Value Village

National Labor Relations Board - Board Decisions

Oct 28, 1966

161 N.L.R.B. 603 (N.L.R.B. 1966)

THRIFTOWN, INC. 603
sional employees, watchmen, guards, and all supervisors as
defined in the Act.4
[Text of Direction of Election omitted from publication-]'
'The Employer would exclude , and the Union would include , the bulldozer operator 1,
the bulldozer operator 2, and four kiln operators . The Employer concedes that all three
classifications were within the unit historically represented by the Union and that their
duties are unchanged , but contends that, following its purchase of the plant , the respon-
sibilities of those occupying these classifications have been redefined in a manner establish-
ing supervisory status . The record shows that the employees occupying these positions are
engaged essentially in rank -and-file work and it is clear that while they exercise lead
authority over other employees of lesser skill and experience , their duties neither entail
the exercise of independent judgment nor reflect any other attributes of supervisory status
sufficient to warrant their exclusion . Accordingly , we find they are not supervisors and
include them in the unit herein.
5 An election eligibility list , containing the names and addresses of all the eligible voters,
must be filed by the Employer with the Regional Director for Region 10, within 7 days
after the date of this Decision and Direction of Election . The Regional Director shall make
the list available to all parties to the election . No extension of time to file this list shall
be granted by the Regional Director except in extraordinary circumstances . Failure to
comply with this requirement shall be grounds for setting aside the election whenever
proper objections are filed. Excelsior Underwear Inc , 156 NLRB 1236.
Thriftown , Inc., d/b/a Value Village , E & L Distributors, Inc.,
and Astra Shoe Company and Retail Clerks International As-
sociation, AFL-CIO, Petitioner
Thriftown , Inc., d/b/a Value Village , Employer -Petitioner and
Retail Clerks International Association AFL-CIO, Local Union
No. 445.1 Cases 25-RC--2761 and 25-RM-169. October 28, 1966
DECISION ON REVIEW
On March 30, 1965, the Regional Director for Region 25 issued a
Decision and Direction of Election in the above-entitled proceeding
in which he rejected as inappropriate the unit requested by the Peti-
tioner in Case 25-RC-2761', comprising employees of Thriftown, Inc.,
and its licensees , E & L Distributors, Inc., and Astra Shoe Company
(hereinafter referred to as Astra). Instead, he found appropriate a
unit limited to the employees of Thriftown as sought by the Em-
ployer, and additional separate units of employees of Astra and E &
L Distributors, Inc., respectively. Thereafter, in accordance with the
National Labor Relations Board Rules and Regulations, Series 8, as
amended, the Retail Clerks filed a timely request for review of the
3 The names of the parties are designated in the ' caption in accord with the record
evidence . Retail Clerks International Association , AFL-CIO, and Retail Clerks Interna-
tional Association , AFL-CIO, Local Union No. 445, are hereinafter referred to collectively
as the Retail Clerks.
161. NLRB No. 42. _
604 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Regional Director's Decision, contending, inter alia, that the Regional
Director erred in finding that the licensor and each of its licensees
were not joint employers of the employees of the licensees. Thriftown
filed a statement in opposition. The Board by telegraphic order dated
June 22, 1965, granted the request for review and stayed the election
pending review.2 Thereafter, the Retail Clerks, Thriftown, and Astra
filed briefs on review.3
The Board has considered the entire record with respect to the
Regional Director's determination under review, together with all
the briefs of the parties,' and makes the following findings :
1. Thriftown, a wholly owned subsidiary of Kroger Company,
presently owns and manages two discount department stores known
as Value Village. This proceeding involves its store in Owensboro,
Kentucky.' This store consists of various departments which are
either wholly owned and operated by Thriftown or are operated by
separate employers pursuant to formal "Department Operating
Agreements" with Thriftown. Thriftown and Astra are parties to an
operating agreement governing the shoe department at Value Vil-
lage.6 Astra employs approximately 6 employees, and depending upon
the season, Thriftown employs between 75 and 120 persons in its
directly operated departments. A general manager, employed by
Thriftown, is responsible for the entire store operation and each
department is separately supervised by an assistant manager. The
entire Value Village operation is designed to create the appearance
2 The Board permitted Amalgamated Clothing Workers of America , AFL-CIO, Inter-
state Department Stores, Inc, and Spartans Industries , Inc., to file amica curiae briefs.
Interstate and Spartans filed a joint brief.
