297 N.L.R.B. 1012 (N.L.R.B. 1990)

Vandaha Air Freight, Inc And Quick Air Freight, Inc And Cps Delivery System, Inc

National Labor Relations Board - Board DecisionsMar 22, 1990

297 N.L.R.B. 1012 (N.L.R.B. 1990)

1012 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Vandaha Air Freight, Inc and Quick Air Freight, Inc and CPS Delivery System, Inc and Team- sters Local Umon No 957, affiliated with the International Brotherhood of Teamsters, Chauf- feurs, Warehousemen and Helpers of America, AFL-CIO 1 Case 9-CA-22384 March 22, 1990 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT AND DEVANEY On December 8, 1988, Administrative Law Judge Bruce C Nasdor issued the attached dem sion The General Counsel filed exceptions and a supporting brief The Respondents filed limited cross-exceptions, a supporting bnef, and an answer- ing bnef The National Labor Relations Board has delegat- ed its authonty in this proceeding to a three member panel The Board has considered the decision and the record in light of the exceptions and bnefs and has decided to affirm the judge's rulings, findmgs, 2 and conclusions, as modified, 3 and to adopt his recom mended Order We adopt the judge's conclusion that the Re spondents' actions did not violate Section 8(a)(5) and (1) In so doing, we find that, assuming the Re- spondents had an obligation to bargam, 4 the Union waived its nght to such bargaining The facts are fully set forth by the judge In bnef, after industry deregulation in 1980, Quick and Vandaha began to suffer significant financial losses As a result, the companies, mcludmg the parent company, United Transportation (UT), refi- nanced loans in order to obtain additional financ- ing In addition, Vandaha twice negotiated wage reductions with the Union Nevertheless, as of 1985, Quick and Vandaha were suffering serious I On November 1 1987 the Teamsters International Union was read muted to the AFL-CIO Accordingly the caption has been amended to reflect that change 2 The General Counsel imphedly has excepted to some of the judge s credibility findings The Board s established policy is not to overrule an administrative law judge s credibility resolutions unless the clear prepon derance 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 Cu. 1951) We have carefully examined the record and find no basis for reversing the finding 3 In adopting the judge s conclusion that the Respondents actions did not violate Sec 8(aX3) and (1) we rely solely on the absence of evidence of animus in the record In this regard we note that the represented Van claim drivers were treated in the same manner as the unrepresented Quick drivers during the takeover Further in light of our decision here we find it unnecessary to pass on the issue of whether the Respondents are alter egos or a single employer and thus also find It unnecessary to pass on the Respondents contention that the raising of this Issue is time barred 4 In so assuming we find it unnecessary to pass on the judge s discus mon of Otis Elevator Co 269 NLRB 891 (1984) cash flow problems, could not meet their financial obligations, and could not obtain additional financ ing As the judge found, they were facing insolven- cy On May 20, 1985, 5 Ronald Kauffman, Vandaha's president, sent a letter to Union President Sasser requesting a 1-year extension of the parties' collec- tive bargaining agreement because the Company could not afford to increase either benefits or wages Sasser did not reply At that time, Kauff- man believed that the companies' financial predica- ment might be reversed, but by the end of May he had come to believe that cessation of business was imminent unless immediate action was forthcoming He unsuccessfully sought additional bank financing In addition, he and other owners of Quick and Vandaha's parent company, UT, pursued discus- sions, which had begun around the time of Kauff- man's letter to Sasser, concerning whether Colum- bia Parcel Service (CPS) would be interested in coming in and managing the two companies On July 16, Kauffman met with Sasser Both parties presented testimony relevant to this key event The judge's factual findings about this meet- ing, to which no exception has been taken, indicate that he relied on the version of events supplied by Kauffman Essentially, Kauffman testified as fol- lows The meeting occurred at Kauffman's request In this regard, Kauffman telephoned Sasser and told him that the Company was in a cntical penod, and that he really needed to meet with Sasser At the outset, Kauffman reiterated that the Company was in a critical situation He then showed Sasser Vandaha's profit and-loss statement and explained in detail the Company's financial plight Kauffman asked Sasser whether he had any suggestions for ways that Vandaha could overcome its financial predicament, but Sasser had no ideas Kauffman and Sasser went on to discuss business that Sasser had previously obtained for Vandaha That bum ness had been lost earlier in the year, and Kauff man noted that this loss had contnbuted to the Company's critical condition Kauffman asked Sasser again if he had any ideas, and Sasser re- sponded that he had no more ideas Kauffman then asked Sasser what Kauffman should do under the circumstances Sasser again said he did not have any ideas Kauffman said that one option was bank- ruptcy, but that, alternatively, the parent company had under consideration the possibility of having CPS come in and manage Vandaha Kauffman ex- plained the ownership structure of the two compa mes to Sasser In response to Sasser's question con- cermng the fate of the drivers, he advised Sasser 5 All dates are in 1985 unless indicated 297 NLRB No 164 VANDALIA AIR FREIGHT 1013 that CPS used