Towne House Convalescent Center

National Labor Relations Board - Board Decisions

Apr 17, 1980

248 N.L.R.B. 1234 (N.L.R.B. 1980)

1234 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Local 1115, Joint Board, Nursing Home & Hospital
Employees-Florida Division and B & K In-
vestments, d/b/a Krest View Nursing Home
and B & K Investments, Inc., d/b/a Towne
House Convalescent Center. Cases 12-CB-1966
and 12-CB-1967
April 17, 1980
DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS
JENKINS, PENELLO, AND TRUESDALE
On May 22, 1979, Administrative Law Judge
Benjamin Schlesinger issued the attached Decision
in this proceeding. Thereafter, the General Counsel
filed exceptions and a supporting brief, and Re-
spondent filed cross-exceptions and a supporting
brief.
The Board has considered the record and the at-
tached Decision in light of the exceptions and
briefs and has decided to affirm the rulings, find-
ings,' and conclusions2 of the Administrative Law
Judge and to adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Re-
lations Board adopts as its Order the recommended
Order of the Administrative Law Judge and
hereby orders that the complaint be, and it hereby
is, dismissed in its entirety.
'Member Jenkins agrees with his colleagues that B & K Investments,
Inc., is not the alter ego of Krest View Nursing Home and Towne House
Convalescent Center, but finds distinguishable Clinton Foods, Inc., d/b/a
Morton's IGA. Foodliner; et al., 240 NLRB No. 179 (1979), relied on by
the Administrative Law Judge.
2 Chairman Fanning and Member Jenkins would affirm the Adminis-
trative Law Judge's Decision for the reason stated therein. Members Pen-
ello and Truesdale agree that the complaint should be dismissed in its en-
tirety, but do so on the grounds that the Board should defer to the arbi-
trator's decision. See their respective opinions in Atlantit Steel Company,
245 NLRB No. 107 (1979). which they believe governs the instant pro-
ceeding
DECISION
STATEMENT OF THE CASE
BENJAMIN SCHLESINGER, Administrative Law Judge:
This case was heard before me in Coral Gables, Florida,
on February 12 through 16, 1979. The unfair labor prac-
tice charges were filed on June 28, 1978, by B & K In-
vestments, Inc. (B & K), doing business as Krest View
Nursing Home (Krest View) and B & K, doing business
as Towne House Convalescent Center (Towne House).
A complaint issued on October 17, 1978, alleging that
local 1115, Joint Board, Nursing Home and Hospital Em-
ployees-Florida Division (Union) refused, since on or
about May 5, 1977, and continued to refuse to bargain
collectively in good faith with B & K by, inter alia, re-
248 NLRB No. 167
fusing to discuss the terms and conditions of employment
of B & K's employees and by insisting to the point of im-
passe that the collective-bargaining agreements between
the Union and the B & K's predecessors are binding on
B & K, all in violation of Section 8(b)(3) of the Act.
There are numerous issues raised by the parties. In es-
sence, the dispute involves whether B & K, an admitted
"successor" operator of Krest View and Towne House,
is bound to arbitrate the extent of its obligations under its
predecessors' collective-bargaining agreements pursuant
to John Wiley & Sons, Inc. v. David Livingston, 376 U.S.
543 (1964), and whether the Union's insistence that B &
K arbitrate violates the principles enunciated in N.L.R.B.
v. The William J. Burns International Detective Agency,
Inc., 406 U.S. 272 (1972); and Howard Johnson Company
v. Detroit Local Joint Executive Board, 417 U.S. 249
(1974).
I have considered the entire record of the proceedings
before me, including my observation of the demeanor of
the witnesses, and the briefs filed by the General Counsel
and the Union. Accordingly, I make the following:
FINDINGS OF FACT
I. JURISDICTION
The Union admits, and I find, that the Union is now,
and has been at all times material herein, a labor organi-
zation within the meaning of Section 2(5) of the Act.
The Union also admits, and I find, that B & K is a
Florida corporation and that both Krest View and
Towne House have their principal places of business lo-
cated in Miami, Florida, where each is engaged in the
business of operating a nursing home. During the past 12
months, which is a representative period, Krest View
and Towne House, in the course and conduct of their
business operations, have each had gross revenues in
excess of $100,000. During this same period each pur-
chased and received goods, materials, and supplies
valued in excess of $50,000, which were shipped directly
to them from points located outside the State of Florida.
