Fed-Mart

National Labor Relations Board - Board Decisions

Jun 8, 1967

165 N.L.R.B. 202 (N.L.R.B. 1967)

202 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Glenn Goulding d/b/a Fed-Mart and Retail
Clerks Union, Local 1167, Retail Clerks
International Association, AFL-CIO. Case
31-CA-48 (formerly Case 21-CA-6514).
June 8, 1967
DECISION AND ORDER
On July 7, 1966, Trial Examiner Maurice M. Miller
issued his Decision in the above-entitled proceeding,
finding that the Respondent had engaged in and was
engaging in certain unfair labor practices and
recommending that it cease and desist therefrom
and take certain affirmative action, as set forth in
the attached Trial Examiner's Decision. Thereafter,
the General Counsel and Respondent filed
exceptions to the Decision and supporting briefs.'
The Board has reviewed the rulings of the Trial
Examiner made at the hearing and finds that no
prejudicial error was committed. The rulings are
hereby affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions and briefs, and
the entire record in the case, and hereby adopts the
findings, conclusions, and recommendations of the
Trial Examiner, with the following modifications.
The Trial Examiner found that Respondent
violated Section 8(a)(5) of the Act by (1) refusing to
recognize and bargain with the Union as the majority
representative of its employees; (2) unilaterally
changing terms and conditions of employment
without first notifying and affording the Union an
opportunity to bargain; and (3) refusing to honor and
maintain the collective-bargaining agreement
executed by Respondent's predecessor, Garrity.''
While we agree with and adopt the Trial
Examiner's findings with respect to Respondent's
duty to bargain,; and its unlawful institution of
unilateral changes, we are unwilling on the instant
record to hold that the successor employer's
statutory bargaining obligation extends beyond the
fundamental duty to recognize and bargain in good
faith with the labor organization that had been
designated by the predecessor's employees. In this
regard, the instant record is replete with
uncertainties as to whether Garrity, Respondent's
predecessor, had actually implemented and applied
' The Respondent's request for oral argument is hereby denied,
as the record, exceptions, and briefs adequately present the
issues and positions of the parties
2 In so holding, the Trial Examiner found that the Supreme
Court's decision in John Wiley & Sons v Livingston, 376 U S 543
(1964), and subsequent circuit court decisions in Wackenhut
Corporation v Plant Guards, 332 F.2d 954 (C.A. 9), and
Steelworkers v Reliance, 335 F.2d 891 (C.A. 3), support the view
that a successor is bound ipso facto by the contract entered into
by its predecessor
' The Trial Examiner found, and we agree, that the Respondent
is the successor of Garrity In determining successorship "[t]he
critical question is whether Respondent continued essentially
the same operation, with substantially the same employee unit
" Maintenance, Incorporated, 148 NLRB 1299, 1301 Here,
the continuity of operations was in no way disrupted by the
transfer from Garrity to Respondent In assuming control,
the terms and conditions of employment existing
under any contract or contracts it had executed with
the Union. Specifically, the record shows that
Garrity signed a Memorandum Agreement on
December 7, 1964. By the terms of that Agreement,
Garrity agreed to adopt the "existing" 1959-64
General Merchandise Agreement negotiated
between the Union and Food Employers' Council,
and effective December 15, 1964, to apply the new
1964-69 contract. Although Food Employers'
Council and the Union had reached agreement on
the new 1964-69 contract some 9 months before
Garrity executed the Memorandum Agreement, the
new contract was not in effect at that time, and there
is no showing that Garrity had ever adopted either its
terms or the terms of any collective-bargaining
agreement at all. It is true that the General Counsel
introduced the 1964-69 contract as being the
agreement in effect at the time of the hearing.
However, this evidence falls far short of establishing
that Garrity ever implemented either the 1959-64 or
the 1964-69 contract, and what terms and conditions
of employment were actually in effect when
Respondent commenced operations.
In our opinion, these considerations, together with
the short time that Garrity operated the store after
execution of the Memorandum Agreement, give rise
to uncertainties as to the existence of the basic
agreements, whether Garrity actually executed
these contracts through arms length bargaining with
the intention to be bound thereby for any reasonable
length of time, and whether Garrity's employees
ever enjoyed the benefits set forth in the
agreements. Against this background, it is our
judgment that the circumstances with which we are
here confronted furnish no reasonable basis for
considering the extent to which Section 8(a)(5)
imposes a duty on a successor-employer to meet the
contract obligations to which its predecessor had
become bound through the process of good-faith
bargaining.4
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent,
Respondent made no significant changes in personnel, or in the
nature of the business Thus, Respondent's subsequent refusal to
recognize and bargain with the Union as the bargaining
representative of its employees is in violation of Section 8(a)(5) of
the Act Valleydale Packers, Inc, of Bristol, 162 NLRB 1486,
Randolph Rubber Company, Inc, 152 NLRB 496, Skaggs Drug
Centers, 150 NLRB 518 As we agree with the Trial Examiner's
successorship finding, we need not pass on other grounds relied
on by the Trial Examiner in finding an unlawful refusal to bargain
' Since the Trial Examiner predicated his backpay finding on
Respondent's assumption of Garrity's contract, we shall eliminate
the backpay provision from the remedial order We also find merit
in General Counsel's exception to that part of the Trial
Examiner's Recommended Order that required service of a copy
of the Board's Decision in this case on Fed-Mart, the franchisor,
since Fed-Mart is not a party to this proceeding
165 NLRB No. 22
FED-MART
Glenn Goulding d/b/a Fed-Mart, Fontana, California,
its officers, agents, successors, and assigns, shall:
1. Cease and desist from:
(a) Refusing to recognize and bargain collectively
with Retail Clerks Union, Local 1167, Retail Clerks
International Association, AFL-CIO, as the
exclusive bargaining representative of Respondent's
employees in the following appropriate unit: All
employees employed by the Respondent at his
Fontana, California, store, exclusive of guards,
watchmen, professional employees, and supervisors
as defined in the Act.
(b) Instituting changes in wages, vacation, sick
leave, group life insurance, and hospital plan, or
other terms and conditions of employment of its said
employees, without first notifying, consulting, and
bargaining with the Union concerning such changes.
(c) In any like or related manner interfering with,
restraining, or coercing his employees in the
exercise of their right to self-organization, to form,
join, or assist unions, to bargain collectively through
representatives of their own choosing, to engage in
concerted activities for the purposes of collective
bargaining or other mutual aid or protection, or to
refrain from such activities, except to the extent that
such right may be affected by an agreement
requiring union membership as a condition of
employment, as authorized in Section 8(a)(3) of the
National Labor Relations Act, as amended by the
Labor-Management Reporting and Disclosure Act of
1959.
2. Take the following affirmative action, which we
find will effectuate the policies of the Act:
(a) Upon request, bargain collectively with the
above-named labor organization as the exclusive
representative of all employees in the appropriate
unit as found above, and, if an understanding is
reached, embody such understanding in a signed
agreement.
(b) Post at its store in Fontana, California, copies
of the attached notice marked "Appendix.'", Copies
of said notice, to be furnished by the Regional
Director for Region 31, after being duly signed by
the Respondent's representative, shall be posted by
Respondent immediately upon receipt thereof, and
be maintained by it for 60 consecutive days
thereafter, in conspicuous places, including all
APPENDIX
203
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National
Labor Relations Board and in order to effectuate the
policies of the National Labor Relations Act, as
amended, we hereby notify our employees that:
WE WILL NOT refuse to recognize and bargain
collectively with Retail Clerks Union, Local
1167, Retail Clerks International Association,
AFL-CIO, as the exclusive bargaining
representative of the employees in the following
appropriate unit:
All employees employed by the Employer
at his Fontana, California, store, exclusive
of guards, watchmen, professional
employees, and supervisors, as defined in
the Act.
WE WILL NOT institute changes in wages,
vacation, sick leave, group life insurance, and
hospital plan, or other terms and conditions of
employment of our employees, without first
notifying, consulting, and bargaining with the
Union concerning such changes.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce the employees
in the exercise of their right to self-organization,
to form, join, or assist unions, to bargain
collectively through representatives of their
own choosing, to engage in concerted activities
for the purposes of collective bargaining or
other mutual aid or protection, or to refrain from
such activities, except to the extent that such
right may be affected by an agreement requiring
union membership as a condition of
employment, as authorized in Section 8(a)(3) of
the National Labor Relations Act, as amended
by the Labor-Management Reporting and
Disclosure Act of 1959.
WE WILL, upon request, bargain collectively
with the above-named labor organization as the
exclusive bargaining representative of all
employees in the appropriate unit as found
above, and, if an understanding is reached,
embody such understanding in a signed
agreement.
places where notices to employees are customarily GLENN GOULDING D/B/A
posted. Reasonable steps shall be taken by the FED-MART
Respondent to insure that said notices are not (Employer)
altered, defaced, or covered by any other material.
(c) Notify the aforesaid Regional Director, in
writing, within 10 days from the date of this Order,
what steps have been taken to comply herewith.
IT IS HEREBY FURTHER ORDERED that the
complaint be, and it hereby is, dismissed, insofar as
it alleges violations not found herein.
' In the event that this Order is enforced by a decree of a
United States Court of Appeals , there shall be substituted for the
words "a Decision and Order " the words "a Decree of the United
States Court of Appeals Enforcing an Order "
Dated By
(Representative) (Title)
This notice must remain posted for 60 consecutive
days from the date of posting and must not be
altered, defaced, or covered by any other material.
If employees have any question concerning this
notice or compliance with its provisions, they may
communicate with the Board's Regional Office, 10th
Floor, Bartlett Building, 215 West Seventh Street,
Los Angeles, California 90014, Telephone 688-5840.
204 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
MAURICE M. MILLER , Trial Examiner : Upon a charge
and amended charge filed on February 26 and March 31,
1965, respectively , and duly served , the General Counsel
of the National Labor Relations Board caused a complaint
and notice of hearing to be issued and served upon Glenn
Goulding d/b/a Fed -Mart , designated as Respondent in
this Decision . The complaint was issued July 30, 1965;
therein , Respondent was charged with unfair labor
practices affecting commerce within the meaning of
Section 8(a)(1) and (5) of the National Labor Relations Act,
as amended (61 Stat. 136, 73 Stat . 519). Within
Respondent 's subsequently filed answer, certain factual
allegations which the complaint set forth were conceded;
Respondent ' s commission of any unfair labor practice,
however , was denied.
Pursuant to notice , a hearing with respect to the issues
was held at Los Angeles, California , on October 19 and 20,
1965, before me . The General Counsel , Complainant, and
Respondent were represented by counsel . (When the
hearing began , Respondent's counsel requested that
General Counsel forthwith produce for inspection copies of
all statements taken by Board representatives in
connection with this matter , together with copies of
whatever signature cards union representatives had
procured from Respondent's workers . Counsel ' s motion
for production was denied . See Section 102.118 of the
Board ' s Rules and Regulations Series 8, as amended;
Harvey Aluminum (Incorporated), 142 NLRB 1041, 1042,
fn. 1, in this connection .) Each party was afforded a full
opportunity to be heard , to examine and cross -examine
witnesses , and to introduce evidence pertinent to the
issues. Since the hearing 's close, timely briefs have been
received from counsel for the General Counsel and
Complainant; these have been duly considered.