owner-operators and that all Vanda- ha drivers would have the opportunity to become owner-operators Sasser, in response, asked wheth- er Vandaha could be kept at its status quo Kauff- man responded by asking Sasser again if he had any ideas on how to accomplish that in light of the information he had given Sasser on Vandaha's fi- nancial situation Sasser once again responded that he had no solutions Kauffman then said, "If you don't have any ideas, this is a letter that I'd like to pass out to all the drivers tomorrow," and gave Sasser a letter detailing that CPS would be taking over Vandaha and its parent company, Quick Sasser read the letter and stated that there was no sense in meeting with the union negotiating com- mittee, but asked if Kauffman could meet with the drivers instead Kauffman agreed Pursuant to Sasser's request, on July 21 Kauff- man met with Sasser and the drivers at the union hall Sasser told Kauffman at that time that the drivers had agreed to extend the contract for 1 year Kauffman explained that this was not now possible because a decision to contract with CPS had already been made He then discussed manage- ment's decision and how it would affect the dnv- ers Several drivers questioned Kauffman, but Sasser was averse to allowing discussion about how CPS, a nonunion company, operated On July 23, Kauffman sent Sasser a letter confirming the July 16 discussion and the July 21 meeting On July 27 the Union's attorney sent Kauffman a letter, requesting, for the first time, information concerning Vandaha's contracting decision and re- questing bargaining over both the decision and its effects By the time Kauffman received the letter, the decision had been effectuated 6 As a preliminary matter, we note that Kauff- man's May 20 letter to Sasser requesting an exten- sion of the parties' agreement stated that Vandaha could not afford wage or benefit increases Further, Kauffman set up the July 16 meeting because the Company was in a cntical period Thus, at the time Kauffman and Sasser finally met, Sasser was well aware of Respondent Vandaha's economic difficul- ties, and of the urgency of the situation In fact, the Union had been privy in some degree to the pre- cariousness of Vandaha's financial' situation for some time and had twice agreed to wage conces- sions since 1980 Thus, it cannot be said that Sasser was completely unprepared for Kauffman's grim fi- nancial news on July 16 or his request for sugges- tions about ways Vandaha could overcome its pre- dicament It is undisputed that Sasser, in response, simply stated that he had no ideas, and asked only 6 CPS took over management of Quick and Vandaha on July 29 if Kauffman had any He did not request bargain- ing, or request additional time to consider the matter On July 16 Kauffman, at the outset, showed Sasser Vandalia's profit-and-loss statement and ex- plained in detail the Company's financial plight Moreover, after Kauffman explained that the parent company had under consideration the possi- bility of having Respondent CPS come in and manage Vandaha, he further discussed the owner- ship and employee structure of the companies with Sasser Thus, Sasser was given sufficient informa- tion to alert him, at least, to the issues involved and some of the variables that could affect unit employ- ees Yet Sasser not only did not request bargaining over the decision, he did not request further bar- gaining over the effects Instead, he asked whether Vandaha could be kept at its status quo In re- sponse, Kauffman again asked Sasser if he had any ideas about how to accomplish this in light of Van- daha's financial situation Again, Sasser responded that he had no solutions Only then, in the absence of Sasser coming forward with suggestions, propos- als, or even a request for time for further consider- ation, did Kauffman give Sasser a copy of the letter he wanted to distribute to Vandaha employ- ees the next day advising them that CPS would be taking over Vandal's and Quick Once again, Sasser made no request for bargaining and, to the contrary, stated that there was no point in meeting with the Union's negotiating committee He instead suggested that Kauffman should meet with the drivers It is well settled that "when an employer notifies a union of proposed changes in terms and condi- tions of employment, it is incumbent upon the union to act with due diligence in requesting bar- gaining" Jim Walter Resources, 289 NLRB 1441, 1442 (1988), quoting Clarkwood Corp, 233 NLRB 1172 (1977) We find that, under all the circum- stances, Respondent Vandalia, through Kauffman, afforded the Union a reasonable opportunity for bargaining and the Union failed to take advantage of that opportunity In this regard, contrary to the General Counsel's assertion, Kauffman did not present the Union with simply a fait accompli A review of the entire July 16 conversation reveals that the Union was made aware of Kauffman's sense of urgency Kauffman presented to Sasser an accurate description of the proposed takeover the parent company was considering He neither con- cealed nor misrepresented the details of the propos- al 7 Moreover, by his repeated requests for sugges- 7 Cf Michigan Ladder Ca, 286 NLRB 21 (1987), in which the Board found that the employer acted unlawfully in concealing or misrepresent- Continued 1014 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tons, Kauffman clearly indicated that no irrevoca- ble decision had been made and that he was recep- tive to any other ideas 8 The Union's silence in the face of Kauffman's remarks precluded, in effect, a test of the sincerity of Kauffman's solicitation of Sasser's input In this regard, it was only after Sas- ser's failure to respond