KEY HANDLING SYSTEMS, INC.

National Labor Relations Board - Board Decisions

Jul 15, 2014

361 N.L.R.B. 4 (N.L.R.B. 2014)

4 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Key Handling Systems, Inc. and UFCW Local 1245,
United Food and Commercial Workers, AFL–
CIO. Case 22–CA–105632
July 15, 2014
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA
AND SCHIFFER
The General Counsel seeks a default judgment in this
case pursuant to the terms of an informal settlement
agreement. Upon a charge and an amended charge filed
by UFCW Local 1245, United Food and Commercial
Workers, AFL–CIO (the Union), on May 22 and July 26,
2013, respectively, the General Counsel issued the com-
plaint on September 20, 2013, against Key Handling Sys-
tems, Inc. (the Respondent), alleging that the Respondent
violated Section 8(a)(5) and (1) of the Act. The Re-
spondent filed an answer to the complaint on October 17,
2013.
Subsequently, the Respondent and the Union entered
into an informal settlement agreement, which was ap-
proved by the Acting Regional Director for Region 22 on
December 5, 2013.1 Among other things, the settlement
agreement required the Respondent to: (1) copy and
mail, at its own expense, a copy of the notice to all cur-
rent bargaining unit employees and former employees
who were employed at any time since November 22,
2012, and (2) make whole employees Angel Agudo, José
Almedia, Luis Castillo, Marcos Rodriguez, Sigfredo
Javier, Victor Javier, Anthony Quiles, Wilson Vargas,
Raymond Clouse, and James Renfro with regard to their
unused sick and vacation leave by paying them specified
amounts of backpay.
The settlement agreement also contained the following
provision:

The Charged Party agrees that in case of non-
compliance with any of the terms of this Settlement
Agreement by the Charged Party, and after 14 days no-
tice from the Regional Director of the National Labor
Relations Board of such non-compliance without rem-
edy by the Charged Party, the Regional Director will
reissue the complaint previously issued on September
20, 2013 in the instant case. Thereafter, the General
Counsel may file a motion for default judgment with
the Board on the allegations of the complaint. The
Charged Party understands and agrees that the allega-
1 Also on December 5, 2013, the Acting Regional Director issued an
Order dismissing complaint and notice of hearing stating that the re-
maining complaint allegations not subject to the settlement agreement
were deferred to collections in accordance with the Board’s deferral
policy regarding collections cases.
tions of the aforementioned complaint will be deemed
admitted and its Answer to such complaint will be con-
sidered withdrawn. The only issue that may be raised
before the Board is whether the Charged Party default-
ed on the terms of this Settlement Agreement. The
Board may then, without necessity of trial or any other
proceeding, find all allegations of the complaint to be
true and make findings of fact and conclusions of law
consistent with those allegations adverse to the
Charged Party on all issues raised by the pleadings.
The Board may then issue an order providing a full
remedy for the violations found as is appropriate to
remedy such violations. The parties further agree that a
U.S. Court of Appeals Judgment may be entered en-
forcing the Board order ex parte, after service or at-
tempted service upon the Charged Party/Respondent at
the last address provided to the General Counsel.

On January 29, 2014, the compliance officer for Re-
gion 22, by email, notified the Respondent’s counsel that
the Respondent was in danger of defaulting on the set-
tlement agreement as the Respondent had neither notified
the Region that it had mailed the required notices nor
submitted to the Region the agreed upon payments to
distribute to the employees named in the agreement. The
compliance officer advised the Respondent’s counsel that
failure to comply with the agreement could result in the
Regional Director revoking his approval of the agree-
ment, reissuing the complaint, and seeking default judg-
ment. By further email to the Respondent’s counsel also
dated January 29, 2014, the compliance officer requested
confirmation of a telephone conversation during the in-
tervening period in which the Respondent’s counsel had
advised the compliance officer that the Respondent was
unable to fulfill its obligations under the settlement
agreement as it had ceased operations and would soon be
filing for bankruptcy. The Region’s email documented
that the compliance officer had informed the Respond-
ent’s counsel that given the Respondent’s inability to
comply, she would recommend that the Regional Direc-
tor revoke the agreement, reissue the complaint and seek
default judgment. By email dated January 31, 2014, the
Respondent’s counsel confirmed the contents of the Jan-
uary 29 emails and stated again that the Respondent was
no longer operating and did not have the ability to fund
the settlement agreement.
Accordingly, pursuant to the terms of the noncompli-
ance provisions of the settlement agreement, on May 14,
2014, the Acting Regional Director reissued the com-
plaint based only upon the allegations as set forth in the
parties’ settlement agreement, and the General Counsel
filed a Motion for Default Judgment with the Board. On
361 NLRB No. 2