FINDINGS OF FACT
Upon the entire testimonial record, documentary
evidence received , and my observation of the witnesses, I
make the following findings of fact:
1. THE BUSINESS OF RESPONDENT
Throughout the period with which this case is directly
concerned , Glenn Goulding , functioning as a sole
proprietor , has maintained and conducted a retail discount
department store business , doing business pursuant to
franchise under the "Fed-Mart" trade name; his principal
office has been maintained within his sole retail store,
located in Fontana , California . General Counsel's
complaint herein-dated July 30, 1965, as previously
noted-alleged that Goulding, in the course and conduct of
his retail department store business during the 12-month
period scheduled to end December 20, 1965, "will do" a
gross volume of business in excess of $500 ,000, and "will
annually purchase and receive" substantial quantities of
goods from suppliers located within the State of California,
which goods "will be purchased and received" by said
suppliers directly from various out-of-State enterprises.
Upon the complaint 's jurisdictional allegations-which
counsel for Goulding never controverted , and which,
therefore , may be taken as true-I find that Respondent is
now, and at all times material has been , an employer
within the meaning of Section 2 (2) of the Act engaged in
commerce and business activities which affect commerce
within the meaning of Section 2 (6) and (7) of the Act, as
amended . With due regard for the jurisdictional standards
which the Board presently applies-see Siemons Mailing
Service, 122 NLRB 81 ; Carolina Supplies and Cement Co.,
122 NLRB 88 ; and related cases-I find assertion of the
Board 's jurisdiction in this case warranted and necessary
to effectuate statutory objectives.
II. THE LABOR ORGANIZATION INVOLVED
Retail Clerks Union , Local 1167, Retail Clerks
International Association , AFL-CIO, designated as the
Complainant or Union within this Decision , is a labor
organization within the meaning of Section 2(5) of the Act,
as amended , which admits certain of Respondent's
employees to membership.
III. THE UNFAIR LABOR PRACTICES
A. Issues
The controversy with which this case is concerned
developed when Respondent , Glenn Goulding d/b/a Fed-
Mart , refused to honor or maintain in force a collective-
bargaining contract previously negotiated and signed by
George Garrity d/b/a Fed -Mart and Retail Clerks Union,
Local 1167, Complainant herein . The questions presented
may be summarized as follows:
1. Whether Respondent should be considered Garrity's
successor-bound by his predecessor's collective-
bargaining contract with Local 1167, Complainant
herein-so that his conceded refusal to honor that contract
or follow its terms violated Section 8(a)(5) of the statute.
2. Assuming , arguendo , that Respondent should not be
considered bound to honor or maintain in force Garrity's
contract , should he, nevertheless , be considered bound to
recognize and bargain with Complainant herein, so that his
conceded refusal to follow such a course violated Section
8(a)(5), previously noted.
3. Whether Respondent ' s effectuation of certain
unilateral changes with respect to wage rates , and various
other terms and conditions of work , constituted violations
of Section 8(a)(1) and (5) of the statute.
4. Assuming , arguendo, that Respondent 's course of
conduct merits proscription , what remedial directives
should be considered necessary and proper to promote the
statute's purpose.
Though Respondent concedes his refusal to honor and
maintain in force the contract which his predecessor,
Garrity, signed-coupled with a refusal to recognize and
bargain with Complainant which purports to represent his
workers-he contends that no statutory duty properly
chargeable to him as Garrity's successor was breached
thereby. This contention , basically, generates the several
related questions with which this Decision will be
concerned.
B. Facts
1. Background
On May 1, 1964 , George Garrity and Fed-Mart
Corporation negotiated and signed a Fed -Mart Franchise
and Supply Contract , whereby Garrity became Fed-Mart's
franchisee . That same day, these parties, further, signed a
lease contract, whereby Garrity subleased from Fed-Mart
certain premises on Foothill Boulevard , Fontana,
FED-MART 205
California, where the retail discount department store
business with which this case is concerned was
conducted. (The Franchise and Supply Contract provided
that May 31, 1966, would be its termination date. There
was a proviso, however, whereby "either party" was
permitted to terminate the contract "without cause" by
giving 7 days' written notice of such termination. Further,
either party was given the right to terminate the contract
for cause by giving 24 hours' written notice; failure to
comply with any covenant or condition set forth within the
contract or Garrity's concurrent sublease, previously
noted, was defined to constitute "cause" for termination.
Fed-Mart's sublease covering the Fontana, California,
store contained a May 31, 1964, termination date;
presumably 1966 was intended. The sublease contained
provisions comparable with those in Garrity's franchise
contract regarding the reciprocal rights of Fed-Mart and
the sublessee to cancel their lease commitments.) During
early September 1964, Retail Clerks Union, Local 1167,
started to organize Garrity's employees. And sometime
during October, thereafter, the Complainant did persuade
a majority of Garrity's Fontana workers to designate or
select it as their collective-bargaining representative.
Subsequently, following a series of developments which
need not be detailed, the Local filed a charge with Region
21 wherein George Garrity d/b/a Fed-Mart was charged
with a refusal to bargain contrary to statute. On
December 2, 1964, Garrity signed a settlement agreement,
calculated to dispose of the charge, whereby he agreed to
recognize and bargain with the Complainant herein, upon
request, as the exclusive representative of all his
employees within a bargaining unit defined as follows:
All employees employed by the Employer at his
Fontana, California store, excluding guards,
watchmen, professional employees and supervisors as
defined in the Act.
Subsequently, the settlement was signed in Complainant's
behalf by Respresentative Wendell C. Rasor of the
Union's Southern California Organizing Committee. On
December 7 it received the Regional Director's
concurrence.
Pursuant to the settlement agreement's provision,
Garrity posted-within his Fontana store office-a notice
confirming his readiness to bargain collectively, upon
request, with the Complainant herein as the exclusive
representative of his workers within the bargaining unit
designated, with respect to rates of pay, hours of
employment, or other conditions of work, coupled with his
readiness to embody any understanding reached in a
signed agreement.
Following Garrity's execution of the settlement
agreement, Local 1167 began negotiations with him which
resulted in their mutual execution of a memorandum
agreement dated December 7, 1964. The document in
question provided, inter alia, that:
1. All of the terms and conditions of the "Retail
Food, Bakery, Candy and General Merchandise
Agreement, 1959-1964" shall be continued in full
force and effect between the parties hereto until the
expiration or termination of this Memorandum
Agreement.
2. The Employer hereby agrees to accept and
adopt in full any final agreement or contract resulting
from the pending collective bargaining negotiations
between Retail Clerks Union, Local 1167, and Food
Employers Council, Inc., respectively, for a successor
contract to the said 1959-64 Agreement and to
execute in writing such final agreement or contract
upon demand by Local 1167. All terms and provisions
of such successor agreement or contract shall be
effective Dec. 15, 1964. This Memorandum
Agreement shall be deemed to be replaced and
superceded by such successor contract upon its
execution by the Employer.
The record shows, and I find, that Food Employers
Council, Inc., and Complainant herein had, substantially,
negotiated a successor contract to their 1959-64
agreement, before Garrity's memorandum agreement was
signed. The contract in question, Retail Food, Bakery,
Candy and General Merchandise Agreement, 1964-69,
which had previously been reduced to writing and signed,
was finally published later. This published document,
proffered by General Counsel for the record, constituted
the successor contract which Garrity-so I find-had
committed himself to sign.
While negotiations with respect to Local 1167's
memorandum agreement were under way, Garrity told
Complainant's representatives, I find, that he "might be
forced" to cease doing business, because of cancellation
clauses within his Fed-Mart contracts. (Representatives of
Complainant, testifying in this connection, declared that
they had understood these contracts contained "thirty
day" cancellation clauses. However, the documents
themselves, previously noted within this Decision, reveal
that Fed-Mart's Sublease and Franchise and Supply
Contract actually gave both parties privy thereto a right of
cancellation or termination, without cause, upon 7 days'
written notice.) Garrity, I find, did not say Fed-Mart had
actually served the requisite notices; nor did he say that he
would definitely cease doing business. So far as the record
shows, he merely characterized such a development as
possible.
2. Goulding replaces Garrity
Late on the morning of December 12, 1964, 5 days
following Garrity's execution of the memorandum
agreement previously noted, Fed-Mart did serve Garrity
with the designated notice. Thereby, his Franchise and
Supply Contract, together with his Sublease, were
terminated and canceled, respectively, with December 19
as their terminal date.
On December 20, following some brief negotiations,
Joseph Glenn Goulding, designated Respondent herein,
reached a consensus with Fed-Mart regarding a new
Franchise and Supply Contract and Sublease for the latter
firm's Fontana store; the record reveals, however, that the
parties did not, really, sign these documents until
January 5, 1965, at Fed-Mart's San Diego headquarters.
When both documents were signed, they provided for a
term scheduled to commence December 20,1964, and end
May 31, 1966. They dealt with the premises within which
Garrity had previously been doing business ; Garrity,
however, was not a contractual party. (The contracts in
question, proffered for the record, had been prepared on
standard Fed-Mart forms. Save for the name of the
franchisee- sublessee , and their respective terms, the
contracts which Garrity and Goulding successively signed
with Fed-Mart were identical in major respects.) Before
taking over the store, Goulding had visited the premises on
or about December 12; while there-so his testimony
shows-he had seen the notice to employees which Garrity
had previously posted within his office, pursuant to the
settlement agreement , sometime during December's first
week.
While a witness, Goulding further conceded
206 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
that-before he took over as Fed-Mart's franchised dealer
within the Fontana store-he knew that Garrity had
agreed to recognize and bargain with Local 1167, and that
he (Garrity) had, in fact, shortly thereafter, signed
Complainant's proffered memorandum contract.
On December 16, Goulding drafted and signed a letter
for transmittal to Complainant herein; the letter was
directed to Complainant at 5250 Santa Monica Boulevard,
Los Angeles, California, however. It bore a notation that it
was to be sent "Certified Mail," with return receipt
requested. (The document-which General Counsel
proffered for the record-bears the receipt stamp of Retail
Clerks Organizing Council of Southern California, dated
December 28, 1964; nothing in the present record suggests
any reason for the letter's presumptively delayed receipt.
Determination would seem to be warranted, however, that
it was forwarded, ultimately, to Complainant Union's
Colton, California, headquarters. I so find.) Thereby,
Goulding advised Retail Clerks Union, Local 1167, that,
effective December 20, 1964, he would "own" the
Fontana, California, Fed-Mart franchise store. Local 1167,
further, was notified that Goulding would "not accept any
successor commitment" with reference to any "labor
relations contract" which Garrity had signed. (The Union
had, previously, learned about the changed-store
"ownership" situation. On or about December 15, one of
Garrity's Fontana workers had telephoned Union
Secretary-Treasurer Butler, reporting a rumor that the
store had been sold. Butler, thereupon, had telephoned
Garrity, who had stated that Goulding was "taking over"
the business.) On Saturday, December 19, the Fontana
store, with respect to which Garrity still functioned as Fed-
Mart's franchised dealer, closed at 6 o'clock, its regular
closing time. Special crew workers then took an inventory,
which they completed at approximately 2 o'clock the
following morning. Later during the morning of Sunday,
December 20, the store opened with Goulding as its
franchised owner-operator.