Accordingly, I find, as the Union admits, that B & K,
doing business as Krest View and Towne House, at all
times material herein has been, and is now, and that
Krest View and Towne House each has been, and each
is now, an employer engaged in commerce within the
meaning of Section 2(6) and (7) of the Act.
1. THE ALLEGED UNFAIR LABOR PRACTICE
A. The Corporate Entities Involved
Gerald D. Keller was the president and, as trustee for
other members of his family, the sole shareholder of G &
J Investment Corporation (G & J), which owned the
land, buildings, and equipment used for the operation of
both nursing homes. From 1962 until about 1972 or 1973,
Keller was also the president and owner, as trustee for
members of his family, of Krest View Nursing Home,
Inc. (Krest View Inc.), which leased from G & J the
premises of Krest View and operated the home. Thus,
for approximately 10 years commencing in 1962, Keller
controlled both the owner of the physical property at
which Krest View had its business location and the oper-
---
LOCAL 1115, HOSPITAL EMPLOYEES 1235
ator of the home. In 1972 or 1973. Keller sold the stock
of Krest View Inc. to a group headed by Robert Wilson,
formerly the assistant administrator and later administra-
tor of Krest View. Wilson operated Krest View until
May 5, 1977.
B & K, incorporated in 1970, was also owned and con-
trolled by Keller, as trustee for members of his family,
and in August 1975 it purchased the stock of Towne
House Convalescent Center, Inc. (Towne House Inc.),
then the owner of the property and operator of Towne
House. B & K immediately transferred title to the real
property and buildings to G & J and sold the stock of
Towne House Inc. to Wilson's group. Wilson then en-
tered into an agreement with G & J to lease Towne
House's land, buildings, and property and operated
Towne House until May 5, 1977.
These corporate manipulations were not without pur-
pose. Until 1972 or 1973, G & J received its lease income
from Krest View Inc., which in turn made sufficient
moneys to pay the rental payments, not only from pay-
ments made by the residents of the home, but also from
subsidies paid through Medicaid. In 1972 or 1973, a
change in Medicaid regulations precluded its reimburse-
ment for rental payments pursuant to leases between re-
lated corporations. As a result, a significant amount of
money which would have ultimately inured to G & J's
benefit was suddenly shut off. Keller was able to circum-
vent this restriction by transferring the Krest View Inc.
stock to Wilson so that Krest View Inc.'s lease payments
to G & J would continue to be subsidized, in part, by
Medicaid. The immediate transfer to Wilson of the oper-
ation of Towne House accomplished the same result to
Keller's ultimate benefit.
B. The Transfer of the Operations of Krest View and
Towne House to B & K
In early 1977 both Krest View and Towne House en-
countered financial difficulties; the rental payments to G
& J were in default, as were several payments of payroll.
In late April 1977 Keller was informed by Joe Dallas,
the director of the Health Related Services of Florida,
that both nursing homes were not meeting state stan-
dards and that, unless the situation was corrected, his
office would revoke the licenses of the homes and
revoke the certification under Medicaid for payments for
services rendered to the Medicaid patients. He suggested
that Keller might want to take over the operations of the
homes, so that the homes would not have to be closed
and the patients transferred. Keller feared that, if the li-
censes for the operations of the two nursing homes were
revoked, G & J would lose its valuable property interest
because the buildings of the two nursing homes were old
and in a state of disrepair and that no new licenses for
their operation would be granted because the buildings
did not then conform to the new nursing homes regula-
tions of the State of Florida. As a result, G & J would be
left with property of little or no value.
Because of that risk of loss it was not important to
Keller to, and he did not, ascertain the cost of the oper-
ation of either of the two nursing homes or what their
obligations were. And because of the lack of reimburse-
ment from Medicaid, Keller knew that he was not going
to make a profit as both the operator and owner. His
theory was "to try to save the buildings by keeping them
licensed, get them back into shape, get a new tenant to
take over the responsibility of operating the facilities,
and let them lease out to be the landlord of G & J."