KEY HANDLING SYSTEMS, INC. 5
May 19, 2014, 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. The allegations in the motion are
therefore undisputed.2
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
Ruling on Motion for Default Judgment
According to the uncontroverted allegations in the mo-
tion for default judgment, the Respondent has failed to
comply with the terms of the settlement agreement by
failing to mail the required notices and failing to make
whole employees Angel Agudo, José Almedia, Luis Cas-
tillo, Marcos Rodriguez, Sigfredo Javier, Victor Javier,
Anthony Quiles, Wilson Vargas, Raymond Clouse, and
James Renfro with respect to their unused sick and vaca-
tion leave by paying them specified amounts as set forth
in the settlement agreement. Consequently, pursuant to
the noncompliance provisions of the settlement agree-
ment set forth above, we find that the Respondent’s an-
swer to the original complaint has been withdrawn and
that all of the allegations in the reissued complaint are
true.3 Accordingly, we grant the General Counsel’s Mo-
tion for Default Judgment.
On the entire record, the Board makes the following
FINDINGS OF FACT
I. JURISDICTION
At all material times, the Respondent, a New Jersey
corporation with an office and place of business in
Moonachie, New Jersey, has been engaged in the busi-
ness of designing, engineering, and installing conveyor
systems.
During the 12-month period preceding reissuance of
the complaint, the Respondent provided services valued
in excess of $50,000 directly to customers located out-
side the State of New Jersey.
We find that the Respondent is an employer engaged
in commerce within the meaning of Section 2(2), (6), and
(7) of the Act, and that the Union is a labor organization
within the meaning of Section 2(5) of the Act.
2 As mentioned above, the settlement agreement provides that in
case of noncompliance the complaint allegations will be deemed admit-
ted and the only issue that may be raised before the Board is whether
the Respondent defaulted on the terms of the settlement agreement.
The Respondent’s counsel’s email admits that the Respondent has
defaulted. The Respondent’s financial situation is not a legitimate
defense for failing to comply with the terms of a settlement agreement.
Nor is it otherwise a basis for denying the motion for default judgment.
See, e.g., Peregrine Co., 356 NLRB No. 179, slip op. at 1 fn. 2 (2011)
(not reported in Board volumes); Judd Contracting, Inc., 338 NLRB
676, 676 fn. 3 (2002), enfd. 76 Fed. Appx. 651 (6th Cir. 2003).
3 See U-Bee, Ltd., 315 NLRB 667, 668 (1994).
II. ALLEGED UNFAIR LABOR PRACTICES
The following employees of the Respondent, the unit,
constitute a unit appropriate for the purposes of collec-
tive-bargaining within the meaning of Section 9(b) of the
Act:

All production, maintenance, installation employees
and truck drivers employed by Key Handling Systems,
Inc. at its Moonachie, New Jersey facility, but exclud-
ing executives, supervisors, office employees, drafts-
men, engineers and such other classifications of em-
ployees not here included.