6 On August 4, 1965, Thriftown filed a motion to strike all posthearing evidence sub-
mitted by the Retail Clerks and the annici curiae in their respective briefs. Both the Retail
Clerks and Interstate and Spartans filed statements in opposition . Thriftown 's motion to
strike is hereby denied. However , in making our Decision , we shall rely only upon factual
allegations contained in the briefs which are supported by evidence in the record.
'The Retail Clerks, Interstate , and Spartans requested oral argument . These requests
are hereby denied because the record and the briefs adequately present the issues and posi-
tions of the parties.
6 Thriftown also operates a store in Moline, Illinois . The Retail Clerks was certified as
bargaining representative of employees at that store after that union won an election
pursuant to a Decision and Direction of Election issued in Case 13-RC -9751. None of the
parties have raised an issue concerning the representation of employees at that store and its
operations are not involved in this proceeding.
6 Originally , Thriftown also had an agreement with E & L Distributors , Inc , governing
the operation of an automotive department . However , subsequent to the Board 's granting
review in this proceeding , the Retail Clerks filed a motion for leave to bring new factual
and decisional developments to the Board 's attention and to dismiss E & L Distributors,
Inc., as a party in this proceeding . The motion requested the Board to take notice of the
fact that E & L is no longer operating the automotive department and that Thriftown is
now operating the department with the same employees . Thriftown filed a response to this
motion, a request to reopen the hearing , and a request to file a brief in response . In this
document , Thriftown admits that E & L has ceased to operate the automotive department,
but takes no position on the Retail Clerks' motion to dismiss E & L as a party . Accord-
ingly, we shall no longer include E & L as a party to this proceeding . Thriftown's request
to file a brief in response and to reopen the hearing are hereby denied.
THRIFTOWN, INC. 605
of an integrated department store. Thus, all signs identify the store
as Value Village rather than displaying the trade names of any indi-
vidual department operators; all bags, wrapping materials, fixtures,
and furnishings are of a uniform type ; there are central checkout
stands; there is no physical separation of the different departments;
and there is only one switchboard, public address system, and park-
ing lot for the entire store.
As noted, Thriftown and Astra are parties to a department operat-
ing agreement. This agreement contains detailed provisions relating
to the financial arrangements between Thriftown and its operator
governing the operation of the department. The agreement requires
the operator to conduct its department "in such manner that it will
appear to the public as a department of the business carried on in the
store and not as though under separate management." It also provides
that "nothing in this Agreement shall in any way be construed to
constitute a co-partnership or joint venture between the parties
hereto."
Under this agreement, Thriftown determines, controls, and admin-
isters all types of advertising and promotional activity; has the
authority to inspect the operator's premises at all times for cleanli-
ness and to order any corrective measures; retains the right to arrange
store layout and in some instances to reduce the space assigned to the
operator; retains the keys to the building; is empowered to audit and
inspect records of the operators; approves all alterations, fixtures,
and signs; has the authority to decide which articles the operator
may sell; establishes pricing policies on merchandise; retains the full
and exclusive right to adjust and settle customer complaints; controls
the amount of overhead expenses which are shared by the parties on
a pro rata basis; and maintains a financial interest in the licensee's
operations to the extent that it receives a percentage commission of
gross sales. Also, the agreement provides that operators must pur-
chase from Thriftown certain supplies and they must see only the
Thriftown name on its signs and labels.
Further, although the agreement provides that the operator with-
out the participation of Thriftown, will hire, fire, and discipline its
own employees, determine their wages, rates of pay, and other bene-
fits, and establish its own deductions such as taxes and social security,
it is apparent that Thriftown also exercises significant control over
the operator's personnel policies. Thus, the agreement provides that
Thriftown may establish conditions which all store employees must
follow with respect to cleanliness, the wearing of a common uniform,
and smoking, and that the operator shall employ "a sufficient number
of qualified competent employees, including a department manager"
606 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
for the conduct of said department. In addition, the agreement pro-
vides that the "Operator will at all times in the conduct of its busi-
ness strictly conform to the methods, rules, business principles, prac-
tices, policies and regulations which may be established and revised
from time to time by THRIFTOWN during the term hereof."
Finally, the agreement provides that "THRIFTOWN may at any
time, for good cause shown, terminate this agreement upon fifteen
(15) days written notice to Operator," but in any event either party
may terminate the agreement at any time upon 60 days' written notice
to the other party.