Keller did, however, attempt to limit his liability by in-
sisting that the Health Related Services give him a letter
of exoneration, so that he would not be responsible for
Wilson's debts. Indeed, there is no evidence that B & K
paid any of the debts of Krest View Inc. and Towne
House Inc., with the exception of 1975 and 1976 taxes on
both homes and a prior mortgage and interest payment
due from Towne House Inc.
On May 3, 1977, Keller flew to Miami, Florida, to
begin the takeover process. On May 5 Keller met with
Wilson, cancelled G & J's leases with Krest View Inc.
and Towne House Inc.,' and entered into new leases be-
tween G & J and B & K containing the same rentals,
terms, and conditions as had existed under the Krest
View Inc. and Towne House Inc. leases.2 Of course,
since Keller had an ownership interest in both G & J and
B & K, no Medicaid contributions would be paid to-
wards the leases, prompting Keller's desire to transfer
the operation of the homes as soon as possible. 3
The first few days of the operations of Krest View and
Towne House were obviously hectic. Keller discovered
that there was insufficient food, linen, blankets, and
cleaning supplies. Suppliers would not deliver to the
nursing homes, except for cash on delivery. Employees'
paychecks had bounced at the banks and they had not
been paid for several weeks. Keller began, with the aid
of his son, daughter-in-law, and Lloyd Handy to put the
homes back in order.
C. Keller's Operation of Krest View and Towne House
and His Dealings With the Union
Over the course of the next few days, Keller met with
the employees at the nursing homes and advised them
that he was responsible for the operations of the home.
Noting the employees' past problems, he assured them
that henceforth they would be issued paychecks which
would not bounce and he expressed his hope that the
employees would remain in their positions. Keller told
the employees that because of the poor financial situa-
tion, B & K could not grant fringe benefits at that time
but hoped that, when the situation improved, he could
again meet some of the employees' requests for benefits.4
Keller also took control of a third home operated b Wilson. ine
Crest Nursing Home. which is not involved in this proceeding
2 The stock of Krest View Inc was signed over in blank and left with
Keller's attorneys However. Keller testified that he never became the
owner of the stock of either Krest View Inc. or Towne House Inc
I On May 3 or 4, 1978, Keller told Dallas that he would do everything
possible to stabilize the affairs of the nursing homes, "'but it would only
hbe for a short period of time until I could find a new tenant, because I
did not wish to remain responsible for the operation of the facilities, that
I was not going to lead him to believe that I would be the operator for a
period of time"
4 Keller stated: "There will be no benefits Benefits have ceased until
such time as we can get this thing straightened out, then we will get to-
gether and talk about benefits I have no objection to paying benefits if
we have a place that will pass inspection and sufficient cash flow; but
right at the moment, there is no sufficient cash flow at these facilities
C(ontnued
1236 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
He advised them that in these circumstances he would
not hold it against them if they decided to resign.5
There is some question whether Keller knew what
fringe benefits he was talking about. He testified that his
assumption was that, as a general rule, all nursing homes
granted benefits such as vacations, sick leave, and holi-
days. Although he knew that both homes had collective-
bargaining agreements with a union, he denied that he
had any knowledge of the contents of those agreements.
I have great reservations about the credibility of that
denial, based upon the fact that Keller had negotiated
and executed the initial contract with the union in 1970
on behalf of Krest View Inc., an agreement which pro-
vided for many of the same benefits, as well as the "suc-
cessors and assigns" clause, which plays so vital a part
herein.
At any rate, there is no dispute that the Union had
been the recognized bargaining representative of employ-
ees at both Krest View and Towne House for the fol-
lowing separate units, which all parties concede are ap-
propriate for the purposes of collective bargaining within
the meaning of Section 9(b) of the Act:
All aides, orderlies, housekeeping and kitchen em-
ployees, but excluding registered nurses, licensed
practical nurses, office clerical and administrative
employees, drivers, maintenance-supervisors, guards
and supervisors as defined in the Act.
Further, there is no dispute that the Krest View agree-
ment became effective on July 13, 1974, and expired by
its terms on July 12, 1978. Under article 25, the Union
had a right to reopen and renegotiate the agreement for
the fourth year of the contract, July 13, 1977, through
July 12, 1978; and that if the parties failed to agree in
those negotiations, the matter would be submitted to ar-
bitration. The Towne House agreement became effective
on January 19, 1976, and was also a 4-year agreement,
with a reopener in the fourth year. Both agreements con-
tain arbitration clauses, and both provide in article 23
that they "shall be binding upon the parties, their succes-
sors and assigns."