with any new proposal, even a proposal for further bargaining, that Kauff- man showed Sasser the letter he wanted to distrib- ute the next day Not only did Sasser fail to request bargaining at this point, as was his obligation when confronted with the proposed change, he in fact stated that there was no point in doing so Further, Sasser sought no further opportunity to propose al- ternative solutions and, indeed, suggested none, aside from his statement at the union meeting, after the decision itself had been made, that the drivers would agree to extend the parties' contract More- over, at the July 21 meeting, the Union, after being told that the decision itself had been made, had an- other opportunity to request effects bargaining and failed to do so We conclude that, in the circumstances of this case, the Union failed to exercise due diligence in apprising Vandalia of its desire to negotiate over the takeover decision or its effects on unit employ- ees Thus, the Union waived its right to bargain when, on Sasser's being repeatedly confronted with the urgency of Vandaha's situation, it failed to re- quest bargaining or to request information regard- ing the takeover decision for more than 10 days Accordingly, on the basis of the foregoing, we agree with the judge that there was no violation of Section 8(a)(5) and (1) Salem College, 261 NLRB 327, 335-337 (1982) ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed mg details of an arrangement already worked out with another company when it purported to negotiate with the bargaining representative 8 Compare Owens-Corning Fiberglas Corp, 282 NLRB 609 fn 1 (1987) James R Schwartz, Esq , for the General Counsel David A Kadela, Esq and James M L Ferber Esq , for the Respondent John R Doll Esq , for the Charging Party DECISION STATEMENT OF THE CASE BRUCE C NASDOR, Administrative Law Judge This case was tried at Dayton, Ohio, on June 11 and July 28, 29, and 30, 1987 The original charge was filed on Sep- tember 10, 1985, and the amended charge was filed on April 17, 1986 The complaint and notice of heanng issued on March 12, 1987 The complaint alleges that Vandaha Air Freight Inc (Vandalia), Quick Air Freight Inc (Quick), and CPS De- livery System, Inc (CPS), are alter egos and a single em- ployer It is alleged that as such, they violated Section 8(a)(1), (3), and (5) of the Act, by unilaterally changing terms and conditions of employment, laying off drivers and refusing to furnish information 1 On the entire record, including my observation of the demeanor of the witnesses, and after considering the briefs, I make the following FINDINGS OF FACT I JURISDICTION At all times material herein, Vandaha, an Ohio corpo- ration, has been a subsidiary of Quick and a wholly owned subsidiary of United Transportation, Inc (UT), engaged in the business of interstate surface freight haul- ing and delivery from its locations in Vandalia and Co- lumbus Ohio At all times material herein, .Quick, an Ohio corpora- tion and the wholly owned subsidiary of UT, with of- fices at Columbus, Ohio, has been engaged in the inter- state air freight trucking business at several locations within the State of Ohio, including the location at Van- dalia At all times material herein, CPS, an Ohio corpora- tion, with offices at Columbus, Ohio, has been engaged in the interstate air freight warehousing and trucking business at its facilities at Vandaha and Columbus, Ohio During the preceding 12 months, a representative period, Vandalia, Quick, and CPS, individually and/or collectively, in the course and conduct of their business operations, derived gross revenues in excess of $50,000 During the same period the Respondents collectively purchased goods, products, and materials valued in excess of $50,000 directly from points located outside the State of Ohio The Respondents are now, and collectively have been at all times material herein, employers engaged in com- merce within the meaning of Section 2(2), (6), and (7) of the Act II THE LABOR ORGANIZATION The Union is now, and has been at all times material herein, a labor organization within the meaning of Sec- tion 2(5) of the Act III THE APPROPRIATE UNIT The following employees of the Respondent, consti- tute a unit appropriate for the purposes of collective bar- gaining within the meaning of Section 9(b) of the Act All full-time and part-time employees of Vandalia Air Freight, Inc, at its Vandalia, Ohio establish- ment, including truckdnvers, helpers and warehou- 1 At the hearing counsel for the General Counsel amended the com- plaint to include this allegation VANDALIA AIR FREIGHT 1015 semen excluding all office clerical employees, pro- fessional employees, guards, dispatchers, and super- visors as defined in the Act, and all other employ- ees IV ALLEGED UNFAIR LABOR PRACTICES The Facts Essentially the faces are not in dispute Therefore, my review of the facts is a composite of witnesses' testimony not in dispute Where a divergence is apparent, I will address it Quick and Vandaha have been in existence since ap- proximately 1960 Prior to August 1985, they were en- gaged in the pickup and delivery business involving air freight trucking, i e, moving freight to, from, and be- tween airports Quick functions from the Columbus, Ohio Internation- al Airport, and Vandalia functioned from a terminal near the Dayton Airport In the early 1980s Vandaha moved to a larger facility on Stop Eight Road approximately 4 miles from the air- port CPS was, and is, engaged in a different area of the transportation industry It was incorporated in 1960 under the name, Columbus Parcel Service Inc CPS has had its own terminal in Columbus, Dayton, Cleveland, and Cambridge, Ohio, plus agent