Industrial Security Guards, Inc.

National Labor Relations Board - Board Decisions

Apr 12, 1971

189 N.L.R.B. 717 (N.L.R.B. 1971)

LINCOLN PRIVATE POLICE, INC. 717
Lincoln Private Police, Inc. as Successor to Industrial
Security Guards, Inc. and United Plant Guard
Workers of America, Amalgamated Plant Guards,
Local 112. Case 24-CA-2867
April 12, 1971
DECISION AND ORDER
National Labor Relations Board has delegated its
powers in connection with this case to a three-member
panel.
Upon the entire record in this case, the Board makes
the following:
FINDINGS OF FACT
BY CHAIRMAN MILLER AND MEMBERS
FANNING AND KENNEDY
Upon a charge filed by United Plant Guard
Workers of America, Amalgamated Plant Guards,
Local 112, herein called the Union, on May 14, 1970,
the General Counsel of the National Labor Relations
Board, by the Regional Director for Region 24, issued
a complaint on August 14, 1970, against Lincoln
Private Police, Inc., herein called Respondent, as
successor to Industrial Security Guards, Inc., alleging
that Respondent had engaged in and was engaging in
unfair labor practices within the meaning of Section
8(a)(1) and (5) and Section 2(6) and (7) of the
National Labor Relations Act, as amended. Copies of
the charge, complaint, and notice of hearing were
duly served upon the Respondent and the Union.
With respect to the unfair labor practices, the
complaint, in substance, alleges that the Union was
certified by the Board on November 4, 1969, as the
collective-bargaining representative of certain em-
ployees of Industrial Guard Services, Inc., that
Respondent is the legal successor to Industrial Guard
Services, Inc., and has violated Section 8(a)(5) and (1)
of the Act by refusing to recognize and bargain with
the Union as the representative of its employees. On
September 4, 1970, Respondent filed an answer
denying the commission of any unfair labor practices
and requesting that the complaint be dismissed in its
entirety.
On November 6 and 7, 1970, the parties executed a
stipulation in which they waived a hearing before a
Trial Examiner and the issuance of a Trial Examiner's
Decision and agreed to submit the case directly to the
Board for findings of fact, conclusions of law, and an
appropriate order. The stipulation also provided that
the charge, complaint, answer, order rescheduling
hearing, supplemental decision and certification of
representative, collective-bargaining agreement, and
stipulation of facts shall constitute the entire record in
this case.
On November 18, 1970, the Board approved the
stipulation of the parties and ordered the case
transferred to the Board, granting permission and
time for the filing of briefs. Thereafter, the General
Counsel filed a brief with the Board.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
1. THE BUSINESS OF THE RESPONDENT
Respondent, a Commonwealth of Puerto Rico
corporation with offices located in Hato Rey, Puerto
Rico, has, at all material times since its incorporation
on or about April 9, 1970, has engaged in the
furnishing of guard services to individuals and
business firms on the Island of Puerto Rico. It is
anticipated that during the year period from April 1,
1970, to April 1, 1971, Respondent in the course and
conduct of its business will have received revenues in
excess of $50,000 from the sale of its guard services to
firms which are engaged in commerce or in operations
affecting commerce within the meaning of the Act.
Until it discontinued operations on or about April
15, 1970, Industrial Security Guards, Inc., herein
called Industrial, a corporation existing under the
laws of the Commonwealth of Puerto Rico, was
engaged in the business of furnishing guard services to
individuals and commercial enterprises on the Island
of Puerto Rico. During the year prior to April 15,
1970, Industrial furnished guard services, valued in
excess of $ 50,000, to firms which are engaged in
commerce or in operations affecting commerce within
the meaning of the Act.
We find, upon these admitted facts, that both
Respondent and Industrial are employers engaged in
commerce within the meaning of Section 2 (6) and (7)
of the Act, and that it will effectuate the policies of the
Act to assert jurisdiction herein.
II. THE LABOR ORGANIZATIONS INVOLVED
United Plant Guard Workers of America, Amalga-
mated Plant Guards, Local 112, is a labor organiza-
tion within the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
The facts, as stipulated by the parties, reflect that
pursuant to an election conducted by the Board on
October 10, 1969, the Union was certified on
November 4, 1969, as the collective-bargaining
representative of the employees of Industrial in an
appropriate unit consisting of :
All guards employed by the Employer in the San
Juan Metropolitan Area, including the towns of
Catano, Bayamon, Guaynabo, Dorado, Carolina
189 NLRB No. 103
718 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and Trujillo Alto, P.R. and the guards employed in
the towns of Fajardo and Caguas, P.R., including
working sergeants, group leaders and patrolmen
and excluding all other employees and supervisors
as defined in the Act.'