The Board has held on a number of occasions that the licensor and
each of its licensees 7 in a discount department store are joint employ-
ers of the employees in the licensee's department where it is estab-
lished that the licensor "is in a position to influence the licensee's
labor policies." 8 The Regional Director concluded here that "the
influence Thriftown exercises over the wages, hours, and working
conditions of its lessees' employees either by virtue of the lease agree-
ment or actual practice is indirect and too insignificant (compared to
the lessees') to constitute control of labor relations as that term is
used in Board Decisions." We believe that the Regional Director
failed to take into consideration the special nature of the relationship
which exists between the parties in a discount department store, and
therefore did not give sufficient weight to those factors which estab-
lish actual or potential control by Thriftown over the labor policies
of its operator, Astra.
Experience has demonstrated that participants in discount store
establishments, although retaining their separate corporate identities,
strive to create the appearance of a sin,,Ie-integrated enterprise in
order to obtain the mutual business advantages derived from this
type of operation. Given this business arrangement, it is apparent
that any disruption of operations, including that resulting from
labor dispute involving an operator, will almost necessarily adversely
affect the operation of the entire store. It follows, therefore, that the
owner of the discount store in some manner will retain sufficient con-
trol over the operations of each department so that it will be in a
position to take those steps necessary to remove the causes for the
disruption in store operations.9
An examination of the operating agreement herein makes it clear
that Thriftown has retained just such power to control the operations
'In this case , as noted, Astra is referred to in the operating agreement as "operator"
rather than licensee . However , the same considerations apply regardless of which term is
used to describe the parties to such agreements.
8 David Gold and Harvey Tesler d /b/a Grand Central Liquors, et al, 155 NLRB 295;
Spartan Department Stores, 140 NLRB 608 ; Frostco Super Save Stores, Inc., 138
NLRB 125.
9 Trade Winds Motor Hotel & Restaurant , 140 NLRB 567.
THRIFTOWN, INC. 607
of the shoe department. Thus, Thriftown can significantly affect the
profits of its operators through its control over the allocation and
reduction of floor space, over the amount of overhead expense which
is shared on a pro rata basis, and over advertising, pricing policies,
and items of merchandise to be sold. Further, Thriftown maintains
significant control over the day-to-day operations of the operators by
virtue of the provision of the operating agreement which requires the
operators to conform to Thriftown's "methods, rules, business prin-
ciples, practices, policies and regulations." Finally, Thriftown has
the power to cancel the agreement on only 60 days' notice without
cause and on 15 days' notice for "good cause" (not otherwise defined).
In the context of this agreement, an operator could not easily resist
Thriftown's views concerning the labor policies applicable to leased
department employees.
In view of Thriftown's extensive powers to control the operations
of Astra, as shown by its ultimate right to dissolve the relationship
entirely, its retention of overall managerial control, and the extent to
which it has retained the right to establish the manner and method
of work performance, it is clear, and we find, that Thriftown is in a
position to influence the labor relations policies of licensee Astra.
Since the power to control is present by virtue of the operating agree-
ment, whether or not exercised, we fund it unnecessary to consider the
actual practice of the parties regarding these matters as evidenced by
the record.
We do not intimate by this holding that licensor-licensee arrange-
ments in a discount department store necessarily create a joint-
employer relationship. Nor does the fact that we find a single unit
appropriate herein mean that we will automatically include all the
employees of the joint-employers in a single unit. However, where,
as here, the parties operate an integrated business enterprise under a
single roof and the provisions of the operating agreement establish
that the owner possesses significant control over the operational and
personnel policies of the operator, we conclude that the owner and
operator are joint employers of the employees of the operator.
Contrary to the suggestion of our dissenting colleagues, our Deci-
sion is based on a realistic evaluation of the effect of the department
operating agreement upon the employment conditions of leased de-
partment employees viewed in light of the purposes of this Act.*1° It
is not based upon mere "appearances" or upon whether the agreement
of the parties "as between themselves" establishes a particular type
of business entity, "in law."
Our dissenting colleagues rely heavily on the parties' disavowal, in
their operating agreement, of any intent to create a joint-employer
10 Cf. N.L.R.B . v. Checker Cab Company , etc., 367 F.2d 692 (C A 6).
608 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
relationship. This, however, is no more than the parties' own conclu-
sionary statement and has no more effect in determining the actual
relationship that exists than would a disclaimer of negligence after
an accident. Indeed, the very disclaimer that "nothing in this agree-
ment shall in any way be construed" as creating such a relationship
relied on by our dissenting colleagues strongly suggests recognition
by the parties themselves that the terms of the agreement to tend to
create a joint-employer relationship.
