Wagoner Water Heater Co., Inc.

National Labor Relations Board - Board Decisions

May 9, 1973

203 N.L.R.B. 518 (N.L.R.B. 1973)

518 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Wagoner Water Heater Co., Inc . and District Lodge
No. 155 of the International Association of Machin-
ists and Aerospace Workers , AFL-CIO. Case 26-
CA-4334
May 9, 1973
an overstocked condition of Respondent's warehouses and
a lack of orders for shipments of its products.... "
Evidence was taken on the controverted issues in Nash-
ville, Tennessee, on October 3, 4, and 26, 1972. Briefs were
thereafter filed by General Counsel and by Respondent.
Upon the entire record including voluminous exhibits,
upon my observation of the witnesses, and upon consider-
ation of the briefs, I make the following:
DECISION AND ORDER
BY CHAIRMAN MILLER AND MEMBERS JENKINS AND
KENNEDY
On January 23, 1973, Administrative Law Judge
Arnold Ordman issued the attached Decision in this
proceeding . Thereafter, the General Counsel filed ex-
ceptions and a supporting brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended , the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three -member panel.
The Board has considered the record and the at-
tached Decision in light of the exceptions and brief
and has decided to affirm the rulings , findings, and
conclusions of the Administrative Law Judge and to
adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board adopts as its Order the recommended
Order of the Administrative Law Judge and hereby
orders that the complaint herein be, and it hereby is,
dismissed in its entirety.
DECISION
STATEMENT OF THE CASE
ARNOLD ORDMAN, Administrative Law Judge: Pursuant to
an unfair labor practice charge filed on May 1, 1972, a
complaint issued on June 14, 1972, alleging that Respon-
dent ( 1) violated Section 8(a)(1) of the National Labor Rela-
tions Act, as amended, in that its supervisor and agent,
Estelle Williams, on or about April 20, 1972, interrogated an
employee concerning his union membership , activities, and
desires and solicited and threatened an employee for the
purpose of discouraging membership in, and support for,
the Union ; and (2) violated Section 8(aX3) and ( 1) of that
Act by a mass layoff on April 24, 1972, of 98 employees
because they engaged in union or concerted activities. Re-
spondent in its answer to the complaint , dated June 23,
1972, denied that it had engaged in the alleged unfair labor
practices and, in addition: pleaded affirmatively that the
mass layoff "was motivated by economic conditions due to the office of assistant treasurer and is an agent of Respondent
FINDINGS AND CONCLUSIONS
I JURISDICTION
Respondent is a corporation with its office and place of
business located in Nashville, Tennessee, where it is en-
gaged in the manufacture of water heaters. Its interstate
purchases and sales during the year preceding issuance of
the complaint exceeded in each instance $50,000 in value.
Respondent is admittedly an employer engaged in com-
merce within the meaning of Section 2(6) and (7) of the Act.
I so find. It is further admitted, and I find, that the Union,
the charging party herein, is a labor organization within the
meaning of Section 2(5) of the Act.
Jurisdiction is properly asserted in this proceeding.
II THE ALLEGED UNFAIR LABOR PRACTICE
A. Chronology of Events
Pursuant to a petition for certification filed with the
Board on February 18, 1972, and election was held among
Respondent's employees on April 21, 1972. The Union, the
charging party herein, prevailed in the election and on May
1, 1972, the Union was certified as the exclusive bargaining
representative of Respondent's production and mainte-
nance employees with certain inclusions of no particular
relevance here.
As already noted, the alleged interrogation, solicitation,
and threat by Estelle Williams occurred on April 20, the day
before the election. The mass layoff of the 98 employees
occurred on April 24, 3 days after the election.
The evidence relating to the Estelle Williams incident on
April 20 derives solely from the testimony of employee Clar-
ene Hight. Hight testified that Estelle Williams, whom he
identified as secretary and treasurer for Respondent,' ap-
proached him on April 20 on one of her infrequent visits to
the plant floor and asked him whether he thought all em-
ployees of Respondent wanted the Union. Hight said he
thought the majority did and Estelle Williams responded,
"Well, you are a good talker; if I were you I would go
around and talk to the other employees and try to talk them
out of joining the Union." Estelle Williams added the com-
ment, according to Hight, that if the Union did come in, the
employees might lose some work or the plant might even be
closed. No one other than Hight or Williams was present at
this conversation. Hight testified that he had known Estelle
Williams for about 17 or 18 years but only in a work rela-
tionship, not on social basis. Hight further testified that
1 The complaint alleges, and the answer admits, that Estelle Williams holds
203 NLRB No. 84
WAGONER WATER HEATER CO., INC.
other than this conversation with Williams he had had no
conversations with any management representative con-
cerning the Union during the entire period relevant to this
proceeding. So far as appears in this record, Estelle Wil-
liams was involved in no other way in any of the events here
under consideration.