The Fontana store-throughout both dealership periods
with which we are concerned-has been maintained and
known as the "Fed-Mart Franchise" store; its building
frontage has, throughout, borne a sign with "Fed-Mart"
shown as its name. When Respondent became Fed-Mart's
franchised dealer, he retained most of the store's
merchandise on hand, save for some damaged goods. No
prominent public notice regarding the dealership change
has ever been published or posted. (The record warrants a
determination that no sign was ever posted, within or
without the store, announcing any management or
ownership change. The only notice published seems to
have been a small, formal advertisement, buried within a
local newspaper's "Legal Notices" section.) The store's
various departments-sandwich, groceries, sporting
goods, housewares, hardware, automotive, jewelry, soft
goods, etc., have been maintained by Respondent without
change from Garrity's dealership. The products sold,
likewise, have remained substantially the same, though
Respondent has increased his stock-in-trade and has
added some new products, specifically, major appliances
such as television, radios, and refrigerators, for which new
floor space, previously vacant, was designated.
Respondent has continued to sell the same "Fed-Mart" or
"FM" brand name products, such as coffee, flour, cooking
oil, shortening, and motor oil, as Garrity did. The basic
nature of the business, likewise, has remained the same.
Garrity had operated a retail discount department store
pursuant to franchise; Respondent has continued this
business. During his first month or two, Goulding made no
change regarding the store's physical layout. Thereafter,
some of the store's departments-cameras, jewelry, dry
goods, housewares-were relocated. The checkstands,
however, have not been moved. Respondent has, likewise,
continued to use the same shopping carts bearing the
standard "Fed-Mart" name, which had been part of the
store's furnishings during Garrity's dealership.
Garrity's workers, all of them, save for his immediate
family, continued in Goulding's employ; Respondent, so
his testimony shows, merely "let it generally be known"
through casual remarks, within the store, that he planned
no personnel changes. The record shows that Respondent
hired no new workers, with the possible exception of his
wife, until sometime in February 1965; thereafter he hired
three full-time and two part-time workers. Since
Respondent became Fed-Mart's franchise dealer, his
employees have performed duties substantially identical
with those they had previously performed, during the
period of Garrity's dealership. Under Garrity, the
employees had had to wear a blue vest with a red stripe;
they have continued to wear the same uniform. Likewise,
both dealers have required employees to wear plastic
name tags bearing the designation "Fed-Mart" thereon,
with the employees' name below that. Under Garrity,
Leland Redfern had functioned as the store's only
supervisor, responsible to the franchise dealer; Redfern
has been retained as the store's only supervisor under
Goulding's dealership.
3. Complainant's redesignation
On January 3, 1965, Local 1167 representatives met
with store workers at the union office. Seven Fed-Mart
workers were present; Secretary-Treasurer Butler and
Business Agent Smith spoke in Complainant's behalf.
They detailed the highlights of the contract which Garrity
had signed, said that the contract in question was still in
force, and characterized Fed-Mart as a "union" store.
During the meeting, however, the store workers were
requested to sign new union authorization cards. The
Complainant's spokesman explained that they believed
the store had been sold or soon would be sold; that they
wanted "new cards" because the Union wished to
continue to function as their representative; and that, if
the workers wished such representation to continue, they
should sign new cards. Cards were then distributed which
all employees present, save one, signed; the cards were
then returned to Complainant's representatives. (The
seventh worker, Judith Logo, testified in Respondent's
behalf that she, likewise, had signed a card, but that she
had subsequently requested its return . Smith denied
receiving any card signed in January 1965, from her, and
no such card with her name was submitted for the record.
For reasons which I propose to detail subsequently, within
this Decision, this testimonial conflict need not, in my
opinion, be resolved ) The next day, Smith met two more
store employees, personally. They were told, likewise, that
Complainant wished to continue to represent them despite
the store's ownership change. Smith asked them to sign
new authorization cards if they wished the Union to
continue functioning as their representative. Both signed
cards which they returned to Smith, forthwith.
4. Complainant seeks recognition
FED-MART 207
On January 6, Secretary-Treasurer Butler sent a letter
to Goulding. He acknowledged receipt of Goulding's
December 16 letter. With Goulding's refusal to "accept
any successor commitment" based on Garrity's contract
with Local 1167 in mind, Butler declared that:
... Local 1167 as the authorized collective bargaining
agent of your employees, requests that negotiations
for a collective bargaining agreement be immediately
commenced.
Goulding's reply was requested for the purpose of making
"necessary arrangements" for a meeting. About
January 10, Butler telephoned Goulding, repeating his
request that a meeting be arranged to "go over"
Complainant's contract covering the Fontana store.
Goulding replied that he was busy and could fix no definite
date for such a conference.
On January 11, Smith and Local Business Agent
William Brooks spoke with Goulding on the store's selling
floor. Smith identified himself as Complainant's
representative for the geographical area within which the
Fontana store was located; he declared that Complainant
represented the store's employees and raised a question
regarding Goulding's knowledge with respect to Local
1167's relationship with the store. Goulding, I find, replied
that he and Garrity had discussed the matter. When Smith
asked whether Goulding knew about Complainant's
contract with Garrity, Goulding replied that he would not
"recognize" that contract, although he would continue to
pay the wage rates therein specified. Smith, I find,
declared that he would contact Goulding further. (Before
this-some time during December 1964, immediately
following his takeover of Fed-Mart's Fontana
franchise-Goulding had instituted a group life insurance
and hospital plan for store workers; Garrity had provided
no such program. Local 1167 was given no notice
regarding the plan's effectuation; Goulding had not
bargained with Complainant concerning such matters.) On
January 13, Butler and Smith met Goulding at the store.
Butler told Respondent that they had come to "discuss the
contract" with him. Goulding asked whether they
represented his employees; Butler replied that Local 1167
did, and that he had cards to prove it. Goulding,
thereupon, expressed doubt that Complainant represented
a majority of the store's workers and requested to see the
cards; Butler, however, though he had the batch of cards
in his hand, declared that he would only allow an impartial
person, such as a priest, to examine them. Respondent,
concedely, rejected this offer, saying that he "wasn't
interested" in such third party verification, but did agree
to meet again.
On January 19, Goulding met Butler and Courtney
Lainhart, Complainant's president, at Local 1167's office.
There, Goulding repeated his declaration of disbelief with
respect to the Union's representative status. Butler
produced the newly signed cards, and showed them to
Goulding, but would not allow him to examine them; he
repeated his offer to submit the cards to an impartial
person, but Goulding failed to accept this proposal. Butler,
further, presented Goulding with a copy of the
memorandum agreement which Garrity had signed, a
copy of the old areawide collective-bargaining contract,
and some papers showing the cost of Complainant's health
and welfare plan. Goulding said he would send the
contract documents to his counsel, and would
subsequently notify Complainant regarding his position.
(When Goulding had taken over Fed-Mart's dealership on
December 20, 1964, there had been 14 store employees.
Between that date and January 4, 1965, three workers had
resigned. On January 7, when Respondent received
Complainant's demand for recognition-and, indeed,
throughout the rest of the month-Goulding was
employing 11 nonsupervisory workers. Eight of these, so
the record shows, had redesignated Complainant as their
bargaining representative, with their January 3 and 4
cards.) Following their last conference, Complainant's
representative did not hear from Goulding for some time.
On February 15, Butler sent Respondent a letter within
which he mentioned their January 19 meeting "for the
purpose of negotiating a contract" covering the Fontana
store workers, and requested a meeting forthwith so that
negotiations might be concluded. (Meanwhile, back on or
about January 12, Goulding had posted a notice to
employees whereby he promulgated a regular sick-leave
policy. Subsequently, on February 3, consistently with a
similar posted notice, he had promulgated a vacation
policy. Complainant had received no prior notice with
respect to Goulding's institution of these employee
benefits, nor had Respondent bargained with Local 1167
concerning such changes in working conditions.) The next
day, Goulding telephoned Butler; he declared that he
desired a representation election. Butler replied that
Complainant would not concur, since its position was that
it had a contract which covered the Fontana store.
5. Goulding's final refusal to bargain
Several days thereafter, Complainant received a letter
from Respondent's counsel; he declared Goulding's
position to be that Local 1167 did not "represent a
majority" of his Fed-Mart Store employees; therefore,
counsel declared, Goulding felt under no legal obligation to
recognize Complainant as their bargaining representative.
This letter was referred to Complainant's counsel, who
thereupon filed the charge with which this case is
concerned.
Since then, during the months of February, March, and
July 1965, specifically, Respondent has given most of his
Fontana store workers two 30-cent raises. Neither of these
wage adjustments, so Goulding concedes, were discussed
with union representatives.
C. Conclusions
1. The unit appropriate for collective bargaining
Within his complaint, General Counsel has designated
the group of workers which he claims to be appropriate for
the purpose of collective bargaining at Respondent's
store-pursuant to Section 9(b) of the statute-as follows:
All employees employed [by Respondent herein] at
[its Fontana, California] store excluding guards,
watchmen, professional employees and supervisors,
as defined in the Act.
Though Respondent, within its answer, had formally
challenged the correctness of this bargaining unit
definition, counsel for the proprietorship did finally
declare, during record discussion, that Goulding's denial
with respect to this portion of General Counsel's complaint
would be retracted. With matters in this posture, the group
which General Counsel, within his complaint, has
designated as proper for collective-bargaining purposes
208 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
would seem to warrant such designation; I conclude that
this group does, indeed, constitute a unit appropriate for
collective-bargaining purposes, within the meaning of
Section 9(b) of the statute.
2. The union's status as bargaining representative
General Counsel contends that Complainant herein,
since October 1964, at least, has been designated or
selected by most of the Fontana store's workers, within the
group previously described, as their representative for
collective-bargaining purposes. Pursuant to Section 9(a) of
the statue, so General Counsel contends, Complainant
has, therefore, been entitled to recognition, since then, as
the exclusive representative of Respondent's employees
within the designated bargaining unit, for the purpose of
collective bargaining with respect to their rates of pay,
wages, hours of employment, and other terms and
conditions of employment. This contention, so the record
shows, rests on several grounds.
a. The significance of the settlement agreement
Determinations have been made, previously, that
Garrity, pursuant to certain December 1964 negotiations
with Board representatives, signed a settlement
agreement, within which he agreed to recognize and
bargain with Complainant as the representative of his
store employees. And, shortly thereafter, he did sign
Complainant's proffered collective-bargaining contract.
Less than 1 month later, however, Respondent
herein-functioning as Fed-Mart's newly franchised
owner-dealer, and prospectively the new employer of those
Fontana store workers whom both the settlement
agreement and Complainant's collective-bargaining
contract covered-declared that he would "not accept any
successor commitment" with respect to Garrity's
previously negotiated contract, and disavowed any
obligation to bargain.
General Counsel contends that settlement
commitments, which, in this respect, should be considered
comparable with Board certifications bottomed upon
representation proceedings, run with a business; such
settlement commitments, therefore, should, like
certifications, preclude the successors of parties privy
thereto from challenging the representative status of labor
organizations designated therein, for some "reasonable
period of time" following their negotiation and execution.
Consistently with well-settled decisional doctrine, this
Board has frequently held that, following the negotiation
and execution of settlement agreements, wherein
employers commit themselves to bargain collectively in
good faith with designated unions, signatory employers
privy thereto are legally obligated to continue to recognize
and bargain with the unions concerned for a reasonable
period of time. N. J. MacDonald & Sons, Inc., 155 NLRB
67. See Poole Foundry and Machine Company v. N.L.R.B.,
192 F.2d 740, 743 (C.A. 4), wherein the court stated that:
We, accordingly, agree with the Board's contention
that [Respondent] by entering into the settlement
agreement, thereby securing a withdrawal of the
charges of unfair labor practices, is bound to bargain
in good faith with the Union for a reasonable period of
time after such agreement, without questioning the
Union's lack of a majority ....