Following certification, the Union and Industrial
engaged in negotiations, and on or about February 3,
1970, reached agreement on the terms and conditions
of a collective-bargaining contract to become effec-
tive on March 1, 1970.2 At Industrial's request, the
Union prepared a final draft of the agreement, which
was submitted to Industrial for signature on March
10.
In the meantime, Industrial, on March 1, put into
effect the wage increases called for by the contract,
and also began checking off union dues.3 Industrial,
however, never executed the agreed-upon collective-
bargaining agreement, and on April 14 notified the
Union that it was going out of business as of April 16.
The decision by Industrial to go out of business
appears to have been motivated in substantial part by
the wage increases it agreed to with the Union. Thus,
on or about February 10, Industrial notified its clients
that, due to the Union's economic demands, it was
forced to raise the rate it charged for guard services.
As a result of this announcement, an unspecified
number of Industrial's clients canceled their guard
service contracts during the latter part of February.
Thereafter, Industrial on March 16 notified its
remaining clients that it was giving them notice that
effective April 16, it was canceling their service
contracts and discontinuing operations.
Respondent was incorporated on or about April 9.
Its sole shareholders and officers consist of Jorge
Calderon (president), Luis Rodriguez Rivera
(business manager), and Edurado R. Sotomayor
(operations manager), each of whom has a one-third
interest in the business. Although Calderon previously
had no connection whatsoever with Industrial, Rivera
was formerly Indstrial's payroll clerk, and until
March 1 Sotomayor was the day duty officer at
Industrial, the latter admittedly being a supervisory
position. None of Respondent's shareholders had any
pecuniary interest in Industrial, and Respondent has
not assumed any of Industrial's assets or liabilities. In
order to obtain operating capital for Respondent,
Calderon borrowed money from a San Juan bank.
Respondent has purchased new uniforms, vehicles,
and equipment, and occupies different premises than
did Industrial.
i The unit description conforms to the unit specified in the
Supplemental Decision and Certification issued by the Regional Director
for Region 24 on November 4, 1969
2 Unless otherwise indicated , all dates herein refer to 1970
3 Prior to March 1 , the wage rate for Industrial 's guards was $ 1 55 per
hour-local, and $ 160 per hour-Federal After March 1, Industrial
increased hourly wage rates to $ 1 68-guards, $ 173-patrolmen, and
Commencing the latter part of February, presuma-
bly after a number of Industrial's clients canceled their
service contracts, Calderon, on behalf of Respondent,
began soliciting clients of Industrial for the continua-
tion of guard services upon Industrial's anticipated
demise. Sotomayor joined Calderon in these efforts
around the middle of March. The parties stipulated
that as a result of these solicitations, Respondent
contracted with "virtually all of the then remaining
clients of Industrial Security for the continuation of
their guard services." Although the stipulated does
not reflect how many of Industrial's "remaining
clients" were assumed by Respondent, the parties
stipulated that of the 61 clients Industrial had before
the February recisions, Respondent as of May 26
had acquired 26 of those clients, or 42 percent. Of the
84 posts or projects serviced by Industrial prior to the
recisions, Respondent by May 26 had acquired 29, or
34 percent. Further, of the 226 Industrial guard
assignments, Respondent had by that date acquired
64, or 28 percent. In addition, the parties stipulated
that prior to the February recisions, Industrial billed
approximately 27,560 hours per month to its clients
for the performance of guard services. As of the time
Industrial discontinued operations, Respondent had
acquired approximately 8,836 monthly billable hours
of guard services, or about 32 percent, from former
Industrial clients. The remaining 68 percent of
Industrial's business was acquired by competing
guard service companies, of which the largest portion,
an amount almost the same as that acquired by
Respondent, was obtained by Metropolitan Security
Services, Inc.
Respondent's clientele has not been limited to
former customers of Industrial. As of May 26,
Respondent had procured approximately 30 percent
of its customers from independent sources.
During the last 2 weeks of operation, Industrial had
92 bargaining unit employees on its payroll.4 When
Industrial discontinued operations on April 16, all
remaining employees were terminated. As of May 26,
61 of the 66 guards in Respondent's employ had
worked for Industrial during the last 2 weeks of its
operation, and all 66 had at one time or another been
employed by Industrial.