Estelle Williams did not testify and Hight's testimony as
to his conversation with her on April 20 stands undisputed
and unchallenged. I credit that testimony.
Many of the essential facts relating to the mass layoff of
April 24 are also undisputed. The complaint alleges and the
answer admits that Respondent laid off 98 employees on
that day. Shortly before quitting time, each of the 98 em-
ployees were given a layoff slip stating that the reason for
the layoff was lack of work. Respondent's employee com-
plement at the time numbered about 120 employees. All 98
employees who were laid off on April 24 were recalled or
offered reinstatement between May 8 and May 15, 1972.2
B. Analysis and Conclusions
The principal matter in controversy in the instant case
is the motivation for the mass layoff of April 24, 1972.
General Counsel contends that the layoff was a reprisal by
Respondent against the employees because of their support
of the Union in the organizational campaign and in the
election of April 21, 1972. Respondent, on the other hand,
contends that the reason for the layoff was solely economic
and resulted from the fact that its warehouses were over-
stocked, that there was a lack of orders for shipments of its
products, and that production had to be curtailed for a
sufficient period of time to enable its inventory to be re-
duced.
According to Respondent's witnesses, whose oral testi-
mony in this regard was consistent and substantially un-
shaken, Walter Vallett, Jr., chairman of the board for
Respondent and the top official in charge of and responsi-
ble for Respondent's operations, made the decision to effect
a layoff. That decision was prompted, according to Vallett,
by the fact that Respondent's warehouses were full; that
Respondent's principal customer, Lochinvar Water Heater
Corporation, to whom Respondent had for some time been
shipping heaters in advance of Lochinvar's scheduled deliv-
ery dates, had notified Respondent that because of
Lochinvar's own overstocked condition, it could no longer
take or pay for any more heaters from Respondent; and that
a lack of releases, i.e., shipping dates, for other customers
of Respondent precluded continued full operation for its
plant because its warehouses were already full.
Vallett, whose testimony in material respects was con-
firmed by Robert M. Dunn, vice president of Lochinvar,
and by Kelly Davis, vice president of Respondent, advised
Kelly Davis of his decision to effect a layoff and the reasons
therefor, and instructed Davis to carry out the decision.
Vallett did not tell Davis how many people to lay off or
what criteria to apply in that regard. No fixed date was set
for recalling the laid off employees although it was con-
2 General Counsel, in its brief filed following the hearing, makes no request
for an order of reinstatement but asks that the employees be reimbursed for
lost wages.
519
templated that production would resume when Lochinvar
could again accept the shipments of heaters.
Davis passed on Vallett's instructions for a layoff to
George Fehrman, Respondent's director of manufacturing.
Vallett and Fehrman discussed guidelines. According to
Davis, the guidelines to be applied were that Respondent
would retain a maintenance crew, would keep the people in
the shipping and receiving department necessary to enable
that department to function, and, as to the production per-
sonnel, would keep a limited number of people who could
perform more than one function so that emergency orders
could be filled or orders completed so as to make up trailer
loads of heaters for shipment. As noted, 98 of the approxi-
mately 120 employees on Respondent's payroll at this time
were laid off. The employees retained were selected on the
basis of their seniority in the particular job classification
they held.3
General Counsel contends that the asserted economic
justification for the layoff of April 24 is sheer pretext, ad-
vanced to conceal the true reason for the layoff, and that the
real motivation for the layoff was retaliation against the
employees because of the union victory in the Board elec-
tion held 3 days earlier. In support of this contention Gener-
al Counsel introduced into evidence a mass of business
records of Respondent and also of Lochinvar Water Heater
Corporation and, based thereon, makes careful and detailed
analyses designed to establish that there was no economic
justification for the mass layoff. Respondent, for its part,
also introduced voluminous business records to establish
the contrary and to corroborate the oral testimony of its
witnesses, and likewise advances careful and detailed ana-
lyses in support of its position.