While not an admission of past liability, a
settlement agreement does constitute a basis for
future liability and the parties recognize a status
thereby fixed. . . . An entire structure or course of
future labor relationships may well be bottomed upon
the binding effect of a status fixed by the terms of a
settlement agreement. If a settlement agreement is to
have real force, it would seem that a reasonable time
must be afforded in which a status fixed by the
agreement is to operate. Otherwise, settlement
agreements might indeed have little practical effect
as an amicable and judicious means to expeditious
disposal of disputes arising under the terms of the
Act. Thus, it follows that [Respondent], after having
solemnly agreed to bargain with the Union, should not
be permitted, within three and one-half months after
the agreement, to refuse so to bargain, even if, as here,
the Union clearly did not represent a majority of the
employees. [Emphasis supplied.]
Such a decisional principle, necessarily, must be
predicated upon, and comport with, a corollary doctrine:
Since any labor organization's right to recognition as the
statutory representative of some workers' group for
collective-bargaining purposes, which a settlement
agreement of the sort with which we are now concerned
confirms, derives from that organization's prior
designation or selection as their representative by a
majority of the workers within the group, such designation
or selection, once conceded, may not be challenged for a
reasonable period of time following the settlement
agreement's negotiation. Stated differently, the decisional
principle noted necessarily means that the representative
status of the labor organization designated within the
settlement, upon which its right to recognition and its right
to bargain must necessarily be predicated, will be
conclusively presumed to continue for a reasonable period
of time. With respect to signatory employers, directly
privy to settlements, such a conclusive presumption,
certainly, would seem patently warranted.
So far as this case is concerned, determination seems
clearly justified that no "reasonable period of time" had
passed between the date on which the Board's Regional
Director approved Garrity's settlement commitment and
the date on which Respondent made patent his refusal to
consider himself bound thereby. Less than 1 month had
elapsed. With due regard for well-settled case law, then,
there can be no doubt that Garrity himself, had his
franchise dealership continued, could not have
successfully challenged Complainant's representative
status within such a short period following his specific
commitment to recognize and bargain with Complainant
herein.
Respondent's counsel contends that his client, who
succeeded Garrity as Fed-Mart's franchise dealer, should
not be considered similarly foreclosed.
Should such a conclusion be considered warranted,
however, Respondent's freedom to challenge
Complainant's representative status could not, properly,
derive from a determination that Garrity's settlement
provided no sufficient foundation for Local 1167's claim to
such status. Rather, such a conclusion would have to rest
upon some determination that Respondent should not be
considered Garrity's successor for statutory purposes,
bound to comply with the latter's previously fixed duty to
recognize and bargain with Complainant Union herein. So
far as I can determine, indeed, Respondent's defense, with
FED-MART 209
respect to this facet of the present case, rests, precisely,
upon the proposition last stated; no contention has been
proffered, specifically, that General Counsel can no longer
rely on Garrity's settlement commitment to "prove" the
Union's representative status, merely because Fed-Mart
had, shortly after his commitment was made, forced him to
surrender his franchise.
With due regard for decisional precedent, I find that
Garrity's concession regarding the Union's representative
status, which necessarily underlay his settlement
commitment to recognize and deal with the labor
organization designated, sufficed to - raise a conclusive
presumption that Complainant continued to enjoy such a
status for some "reasonable period of time" following the
settlement negotiation. Whether such a presumption,
which clearly would have foreclosed Garrity from
challenging Complainant's representative status within
the period with which we are concerned, had he retained
his franchise, should properly be considered binding upon
Respondent as Garrity's "successor" herein, will be
-considered further within this Decision.
b. The significance of Complainant Union's redesignation
General Counsel, however, contends further
that-whether or not Complainant may legitimately rest
its current claim to representative status upon some
conclusive presumption-the Respondent herein was
statutorily bound nevertheless, just as any similarly
situated employer would be bound, to recognize and
bargain with Complainant Union pursuant to request,
since the Union really had been designated and selected,
by most of his Fontana store workers, as their bargaining
representative.
Such a determination, certainly, seems warranted.
When Goulding received the Union's January 6 request
that negotiations for a collective-bargaining contract be
commenced forthwith, Local 1167 representatives held
newly signed "authorization" cards from 8 of
Respondent's 11 store workers. On their face, these cards,
which were proffered and received for the record, do show
that Complainant herein, when it first requested Goulding
to bargain, did, really, represent a majority of his Fontana
store workers.
Respondent's counsel, nevertheless, would argue that
Complainant's claim to representative status, bottomed
upon such newly signed cards, cannot properly be
considered proven, since the cards had not been validly
procured.
Specifically, counsel contends that these newly signed
cards reflect no real purpose to redesignate Union as their
signers' bargaining representative, since the store workers
who signed such cards did so primarily because they
shared some impression or belief, derived from the context
within which their signatures were solicited, that
Respondent's Fontana store was a so-called union store,
still covered by Garrity's previously signed "union shop';
contract, so that they would have to redesignate
Complainant as their collective-bargaining representative
or they would "probably" lose their jobs. No more than
one of Complainant's eight proven card signers, James
Gronek, so testified, however. (With respect to his
testimony General Counsel notes, persuasively,
that-within a previous written statement-Gronek had
said Goulding told him, around December 28 or
December 29,1964, that there was "no more union" within
the store. Gronek's witness-chair concession with respect
to the correctness of his prehearing statement, despite his
subsequent testimonial declaration that he was not sure
regarding the date of Goulding's remark, suggests that
whatever he was told by Local 1167 representatives,
during the January 3 meeting, regarding the continued
status of Goulding's Fontana store as a so-called "union
store" reasonably could have been evaluated by him as
nothing more than a statement of Complainant's position.)
Beatrice Meyer, another card signer summoned to testify
as Respondent's witness, did testify that she signed a
second card on January 3 following specific
representations that Garrity had previously signed
Complainant's contract and that Respondent's Fontana
store was "union" therefore; she declared further,
however, that Goulding's workers were requested to sign
new cards so that Complainant could "represent the shop"
thereafter. The only other card signer who testified, Paul
Gonzales, declared that, when he signed his second card,
he did so because he then desired Complainant to
represent him; that no one had directed him or forced him
to sign; and that the possibility he might lose his job if he
did not sign the card had never occurred to him.
With matters in this posture, Respondent has not, I find,
persuasively countered General Counsel's contention
regarding the significance of Complainant's newly signed
January cards.
The language found within Complainant's cards is clear
and definite; card signers specifically designate "Retail
Clerks International Association by its agent Retail Clerks
Union, Local 1167," their exclusive representative for
collective-bargaining purposes. Thus, Respondent's
counsel, had he wished to prove that most of those who
signed Complainant's designation cards on January 3 and
4 did so because of their "mistaken impression" that a
failure or refusal to sign would jeopardize their jobs, would
have had to proffer testimony calculated to support such a
determination. Sufficient witnesses for the purpose,
however, were simply not presented.
Further, whatever testimony Respondent did present
clearly fails to show threats or coercion, chargeable to
Local 1167's representatives, sufficient to vitiate a
determination that Complainant's January 3 and 4 cards
validly represented the shared desire of their signers.
Several of Respondent's witnesses conceded that
Complainant's spokesmen made no threats; that they
(Goulding's workers) knew what they were doing; that no
one said anything would happen to them if they failed or
refused to sign ; that they voluntarily signed the cards; and
that they knew what kind of cards they were signing. The
cards in question, therefore, constitute valid designations;
whatever "unexpressed and unilateral misunderstandings"
or mental reservations some of their signers may now
profess they had cannot be considered sufficient to impair
the cards' validity. N.L.R.B. v. Hyde's Supermarket, 339
F.2d 568 (C.A. 9); Colson Corporation v. N.L.R.B., 347
F.2d 128 (C.A. 8); Gary Steel Products Corporation, 144
NLRB 1160,1 so find.
With matters in this posture, determination seems
warranted, consistently with General Counsel's alternative
contention, that, since January 4, 1965, and continuing to
date, Complainant has in fact been the designated and
selected representative of a majority of Goulding's
employees for collective- bargaining purposes, within the
bargaining unit previously described. By virtue of Section
9(a) of the statute, therefore, Complainant has been, and is
now-so I find-entitled to recognition as the exclusive
representative of all Goulding's employees within the
described unit , for the purpose of collective bargaining
210 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
with respect to their rates of pay, wages, hours of
employment, and other terms and conditions of work.
3. The refusal to bargain
The present record, clearly, will support a
determination that Goulding has, despite repeated
requests for recognition, persistently refused to recognize
and bargain with Complainant herein. Documentary
material, proffered and received without protest, clearly
reveals that, before Local 1167's representatives
presented their first demand, they were notified that
Respondent would "not accept any successor
commitment" with reference to Garrity's previously
negotiated contract. Nor does Goulding now, so far as the
record shows, deny his subsequent refusal to recognize or
deal with the Union's representatives. Respondent's
counsel presently contends, merely, that his client's
conceded initial refusal to honor Garrity's contract,
coupled with his later refusal to discuss or negotiate some
new contract with Complainant herein, breached no
statutory duty.
a. Since Respondent may properly be considered Garrity's
successor for statutory purposes, he may
be required to recognize and bargain
with Complainant Union herein
(1)
Upon the whole record, General Counsel argues that
Garrity's statutory duty to bargain with Complainant
herein-which the franchise holder, realistically,
conceded when he signed the settlement agreement
previously noted, and confirmed when he subsequently
negotiated and signed Local 1167's memorandum
contract-devolved upon Goulding; Respondent, so the
argument runs, became Garrity's successor, for statutory
purposes, when he consummated his Franchise and
Supply Contract with Fed-Mart, covering the Fontana
store. Substantially, General Counsel contends that
Goulding became the previous franchise holder's
"successor" because he "took over" completely Garrity's
retail discount department store dealership, pursuant to
contractual commitments whereby no "basic change in
the employing industry" resulted. Cf. Firchau Logging
Company, Inc., 126 NLRB 1213,1219-20. With a quotation
from the case cited, slightly modified to fit the facts
herein, the question now presented for determination may
be formulated as follows:
The basic question herein is whether Respondent is
a successor employer to [Garrity] and is therefore
under a duty to bargain collectively [for a reasonable
time], with the Union as the [recognized]
representative of the employees in the appropriate
unit . The theory of successorship is that the new
operator of the business falls heir to the
responsibilities and liabilities, if not privileges, of the
original employer that stem from [his concessions
regarding the Union's representative status, reflected
within a settlement agreement previously negotiated
and signed]. [ Such a settlement ] runs with the
employing industry and is normally not affected by a
change in management or ownership .... The
fundamental approach and test is whether the
employing industry is substantially unchanged in
terms of such factors as location, equipment,
personnel, and mode of operation.