terminals in Akron, Ironton, Manon, Toledo, and Youngstown, Ohio Cus- tomers of CPS' pooling and distribution business brings trailers of freight to a CPS terminal, where CPS breaks it down into smaller loads to be delivered to individual stores Most of CPS' drivers have been owner operators, although there is a smaller group of hourly dnvers None of the CPS drivers has ever been represented by a labor organization United Transportation (UT) had offices in Columbus, Ohio, where it was engaged in the taxicab, ambulance, and auto leasing business, employing approximately 200 employees The mechanics at UT's taxicab operation have been represented by a different local of the Team- sters Union UT employs between 12 and 15 mechanics As of July 1985, Quick was a wholly owned subsidiary of UT, which had purchased Quick in 1972 from its original owner Vandalia, a wholly owned subsidiaryLof Quick, was acquired by Quick in 1973 UT, the parent of Vandalia and Quick, was formed in 1966 Since its inception UT's officers, directors, and share- holders have remained constant Marvin Glassman is a 35-percent shareholder, Kenneth Kauffman is a 25-per- cent shareholder, Jeff Glassman is a 15-percent share- holder, and Ronald Kauffman is a 25-percent sharehold- er As of July 1985 these individuals, all close relatives, were also officers and directors of Quick and Vandalia, positions they assumed when UT acquired these compa- nies In 1963 CPS was formed by different individuals who are not related to any of the persons with interest in Quick, Vandalia, or UT in 1972 Ronald Kauffman pur- chased 50-percent interest in CPS He purchased this stock for $100,000 on his own behalf as an investment In 1980 Ronald Kauffman's wife, Renee Kaufman, who was in law school, went to work for CPS, initially without pay, during the summer when school was not in session, at the request of J C Underwood 2 CPS was running out of money, and the purpose of hiring Renee Kauffman was an attempt to turn its financial picture around After she completed law school during 1981, Renee Kauffman received a 33-percent interest in CPS from her husband Ronald and Underwood, to induce her not to leave CPS and enter the practice of law During 1983 Underwood sold his 33-percent interest in CPS back to CPS, therefore Ronald Kauffman became a 48- percent shareholder and his wife Renee a 52-percent shareholder Renee Kauffman took the controlling inter- est because she was managing CPS Since that time own- ership has remained the same Renee Kauffman has never had an interest in Vandalia, Quick, or UT, nor has she ever been involved in these concerns as an officer or di- rector Moreover, the individuals involved in UT had never had any interest in, or position with, CPS Ronald Kauffman has been president of Quick since 1972 He was also president of Vandalia from 1973 until it was merged into Quick Prior to July 29, 1985, he was in charge of the daily management of both operations, with overall responsibility for labor relations, operations, sales, safety, bank financing, and "keeping the company going" Kauffman handled contract negotiations with the aid of Paul Smith who was the vice president of Quick and Vandalia In addition, Kauffman, on a monthly basis, sought the advice of Ken Kauffman and Jeff Glassman, owners of UT Since 1983, Renee Kauffman has been the president of CPS and, beginning in 1982, she has had the overall re- sponsibility for the daily management and operation of that business, attending to labor relations, finance, admin- istration, and difficult cases of customer service Kauff- man testified that she maintained an open door policy and she authored the employee manual As of July 1985, Mary Klemhenz was CPS' general manager, Jim Jones its comptroller, David Clifton its op- erations manager, Jim Limbers its customer service man- ager, and Mike Tweed its electronic data processing manager The last category was the company's various terminal managers Ronald Kauffman enjoyed no status or capacity at CPS prior to July 29, 1985 In no way did he participate in any management decision Moreover, none of the other management personnel of UT, Quick, and Vandaha ever worked for CPS Similarly, neither Renee Kauff- mann nor any other management personnel at CPS ever worked for Vandal's, Quick, or UT Vandaha and Quick operated with full and part-time drivers Vandalia's full-time dnvers were represented by the Charging Party (Union), while Quick's drivers and the part-time employee dnvers at Vandalia were unrep- resented CPS for many years almost exclusively used owner operators 2 Underwood was the owner when Ronald Kauffman purchased his 50-percent Interest 1016 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Quick and Vandalia were engaged in a different sector of the freight/transportation industry than CPS, and serviced different customers than CPS Furthermore, the Quick/Vandalia contingent and CPS had separate oper- ating authorities, did not share or interchange equipment, employees, or management personnel, and had separate bank accounts Moreover, the entities maintained sepa- rate books and records, filed separate tax returns, main- tained separate insurance, utilized different accountants, paid their employees separate wages,and gave them sepa- rate benefits Vehicles at the Vandal's facility used both the "Quick" and "Vandalm" logo Prior to 1980 Quick and Vandaha held operating au- thorities (permits) granted by the interstate Commerce Commission (ICC) These authorities were granted on the basis of need and necessity and, as such, were quite valuable, rendering competition almost nil In 1980 the Federal government deregulated the truck- ing and air freight trucking