The burden of proof in this regard rests, of course, upon
General Counsel and the burden in the context of the pre-
sent case is considerable. What is at issue here is not wheth-
er the business considerations which Respondent advances
to support its position were or were not adequate to justify
the mass layoff. The Act imposes no requirement that an
employer exercise good business judgment and exacts no
penalty because he exercises bad business judgment. What
General Counsel must establish here is that Respondent's
decision to effect the layoff was not motivated by business
considerations, but rather by its determination to visit repri-
sals upon its employees because of their union activities and
sympathies.
Moreover, lack of business justification, even if estab-
lished, does not carry the day for General Counsel. Vindica-
tion of its complaint must be based on affirmative evidence
that the motivating reason for the layoff was one proscribed
by the Act-in the instant case, retaliation against the em-
ployees for engaging in protected union or concerted activi-
ties. Given such evidence, lack of business justification for
the layoff would strongly undergird a finding of unfair labor
practice. Absent such evidence, lack of business justifica-
tion would not in and of itself justify a finding of motivation
proscribed by the Act.
General Counsel in its brief (p. 10) recognizes its burden
in this regard. In support of its contention that "the union
3 Apart from the contention that the April 24 mass layoff was itself discri-
minatorily motivated , General Counsel does not argue that the selection of
individuals for layoff or the criteria applied was otherwise discriminatory.
520 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
victory of April 21, 1972, motivated Respondent to institute
its retaliatory measures against its employees," General
Counsel makes reference to three items of evidence: (1)
Respondent's preelection letter to its employees dated
March 23, 1972, urging its employees to vote against union
representation in the April 21 election ; (2) Estelle Williams'
conversation with employee Clarence Hight on April 20,
already detailed; and (3) the mass layoff of April 24, 1972,
3 days after the election.
Item 3 in this list is a bootstrap argument and also an
instance of circular reasoning . Certainly, it is fallacious to
argue that the mass layoff supports a finding of union ani-
mus and then to argue that the animus thus established
warrants a finding that the layoff was discriminatorily moti-
vated. Similarly, General Counsel can derive little comfort
from item 1, Respondent's preelection letter of March 23,
addressed to all its employees. The letter contrasts vigor-
ously, but noncoercively, the economic benefits actually
conferred by Respondent as against the promises made by
the Union . General Counsel stresses the penultimate para-
graph of the letter which reads in relevant part:
Which would you rather have? Proven performance
with good wages and benefits and real job security
through steady employment? Or a lot of promises and
a guaranty only of lost work and lost wages through
strikes? Think about it!
In the context of the entire letter, General Counsel appar-
ently did not consider that the boundaries of lawful expres-
sion of opinion were breached. Indeed, General Counsel
explicitly disavowed at the heanng that the letter contained
a threat or that it constituted an independent violation of
the Act. The argument, rather, is that the letter, particularly
the quoted portion. "illuminates [an] intent" which demon-
strates the illicit motivation for the layoff which occurred a
month later after the union victory in the election . While not
wholly without significance, I find the inference which Gen-
eral Counsel here seeks to draw somewhat tenuous.
Remaining, however, is the fact , heretofore found that
Estelle Williams did on April 20 question employee Clar-
ence Hight concerning the union sympathies of the employ-
ees, did urge him to discourage their adherence to the
Union, and did comment that if the Union came in the
employees might lose some work and the plant might close.
Granted that this was an isolated conversation and that it
did not thwart a union victory in the election, granted also
that there is no showing that Estelle Williams participated
in any way in the decision of layoff, the significance of her
remarks as a member of Respondent's official hierarchy
cannot be wholly discounted. On the other hand, standing
alone or even together with what slight support might denve
from the preelection letter of March 23, I find Williams'
comments wholly inadequate to establish the premise that
the layoff of April 24 was discriminatorily motivated.
Quite naturally, therefore, the gravamen of General
Counsel's case rests upon its assertion that the asserted eco-
nomic basis for the layoff was a fabrication and both the
evidence it presented and its arguments based thereon re-
flect that position. Thus, General Counsel points to the
undisputed fact that Respondent is a wholly owned subsid-
iary of Lochinvar, Respondent's principal customer, and
that both enterprises had interlocking officers and directors.