When no substantial change with respect to the factors
noted can be found, the Board has long held that prior
certifications run with the employing industry; thus,
neither changes of ownership nor possible minor changes
in the nature or operation of the business, particularly
when they occur within the first year following the
certification, will relieve a successor of his duty to bargain
with the certified labor organization Mole Oldsmobile,
Inc., 152 NLRB 1384; Consolidated American Services,
Inc., 148 NLRB 1521; Maintenance, Incorporated, 148
NLRB 1299; Johnson Ready Mix Co., 142 NLRB 437;
Witham Buick, Inc., 139 NLRB 1209; Ugite Gas
Incorporated, 126 NLRB 494; Alamo White Truck Service,
Inc., 122 NLRB 1174; Investment Building Cafeteria, 120
NLRB 38. Further, see Cruse Motors, Inc., 105 NLRB 242;
Miller Lumber Company, 90 NLRB 1361; The Northwest
Glove Co., Inc , 74 NLRB 1697; cf. Herman Loewenstein,
Inc., 75 NLRB 377, in this connection. (Similar
determinations regarding the statutory duty of so-called
successors to bargain have been made in cases where the
certification, on which the labor organization relied, was
more than 1 year old when the business concerned was
transferred; where a record reveals no basis for good-faith
doubt regarding the certified union's continued
representative status, successor employers have been
found obligated to recognize and bargain with it for the
workers represented. Randolph Rubber Company, Inc.,
152 NLRB 496; Rohlik, Inc., 145 NLRB 1236; Auto Vent-
shade, Inc., 123 NLRB 451; cf. Paramount Paper Products
Co., 154 NLRB 1064; The Richard Kaase Company, 141
NLRB 245, enforcement denied 346 F.2d 24,30,31 (C.A. 6).
Within the present case's factual context, however, no
such, problem is presented.) A similar determination, so
the argument runs, should be considered warranted where
a labor organization's right to claim representative status
has been acknowledged within a settlement; where the
business concerned has, demonstrably, remained
substantially the same, General Counsel contends that
specific concessions made by a predecessor employer,
regarding his duty to recognize and bargain with a union,
should be considered binding upon his successor in title
Settlements, like certifications, in 8(a)(5) cases, confirm
a labor organization's designation or selection, for
collective-bargaining purposes, by a majority of some
employer's workers within a unit found or conceded to be
appropriate for such purposes; when negotiated and
signed, such a settlement, like a certification, binds its
signatory to recognize and bargain with the union therein
designated. Since settlements, like certifications, confirm
a labor organization's representative status, they should,
logically, carry similar consequences in so-called
successorship situations . Specifically, they should be
considered sufficient to create a duty, binding on both
signatory and successor employers, to recognize and
bargain with the labor organization designated therein, for
some reasonable period of time. (Particularly, a successor
employer found to have taken over some designated
"employing industry" with notice that his predecessor in
title had negotiated and signedla settlement, whereby such
a predecessor had committed himself to recognize and
bargain with a union, should clearly be found similarly
committed.) This Board has, within a related factual
context, found certifications and settlements sufficiently
akin to warrant similar weight. See Mar-Jac Poultry
Company, Inc., 136 NLRB 7851 And Board determinations
that respondents properly found successors will be
considered bound to recognize and bargain with
designated unions for some "reasonable period" of
FED-MART
time-following their predecessors' execution of
settlement agreements wherein the representative status
of such labor organization is conceded-would certainly
be consistent with the basic policies which have long been
considered sufficient to bind successors confronted with
Board certifications.
For many years, Board decisions within this field have
rested upon the general principle, developed with judicial
concurrence, that bargaining relationships once rightfully
established must be permitted to exist and function for a
reasonable period, within which they can be given a fair
chance to succeed. Franks Bros. Company v. N.L.R.B., 321
U.S. 702, 705; Centr-O-Cast & Engineering Company, 100
NLRB 1507; cf. Universal Gear Service Corporation, 157
NLRB 1167. By substantially foreclosing questions of
representation in so-called successorship cases, thereby
clearly defining the duty of successor employers to bargain
with certified unions during their 1-year certification
period, this Board has both encouraged the execution of
collective-bargaining contracts and enhanced the stability
of industrial relations. And similar purposes, clearly,
would be served should the Board, through its Decision
herein, confirm the duty of successor employers to bargain
with designated labor organizations , for some reasonable
period of time, bottomed upon their predecessors ' settle-
ment commitments to recognize and bargain with
particular unions claiming representative status.
Though Respondent has challenged his designation as
Garrity's successor for statutory purposes, the record
presents as clear and compelling a case for successorship
as any which the Board has decided. Goulding, pursuant to
franchise, presently maintains the self-same business
which Garrity maintained, within the same premises,
functioning under the same business name. (In this
connection the record reveals that, when Goulding
acquired Fed-Mart's franchise, public notice with respect
thereto was restricted to small newspaper advertisements
buried within the legal notices section. No real notice,
such as a sign posted within the store, was given to
customers. As General Counsel suggests , persuasively, we
may reasonably deduce, therefore, that the general public
remained completely without knowledge regarding the
change of store ownership.) Goulding retained all of
Garrity's store workers, except for the latter's family
members, and several weeks elapsed before any new
employees were hired. Leland Redfern, Garrity's only
supervisor within the store, was retained as the store's
only supervisor following Respondent's take over. Store
workers have continued to wear the same partial uniforms;
they wear the same badges, and perform substantially the
same duties. The nature of the business, that of a retail
discount department store, has not changed, Respondent
continues to carry the same "Fed-Mart" or "FM" brand-
name lines which Garrity carried. Though Respondent
now sells some additional products, his stock-in-trade,
essentially, remains the same. The store's physical layout,
with particular reference to the location of checkout
stands and various departments, has also remained
substantially the same. With matters in this posture,
clearly, there can be no doubt that the specific "employing
industry" with which we are concerned continued
substantially without change despite Fed-Mart's franchise
shift. Consistently with well-established precedent,
previously noted, Respondent herein, since he presently
continues his predecessor's business without substantial
modification, may properly be considered Garrity's
successor, for statutory purposes.
211
Counsel for Respondent contends that he should not be
considered Garrity's successor because the record fails to
show privity of contract between them. This contention,
however, raises no substantial question. Within a recent
case, Maintenance, Incorporated, supra, accord
Consolidated American Services, Inc., supra, the Board
was confronted with a factual situation substantially
comparable with the case presented on this record. The
respondent firms within the matters cited were each
successful bidders for Federal Government contracts,
pursuant to which they were to perform "custodial
janitorial" or "maintenance" services. Their contracts
were won directly from the Government, through low bids.
There were no contractual dealings shown between the
respondent firms and the Government's previous
contractors, nor could any privity of contract be found
between them. Within both cases, however, the record
showed that the respondent firms had hired most of the
previous contractors' workers, though neither firm had
taken over the previous contractors' business identity or
physical assets. The Board concluded, with respect to
both cases, that, since the respondent firms had continued
substantially the same business operations with
substantially the same group of workers, they were bound
to bargain with particular labor organizations which had
been certified to represent those workers while they
worked for the predecessor contractors, within the 12-
month period prior thereto. Regarding the so-called privity
of contract question, the Board noted within its
Maintenance, Incorporated decision, that:
The duty of an employer who has taken over an
"employing industry" to honor the employees' choice
of a bargaining agent is not one that derives from a
private contract, nor is it one that necessarily turns
upon the acquisition of assets or assumption of other
obligations usually incident to a sale, lease, or other
arrangement between employers. It is a public
obligation arising by operation of the Act. The critical
question is not whether Respondent succeeded to
[the previous employer's] corporate identity or
physical assets, but whether Respondent continued
essentially the same operation, with substantially the
same employee unit whose duly certified bargaining
representative was entitled to statutory recognition at
the time Respondent took over.
This decisional principle, further, has been confirmed
within similar factual contexts. Compare Witham Buick,
Inc., supra, and Burlington Roadbuilders, Inc., 149 NLRB
791, 802-803. Within the last cited case, the Trial
Examiner concluded, with Board concurrence, that:
New Burlington was the successor of Old
Burlington and, as such, it was obligated to carry on
the bargaining relations of Old Burlington.... There
was no change in the business itself. The fact that Old
Burlington's plant and equipment were not sold
directly by Old Burlington, but were obtained by New
Burlington through the legal device of transferring
them as a liquidating dividend to the shareholders
who then conveyed them to New Burlington, is of no
significance in the circumstances. General Counsel
does not contend, nor is it found, that New Burlington
was not a bonafide purchaser. However, there was no
break in the continuity of the employing industry nor
in the continuity of employment of the four men who
worked in the shop at the time New Burlington
commenced its operation .... The issue here is not
whether Respondent was bound by a Board Order
212 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
against its predecessor as a successor or assign, or as
a disguised continuance, but merely whether
Respondent continued the enterprise of Old
Burlington basically unchanged.
Compare further, Trial Examiner Frey's recent decision
(Poly-Seal Corporation, Standard & Molding Division,
Case 5-CA-3031, October 1965), wherein he found the
designated respondent a successor, committed to honor
various statutory and contractual obligations by which its
predecessor had been bound, though it had acquired the
predecessor's business through a judicial sale. See West
Suburban Transit Lines, Inc., 158 NLRB 794, likewise, in
this connection.
The Board decisions noted, which I am bound to follow,
thus dictate a rejection of Respondent's contention that he
cannot be considered Garrity's "successor" because the
two franchise dealers shared no privity of contract. With
his "successorship" established, Goulding was bound, so I
find, for reasons previously noted, to comply with Garrity's
settlement commitment regarding recognition and
bargaining with the Complainant herein, since no
"reasonable period of time" had yet passed, following the
settlement's negotiation.
(2)
Further, with matters in their present posture,
Goulding's , duty to recognize and bargain with
Complainant may, with equal propriety, be bottomed on
the designated organization's contractually recognized
representative status.
This Board has held, within a case which dealt,
specifically, with a respondent firm which had purchased
another firm's physical assets but purportedly had not
assumed its seller's contractual commitments , that certain
changes in wages, hours, and working conditions which
the purchaser thereafter unilaterally effectuated, without
regard for the provisions of a labor contract previously
negotiated by the seller with its workers' collective-
bargaining representative for a term which had not yet
expired, violated Section 8(a)(5) of the statute. Chemrock
Corporation, 151 NLRB 1074. The Board's conclusion
derived, partially, from a determination that workers
confronted with a transfer of ownership which did not
substantially change their "employing industry" should be
considered statutorily entitled to seek through bargaining
to protect their contractually fixed economic relationship
with the business which employed them. In this
connection, the Board particularly noted a Supreme Court
rationale , set forth in John Wiley & Sons v. Livingston, 376
U.S. 543, 549, specifically, to the effect that:
Employees, and the union which represents them,
ordinarily do not take part in negotiations leading to a
change in corporate ownership. The negotiations will
ordinarily not concern the well-being of the
employees, whose advantage or disadvantage,
potentially great, will inevitably be incidental to the
main considerations. The objectives of national labor
policy, reflected in established principles of federal
law, require that the rightful prerogative of owners
independently to rearrange their businesses and even
eliminate themselves as employers be balanced by
some protection to the employees from a sudden
change in the employment relationship.
Though the Board did not, within its Chemrock decision,
supra, decide whether or not the Union's nonexpired
contract with the predecessor firm therein should be
considered "binding" with respect to that firm's
successor, it did consider the Supreme Court's quoted
comment pertinent, and held that, under the
circumstances presented, the purchaser of a business may
not ignore the contractually recognized collective-
bargaining representative of that business' workers, when
dealing with them on matters related to the continuation of
their employment and the terms and conditions of their
work. Inter alia, the Board further noted the Supreme
Court's observation, see N.L.R.B. v. Hearst Publications,
Inc., 322 U.S. 111, 129, specifically, that where all the
conditions of the relation (between an employer and
workers claiming statutory coverage) require protection,
protection ought to be given.