Shortly after Keller's meetings with the employees of
the homes, several employees advised Union Secretary-
Treasurer George Gluck by telephone that Wilson was
no longer the homes' operator. Gluck telephoned one of
the homes and spoke to Lloyd Handy, who was Keller's
"trouble-shooter," who confirmed that Keller was then
in control of the facilities. A meeting was scheduled for
May 13, at which time Handy advised Gluck that he was
taking care of matters for Keller and that Gluck should
deal directly with him. Gluck informed Handy that the
nursing homes were under contract with his Union, and
Handy assured Gluck that things would continue as
before without any changes.
Gluck explained to Handy that dues-checkoff lists
were regularly forwarded by the Union to the homes to
determine the accuracy of the persons then on the pay-
(wkhichever facility I was at) as . . . this facility will not get any reim-
bursemnent from the State of Florida for sixty days from May 5."
5 Keller thought that one or two employees, perhaps more, may have
quit their employment at Towne House
roll and stated that the May lists had not been returned
to the Union. Gluck requested that it be forwarded to
the Union, even without the dues remittance. Handy
agreed to do so, stating that the dues which had been
checked offe would be forthcoming in due time. At a
meeting on May 16 or 18 concerning the termination of
an employee, Gluck once again inquired about the
Union's dues-checkoff lists. Handy replied that the Union
would soon receive a check for dues. A few days later,
an agent of the Union obtained the checkoff lists for
May.
In early June, Keller and Gluck met by chance at
Krest View. Gluck complained that the Union had still
not received its dues remittances for the month of May,
nor the checkoff lists for the month of June. Keller
stated that he could not presently afford to pay the dues
to the Union because he had just borrowed substantial
amounts to meet the payroll; however, Keller agreed to
furnish the June lists. Even after this conversation, when
Keller was assuredly on notice that dues were being de-
ducted from the employees' wages, no change was made
in the computer program and dues continued to be de-
ducted. However, in late July, after the Union had filed
its Section 301 action, discussed infra, B & K refunded
the checked-off moneys directly to its employees.'
At the meeting in early June, Keller also discussed B
& K's inability to pay for vacations, holidays, and sick
benefits. Keller advised that these obligations would be
taken up when his cash flow improved, and Gluck stated
that the Union would go along with the discontinuation
of benefits for the time being. Finally, Gluck also noti-
fied Keller that he was seeking a reopening of the Krest
View contract, in accordance with its terms, for the
fourth year, concerning bargaining for wages and bene-
fits. No mention was made by Keller of any intention to
disavow the Union's contract during that meeting.
On June 28 Gluck and his attorney, Elster, met with
Cabot, Keller's labor relations attorney. At this meeting,
Gluck presented a number of grievances relating to the
homes' failure to pay fringe benefits provided in the col-
lective-bargaining agreements and presented the Union's
request for the Krest View employees. Cabot informed
Gluck that he was just getting into the matter, that he
had had very little communication with Keller, and that
he would present these matters to Keller and meet again
with the Union.
Cabot advised Gluck that Keller was anxious to sell B
& K as soon as possible and that he did not want the
burden of operating the homes. By telegram sent on July
7, the Union requested that Keller give his assurance
that, in accordance with the successorship clauses in its
contracts with Wilson's companies, he would obtain a
signed written commitment from any purchaser that it
would abide by the terms of those union contracts. In a
telephone conversation the following day, July 8, Keller
6 The payroll for the employees was prepared by computer, which had
been leased from Wilson. The computer was programmed to deduct dues
from the employees' wages.
7 Gluck also showed Keller checks for dues prior to May 1977 which
had been returned to the Union because of insufficient funds. Keller told
Gluck that the bounced checks are a problem between the Union and
Wilson.
LOCAL 1115, HOSPITAL EMPLOYEES 1237
committed himself only to tell any prospective buyer or
lessee that there was a union at the homes. Keller's re-
sponse was deemed insufficient by the Union, which on
the same day renewed its request for a signed, written
agreement complying with article 23 of the agreements
and threatened to commence an arbitration proceeding to
enforce the substance of that article. Keller rejected the
Union's proposal.