industries, effectively causing their operating authorities to become virtually worthless A large proportion of Quick and Vandalia customers directed their business to air freight forwarders or trans- ferred their business to new companies entering the in- dustry Therefore, Quick and Vandalia commenced to suffer significant losses in revenue Over a 4-year period, from the fiscal year ending Oc- tober 31, 1982 through the fiscal year ending October 31, 1985, Quick lost $1,467,520, of which $403,500 was ac- countable to Vandalia In 1982 Quick had an accumulat- ed deficit (negative net worth) of $552,179 By 1985 its accumulated deficit was $1,181,708 Vandalm had an ac- cumulated deficit of $1,158 in 1982, which by the close of fiscal 1985 had increased to $315,758 Alfred Friedman, a certified public accountant for Coopers and Lybrand, testified that in June 1985, Ronald Kauffman sought his advice relative to the financial status of Quick and Vandalm Friedman told Kauffman that he did not know how he was going to continue in business without the infusion of additional capital He testified additionally that if Quick and Vandalm went into bankruptcy, UT would probably be similarly affect- ed and forced into bankruptcy as well Moreover, based on Fnedman's analysis of the finan- cial status of the various entities, Friedman testified that they needed additional capital or that they would not be able to meet their operating expenses Fnedman testified further that Quick and Vandalia would have to reduce their drivers' cost and related benefits, payroll taxes, etc, by approximately $400,000 for Quick and Vandalm to break even for the year ending October 31, 1985 It should be noted that Friedman worked with Quick, Van- dalia, and UT for quite a number of years and appeared to be knowledgeable with respect to reviewing the finan- cial information which was introduced into evidence Be- cause of its tenuous financial footing as early as 1982, Vandaha requested economic concessions from the Union At that time, Vandalia and the Union had been parties to successive contracts covering the unit of full- time drivers, even before Quick's acquisition of Vandalia The Union also had represented Vandalia's mechanics and office clericals Accordingly, in 1982 the parties negotiated a 3-year contract, to remain in effect until July 28, 1985, provid- ing that the drivers' hourly rate would be reduced, with no increase during the duration of the contract, but only a wage reopener in the second year As a result of reduction in working capital, in Decem- ber 1982, Quick and Vandalm refinanced loans with Ban- cOhio National Bank to attain additional financing Each executed a note for $650,000, which resulted in an out- standing principal of $1 million In the aggregate, those entities received $380,000 in additional financing They gave the bank a security interest in substantially all their assets At the same time UT and its other subsidiaries also refinanced notes they had with the bank The total of all the notes executed by UT and its subsidiaries, in- cluding Quick and Vandalm, came to approximately $2 million The bank also required that the various entities, including UT, cross-guarantee the notes executed by the other entities Moreover, the individual stockholders of UT were required to execute personal guaranties As a consequence of its continuing losses, Vandaha ne- gotiated a further reduction in the drivers' hourly rate from $8 70 an hour to $8 an hour in March 1983 Vanda- lm advised the Union that the pay reduction was not enough to salvage the company, but was only a stopgap measure and that in order to recover, the company needed to greatly increase its revenues Quick's and Vandalia's revenues increased in 1984 as the result of a sale of a building and the New American Freight account, which was a Vandalm account Unfor- tunately, this account only lasted until February 1985 be- cause, among other reasons, American Freight wanted Vandalia to pull doubles, and Vandaha did not have the wherewithal to do so As a result, by 1985, cost and expenses exceeded income and Quick and Vandalia suffered serious cash- flow problems, could not meet their bills, nor obtain ad- ditional financing They were facing insolvency On May 20, 1985, Ronald Kauffman, by letter, com- municated with Union President Charles Sasser and re- quested a 1-year extension of Vandaha's collective-bar- gaining agreement because the company could not afford to increase either benefits or wages Sasser made no re- sponse At the time Kauffman sent the letter he believed that management could "turn the companies around" and alleviate their financial problems Quick's and Vandaha's profit-and-loss statements for the period ending May 31, 1985, reflected substantial losses During this same period, Quick and Vandaha re- ceived their workers compensation premiums totaling ap- proximately $40,000 and payable in the late summer Nei- ther company had the finances to honor the payments Vandaha and Quick were in the position of making only partial payments to vendors and they were in arrears on payments for leased trucks Accordingly, Kauffman be- lieved that cessation of the business was imminent unless immediate action was forthcoming Kauffman and the other stockholders of UT requested additional financing from BancOluo but their request was denied They sought the advice of counsel and business advisors, and were told that without an immediate mfu- VANDALIA AIR FREIGHT 1017 sion installation of capital, Quick and Vandaha would be forced to go out of business They also learned that they would no longer be saleable if in bankruptcy, and the guaranties on bank notes would be activated, resulting in the bankruptcy