Wagoner Water Heater Co., Inc.Download PDFNational Labor Relations Board - Board DecisionsMay 9, 1973203 N.L.R.B. 518 (N.L.R.B. 1973) Copy Citation 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. Copy with citationCopy as parenthetical citation