Since about 1977 and at material times, the Respond-
ent has recognized the Union as the exclusive collective-
bargaining representative of the unit. This recognition
has been embodied in successive collective-bargaining
agreements, the most recent of which was effective from
March 1, 2012, to February 28, 2013, and was thereafter
extended by mutual agreement of the parties from Febru-
ary 1, 2013, until April 29, 2013 (the 2012–2013 Agree-
ment).
At all times since about 1977, based on Section 9(a) of
the Act, the Union has been the exclusive collective-
bargaining representative of the unit.
Since about January 4, 2013, the Respondent has failed
to continue in effect all the terms and conditions of the
2012–2013 Agreement by failing to make payments to
certain bargaining unit employees with respect to their
unused sick leave and vacation leave.
The subjects set forth above relate to the wages, hours,
and other terms and conditions of employment of the unit
and are mandatory subjects for the purposes of collective
bargaining.
The Respondent engaged in the conduct described
above without the Union’s consent.
CONCLUSION OF LAW
By the conduct described above, the Respondent has
been failing and refusing to bargain collectively with the
exclusive collective-bargaining representative of its em-
ployees within the meaning of the Act, in violation of
Section 8(a)(5) and (1) of the Act. The Respondent’s
unfair labor practices affect commerce within the mean-
ing of Section 2(6) and (7) of the Act.
REMEDY
Having found that the Respondent has engaged in cer-
tain unfair labor practices, we shall order it to cease and
desist and to take certain affirmative action designed to
effectuate the policies of the Act. Specifically, having
found that the Respondent violated Section 8(a)(5) and
(1) of the Act by ceasing, since about January 4, to honor

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 6
and comply with the terms and conditions of the 2012–
2013 Agreement with the Union by failing to make pay-
ments to certain unit employees with respect to their un-
used sick and vacation leave, we shall order the Re-
spondent to make the unit employees whole for any loss
of earnings and other benefits attributable to its unlawful
conduct. All amounts due to employees shall be com-
puted in accordance with Ogle Protection Service, 183
NLRB 682 (1970), enfd. 444 F.2d 502 (6th Cir. 1971),
with interest as prescribed in New Horizons, 283 NLRB
1173 (1987), compounded daily as prescribed in Ken-
tucky River Medical Center, 356 NLRB 6 (2010).
In addition, we shall order the Respondent to reim-
burse the unit employees in an amount equal to the dif-
ferences in taxes owed upon receipt of a lump-sum back-
pay payment and taxes that would have been owed had
the Respondent not violated Section 8(a)(5) and (1) as
concluded above. We shall also order the Respondent to
submit the appropriate documentation to the Social Secu-
rity Administration so that when backpay is paid, it will
be allocated to the appropriate calendar quarters.4
ORDER
The National Labor Relations Board orders that the
Respondent, Key Handling Systems, Inc., Moonachie,
New Jersey, its officers, agents, successors, and assigns,
shall
1. Cease and desist from
(a) Failing and refusing to bargain collectively and in
good faith with UFCW Local 1245, United Food and
Commercial Workers, AFL–CIO as the exclusive collec-
tive-bargaining representative of the employees in the
following unit by failing, since about January 4, 2013, to
continue in effect all the terms and conditions of the
2012–2013 Agreement by failing to make payments to
employees Angel Agudo, José Almedia, Luis Castillo,
Marcos Rodriguez, Sigfredo Javier, Victor Javier, An-
thony Quiles, Wilson Vargas, Raymond Clouse, and
James Renfro with respect to their unused sick and vaca-
tion leave. The bargaining unit is:

All production, maintenance, installation employees
and truck drivers employed by Key Handling Systems,
Inc. at its Moonachie, New Jersey facility, but exclud-
ing executives, supervisors, office employees, drafts-
4 In his motion for default judgment, the General Counsel requests
that the Board “[i]ssue a Decision and Order against Respondent con-
taining findings of fact and conclusions of law based on, and in accord-
ance with, the allegations of the [r]eissued [c]omplaint, and provide a
full remedy for the unfair labor practices alleged.” Because it is un-
clear whether the total amount set forth in the settlement agreement
($12,696.89) constitutes a full make-whole remedy, we leave to com-
pliance a determination of the amount due the specified unit employees.
men, engineers and such other classifications of em-
ployees not here included.