of UT and its other subsidiaries At about the time Ron Kauffman wrote to Sasser, he and the other owners of UT approached Renee Kauff- man to explore whether her company, CPS, was interest- ed in taking over and managing Quick/Vandaha At that time, CPS was showing a profit and exploring alterna- tives to widen its operations After successive discus- sions, Renee Kauffman expressed interest in acquiring Quick and Vandal's, but was cognizant that a sale was not practical because of the two companies' financial conditions It was contemplated that CPS combine its operations with, and assume control over, Quick and Vandaha CPS would take an option to purchase the companies if it could turn them around financially Renee Kauffman took the proposal to the other members of her management at CPS to analyze its feasibility Mary Kleinhenz, general manager of CPS, testified that Renee Kauffman presented to the management team that they, as a team, take on the management of the Quick and Vandaha operation The management team discussed the poor financial condition of Quick/Vandaha and a question-and-answer period ensued The manage- ment team voted for the takeover and operation Accordingly the parties needed to work out additional financing with BancOhio so as to separate the Quicic/Vandalia debt from the debt owed by UT and its other subsidiaries After some reluctance, by mid-July, the bank agreed to the proposal On July 23, 1985, UT and CPS entered into agreement outlining the terms Furthermore, UT and CPS entered into a management agreement embodying the terms of CPS' assumption of control over Quick and Vandaha The management agreement, which was effective from July 29, 1985 to December 31, 1986, provided that CPS would receive 3 percent of the gross sales of Quick and Vandaha for the reminder of 1985, if they showed a profit, and 3 percent of gross sales during 1986, whether or not they showed a profit It was also determined that CPS would use owner-operators instead of employee drivers at Quick and Vandal's Accordingly, Ronald Kauffman obtained an agreement from CPS to offer all of Quick and Vandaha's drivers the opportunity to become owner-operators On July 16, 1985, Ronald Kauffman met with Charles Sasser to advise him that UT has under consideration the possibility of having CPS manager Vandaha and to ask Sasser for any suggestions He showed Sasser the recent profit-and-loss statement and explained Vandaha's finan- cial plight in detail He asked Sasser whether he had any suggestions for ways that Vandaha could surmount its fi- nancial predicament, but Sasser had no suggestions Kauffman also explained that UT had been negotiating with CPS to have it assume management and control of Vandaha and described the similarities in ownership be- tween CPS and UT He advised Sasser that CPS used owner-operators and that it could offer all the Vandal's drivers the opportunity to become owner-operators Sasser asked whether Vandaha could be kept at it status quo, and Kauffman responded by asking whether he knew of any way to accomplish that in view of Vanda- ha's financial condition Sasser reiterated that he did not have any solutions Kauffman gave Sasser a memoran- dum which he intended to distribute to the Vandalia em- ployees the next day telling them that CPS would be taking over the management of Quick and Vandalia Sasser read the letter, and stated that there was no point in meeting with the Union's negotiating committee, that they should meet with all of the drivers The next day, Kauffman distnbuted to the Quick and Vandaha employees the letter he had shown to Sasser Subsequently Sasser and Kauffman arranged to meet with Vandaha's drivers at the Union Hall in Dayton, Ohio, on July 21, 1985 Upon arnvmg at the Union Hall, Kauffman was told to wait outside Sasser and the drivers were meeting over what they could do to the decision to have CPS manage Vandaha They voted to accept Kauffman's pre- viously withdrawn, 2-month old offer to extend the col- lective-bargaining agreement for 1 year Kauffman then came into the meeting at which time Sasser gave him an agreement extending the contract for a year Kauffman explained that the decision to contract with CPS had been made and that it was not now possible to enter into an extension He then discussed the rationale of contract- ing with CPS The drivers asked Kauffman about their future and he advised them that CPS was willing to offer each of them the opportunity to become an owner opera- tor A driver asked how the system worked and Kauff- man responded that CPS representatives would be at Vandalia during the next week to discuss the details of the system Sasser was adverse to allowing Kauffman and the dnvers to discuss in the Union Hall how a non- union company operated A driver asked about vacation pay and Kauffman announced that all amounts owed would be paid, but he would prefer to pay it one week at a time Several drivers asked about retirement benefits and Kauffman agreed to contact the Plan's Administrator and ask him to expedite the processing of the drivers' claims A driver asked if the company would issue layoff letters so that they could collect unemployment and Kauffman agreed to do so if necessary On July 23, 1985, Ron Kauffman sent Sasser a letter confirming the discussions of the July 16 and July 21 meetings On July 27, 1985, John Doll, the Union's attor- ney wrote to Ron Kauffman requesting information with regard to the decision to have CPS manage Vandalia, and asked that Vandal's bargain over both the decision had its effect By the time Kauffman received the letter the decision had been effectuated Kauffman sent the letter to Vandaha's attorney, but no response was given to