The Board had, previously, found an employer-
purchaser guilty of refusal to bargain, following its refusal
to recognize and deal with a labor organization claiming a
currently operative but partially reopened contract with its
predecessor-seller. Skaggs Drug Centers, Inc., 150 NLRB
518. The Trial Examiner therein, having found that the
purchaser respondent could properly be considered a
successor employer, had referred to the Board's
consistent prior holdings that such "successors" remain
subject to their predecessor's duty to recognize and
bargain in good faith with whatever "incumbent union"
then represented such a predecessor's workers.
Further, since Chemrock, this Board has found a
successor firm, which purchased a new facility, guilty of a
refusal to bargain because it unilaterally modified certain
terms and working conditions governing workers therein,
which had previously been established under a recently
terminated contract which had bound their former
employer. Overnite Transportation Company, Inc., 157
NLRB 1185. The successor-respondent had decreed the
changes in question promptly following its succession,
without first apprising the worker's contractually
recognized bargaining representative, and without giving it
a chance to bargain concerning such changes. The Board
found that-when the successor-respondent extended to
its newly purchased establishment particular terms and
conditions which then prevailed within its previously held
establishments-such action constituted a unilateral
change. Within its decision, the Board declared that
where, as in the case before it, the employees' economic
relationship with their employer was vitally affected by
such a change in corporate ownership, the only
"protective balancing" which could be provided required
a determination that the concerned workers should be
given an opportunity to bargain, through their designated
representative, before the new owners could be permitted
to alter that relationship. It concluded, therefore, that the
successor respondent, having taken over the particular
"employing industry" with full knowledge that the workers
currently employed therein had union representation,
deprived such workers of statutory protection when it
changed their economic and employment relationships
before it notified their bargaining representative of
proposed changes and gave such representative a chance
to bargain concerning them.
Most recently, the Board had reached a similar
conclusion regarding a successor respondent's bargaining
obligation, following its purchase of three retail grocery
stores, within which meat market department employees
were currently covered by a collective-bargaining
contract, negotiated and signed by the predecessor-seller.
K.B. & J. Young's Super Markets, Inc., 157 NLRB 271. The
Board, within the case cited, declared specifically that one
FED-MART
reason for its concurrence with the Trial Examiner's
recommendation, regarding the respondent firm's
statutory obligation, derived from a determination that the
respondent concerned had succeeded, for statutory
purposes, the firm which had, prior to the sale, negotiated
and signed a labor contract covering "meat market
department" workers.
Should the Board, therefore, conclude that Garrity's
settlement had, really, been given some "fair chance" to
succeed, since it had, in fact, promoted collective
bargaining , and had led Garrity to sign a memorandum
contract with Complainant herein, determination would
still be warranted that Respondent, functioning as
Garrity's successor, was statutorily bound to recognize
and bargain with the labor organization which Garrity had,
previously, contractually recognized. (Whether Goulding's,
statutory duty to bargain compassed a further duty to
honor the contract which Garrity had signed will be
considered, subsequently, within this Decision. In Young's
Super Markets, the Board found no necessity to pass upon
this question . So far as I can determine, despite some
passing Board references to the Supreme Court's Wiley v.
Livingston, rationale, the question of Section 8(a)(5)'s
thrust in this regard has not yet been decided.)
The statutory duty of so-called successor firms to
recognize and bargain with labor organizations privy to
contracts, whether current or recently terminated,
covering workers within the particular "employing
industry" transferred, has not, seemingly, been derived
from any presumption that the contractually recognized
union continues to represent a majority of the workers
covered. Rather, relevant decisions suggest that it has
derived from Board recognition that the worker's
contractually fixed relationship with his "employing
industry" constitutes a relationship with respect to which
protection, in transfer cases, ought to be given. The
national labor policy, so the Board holds, requires that the
"rightful prerogative of owners independently to rearrange
their businesses and even eliminate themselves as
employers" must be balanced by some protection for
employees from a sudden change in the employment
relationship. John Wiley & Sons v. Livingston, supra.
Thus, workers who have previously made clear their
desire to bargain collectively must be given their statutory
right to claim the protection of continued collective
bargaining , before any bona fide change in business
ownership can be permitted to modify their prevailing
relationship with the particular "employing industry"
concerned.
b. Since a majority of Respondent's workers have
redesignated and selected Complainant as
their representative, Respondent may
be required to recognize and bargain
with Complainant herein
Without regard to so-called successorship considera-
tions, however, General Counsel contends, alternatively,
that since a majority of Goulding's employees redesignated
Complainant as their collective-bargaining representative,
subsequent to his purchase of Fed-Mart's franchise,
Respondent should be considered statutorily bound to
recognize and deal with Complainant herein.
Previously, within this Decision, determination has been
made that when Goulding received Complainant's request
for recognition and bargaining, on January 7, 1965,
specifically, that organization held signed designation
cards from 8 of his 11 store employees. Thus, apart from
213
any successor liability to recognize the designated union,
so General Counsel contends, the new franchise dealer
was statutorily bound, just as would be any employer
similarly situated, to recognize the majority representative
of his store workers.
Counsel for Respondent argues, however, that his
chent's refusal to recognize Complainant Union reflects no
8(a)(1) or (5) violation, since: (1) Complainant's new
designation cards were not validly procured, and
(2) Respondent, had, further, good reason to doubt
Complainant's claim to continued representative status.
Previously, within this Decision, Respondent's first
contention-regarding the validity of Complainant's new
designation cards-has been rejected. By way of
recapitulation: Well-established decisional doctrine
teaches that such designations may not be disregarded or
declared void without reliable, probative, and substantial
evidence that threats or improper inducements,
chargeable to union representatives, had been employed
to obtain them. Smeco Industries, Inc., 151 NLRB 1240;
Superior Rambler, 150 NLRB 1264; cf. Purity Food Stores,
Inc., 150 NLRB 1523. Nothing in the present record,
however, would warrant a determination that
Respondent's workers, prior to Complainant's
redesignation, were subjected to any threats or
inducements, whether from Garrity or union
representatives, sufficient to justify Board rejection of
their choice. Within his brief, Complainant Union's
counsel notes that:
The comment that the store was a Union shop
apparently had varying degrees of meaning to the
employees present. Objectively, such a statement
does not come within the meaning of threat or
inducement in the cases examined. Further, it is horn-
book law that the subjective reaction or unilateral
misunderstanding of the employee to requests for
authorization is not controlling as to the voluntariness
of the authorization.
With matters in their present posture, counsel's comment
with respect to the record's significance must be
considered cogent; his summary of Board decisional
doctrine, further, correctly states the principle which must
be considered determinative herein. Cf. Jas. H. Matthews
& Co. v. N.L.R.B., 354 F.2d 432 (C.A. 8); Gary Steel
Products Corporation, 144 NLRB 1160; Peterson Brothers,
144 NLRB 679, 682, in this connection. (Though the record
does show that Garrity, Respondent's predecessor, may
have told some store workers that they would have to join
Complainant, there can be no doubt that his comments
followed his execution of Complainant's memorandum
contract. Since that contract did contain statutorily
permitted union-shop provisions, Garrity could hardly be
faulted for his remarks.) True, Garrity's suggestion that his
workers join the Union, which he seems to have made
shortly after he signed the memorandum contract, could
conceivably have persuaded some Fontana workers to
seek union membership without waiting out their 30-day
contractual grace period; his failure to mention their right
to wait out that grace period, however, cannot be said to
have rendered his remarks coercive. Besides, nothing in
the record will support a determination that Garrity made
such suggestions to those particular workers who,
subsequently, redesignated Complainant. And, assuming,
arguendo, that some of these workers may have "heard"
Garrity's suggestion shortly after he became a contract
signatory, determination could hardly be considered
warranted that Respondent's workers, when they
299-352 0-70-15
214 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
redesignated Complainant slightly less than 1 month later,
did so because their previous employer's directive had
coerced their judgment.
Despite his conceded knowledge with respect to
Garrity's settlement commitment, his further knowledge
that Garrity had finally signed Local 1167's memorandum
contract, and Complainant's proposal to submit its
redesignation cards for verification by some neutral party,
Goulding contended that he did not, really, believe
Complainant represented a majority of his Fontana store
workers. This claim rests, principally, upon three grounds:
1. Garrity had reported, to him, that he had told "some
of the employees" they would have to join Complainant
herein.
2. The Fontana store is small, so that Goulding could
reasonably consider himself a beneficiary of relatively
"close" rapport with his employees. As recipient of their
relevant expressions of opinion, he believed that
Complainant did not, during the period with which we are
concerned, represent them.
3. Goulding's various "casual" conversations with store
workers led him to believe that Complainant had misled
them before their redesignation cards were signed.
These contentions, however, provide no persuasive
justification for Goulding's claim of good-faith doubt; with
due regard for the record, Respondent's contention in this
regard must be rejected.
First: Whatever Garrity may have told Goulding must be
considered hearsay; Respondent can hardly contend that
his predecessor's statements provided any "reasonable
basis" for his later claims. Though Respondent's
testimony with respect to Garrity's report was received for
whatever value it might have as tending to show his
(Goulding's) subjective state of mind, its probative weight
with respect thereto must be considered minimal. Within
his brief, Complainant's counsel has suggested, cogently,
that Goulding knew, or should have known, that Garrity,
who had resisted his store' s unionization before he signed
the settlement previously noted, which settlement
included a bargaining order, would hardly have urged his
workers to seek union membership, thereafter, except
pursuant to some valid and binding contractual union-
security clause. Since the record warrants a determination
that his commitment to such a clause did, indeed, lead
Garrity to make his suggestion, that suggestion can hardly
be considered unlawful; certainly, it can provide no
reasonable justification for Goulding's presently claimed
belief that Complainant's representative status had been
won through coercion.
Second: Goulding's claim to knowledge regarding what
his workers felt with respect to union representation could
not, reasonably have been bottomed merely on his store's
small size. His purported belief with respect to his
workers' representation desires could only have derived
from whatever specific conversations he may have had
with them. These conversations, then-rather than some
vague rapport between the franchise dealer and his
employees bottomed on their close working
relationship-must be considered.
Third: Goulding's claim of good-faith doubt, which
he purports to have derived from several informal
conversations with store workers after he took over
Fed-Mart's franchise, rests on testimony which can
hardly be considered persuasive. While a witness,
Respondent first testified that various workers made
statements, shortly after he took over the store, from which
he derived "impressions" that they did not desire union
representation. When cross-examined, however, he was
unable to say which employees had spoken to him during
late December or early January; nor could he recall what
they said. When pressed, he could merely report that some
of them had asked him whether the store was "Union"
still. Such queries, because of their equivocal character,
can hardly be considered a manifestation of discontent
with union representation. (During direct examination,
Goulding had testified, generally: that some of his
workers, their number unspecified, had questioned him as
to what could be done to them if they did not pay their
union dues; that some had reported receiving union letters
which said that if they did not pay their dues there would
be repercussions; and that some had declared the only
reason they "signed" was because they were told to sign.