On the basis of business records introduced into evidence,
General Counsel argues that Lochinvar, whose only busi-
ness was selling heaters , was an even larger customer of
Respondent than the latter 's witnesses had testified and that
by comparison with other periods , Lochinvar' s claim that its
warehouses were overstocked and that it could not accept
any more shipments was exaggerated . In addition , General
Counsel sought to expose Respondent's claim of a scarcity
of release orders for shipment by establishing that some
production did continue and that substantial shipments
were made from Respondent 's plant during the layoff peri-
od both to Lochinvar and to other customers , although
admittedly at a lower level than during the prelayoff peri-
od.' In addition , General Counsel points to Vallett's admis-
sion that business was good and sales were good during the
period from January to June 1972 but makes light of
Vallett's further testimony that because of scheduled deliv-
ery dates, a normal pattern in the industry, Respondent was
unable dunng the period critical here to make substantial
shipments . Finally , General Counsel points to the admitted
fact that Respondent had never had a general layoff before
(Respondent began its operations in August of 1970) even
though on several occasions during that period
Respondent's inventory was even higher than it was at the
time of the April 24 layoff, and that before the layoff em-
ployees of Respondent had put in overtime hours.5
On the basis of the foregoing showing and a number of
ancillary arguments not here enumerated , General Counsel
argues that the proffered economic justification for the
April 24 layoff was sheer pretext.
Respondent , for its part, relies upon both the business
records introduced by General Counsel and business re-
cords Respondent itself introduced to buttress its position
of economic motivation for the layoff. Some of the exhibits
introduced by Respondent were vulnerable in that they
showed inventory on the basis of dollar value , rather than
by number of units , i.e., number of water heaters , tanks, or
parts. Inasmuch as dollar values do not reflect necessarily
the number of units which varied substantially in value and
size , and inasmuch as dollar values of inventory admittedly
included to a substantial degree such items as overhead,
labor costs , and sundry items, they are not truly indicative
of the true quantity of physical inventory . On the other
4 Respondent's business records also establish that Respondent shipped
more heaters in the prelayoff period in 1972 than it had shipped in a compa-
rable period in 1971
5 General Counsel also establishes from Respondent 's business records
that one employee, Edward T Hulme, was hired in the shipping department
on the day of the layoff and worked throughout the layoff penod even though
employees with seniority in that department were laid off. The record casts
no light on this apparent departure from the criterion of seniority as a
guideline to layoffs. On the other hand, in view of the fact that 98 employees
were laid off, that the guideline of seniority does not appear to have been
violated otherwise , that all 98 employees were thereafter recalled or offered
reinstatement, and that Hulme himself was discharged shortly thereafter, it
is questionable that significance can be attached to this single deviation in
the case of Hulme. General Counsel also points to the fact that Respondent
was running advertisements for general help during the layoff period . Again,
the significance of this evidentiary item is questionable inasmuch as the
record shows that Respondent 's business and its employee complement had
been growing since its inception in August 1970, that all 98 laid-off employ-
ees were recalled or offered reinstatement , and that, except for Hulme, no
new employees appear to have been hired during the layoff period.
WAGONER WATER HEATER CO., INC. 521
hand, reference to these exhibits coupled with the exhibits
introduced by General Counsel which do not suffer from
this frailty do establish, as contended by Respondent, that
its inventory was high 6 and that there was a falling off of
orders which called for immediate delivery. A limited
amount of work and shipments continued as was contem-
plated when a portion of the employee complement was re-
tained but the bulk of that work was devoted, not to the
production of tanks but to the maintenance, shipping, and
receiving, and the finished goods assembly areas.
Respondent's inventory did diminish substantially during
the layoff period.
In sum, I conclude and find, after careful review of the
business records and of the analyses based thereon submit-
ted by the parties, that General Counsel has failed to estab-
lish the absence of economic motivation for the layoff, or
that the economic motivation was a pretext to conceal the
true reason for the lockout. Whether the layoff was a wise
business judgment or whether it could have been of more
limited scope and still satisfy Respondent's business needs
is of no legal significance here, for reasons already set forth.