Doll because within several days the Union filed its initial unfair labor practice charge During the week of July 27, 1985, CPS representatives met with Vandalia and Quick drivers to offer them an opportunity to become owner-operators Of the 24 driv- ers on the Vandaha payroll, only one chose to become an owner-operator CPS took over the management of Quick and Vanda- ha on July 29, 1985, and combined the operations of 1018 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD those companies with its operations in Columbus and Dayton Quick closed its Columbus terminal and moved into the CPS facility and CPS closed its Dayton terminal and moved into the Vandal's facility Renee Kauffman assumed the principle responsibility for the daily man- agement of the combined operation The other members of the CPS management team were responsible for Quick's and Vandalia's operations Ron Kauffman, gave up duties he had previously performed and attended to sales and marketing CPS retained Vandaha's terminal manager in Dayton, Don Fisher Fred Whitt was as- signed as his assistant Immediately after assuming control, CPS changed over Quick and Vandalia to an owner-operator system The trucks owned by Quick and Vandalia were sold to owner-operators, while trucks that Quick and Vandalia leased were subleased to owner-operators Each owner- operator entered into a motor vehicle lease and agree- ment which provided, inter aim, that the operator was responsible for all expenses related to the operation of his vehicle In an effort to be cost efficient CPS and Vandalia/- Quick loads, originating from the Columbus and Dayton terminals were combined CPS paid the Quick/Vandalia owner-operators and charged Quick and Vandalia for that portion of the drivers compensation associated with carrying the freight of their customers CPS and Quick/Vandaha continued to maintain sepa- rate operating authorities The operating authorities held by Quick and Vandal's continued the Same geographical restrictions for owner-operators as those for employee drivers prior to CPS' takeover There were changes in destinations and the freight car- ried by owner-operators In July 1985, approximately 50 percent of Quick and Vandalia's freight was air CPS re- duced that amount to 18 percent 3 In its first year of management CPS eliminated approximately $1 5 million in unprofitable sales This was accomplished among other things through computerization Quick had been noncomputenzed CPS also reduced the number of em- ployees at Quick CPS and Quick/Vandalia maintained separate books, records and used different accountants Furthermore their bank accounts and insurance policies were different, and they filed separate tax returns and paid their employ- ees separate wages and different benefits CPS extended loans to meet Quick's and Vandaha's impending cash requirements As a result of the improve- ment of Quick's and Vandaha's financial status, CPS ex- ercised its purchase option in December 1986 The terms being that CPS took over $1 2 million in liabilities and released all the other owners of their personal guarantees on those loans Thereafter, CPS merged Vandalia into Quick, the result of which is that Vandaha as a corporate entity no longer is in existence 3 Management s goal is to cut air freight to under 10 percent according to the testimony of Renee Kauffman Conclusion and Analysis Alter Egos and Single Employer The critical factors in determining alter ego status are whether the businesses have substantially identical own- ership, management, business purpose, operation, equip- ment, customers and supervision Crawford Door Saks Co, 226 NLRB 1144 (1976) The method of analysis for determining single employ- er status bears upon four criteria (1) interrelation of op- eration, (2) common management, (3) centralized control of labor relations, and (4) common ownership and finan- cial control Radio Union Local 1264 v Broadcast Service, 380 U S 255 (1965), Alabama Metal Products, 280 NLRB 1090 (1986) The unrefuted facts disclose that the decision by Quick and Vandaha to contract with CPS was based solely upon economic realities and considerations Quick and Vandaha could not continue to function without an im- mediate infusion of working capital There is a dearth of any evidence of antiunion minus or motive to avoid statutory obligations Cf Love's Bar- becue Restaurant No 42, 245 NLRB 78 (1979) To the contrary, evidence reflects an excellent relationship be- tween the parties going back many years Moreover, concessions on both sides were made dunng the negotia- tions for collective-bargaining agreements during those years including wage freezes Since 1963, CPS was a distinct entity from Quick and Vandalia, and engaged in a different business Moreover, CPS had different ownership, separate management, sep- arate supervision, separate customers, and separate equip- ment When CPS took control, headed by Renee Kauffman, it remained a separate entity from Quick and Vandalia, CPS had its own staff and management team Ron Kauff- man owned a minority interest in UT, the parent corpo- ration CPS was not "merely a disguised continuance of the old employer" Southport Petroleum 315 U S 100 (1941) After CPS took control, several management members of Quick and Vandaha including Ron Kauffman re- mained Kauffman's role was confined to sales and mar- keting, a complete departure from his previous responsi- bilities It is clear that CPS management was the instru- ment of control over the old Quick/Vandaha manage- ment Renee Kauffman directed and governed labor rela- tions Quick's and Vandaha's personalities were sub- merged into the CPS identity In the beginning CPS con- solidated by moving its Dayton