Keller, Gluck, and their attorneys next met on July 14,
their last meeting. Gluck listed the Union's grievances
based on B & K's noncompliance with the provisions of
the union contracts. 8 Again, he requested changes in the
Krest View collective-bargaining agreement pursuant to
the reopener clause and demanded that Keller give writ-
ten assurance that if he transferred the operating compa-
ny to someone else, his successor would be bound by the
Union's agreements. Keller reiterated that he was hard-
pressed financially, that he lacked a cash flow, and that
he needed a "hiatus" before vacations could be granted
to the employees or the Union's proposals could be
given consideration-to which Cabot added that the
"hiatus" he sought was until such time as B & K found a
buyer.
Gluck agreed to the "hiatus" on vacations and holiday
pay if Keller would assure the Union, in writing, that a
further successor would be bound by the collective-bar-
gaining agreements, expressing his fear that a delay in
such a commitment would leave the Union with nothing.
Cabot said that he could not do that, renewing Keller's
prior position that he would relate to a buyer or tenant
that the employees were represented by the Union and
that the buyer or tenant would probably have to meet
with the Union. The Union accused Cabot and Keller of
not bargaining with them. Cabot assured the Union that
he was trying to cooperate and work out a suitable solu-
tion; but the Union threatened to litigate the successor-
ship issue. Cabot suggested that the parties should not
get involved in legal niceties ("you know, I could invoke
Burns [supra]"), but that the parties ought to resolve
their differences "right now."9 The Union refused to do
so.
There is no question that between May 5, the date of
Keller's takeover, of the homes, and July 14 many provi-
sions of the old collective-bargaining agreements were
complied with by Krest View and Towne House. Many
did not involve money: Grievance meetings were held;
the union representatives continued to obtain access to
and hold shop meetings on the premises of the nursing
homes; the Union continued to use the employer's bulle-
tin boards to post notices; the same employees continued
to function as shop stewards and were recognized by B
& K as such; and conferences were held by B & K with
the Union before employees were disciplined. Some were
monetary items: Wages were paid, but not semiannual in-
crements; money was paid in lieu of meals; Decoration
8 The grievances included nonpayment of checked-off dues, holidays,
wage increments, the failure to keep insurance in force, and the failure to
grant vacations
9 Keller testified that Cabot's "whole concept . . . was trying to work
out something suitable to both sides, and that we can keep the facility
open, one; we could satisfy the employees, two; keep the employees
working; and that I could step out as being responsible for the manage-
ment and bring in a new tenant to operate the nursing homes."
Day was paid for at Towne House; and raises were
given to new employees after they had completed their
periods of probationary employment.
D. The Court Proceedings
On July 14, 1977, the Union commenced an action for
injunctive relief and for an order compelling arbitration
in the United States District Court for the Southern Dis-
trict of Florida. The principal thrust of its action was to
enjoin B & K's transfer of the homes without requiring
the transferee to become bound by the Union's collec-
tive-bargaining agreements. That B & K was required to
comply with the "successors and assigns" clause was
grounded on two theories: First, that B & K was merely
the alter ego of Krest View Inc. and Towne House Inc.;
and, second, that B & K had assumed the then subsisting
collective-bargaining agreements. In the alternative, the
Union alleged that B & K was the successor to Krest
View Inc. and Towne House Inc.; that as successor, the
arbitration clause of the collective-bargaining agreements
continued to be binding upon it under Wileyv, supra; and
that Wiley authorized the issuance of an order compel-
ling arbitration of the issue of what other terms and pro-
visions of the collective-bargaining agreements are bind-
ing on B & K. Thus, the Union sought to enjoin the
transfer of the nursing homes pending the outcome of
the arbitration, particularly the arbitrator's award as to
whether or not B & K is bound by the "successors and
assigns" clause.