As Sotomayor solicited business on behalf of
Respondent prior to the demise of Industrial, some of
the latter's clients insisted, as a condition of signing a
guard service contract with Respondent, that the
same guards be assigned to them as Industrial had
$1 78-armed guards The wage rates being paid by Respondent are $1.65
for patrolmen and armed guards
4 At the time of the election in the representation case , October 10,
1969, there were approximately 144 eligible employees in the bargaining
unit Although not reflected in the parties' stipulation , the subsequent
reduction in the size of the bargaining unit is presumable accounted for by
the loss of clients beginning in February 1970
LINCOLN PRIVATE POLICE, INC. 719
supplied. In virtually all instances where former
Industrial clients were acquired by Respondent, the
same guards who had formerly been employed by
Industrial were retained by Respondent and contin-
ued on the same posts. As Respondent obtained
former clients of Industrial, the guards assigned to the
respective posts were interviewed and, as stipulated
by the parties, expressed their willingness to work for
Respondent, continuing at the same posts, at wage
rates which were less than those agreed to during
negotiations between the Union and Industrial.
On April 21, after Industrial ceased operations, the
Union wrote Respondent and requested that it meet
with the Union on April 28 and sign the agreement
previously reached with Industrial. Respondent rep-
lied on April 28, refusing to sign the contract or meet
with the Union, and denied being a legal successor to
Industrial.
Although the stipulation between the parties does
not reflect that Respondent had knowledge of the
agreement reached between the Union and Industrial
at the time the latter ceased and Respondent
commenced operations, the parties have stipulated
that as of March 1, Rivera, who was then Industrial's
payroll clerk, was aware that the Union and Industrial
had agreed to a wage increase and checkoff of union
dues, and knew that such wage increase and the
checkoff of dues had been placed into effect.
On May 4, unfair labor practice charges were filed
which resulted in the issuance of the complaint in the
instant proceeding.
B. The Issues Involved and Contentions of the
Parties
The threshold issue presented in this case concerns
whether Respondent is to be treated as a successor to
Industrial. General Counsel contends in this regard
that, viewing the business of Industrial at or shortly
before the time it ceased operations, successorship is
established by virtue of the fact the Respondent
continued, uninterrupted, virtually all of the guard
services that remained with and were being performed
by Industrial at that point in time, and further that in
continuing such services, Respondent retained virtu-
ally intact the same guard personnel at the same posts
and on the same shifts as when they had been
employed by Industrial. Alternatively, General Coun-
sel argues that even if the Board were to view the
relationship between Respondent and Industrial at a
point in time prior to the February contract recisions,
successorship still exists inasmuch as Respondent
nevertheless succeeded to a "substantial part" of
Industrial's former business, and Respondent should
not be permitted to benefit from its inability to obtain
a greater part of Industrial's business, since with
purported "full knowledge" of the union contract and
customer recisions, Respondent opted to take over as
much of the predecessor' s business as it might acquire.
Although not alleged in the complaint as an
independent violation, General Counsel asserts, upon
the basis of the Board's decision in the Burns case,5
that Respondent, as successor to the Industrial
bargaining unit who assertedly was aware of the
agreed-upon and partly implemented contract be-
tween the Union and predecessor, should be required
to honor and abide by the full terms of that contract
for its duration.
Although no brief has been received from Respon-
dent, it denied in its answer that it is the successor to
Industrial and contended that it therefore owes no
bargaining obligation to the Union.
C. Discussion and Conclusion
The Board has long recognized that a change in
ownership of a business enterprise does not in itself
absolve the new owner from an obligation, arising
under the Act, to recognize and bargain with the
union that represents the former owner's employees.
Where there is a substantial continuity in the identity
of the employing enterprise, the purchasing employer
is bound to recognize and bargain with the incumbent
unions In the many cases that have been before the
Board on the successorship issue , it has not accorded
controlling weight to any single factor, but has
evaluated all the circumstances present in any given
case in arriving at an ultimate conclusion.
In the instant case, the totality of circumstances
persuades us that there has been a substantial and
material alteration in the employing enterprise.
Respondent did not purchase any of Industrial's
assets or property. Although Respondent acquired
many of Industrial's former clients, it did so by means
of independent solicitation. It obtained a significant
number of its clients, approximately 30 percent, from
new and outside sources.