operations into Vanda- ha's terminal and Quick's terminal into its Columbus ter- minal It then sold or subleased the trucks used by Quick and Vandal's customers CPS changed the character of the Quick/Vandal's business by eliminating a large per- cent of air freight and eliminating unprofitable accounts Thus the essence of Quick's and Vandalia's business pur- pose, modus operandi and management, changed drasti- cally Accordingly the burden of establishing an alter ego or single employer status has not been met Therefore I rec- VANDALIA AIR FREIGHT 1019 ommend dismissing these allegations and the allegation that Section 8(a)(3) of the Act has been violated The Duty to Bargain Otis Elevator, 269 NLRB 891 (1984), sets forth the pa- rameters as to whether the decision to contract out work and layoff employees is a mandatory subject of bargain- ing In Otis Elevator, bargaining unit work was transferred from one location to another The Board stated, the "critical factor to a determination whether the decision is subject to mandatory bargaining is the essence of the de- cision itself, i e, whether it turns upon a change in the nature or direction of the business, or turns upon labor cost, not its effect on employees nor a union's ability to offer alternatives" It was concluded that there was a change in the "nature and direction of a significant facet of its busi- ness" and the board found that the decision to transfer work was at the "core of entrepreneurial control," out- side the scope of Section 8(d) and therefore not subject to bargaining See also Gar Wood-Detroit Truck Equip- ment, 274 NLRB 113 (1985) Here, the decision by Vandal's to lay off drivers and utilize owner-operators came as the result of CPS taking over Quick/Vandalia management The decision was based solely on business principles and economic reali- ties, therefore there was no duty to bargain Although the operational change resulted in the lowering of some labor costs, the decision to contract with CPS did not turn upon labor costs Ron Kauffman advised the Union that merely lowering the labor cost was not a solution There occurred a fundamental change in the nature and direction of Quick and Vandalia's business Accordingly, the decision was not a mandatory subject of bargaining and the Respondent did not violate Section 8(a)(5) or 8(d) of the Act I recommend dismissal of the 8(a)(3) and (5) allegations Assuming arguendo that Vandaha had a duty to bar- gain, in my opinion it met that obligation Kauffman in- vited the Union to suggest alternatives The meeting of July 16, 1985, ended at impasse The Union had no alter- native suggestions for avoiding imminent financial col- lapse of Quick/Vandaha The Union, by its president, Sasser, only asked to maintain the status quo, things should remain the same At Kauffman's meeting with the drivers on July 21, 1985, he explained that CPS would offer each driver the opportunity to work as an owner-operator He promised their vacation pay would be forthcoming and that he would contact the retirement plan administrator to deter- mine how the drivers might obtain their benefits Kauff- man also agreed to give employees layoff letters so they could collect unemployment Therefore, in my view, al- though not required to bargain, the Respondent did indeed bargain over the decision to contract with CPS and convert to owner-operators, and the effect on the employees of that decision Section 10(b) as a bar to the Alter Ego/Single Employer Allegation Historically the Board and courts have allowed the General Counsel to amend complaints and add allega- tions outside the 6-month, 10(b) period, if they are ,close- ly related to the allegations of the timely filed charge A frequently cited test is set forth in NLRB v Dimon Coil, 201 F 2d 484, 491 (2d Cir 1982) 1 A complaint, as distinguished from a charge, need not be filed and served within the 6 months, and may therefore be amended after the 6 months 2 If a charge was filed and served within 6 months after the violations alleged in the charge, the complaint (or amended complaint), although filed after the 6 months, may allege violations not alleged in the charge if (a) they are closely related to the violations named in the charge, and (b) oc- curred within 6 months before the filing of the charge In deciding whether amendments are closely related to allegations in the charge, the Board and the courts have considered whether the amendments are factually and le- gally related to the charge National Licorice Co v NLRB, 309 U S 350 (1940) The amendment in the instant case was well prior to the hearing so due process cannot be raised Moreover the Respondents cannot claim they had insufficient time to prepare a defense and present their case In my view the amendment is closely related to the al- legations referred to in the original charge, and therefore not time-barred by Section 10(b) of the Act Based on the above, I will recommend that the 8(a)(1), (3), and (5) allegations of the complaint be dismissed The refusal to furnish information allegation also must be dismissed CONCLUSIONS OF LAW 1 Respondents, and each of them are engaged in com- merce within the meaning of Section 2(6) and (7) of the Act 2 The union is a labor organization within the mean- ing of Section 2(5) of the Act 3 The allegations of the complaint that Respondents, and each of them, have engaged in conduct violative of Section 8(a)(1), (3), and (5) and Section 8(d) of the Act have not been supported by substantial evidence On these findings of fact, and conclusions of law and on the entire record, I issue the following4 ORDER It is recommended that the complaint be dismissed 4 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"