During cross -examination , however, Respondent
professed to recall conversations with no more than seven
workers. Three of these, Johnson, Logo, and Marovich,
none of them January card signers, had merely asked
whether the store was "Union" still. With respect to four
January card signers, Dawson, Gronek, Merlo, and
Sanders, Goulding could merely recall that two had
queried the store's "Union" status, and that one had
mentioned receiving a union letter; he could not remember
the substance or tenor of his conversation with the fourth
card signer. ) Thus, assuming, arguendo, that Goulding
may really have had some casual conversations with
various store workers, their tenor certainly cannot be
considered reasonably sufficient to raise a good-faith
doubt regarding Complainant's renewed representation
claims. Cf. West Suburban Transit Lines, Inc., supra
798-800, and cases therein cited; Cameo Lingerie, Inc.,
148 NLRB 535, 538-539; asserted doubts regarding
representative status must rest on something more than
unfounded assertions or speculation; good-faith doubt
presupposes a rational basis in fact. N.L.R.B. v. Howe
Scale Co., 311 F.2d 502, 504 (C.A. 7). No such showing has
been made herein. Further, testimony proffered in
Respondent's behalf, apart from that of Goulding himself,
tends to show that whatever conversations he may have
had, with possibly one exception, took place some time
after January 7, when he received Complainant Union's
first formal demand for recognition. I so find. Such
conversations can hardly have influenced his prompt
rejection of Local 1167's claim of majority representation.
Taken as a whole, therefore, the record shows: That
before Goulding took over Fed-Mart's franchise, he knew
that Garrity, his predecessor, pursuant to a posted
settlement notice, had shortly before conceded
Complainant's representative status; that he was, further,
aware of Garrity's contractual privity with Local 1167,
since he knew that Garrity had signed that organization's
memorandum contract less than 1 month previously; that
he (Goulding) nevertheless rejected, thereafter,
Complainant's offer to prove its January redesignation by
a majority of Fontana store workers, through a card check
which some neutral person could conduct; that he had,
prior to Complainant's recognition demand, purchased a
group life insurance and hospitalization plan for store
workers, without notice or consultation with union
representatives; that, following Complainant's demand for
recognition, he (Goulding) had further unilaterally
promulgated a sick leave policy and vacation program; and
that, shortly thereafter, he had granted store workers the
first of two substantial wage increases. With matters in
FED-MART 215
this posture, Respondent's present claim, that his refusal
to recognize and bargain with Complainant derived from
some "reasonably based" good-faith doubt regarding its
representative status, fails to persuade.
Dispassionately considered, rather, Respondent's
present claim of good-faith doubt-considered in the fight
of his prior refusal to accept or acknowledge
Complainant's suggestion regarding a method by which
such a doubt could be resolved-constituted "nothing
more than a stalling device" calculated to provide him
with time within which Complainant's representative
status could be subverted. Upon this record, I find that
Complainant did, really, represent a majority of
Respondent's Fontana store workers on January 7, 1965;
that Respondent was then confronted with Complainant's
demand for recognition and request for collective-
bargaining; and that his refusal to deal with Complainant's
representatives, thereafter, violated the statute.
c. Since Respondent must be considered Garrity's
successor; his statutory duty to recognize
and bargain with Complainant compasses a
duty to honor his predecessor's
collective-bargaining contract
Within his brief, General Counsel notes that, were
Garrity still the Fontana store's franchise holder, he would
be bound (pursuant to the terms of his memorandum
contract) to maintain and comply with Local 1167's master
collective-bargaining agreement, with a scheduled 1969
termination date. General Counsel contends, therefore,
that Respondent herein-since he must he considered
Garrity's successor for statutory purposes-should
likewise be considered bound by that contract.
General Counsel takes this position notwithstanding
well-established Board decisional doctrine which clearly
laid down a rule-before the Supreme Court's decision in
Wiley & Sons v. Livingston, previously noted-that,
absent some express assumption of previously signed
contracts, successor employers are not bound by their
predecessors' collective-bargaining agreements. United
States Gypsum Company, 157 NLRB 652, 655-656;
Triumph Sales, Inc., 154 NLRB 916, 920; Rohlik, Inc., 145
NLRB 1236, 1242, fn. 15; General Extrusion Company, 121
NLRB 1165; Jolly Giant Lumber Co., 114 NLRB 413;
International Longshoremen's and Warehousemen's
Union, Local No. 16, CIO (Juneau Spruce Corporation), 82
NLRB 650, 659; cf. Cruse Motors, Inc., 105 NLRB 242,
248. Within the present record's factual context, however,
General Counsel submits that Wiley & Sons v. Livingston
dictates a revision of current Board decisional principles,
regarding the scope of the bargaining duty which the
statute lays on so-called "successor" firms.
The Supreme Court, within its Wiley & Sons v.
Livingston decision, was required to determine whether a
company, found a successor employer, should be
considered bound to arbitrate certain claims bottomed
upon a collective-bargaining contract which its
predecessor had signed. The specific questions with
respect to which arbitration had been sought were
questions dealing with certain current and prospective
contractual obligations which purportedly bound the
successor, following the predecessor firm's disappearance
through merger. The Court held at 548-549:
... that the disappearance by merger of a corporate
employer which has entered into a collective
bargaining agreement with a union does not
automatically terminate all rights of the employees
covered by the agreement, and that, in appropriate
circumstances, present here, the successor employer
may be required to arbitrate with the union under the
agreement.
It would derogate from "the federal policy of settling
labor disputes by arbitration," ... if a change in the
corporate structure or ownership of a business
enterprise had the automatic consequence of
removing a duty to arbitrate previously established;
this is so as much in cases like the present, where the
contracting employer. diasppears into another by
merger, as in those in which one owner replaces
another but the business entity remains the same
[Emphasis supplied.]
There follows, within the Supreme Court's opinion, the
paragraph, previously quoted within this Decision,
wherein the Court declares that "national labor policy,
reflected in established principles of federal law" requires
that the rightful prerogative of business owners to
rearrange their businesses be balanced by "some
protection" for workers from sudden changes in their
employment relationship. With comments which-within
the context of the present record-seem particularly
cogent, the Court further declares, at 550, that:
While the principles of law governing ordinary
contracts would not bind to a contract an
unconsenting successor to a contracting party, a
collective bargaining agreement is not an ordinary
contract. "... [I]t is a generalized code to govern a
myriad of cases which the draftsmen cannot wholly
anticipate. ... The collective agreement covers the
whole employment relationship. It calls into being a
new common law-the common law of a particular
industry or of a particular plant." ... Central to the
peculiar status and function of a collective bargaining
agreement is the fact, dictated both by circumstance
. and by the requirements of the National Labor
Relations Act, that it is not in any real sense the
simple product of a consensual relationship.
Therefore, although the duty to arbitrate ... must be
founded on a contract, the impressive policy
considerations favoring arbitration are not wholly
overborne by the fact that Wiley did not sign the
contract being construed. This case cannot readily be
assimilated to the category of those in which there is
no contract whatever, or none which is reasonably
related to the party sought to be obligated. There was
a contract, and Interscience, Wiley's predecessor,
was party to it. We thus find Wiley's obligation to
arbitrate this dispute in the Interscience contract,
construed in the context of a national labor policy.
[Emphasis added.]
Superficially considered, Wiley & Sons v. Livingston
dealt merely with a successor employer's duty to arbitrate
questions or claims bottomed upon his predecessor's
collective-bargaining contract. There can be no doubt,
however, that, since the Supreme Court decided that
Interscience's contractually fixed duty to arbitrate
devolved upon its successor, the Court's decision
necessarily reflects a determination that the contracting
firm's successor could legitimately be considered bound by
whatever substantive contractual provisions a designated
arbitrator might be requested to construe. With respect to
216 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
this aspect of the case, the Supreme Court noted, at 554,
that:
All of the Union's grievances concern conditions of
employment typically covered by collective
bargaining agreements and submitted to arbitration if
other grievance procedures fail. . . . Wiley argues,
however, that the Union' s claims are plainly outside
the scope of the arbitration clause: first, because the
agreement did not embrace post-merger claims .... In
all probability, the situation created by the merger
was one not expressly contemplated by the Union or
Interscience when the agreement was made in 1960.
Fairly taken, however, the Union's demands
collectively raise the question which underlies the
whole litigation : What is the effect of the merger on
the rights of covered employees? It would be
inconsistent with our holding that the obligation to
arbitrate survived the merger were we to hold that the
fact of the merger, without more, removed claims
otherwise plainly arbitrable from the scope of the
arbitration clause.... Claimed rights during the term
of the agreement, at least, are unquestionably within
the arbitration clause; we do not understand Wiley to
urge that the Union 's claims to all such rights have
become moot by reason of the expiration of the
agreement . [Emphasis supplied.]
Since the Supreme Court's decision, two circuit courts of
appeals have, indeed, construed Wiley & Sons v.
Livingston as holding that firms properly subject to
characterization as successors remain bound to honor
their predecessors ' entire collective -bargaining contracts,
whenever the circumstances of their succession reflect
"substantial continuity of identity and operation" with
respect to the business enterprises concerned , before and
after such a change. United Steelworkers of America v.
Reliance Universal, Inc. of Ohio, 335 F.2d 891 (C.A. 3);
Wackenhut v. International Union, United Plant Guard
Workers of America, 332 F.2d 954 (C.A. 9). The Wackenhut
case, like the Wiley case , concerned a labor organization's
attempt to enforce a trade agreement 's arbitration clause
against the purchaser of a business. With respect to the
question now under consideration , the court of appeals
held, at 958, that:
. the policy of the national labor laws obligates
Wackenhut , as the successor employer , to honor the
collective bargaining agreement entered into by its
predecessor, General Plant.
*
The specific rule which we derive from Wiley is
that where there is substantial similarity of operation
and continuity of identity of the business enterprise
before and after a change in ownership , a collective
bargaining agreement containing an arbitration
provision , entered into by the predecessor employer is
binding- upon the successor employer. [Emphasis
supplied.]
Consistently , the court of appeals found Wackenhut, the
successor purchaser of the business , "bound by the
collective - bargaining agreement " which its predecessor
seller had signed; Wackenhut was, specifically, found
committed to arbitrate union grievances regarding the
continued postpurchase viability of certain wage increase,
union shop , and dues checkoff provisions . In United
Steelworkers v. Reliance Universal , the Court of Appeals
for the Third Circuit was confronted with a comparable
question. Noting the relevance of Wiley & Sons v.
Livingston, the court construed it to stand for the
proposition that , under appropriate circumstances , certain
obligations may be imposed upon the new owner of a
business-regardless of whether that new owner had
acquired the business through purchase and sale or
merger-by reason of the collective-bargaining contract
negotiated and signed by the preceding owner . Having
found Wiley & Sons v. Livingston determinative, the court
noted, at 894, that:
The opposing parties here have argued for and against
the proposition that the collective bargaining
agreement is unqualifiedly binding upon Reliance, as
would have been the case if there had been an
assignment or novation substituting Reliance as a
party to the instrument . [ Emphasis supplied.]
And within a footnote, the court found the Ninth Circuit's
Wackenhut decision premised upon that circuit's
construction of Wiley as authority for making a preexisting
labor contract unqualifiedly binding upon a new
proprietor. Though the Third Circuit professed not to
share the Ninth Circuit's view regarding the breadth of the
Wiley decision, it did conclude, at 895, that:
The requirements of the contract remain basic guides
to the law of the shop ... [and] ... the basic charter
of labor relations . . . after the change of ownership.
The court, however, went on to declare that an arbitrator,
designated to determine disputes thereunder, might
properly give weight to changed circumstances created by
the transfer of ownership, which might make continued
adherence to particular terms of that contract
unreasonable or inequitable.