In suggesting that the power to terminate is the sole criterion upon
which the majority relies, the dissent still ignores the very significant
impact upon this case of "the special nature of the relationship." We
reiterate that we will not automatically find a joint-employer rela-
tionship in every discount store operation involving a licensor-licensee
agreement, without more. There is, in our view, enough "more" here
to warrant such a finding.
The fact that Astra is also granted the ultimate right to terminate
its agreement with Thriftown does not mean that we would also find
Astra to be the employer of Thriftown's employees. It is plain from
the agreement that the dominant party is Thriftown, not Astra, and
the bulk of the provisions to which we refer go to show Thriftown's
control over Astra, not the converse, and establish requirements that
Astra must live up to, not the converse.
2. The Retail Clerks seeks a unit of all employees at the Thriftown
store. The Employer filed a petition requesting a unit of only the
employees employed by Thriftown, excluding the employees at each
of its operator's departments. There is no history of bargaining. As
found above, Thriftown's operation resembles in its physical aspects
a single retail department store. Further, all employees at Value Vil-
lage are subject to common overall supervision, they use common
facilities, and there is a similarity of working conditions. In view of
the indicia of their mutuality of employment interests, and as no
union seeks a more limited unit, we find a emit embracing the employ-
ees of the licensor and its licensed department to be appropriate.
Accordingly, the case is hereby remanded to the Regional Director
for Region 25 for the purpose of holding an election, pursuant to his
Decision and Direction of Election, as amended by the unit findings
herein, except that the period for determining eligibility shall be the
payroll period immediately preceding the date below.
CHAIRMAN MCCULLOCH and MEMBER FANNING, dissenting :
Although we accept the basic facts as stated in the majority opinion
and agree that Thriftown and Astra have created the appearance of
a single-integrated enterprise as far as the public is concerned, we
THRIFTOWN, INC. 609
find unwarranted our colleagues' further conclusion that Thriftown
and Astra, as between themselves, have established through their
operating agreement the relationship, in law, of joint employers of
Astra's employees working in the Astra-leased department at Thrif-
town's retail department store.
In past cases involving the issue of "joint-employers" of employees
of a licensee in a discount department store , the Board has found
such a relationship only where the license agreement or the actual
practice of the parties established that the licensor was empowered to
exercise control over the licensee's labor policies."
In the case now before us, the operating agreement not only specif-
ically states that "nothing in this agreement shall in any way be con-
strued to constitute a co-partnership or joint venture between the
paries hereto"; it also specifically provides that Astra, without the
participation of Thriftown, will hire, fire, and discipline its own
employees, determine their wages, rates of pay, and other benefits,
and establish its own deductions for taxes, social security, and related
items. These provisions are clearly at odds with a contractual intent
on the part of Thriftown and Astra to create a joint-employer rela-
tionship. Nor are there in this record other facts from which such an
intent may reasonably be inferred. We look in vain in our colleagues'
opinion for evidence that Thriftown has actually controlled Astra's
labor policies. Our colleagues rely upon (1) vague provisions in the
license agreement requiring Astra to conform to Thriftown's "meth-
ods, rules , business principles, practices, policies and regulations,"
and (2 ) the power granted to Thriftown to cancel the agreement
upon only 60 days' notice without cause and upon 15 days' notice for
good cause . We believe, however, that this evidence is insufficient to
support a legal conclusion that Astra and Thriftown are joint employ-
ers. The conformity requirements are quite clearly aimed at fostering
the public appearance of a single-integrated enterprise. They have
nothing to do with the employment relationship as such. Nor do we
think it controlling on the issue before us that the operating agree-
ment grants Thriftown the ultimate right to dissolve the licensor-
licensee relationship entirely. To our knowledge this is the first time
that such a factor has been considered to be evidence of a joint-
employer relationship. In fact, in the recent Bab-Rand Company 12
case, one of the reasons upon which the Board relied in refusing to
n Compare Grand Central Liquors, supra, footnote 8, Spartan Department Stores, supra,
footnote 8, Frostco Super Save Stores , Inc , sups a, footnote 8, and K-Mart, 159 NLRB 250,
with S A G E., Inc. of Houston, 146 NLRB 325, and Esgro Anaheim, Inc, 150 NLRB 401
See also N L.R B. v. New Madrid Manufacturing Company, d/b/a Jones Manufacturing Co ,
215 1°28 908, 912-913 (CA 8).