On August 17, 1977, District Judge Aronovitz granted
the motion to compel arbitration and denied the petition
for injunctive relief (Local 1115 Joint Board Nursing
Home and Hospital Employees, Florida Division (B & K
Investments, Inc.), 436 F.Supp. 1203 (1977)). The court
found the Union's argument that the Wilson and Keller
corporations were alter egos, was without merit, finding
that there was no evidence that Wilson's leases of the
premises and his acquisition of the stock of the nursing
homes were anything but bona fide, arm's-length transac-
tions and that Keller had no involvement in the day-to-
day administration or general management of the homes
during the period of Wilson's operation. It further found
that Keller's eventual reacquisition of the nursing homes
was precipitated by Wilson's default and was essentially
involuntary.
The court also rejected the Union's argument that the
nursing homes by their actions impliedly agreed to be
bound by the collective-bargaining agreements. Regard-
less of whether Keller or Handy had told the Union at
various meetings that they would not agree to "assume
the contract," or whether they simply stated that they
would not adhere to some of its provisions, the court
found that the nursing homes were consistent in their po-
sition that they were not operating under the Union's
agreements. Rather, the nursing homes relied on their
"Burns defense," and sought at most to negotiate new
collective-bargaining agreements with the Union, while
the latter steadfastly held to its view that B & K was al-
ready bound by the old ones.
The court then turned to the Union's claim that & K
was bound to arbitrate under Wilev, which "held that
where two corporations merge and the surviving corpo-
1238 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ration hires all of the prior employees and runs a sub-
stantially identical business, then that corporation is
under a duty to arbitrate under the merged corporation's
collective-bargaining agreement." (Local 1115, supra, 430
F.Supp. at 1207.)
Burns, however, was an unfair labor practice proceed-
ing, the district court stated, which involved a complaint
against a "successor" for failing to recognize its prede-
cessor's union and adopting its agreement with that
union. Judge Aronovitz stated that the basic holding of
Burns was "that the NLRB was without authority to re-
quire Burns to honor a substantive provision of the
agreement executed by its predecessor, Wackenhut, even
though Burns had hired a majority of its employees from
Wackenhut's previous employees. The policies stressed
by the Burns Court were (1) freedom of contract under
federal labor policy (as Burns had not expressly or im-
pliedly agreed to assume the obligations of the predeces-
sor's agreement); (2) inhibition of the free flow of capital
if new employers were to be bound to preexisting agree-
ments; and (3) freedom of the successor to make substan-
tial changes in the operation of the enterprise. Also sig-
nificant was the fact that Burns had purchased nothing
from Wackenhut; it was merely the low bidder on the
contract for security services offered by Lockheed and
was hired at the expiration of Wackenhut's contract."
The Court then considered Howard Johnson which, it
opined, "held that the new employer cannot be com-
pelled to arbitrate obligations to the former employees of
the old employer when there is 'no substantial continuity
of identity in the work force hired . . . and no express
or implied assumption of the agreement to arbitrate.' 417
U.S. at 264, 94 S. Ct. at 2244." Id. at 1208.
The district court noted that the Supreme Court in
Howard Johnson explicitly declined to resolve the appar-
ent conflict between Burns and Wiley and therefore
guided itself by the decisions of the Fifth Circuit. In
United Steelworkers of America, AFL-CIO v. United
States CGypsum Co., 492 F.2d 713 (5th Cir. 1974), the
court distinguished between the power of the NLRB and
that of an arbitrator to bind a successor to a prior exist-
ing collective-bargaining agreement. The court wrote:
Reading the Burns' opinion as a whole could justifi-
ably leave one with the conviction that it presages a
similar holding to the effect that an arbitrator, oper-
ating within the same basic framework of national
labor policy as the board, does not generally have
the power to bind a successor to the substantive
provisions of a collective bargaining agreement to
which it is not a party. We decline, however, to
adopt that position at this juncture. Clearly the
holding in Burns does not require that result.
To remove or to restrict to the point of meaning-
lessness the power of an abritrator to perform his
task in the manner Wiley envisioned-that is, to
bring his informed judgment to bear in determining
which, if any, contract terms should survive-
would be, we believe, an unwarranted application
of Burns.
Whatever may be the ultimate effect of Burns, fur-
ther elaboration is unnecessary to illustrate that
there are adequate reasons for not reading that deci-
sion as indicative of a national labor policy that pre-
cludes an arbitrator from binding a successor to sub-
stantive provisions of a prior existing collective bar-
gaining agreement." [492 F.2d at 725, 726, 727.]
