ice cream packaging, and
relocating elsewhere. And, as we noted earlier,
Denham, at the employee meeting on August 8,
related to employees similar' operational changes
which he would effect, but only if they "went union."
Respondent's contention that these open rumina-
tions by Denham represented Respondent's true
state of mind is completely at odds with the other
statements and actions of Respondent, as found by
5 206 NLRB 659.
6 See, e.g., Erie Marine Division, The Rust Engineering Company, 195
NLRB 815, 816 (1972), and cases cited in fn 4 therein See also Howard
Johnson Company, 198 NLRB 763 (1972), and Good Foods Manufacturing &
Processing Corporation, 200 NLRB 623 (1972).
T In fact, in our original Decision and Order, we found the August 8
statements to employees to be violations of Sec. 8(a)(1).
Respondent sets forth two additional arguments for setting aside our
earlier holding , neither of which merits much consideration: First , assuming
arguendo an obligation by Respondent to consult with the Union before
setting initial terms of employment , such obligation was met when , prior to
the takeover , Union Agent Kikkert was formally notified by Olson and
Denham that there was a possibility that the latter might buy the Swift
operation, and Denham and Kikkert then discussed the possibility of
the Administrative Law Judge. If Respondent truly
intended to reduce or curtail its operations, and
hence its work force, why was no mention made of
this fact at the July 28 employee meeting wherein
Respondent first announced the takeover? Indeed,
Respondent Representative Forsythe's solicitation of
employees at this meeting to sign up for Respon-
dent's new health plan is hardly consistent with plans
to phase out operations and to reduce the work force.
Likewise, Supervisor King's statement at that meet-
ing that Respondent's product line would be expand-
ed directly rebuts Respondent's present allegation
that such a phasing out was ever contemplated.
Respondent's true state of mind is revealed at the
August 8 meeting when Denham announced that
employees would work year-round and receive a
Christmas bonus as long as they rejected the Union.
To the extent that Respondent did communicate an
intention to terminate or curtail its operations, we
conclude that it was either to discourage Union
Agents Wills and Kikkert from pressing their
demands for collective bargaining, or to coerce
employees unlawfully into rejecting the Union as
their bargaining agent.?
For all the above reasons, we adhere to our earlier
findings and conclusions, as set forth in our Supple-
mental Decision, that, as Respondent planned to
retain, as of July 28, 1969, all the unit employees
previously employed by Swift and did indeed so
retain them, an obligation to bargain with the Union
before setting initial terms of employment matured at
that time. By failing to honor its obligation, Respon-
dent violated Section 8(a)(5) and (1) of the Act.
Accordingly, we reaffirm in its entirety our amended
Order as set forth in our Supplemental Decision and
Order.8
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that Respondent, No
H. Denham and Geraldine A. Denham, d/b/a The
Denham Company, Hanford, California, its officers,
agents, successors, and assigns, shall take the action
set forth in our original Supplemental Order, dated
October 29, 1973.
Respondent's taking over the current collective-bargaining agreement.
However, we are unwilling to equate such vague preliminary statements
with actual good-faith bargaining by Respondent with the Union pnor to
setting initial terms of employment and therefore reject this argument.
Finally, Respondent argues that even if the Union enjoyed a majority status
its majority was coerced and therefore no obligation to bargain existed for
Respondent to assume . This argument was fully considered in our original
Decision and resolved against Respondent . As it is our understanding that
only such parts of our original Decision and Order as pertained to the
Supreme Court's decision in Burns, supra, were remanded for our further
consideration , we need not, and do not, consider this argument any further.