These judicial determinations, though bottomed upon
considerations of national labor policy laid down in Section
301 suits , persuasively suggest that a successor firm,
charged with a refusal to bargain within the meaning of
Section 8(a)(5) and 8(d) of the statute, may properly be
required by this Board to honor, maintain , and comply
with the predecessor's contract.
Since Wiley & Sons v. Livingston, we may note, both the
Wisconsin Supreme Court and that State's Employment
Relations Board have considered that decision
determinative in connection with refusal -to-bargain
charges brought under that State's labor relations statute.
Drivers, Warehouse and Dairy Employees Union Local No.
75 v. Wisconsin Employment Relations Board, 61 LRRM
2113; Retail Clerks Union Local 1116, et al. and Norm's
I.G.A., 61 LRRM 1123; Local No. 126, General Teamsters,
etc. O'Brien Transport Co., 60 LRRM 1528. Within the first
case cited, the Wisconsin Supreme Court declared that
Wiley stands for the principle that a collective-bargaining
contract , in reference to a particular plant or business,
survives a change in ownership of such business and binds
the new owner and employer , if there is a relevant
similarity and continuity of operations across the change
in ownership. Though the court did find that Wiley did not
compel the respondent purchaser, within the case before
it, to recognize the labor agreement which the seller had
previously signed , its determination derived from a record
which, it found, revealed no substantial continuity of
identity in the business enterprise before and after the
change. Both Wisconsin Employment Relations Board
decisions cited, though they reflect no provisions
conferring affirmative relief for various reasons, recognize
the relevance of the Supreme Court ' s Wiley rationale with
respect to cases under the Wisconsin statute, when
"successorship" can be proven.
These State court and board pronouncements , likewise,
FED-MART
persuasively demonstrate the reasonableness of General
Counsel's contention, herein, that Goulding's duty to
bargain with Complainant Union compasses a present
duty on his part to honor and maintain Local 1167's master
contract, currently in force. Within his brief, General
Counsel's representative suggests, cogently, that:
It is submitted that if the stability of labor relations
requires a continuity of bargaining rights, then the
same policy considerations dictate a continuity of
contract rights. There is no logical reason why a
successor employer should be bound by one and not
the other. If employees lost the rights secured for
them in labor contracts every time a business changes
hands, the prior negotiations would prove to be of
minimal value. New negotiations would mean a gap in
the terms and conditions of employment. Employees
would be subjected to an uncertain fate which, of
course, does not mean stability of labor relations.
Within its Maintenance, Incorporated decision, previously
noted, this Board had found a so-called "successor" firm
duty-bound to bargain for substantially similar reasons.
The Board's decision noted that:
It would be virtually impossible for employees to
achieve collective-bargaining rights in an employing
industry which is periodically subject to a possible
change of employers if with every change the
employees must again resort to the Board's processes
in order to demonstrate anew their desire to be
represented by their formerly certified bargaining
representative. In our opinion, it would best
effectuate the policies of the Act if, in the
circumstances here present, the Respondent is
required to bargain with the Union and the Union is
left free to devote itself to its function as bargaining
agent for at least the normal operative period before
the presumed majority status flowing from its
certification may be questioned.
For reasons previously noted within my Decision, this
rationale persuades me that the purposes of the statute
would likewise be served "in the circumstances here
present" by a determination that Goulding remained duty-
bound to honor and maintain Complainant's current
contract. I so find.
d. Respondent's changes in wages and conditions of work
without notice to Complainant Union likewise constitute
refusals to bargain
Previously, within this Decision, reference has been
made to Respondent's unilateral promulgation of a group
life insurance and hospitalization plan, sick leave policy,
and vacation policy. Further, reference has been made to
Goulding's subsequent series of unilateral wage raises.
Respondent's lack of concern regarding any possible
union interest with respect to these matters is
realistically conceded; clearly, Goulding's course of
conduct reflected his consistent belief that he was not
bound to deal with Complainant at all. That belief has,
however, been found lacking in merit. Respondent, rather,
has been found firm in his refusal to grant Complainant
recognition, despite the present duty which I have found
the statute lays upon him. Necessarily, any course of
conduct, chargeable to him, which resulted in unilateral
changes affecting terms or conditions of employment for
his Fontana store workers must be considered equally
violative of the Act. N.L.R.B. v. Katz, d/b/a Williamsburg
Steel Products Co., 369 U.S. 736; RoyE. Hanson, Jr., Mfg.,
137 NLRB 251. And I so find. General Counsel contends,
217
further , that the wage raises and fringe benefit grants with
which we are now concerned were bestowed for the
purpose of discouraging union membership . I find merit,
likewise, in this contention.
Determination seems warranted , upon the entire record,
that Respondent 's course of conduct was reasonably
calculated to subvert Complainant 's representative status.
Goulding, clearly , sought this goal through his program of
wage raises and various fringe benefit grants. There can
be no doubt , however, that wage increases and fringe
benefit improvements , granted for the purpose of
discouraging union membership , constitute interference,
restraint , and coercion violative of the statute . N.L.R.B. v.
Exchange Parts Company, 375 U.S. 405; N.L.R.B. v.
Hyde's Supermarket , supra; I so find.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON
COMMERCE
The activities of Respondent set forth in section III,
above, occurring in connection with his business
operations described in section I, above, have a close,
intimate , and substantial relationship to trade, traffic, and
commerce among the several States and tend to lead to
labor disputes burdening and obstructing commerce and
the free flow of commerce.
V. THE REMEDY
Since it has been found that Respondent did commit,
and continues to commit, unfair labor practices, I shall
recommend that the Board issue an order requiring that he
cease and desist therefrom and take certain affirmative
action, including the posting of appropriate notices,
designed to effectuate the policies of the Act, as amended.
Specifically, determination has been made herein that
Goulding violated Section 8(a)(5) and (1) of the statute by:
(1) his refusal to recognize and bargain with Complainant,
upon request, as the representative of his Fontana store
workers; (2) his refusal to honor Complainant's
December 7, 1964, memorandum contract, coupled with
his refusal, despite the requirements of the designated
document, to further "continue in full force and effect"
the labor organization's Retail Food, Bakery, Candy and
General Merchandise Agreement, 1959-64, or to "accept
and adopt in full" the Complainant's 1964-69 successor
contract, negotiated with Food Employers Council, Inc.;
and (3) his program of wage increases, coupled with his
modification of various terms and conditions of work for
Fontana store workers, without notice or consulation with
Complainant herein. Confronted with a comparable
situation, this Board has noted its duty to bear in mind that
whatever remedy it may fashion for unfair labor practices
should be adapted to the situation which calls for redress;
remedies, so the Board holds, should be fashioned with a
view toward restoring, as nearly as possible, the situation
which would have prevailed but for the specific unfair
labor practices found. Phelps Dodge Corporation v.
N.L.R.B., 313 U.S. 177, 194; Chemrock Corporation, supra.
I shall, therefore, recommend that Respondent bargain
with the Union, upon request, and, further, that
Respondent honor Complainant's December 7, 1964,
memorandum contract with his predecessor. Consistently
with this recommendation, I shall recommend that
Goulding honor the designated labor organization's Retail
Food, Bakery, Candy, and General Merchandise
Agreement, 1959-64, so far as it may be applicable
retroactively to the date when he took over Fed-Mart's
218 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
franchise dealership for the Fontana store, together with
Complainant's current Retail Food, Bakery, Candy, and
General Merchandise Agreement, 1964-69, for the balance
of that document's stated term. Respondent's obligation,
however, with respect to maintaining or complying with
these contracts, should not be construed to require his
withdrawal from Fontana store workers of any benefits
they may have been given, beyond those which the several
contracts designated might require.
Consistently with my recommendation regarding
retroactivity, Respondent should be required to make his
Fontana store workers whole for any loss of pay or other
benefits which they may have suffered by reason of
Respondent's unlawful refusal to honor the several
contracts previously designated since December 20, 1964.
Chemrock Corporation, supra. Whatever backpay
Respondent's Fontana store workers may be entitled to
receive, shall be computed in the manner set forth in F. W.
Woolworth Company, 90 NLRB 289, and shall include
interest, computed in the amount and manner which Isis
Plumbing & Heating Co , 138 NLRB 716, sets forth.
Though Goulding's franchise grantor, Fed-Mart, has not
been designated a respondent herein, the possibility that it
may be concerned, legitimately, with the scope of the
Board's remedial order in this case cannot, realistically, be
disregarded. (Pursuant to its standard Franchise and
Supply Contracts and Subleases, Fed-Mart retains rights
of cancellation and termination, with or without cause.
The franchise grantor, certainly, should be notified that,
under certain circumstances, the exercise of those rights
will not extinguish rights which the National Labor
Relations Act confers upon workers who might be affected
thereby; nor will their exercise by Fed-Mart, under such
circumstances, leave successor franchisees free to deal
with labor relations matters without regard for their
statutorily fixed obligations.) The franchise grantor,
therefore, should, in my view, be given formal notice that
franchise recipients taking over Fed-Mart dealerships,
under circumstances comparable with those found present
herein, will be considered subject to certain statutory
obligations vis-a-vis whatever bargaining representative
the workers concerned may have selected. I shall
recommend, therefore, that the Regional Director formally
serve Fed-Mart with a copy of this Decision, and that
whatever order the Board may issue regarding this matter
be served on the franchise grantor.'
' Consistently with Motions to Correct the Transcript filed by
counsel for General Counsel and the Complainant Union, the
In the light of the foregoing findings of fact and upon the
entire record in this case, I make the following:
CONCLUSIONS OF LAW
1. Joseph Glenn Goulding d/b/a Fed-Mart, designated
as Respondent herein, is an employer within the meaning
of Section 2(2) of the Act, engaged in commerce and
business activities which affect commerce within the
meaning of Section 2(6) and (7) of the Act, as amended.
2. Retail Clerks Union, Local 1167, Retail Clerks
International Association, AFL-CIO, is a labor
organization within the meaning of Section 2(5) of the Act,
as amended, which admits employees of Joseph Glenn
Goulding to membership.
3. All employees employed by Joseph Glenn Goulding,
d/b/a Fed-Mart, at his Fontana, California, store, exclusive
of guards, watchmen, professional employees and
supervisors as defined in the Act, constitute a unit
appropriate for the purposes of a collective bargain, within
the meaning of Section 9(b) of the Act, as amended.
4. At all times material herein, subsequent to
December 20, 1964, Complainant has been entitled to
recognition as the exclusive representative of
Respondent's Fontana store employees, within the unit
described above, pursuant to the provisions of Section 9(a)
of the Act, as amended, for the purposes of collective
bargaining with respect to rates of pay, wages, hours of
work, and other terms and conditions of employment.
5. By his refusal to honor, maintain, or give any effect to
Complainant's December 7, 1964, memorandum contract
with his predecessor franchisee; his further refusal to
honor, maintain, or effectuate those successive contracts
between Complainant and Food Employers Council, Inc.,
which the memorandum contract designated incorporates
or adopts by reference; his concurrent refusal to bargain
collectively with Complainant as the exclusive
representative of his Fontana store employees on and after
January 7, 1965; and his unilateral modification of wage
rates and various terms and conditions of work affecting
those Fontana store workers, Respondent has engaged in
and is engaging in unfair labor practices affecting
commerce within the meaning of Section 8(a)(5) and (1)
and Section 2(6) and (7) of the Act, as amended.
[Recommended Order omitted from publication.]
transcript is corrected as follows p. 217, 1 16 should read
December 9, 1964, instead of September 9, 1965