Gypsum Co., supra was decided before Howard John-
son. After Howard Johnson, in Boeing Company v. Inter-
national Association of Machinists and Aerospace Workers,
504 F.2d 307 (5th Cir. 1974), the Fifth Circuit again con-
sidered the Wiley-Burns conflict. Citing Gypsum Co., 504
F.2d at 311 with approval, the court stated:
We are confident, however, that even at the most
Burns has not overruled the principles of Wiley."
[436 F.Supp at 1208.]
Feeling itself bound by the approach taken by the
Fifth Circuit, the district court turned its attention to
whether, as in Wiley, there was such a substantial con-
tinuity in the business enterprise between the Keller and
Wilson interests that the duty to arbitrate under the prior
collective-bargaining agreement is not "'something im-
posed from without, not reasonably to be found in the
particular bargaining agreement and the acts of the par-
ties involved.' 376 U.S. at 551, 84 S.Ct. at 915." 436
F.Supp. at 1208. Further, mindful of the caviat in
Howard Johnson that each case must be determined on its
own facts, the district court determined that B & K, after
its takeover of the operation of the nursing homes, con-
tinued to operate them in substantially the same manner
as they had been operated before. B & K retained sub-
stantially all of Wilson's former employees, "thus estab-
lishing the 'substantial continuity of identity of the work
force' absent in Howard Johnson." 463 F.Supp at 1209.
As a result, it held that the same factors which led the
Wiley Court to impose a duty to arbitrate upon the suc-
cessor were present in the case before it and granted the
Union's motion to compel arbitration, stating at 436
F.Supp. at 1209:
It is important to note that the Court does not
hold here that Respondents are necessarily bound
by the terms of their predecessor's agreement-
though they are required to arbitrate claims arising
out of an alleged breach of that agreement subject
to judicial review. Whether or not any of the sub-
stantive terms of the agreement are binding is a
question for the arbitrator to decide. The Court
holds only that, under the facts of this case, there is
such substantial continuity in the business enter-
prise-a part of which is evidenced by the continu-
ity of identity in the work force-that the Respon-
dents are subject to the duty to arbitrate.
LOCAL 1115, HOSPITAL EMPLOYEES 1239
The district court, however, denied the Union's
motion for a preliminary injunction, noting that the
Union had failed to establish that any transfer of the
nursing homes was at all "imminent" and noting that
"since the homes meet only the standards of the early
1960's, if closed, they would not be able to reopen with-
out substantial improvements. In short, as Keller stated,
if he cannot sell the homes soon, his only alternative is to
go out of business." 436 F.Supp. at 1209. In that context,
the court found that the potential harm to B & K of an
injunction would outweigh the potential harm to the
Union and further, if the homes were to close, the relo-
cation of the patients would be a very traumatic experi-
ence for them; and the harm to the public, therefore,
outweighed the potential harm to the petitioner. The
court, however, further ordered B & K to give 10 days'
prior written notice by registered mail to the Union of
any pending closing of a transaction, directly or indirect-
ly, involving the sale, lease, merger, or any other disposi-
tion of the nursing homes.
By letter dated August 30, 1977, B & K informed the
Union that a transfer of the leasehold of Krest View and
Towne House was imminent and that the closing of the
transaction was scheduled for sometime after September
9, 1977. As a result, the Union reapplied for its prelimi-
nary injunction against the transfer of the homes pending
the outcome of the arbitration. An order enjoining B &
K was granted on September 9, 1977.10 An appeal from
some or all of the relief granted by the district court was
filed by B & K with the United States Court of Appeals
for the Fifth Circuit; but on November 26, 1977, B & K
moved to withdraw the appeal or, in the alternative, for
voluntary dismissal. On December 7, 1977, the circuit
court entered an order withdrawing the appeal.
B & K and the Union then proceeded to arbitration
pursuant to the order of the district court in Florida.