12 147 NLRB 247.
264-188-67-vol. 161-40
610 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
find a joint-employer relationship was that the lease agreement gave
the licensor the right to terminate the lease within 24 hours if the
licensee became involved in a labor difficulty that might lead to pick-
eting of the store. We note parenthetically, that the operating agree-
ment also grants Astra the "ultimate right" to terminate the lease
agreement. Would the majority conclude from this that Astra is an
employer of Thriftown's employees?
The majority attempts to buttress its joint-employer finding by
generalized references to Thriftown's "extensive powers to control
the operations of Astra," "its retention of overall managerial control,"
and "the extent to which it has retained the right to establish the
manner and method of work performance." We do not agree that the
record in this case supports such broad conclusionary assertions.
However, even if it did, these considerations appear to us to provide
only a further indication of the parties' concern with creating the
public impression of a unified enterprise. They are not enough to
show that the parties have established in fact a joint-employer rela-
tionship with respect to the licensee's employees. Substantially the
same factors were present in S.A.G.E., Inc. of Houston.13 Although
finding in that case that the licensor and licensee had created the
impression of a single-integrated enterprise, the Board nevertheless
declined to find that the licensor and licensee were joint employers,
and this because neither the license provisions nor the actual practice
of the parties revealed that the licensor had the power to exercise, or
actually did exercise, control over the labor policies of the licensee.
We believe the same conclusion is compelled in this case for the same
reason.
The majority states that it does "not intimate by [its] holding that
licensor-licensee arrangements in a discount department store neces-
sarily create a joint-employer relationship." Yet, the majority
reverses the Regional Director's conclusion that Thriftown and Astra
are not joint employers for the declared reason that the Regional
Director "failed to take into consideration the special nature of the
relationship which exists between the parties in a discount depart-
ment store." From our reading of the majority opinion we take it
that our colleagues consider the creation of the outward appearance
of a unified enterprise to be the mark of the "special nature of the
relationship" to which they allude. If that is so, we find it difficult to
conceive of a situation where the majority would not almost as a
matter of course find a joint-employer relationship present in any
discount store operation involving a licensor-licensee arrangement. In
that respect we think our colleagues go too far. We still believe in
Is Supra, footnote 10.
GENERAL ELECTRIC COMPANY 611
accordance with past precedent that there must be some legal foun-
dation for a holding of a joint-employer relationship, supported
either by language in the license agreement establishing that the
licensor is empowered to influence the licensees' labor policy, or by a
showing that the licensor has actually done so, from which the power
to do so may be inferred . As there is no support for such a holding
in this case, we dissent.
General Electric Company and International Union of Electrical,
Radio and Machine Workers , IUE, AFL-CIO, Petitioner. Case
1-RC-8712. October 28, 1966
DECISION AND CERTIFICATION OF
RESULTS OF ELECTION
Pursuant to a stipulation for certification upon consent election
executed on November 17, 1965, an election by secret ballot was con-
ducted on December 9, 1965, under the direction and supervision of
the Regional Director for Region 1 among the employees in the
appropriate unit. At the conclusion of the election, the parties were
furnished with a tally of ballots which showed that of approximately
1,070 eligible voters, 1,008 cast ballots, of which 469 were for, and
538 against, the Petitioner, and 1 ballot was challenged. Thereafter,
the Petitioner filed timely objections to conduct affecting the results
of the election.
In accordance with the National Labor Relations Board Rules and
Regulations, Series 8, as amended, the Regional Director conducted
an investigation and, on January 25, 1966, issued and duly served
upon the parties his report on objections in which he recommended
that the objections be overruled in their entirety, and that a certifi-
cation of results of election be issued. Thereafter, the Petitioner filed
timely exceptions to the Regional Director's report.
Upon the entire record in this case, the National Labor Relations
Board finds :
1. The Employer is engaged in commerce within the meaning of
the National Labor Relations Act, as amended, and it will effectuate
the purposes of the Act to assert jurisdiction herein.
2. The Petitioner is a labor organization claiming to represent cer-
tain employees of the Employer.
3. A question affecting commerce exists concerning the representa-
tion of the employees of the Employer with the meaning of Sections
9(c) (1) and 2 (6) and (7) of the Act.
161 NLRB No. 57.