The fact is that Respondent's inventory, whether its magni-
tude was equal to or less than other occasions, was high. The
further fact is that delivery dates for shipments promised no
immediate substantial relief for the swollen inventory.
Whether the relationship between Respondent and its par-
ent, Lochinvar, was wholly at arms' length or closer, as
General Counsel suggests, does not gainsay the undisputed
evidence that Respondent had been making shipments to
Lochinvar in advance of its previously scheduled delivery
dates. Nor do I find basis for discrediting the testimony of
Vallett and of Robert M. Dunn, vice president of Lochin-
var, that Dunn's telephone call to Vallett on the morning of
April 24 cancelling further shipments triggered Vallett's de-
cision to put the layoff into effect forthwith.
Moreover, other evidence of record casts doubt on the
validity of the thesis that the layoff was designed as a repri-
sal against the employees. Ninety-eight employees were laid
off, all in order of seniority. Among those retained were
members of the appropriate unit whom the Union had been
chosen to represent. Among those laid off were recently
hired employees who were ineligible to vote in the April 21
election. Except for one Edward T. Hulme, previously dis-
cussed (fn.5 supra), no new employees were hired and all the
laid-off employees were recalled or offered reinstatement
within 2 to 3 weeks after the layoff. The Union in the mean-
time had been certified as a result of its victory in the April
21 election. In the light of all these circumstances it strains
credulity to believe that Respondent would have undertak-
en so drastic an economic disruption of its business merely
as a demonstration of its hostility to the Union. Finally, it
would appear that such hostility if it did exist would have
manifested itself earlier in the union campaign. Yet, the
only showing made in that regard consists of Respondent's
6 Employee Holbrook , who works as a traffic clerk for Respondent han-
dling loadings and shipments , testified as a witness for General Counsel. His
testimony , consistent with that of Respondent's witnesses , was that
Respondent's warehouse spaces were full on April 24.
preelection letter of March 23, which General Counsel has
disavowed as an independent unfair labor practice, and the
isolated conversation of April 20 between Estelle Williams,
Respondent's assistant treasurer and Clarence Hight, one of
the approximately 120 employees in Respondent's work
force.
In sum, and on all the evidence of record, I conclude and
find that General Counsel has not established that the layoff
of April 24 was discriminatorily motivated and designed to
serve as a retaliation against the employees because of their
union or concerted activities. A violation of Section 8(a)(3)
and (1) of the Act in this regard has not been proved.
Remaining for consideration is the independent violation
of Section 8(a)(1) alleged to have occurred as a result of the
April 20 conversation between Estelle Williams and Clar-
ence Hight. As previously set forth, I find Estelle Williams
did in this conversation question Hight as to whether the
employees wanted the Union, solicited him to talk the other
employees out of joining the Union, and stated that if the
Union came in, the employees might lose some work or the
plant might be closed. These comments would appear to fall
in the category of interference with statutory rights of em-
ployees proscribed by Section 8(a)(1) of the Act. On the
other hand, the total conversation was between individuals
who had a working relationship of many years; so far as
appears Estelle Williams, while admittedly an agent of Re-
spondent, seems to have played no role in labor relations
matters ; the incident was isolated, does not appear to have
been transmitted to other employees, and appears to have
had no impact on the election which occurred the following
day. While entertaining some reservations in this regard, I
am inclined to the view that Estelle Williams' statements on
this single occasion do not rise to the level of a Section
8(a)(1) violation. The Board has also said in a somewhat
comparable situation, "assuming that this single isolated
incident may have constituted a technical violation, we do
not believe that in the circumstances of this case the is-
suance of a Board order would be warranted or would
effectuate the policies of the National Labor Relations
Act." Ben V. Cascio, d/b/a/ Cascio's Food Mart, 197 NLRB
19 (1972). Accordingly, I would dismiss this allegation of
the complaint also.
CONCLUSION OF LAW
The General Counsel has not shown by a preponderance
of the evidence that Respondent committed any unfair la-
bor practice alleged in the complaint.
RECOMMENDED ORDER
I recommend that the complaint be dismissed in its en-
tirety.7
1 In the event no exceptions are filed as provided by Sec. 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions , and recommended Order herein shall, as provided in Sec . 102.48
of the Rules and Regulations , be adopted by the Board and become its
findings, conclusions, and Order, and all objections thereto shall be deemed
waived for all purposes.