(b) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Honor and comply with the terms and conditions
of the 2012–2013 Agreement by paying Angel Agudo,
José Almedia, Luis Castillo, Marcos Rodriguez, Sigfredo
Javier, Victor Javier, Anthony Quiles, Wilson Vargas,
Raymond Clouse, and James Renfro the contractual
amounts due with regard to their unused sick and vaca-
tion leave, with interest, in the manner set forth in the
remedy section of this decision.
(b) Make Angel Agudo, José Almedia, Luis Castillo,
Marcos Rodriguez, Sigfredo Javier, Victor Javier, An-
thony Quiles, Wilson Vargas, Raymond Clouse, and
James Renfro whole for any loss of earnings and other
benefits suffered as a result of the Respondent’s unlawful
conduct, with interest, in the manner set forth in the rem-
edy section of this decision.
(c) Compensate the unit employees for the adverse tax
consequences, if any, of receiving lump-sum backpay
awards, in the manner set forth in the remedy section of
this decision, and file a report with the Social Security
Administration allocating the backpay awards to the ap-
propriate calendar quarters for each employee.
(d) Preserve and, within 14 days of a request, or such
additional time as the Regional Director may allow for
good cause shown, provide at a reasonable place desig-
nated by the Board or its agents, all payroll records, so-
cial security payment records, timecards, personnel rec-
ords and reports, and all other records, timecards, per-
sonnel records and reports, and all other records, includ-
ing an electronic copy of such records if stored in elec-
tronic form, necessary to analyze the amount of backpay
due under the terms of this Order.
(e) Within 14 days after service by the Region, dupli-
cate and mail, at its own expense and after being signed
by the Respondent’s authorized representative, copies of
the attached notice marked “Appendix”5 to the Union
and to all employees who were employed by the Re-
spondent at its Mooachie, New Jersey facility at any time
since about January 2013 until it ceased operations there.
In addition to physical posting of paper notices, notices
5 If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading “Mailed By Order of the Na-
tional Labor Relations Board” shall read “Mailed Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”

KEY HANDLING SYSTEMS, INC. 7
shall be distributed electronically, such as by email, post-
ing on an intranet or an internet site, and/or other elec-
tronic means, if the Respondent customarily communi-
cates with its employees by such means.
(f) Within 21 days after service by the Region, file
with the Regional Director for Region 22 a sworn certifi-
cation of a responsible official on a form provided by the
Region attesting to the steps that the Respondent has
taken to comply.
APPENDIX
NOTICE TO EMPLOYEES
MAILED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government

The National Labor Relations Board has found that we
violated Federal labor law and has ordered us to mail and
obey this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on
your behalf
Act together with other employees for your bene-
fit and protection
Choose not to engage in any of these protected
activities.

WE WILL NOT fail and refuse to bargain collectively and in
good faith with UFCW Local 1245, United Food and Commer-
cial Workers, AFL–CIO (the Union) as the exclusive collec-
tive-bargaining representative of our employees in the follow-
ing unit by failing and refusing to make payments to unit em-
ployees under the terms of our 2012–2013 collective-
bargaining agreement with the Union, with respect to their
unused sick and vacation leave:

All production, maintenance, installation employees
and truck drivers employed by us at our Moonachie,
New Jersey facility, but excluding executives, supervi-
sors, office employees, draftsmen, engineers and such
other classifications of employees not here included.

WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
listed above.
WE WILL honor and comply with the terms and condi-
tions of our 2012–2013 collective-bargaining agreement
with the Union, by paying our unit employees the con-
tractual amounts due for their unused sick and vacation
leave, which we have not paid since January 4, 2013,
with interest.
WE WILL make our unit employees whole for any loss
of earnings and other benefits suffered as a result of our
unlawful conduct, with interest.
WE WILL compensate our unit employees for the ad-
verse tax consequences, if any, of receiving lump-sum
backpay awards, and WE WILL file a report with the So-
cial Security Administration allocating the backpay
awards to the appropriate calendar quarters.

KEY HANDLING SYSTEMS, INC.

The Board’s decision can be found at
www.nlrb.gov/case/22-CA-105632 or by using the QR
code below. Alternatively, you can obtain a copy of the
decision from the Executive Secretary, National Labor
Relations Board, 1099 14th Street, N.W., Washington,
D.C. 20570, or by calling (202) 273-1940.