Wally Electrical Supply Co.

National Labor Relations Board - Board Decisions

Jun 7, 1984

270 N.L.R.B. 1089 (N.L.R.B. 1984)

WALLY ELECTRICAL SUPPLY CO.
Wally Electrical Supply Company and Wally Electri-
cal Supply Company, Debtor in Possession and
International Brotherhood of Electrical Work-
ers, Local No. 5, AFL-CIO. Case 6-CA-16731
7 June 1984
ORDER DENYING MOTION
BY CHAIRMAN DOTSON AND MEMBERS
ZIMMERMAN AND DENNIS
Upon a charge and two amended charges filed
by the Union 16 September 1983,1 14 October, and
31 October, respectively, the Regional Director for
Region 6 of the National Labor Relations Board
issued a complaint and notice of hearing 31 Octo-
ber against Wally Electrical Supply Company and
Wally Electrical Supply, Debtor in Possession, the
Respondent, alleging that it has violated Section
8(a)(5) and (1) of the National Labor Relations
Act. Although properly served copies of the
charge, amended charges, and complaint, the Re-
spondent has failed to file an answer to the com-
plaint. By letter dated 17 November the Regional
Attorney informed the Respondent that unless it
filed an answer to the complaint immediately, a
Motion for Summary Judgment would be filed
with the Board. The Respondent filed no answer.
On 6 February 1984 the General Counsel filed a
Motion for Summary Judgment. On 8 February
1984 the Board issued an order transferring the
proceeding to the Board and a Notice to Show
Cause why the motion should not be granted. The
Respondent filed no response.
Ruling on Motion for Summary Judgment
The complaint alleges that about 9 September
the Respondent violated Section 8(a)(5) and (1) of
the Act by laying off bargaining unit employees
and failing to make contractually required pay-
ments to various funds, including health and wel-
fare and pension funds, without prior notice to the
Union and without having afforded the Union an
opportunity to bargain with respect to such acts
and the effects of such acts.
On 22 February 1984 the United States Supreme
Court decided NLRB v. Bildisco & Bildisco, 115
LRRM 2805, 100 LC ¶ 10,771 (1984). The Court
held that the Bankruptcy Court should permit re-
jection of a collective-bargaining agreement if the
debtor-in-possession in Chapter 11 proceedings can
show that the agreement burdens the estate and
that the equities balance in favor of rejection. The
Court also held that a debtor-in-possession does not
commit an unfair labor practice when it unilaterally
All subsequent dates refer to 1983 unless otherwise indicated.
270 NLRB No. 165
rejects or modifies a collective-bargaining agree-
ment before the Bankruptcy Court approves formal
rejection. In connection with this second holding,
the Court stated, in pertinent part:
[T]he Board is precluded from, in effect, en-
forcing the contract terms of the collective-
bargaining agreement by filing unfair labor
practices against the debtor-in-possession for
violating § 8(d) of the NLRA. Though the
Board's action is nominally one to enforce §
8(d) of the Act, the practical effect of the en-
forcement action would be to require adher-
ence to the terms of the collective-bargaining
agreement. But the filing of the petition in
bankruptcy means that the collective-bargain-
ing agreement is no longer immediately en-
forceable, and may never be enforceable again.
Consequently, Board enforcement of a claimed
violation of § 8(d) under these circumstances
would run directly counter to the express pro-
visions of the Bankruptcy Code and to the
Code's overall effort to give a debtor-in-pos-
session some flexibility and breathing space.
See H.R. Rep. No. 95-595, p. 340 (1977). We
conclude that from the filing of a petition in
bankruptcy until formal acceptance, the collec-
tive-bargaining agreement is not an enforcea-
ble contract within the meaning of NLRA §
8(d). Cf. Allied Chemical Workers, supra, at
187; Dowd Box Co. v. Courtney, 368 U.S. 502,
510-513 (1962). [Id. at 2815.]
Although the Respondent failed to file an answer
to the complaint, the complaint discloses that on or
about 13 September the United States Bankruptcy
Court for the Western District of Pennsylvania
designated Wally Electrical Supply Company,
Debtor in Possession as debtor-in-possession of
Wally Electrical Supply Company. Nothing before
us, however, informs us when the Company filed
the bankruptcy petition, whether the alleged viola-
tions occurred before or after the filing date,
whether or when the Respondent formally accept-
ed the collective-bargaining agreement after filing
the petition, or whether the Bankruptcy Court per-
mitted the rejection of the contract. Such informa-
tion is critical in deciding whether the Respondent
has violated the Act. Accordingly, in light of Bil-
disco, further investigation by the Regional Direc-
tor into the circumstances surrounding the filing of
the bankruptcy petition is necessary.2 The General
Counsel's Motion for Summary Judgment must
2 See generally Earle Equipment Co., 270 NLRB 827 (1984).
1089
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
therefore be denied and the case remanded to the
Regional Director.
ORDER
The General Counsel's Motion for Summary
Judgment is denied, and the proceeding is remand-
ed to the Regional Director for further investiga-
tion and consideration.
1090