Respondent, moreover, has operated as an entirely
new and independent business enterprise. It obtained
its own operating capital, purchased new uniforms,
vehicles, and equipment, and occupied different
premises than Industrial. Additionally, there is no
indication that there has been any carryover of
supervisory personnel from Industrial to Respondent.
General Counsel contends that in view of the
circumstances that existed immediately before it
5 The William J. Burns International Detective Agency, Inc., 182 NLRB
No. 50.
6 Randolph Rubber Company, Inc., 152 NLRB 496, 499; Maintenance,
Incorporate4 148 NLRB 1299; Royal Brand Cutlery Company, 122 NLRB
901.
720 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
commenced operations, the Respondent continued
Industrial's "remaining" business operations virtually
intact. However, viewed in what we are convinced is
the more realistic perspective, and comparing the
situation as it was prior to the February contract
rescisions, with the situation after Industrial's dem-
ise, it is clear that Respondent did not acquire a
majority of Industrial's clients or the greater part of its
former business. And while we do not attach
controlling weight to this factor alone, it does take on
added significance when considered together with the
fact that a competing guard service company ob-
tained virtually the same amount of Industrial's
former business as did Respondent.
We are not confronted in this case, as General
Counsel contends, with the same situation that existed
in Burns, supra. There, the bargaining unit in which
the union was certified was confined to the operations
of the predecessor employer at a single location. Upon
the cancellation of the contract between that custom-
er and the predecessor, the successor acquired the
contract, hired a majority of the predecessor's
employees, and continued to perform the same
service, in the same manner, and for the same
customer at the same location as its predecessor. The
Board held in that case that there had been no change
in the employing enterprise. The instant case, howev-
er, is clearly distinguishable on its facts in that the
Union was certified as the representative of Industri-
al's employees at many locations throughout the San
Juan metropolitan area, and Industrial's operations at
those various locations were of course encompassed
within the employing enterprise. And as we have
already noted, Respondent has acquired substantially
less than a majority of Industrial's former customers;
many of those customers have been acquired by other
guard service companies, and in fact one of those
customers have been acquired by other guard service
companies, and in fact one of those companies has
obtained just as much of Industrial's former business
as Respondent. Thus, unlike Burns, the employing
industry in this case has thus been materially
fragmented and, in effect, split asunder.
Solomon Johnsky d/b/a Avenue Meat Center, 184
NLRB No. 94, also relied on by the General Counsel,
is inapposite. In that case, the successor employer
directly purchased the furniture, fixtures, equipment,
and merchandise inventory, as well as the lease to one
of the predecessor's four retail meat markets. More
importantly, although the union's contract with the
predecessor had covered the four stores, the parties
stipulated, and the Board found, that a unit limited to
the employees at the single store acquired by the
successor was appropriate. The employing industry,
therefore, unlike that in the instant case, was confined
to that single location and was not materially altered
by the change in ownership.
While we do not mean to imply by our decision
herein that successorship can never be found where
the new employer acquires less than the predecessor's
entire business, or hires less than a majority of the
predecessor employer's workforce-indeed the Board
has held otherwise in prior cases-7 we do require in
such circumstances that other sufficient criteria exist
which, in balance, warrant a finding that there has
been no basic change in the employing industry. In
the instant case, we believe such cnteria have not been
shown to exist.8
Upon the foregoing, we conclude that Respondent
is not a legal successor to Industrial. It follows, a
fortiori, that Respondent has not violated the Act by
refusing to recognize and bargain with the Union. In
view of our disposition in this case, it is unnecessary to
consider General Counsel's contention that Respon-
dent should be required to abide by the agreed-upon
but unsigned contract between the Union and
Industrial.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that the complaint
herein be, and it hereby is, dismissed.
7 See Lloyd A Fry Roofing Co, Inc, 176 NLRB No 136, remanded 435 denied 338 F 2d 833 (C A 9)
F 2d 848 (C A 5, December 14, 1970), Western Freight Association, 172 8 Cf Plant and Field Service Corporation, 184 NLRB No 100, Ellary
NLRB No 46, Rohhck, Inc, 145 NLRB 1236, Johnson Ready Mix Co, 142 Lace Corp, 178 NLRB No 11, Thomas Cadillac, Inc, 170 NLRB No 92,
NLRB 437, John Stepp's Friendly Ford, Inc, 141 NLRB 1065, enforcement affd 414 F 2d 1135 (C A D C )