Hearings were held before arbitrator Burton B. Turkus
in October 1977 and March 1978, and the arbitrator ren-
dered his decision and award on June 16, 1978. The issue
before the arbitrator, as stated by him, was: "What, if
any, substantive terms of the collective bargaining agree-
ment covering the Krest View Nursing Home, the
Towne House Convalescent Center and the Pinecrest
Convalescent Home are binding upon the Employer?" In
clarifying that issue, the arbitrator noted that B & K's ar-
gument that a successor is not bound by its predecessor's
collective-bargaining agreement must be viewed solely as
a guide to the application of equitable considerations as
to "[w]hether or not any of the substantive terms of the
agreement are binding" on the nursing homes, "since the
District Court has already determined the governing
law." Further, B & K's assertion that a successor is not
obligated to honor its predecessor's collective-bargaining
agreement begs the question; "Judge Aronovitz has ruled
that B & K, as a successor employer, may be bound by
the substantive provisions of the predecessor's collective
bargaining agreement, although expressly not deciding
whether it is 'bound by any or all of the substantive pro-
'O Keller sold the stock of B & K in September 1977; but the record
does not make clear whether the sale occurred before or after the injunc-
tion was granted.
visions...' . . . That decision had been placed before
the arbitrator."
B & K also asserted that the arbitrator was restricted
only to those issues "which had vested under the prede-
cessor's collective bargaining agreement prior to May 5,
1977." Relying upon Judge Aronovitz' quotation as set
forth above involving Gypsum Co. and Boeing, the arbi-
trator wrote:
To accept the Employer's argument that any at-
tempt to bind the successor employer to the senior-
ity, grievance, wage structure and other substantive
provisions of the contract "would not only be in
clear contravention of established federal labor
policy but would also be a direct violation of a suc-
cessor employer's rights as set forth in the decisions
of the Supreme Court and the National Labor Rela-
tions Board" (Employer's Brief in Arbitration, p.
21), would disregard the decision of Judge Arono-
vitz mandating a determination as to which of these
provisions, if any, are to be honored by the succes-
sor employer, and render meaningless the within
proceeding.
The arbitrator proceeded to discuss and give his ratio-
nale for his ultimate award, which held that the collec-
tive-bargaining agreements were binding upon and en-
forceable against B & K, except that the provisions for
holidays, vacations, sick leave, and leaves of absence
shall be deemed in force only as of January 1, 1978; that
for 1978 only, B & K may require any employee to work
for a period no greater than half the employee's vacation
time and shall pay to such employee an amount equal to
the regular straight time pay for such time being worked
as vacation pay, in addition to straight time pay for the
time actually worked; and that the provision of the Krest
View agreement permitting the Union to renegotiate
wages, hours, and general terms and conditions for the
period from July 13, 1977, to July 12, 1978 shall be
deemed null and void; and that said agreement shall be
deemed in full force and effect through July 12, 1978. He
further ordered B & K to comply with the terms and
provisions of each of the agreements regarding the con-
tinuation of benefits or comparable benefits in the exist-
ing group insurance program covering hospital, major
medical and life insurance, the deduction by the employ-
er of union membership dues, assessments and initiation
fees, and retroactive implementation of the wage in-
creases provided in the agreements. Finally, he directed
that the collective-bargaining agreements required that B
& K shall not sell, lease, or otherwise transfer the oper-
ations of the nursing homes without the express assump-
tion of the collective-bargaining agreements by the pur-
chaser, lessee, or transferee.
Shortly after the rendition of the award, on June 20,
1978, the Union wrote to B & K and requested that it
comply with the arbitrator's award. B & K refused and
filed the unfair labor practice charges herein on June 28,
1978. The Union countered on July 5, 1978, by filing a
petition for enforcement of the arbitrator's award; and on
November 13, 1978, District Judge Milton Pollack of the
United States District Court for the Southern District of
1240 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
New York ordered B & K to comply with the arbitra-
tor's award. (100 LRRM 2174; not officially reported)
Judge Pollack rejected B & K defense that the arbitrator
exceeded his power and disregarded applicable law by
refusing to confine himself to claims that had vested
when B & K took over, and by subjecting B & K to
comply in the future with the obligations of its predeces-
sor's contracts with the Union, stating:
In Howard Johnson, the Union sought by arbitra-
tion to bind the successor to its predecessor's con-
tract after its takeover. If the import of Burns and
Howard Johnson were that an arbitrator could not
so bind the successor, then the Court could have
decided Howard Johnson on that basis, rather than
on the degree of continuity between the predecessor
and successor. [100 LRRM 2176-77.]
Further, Judge Pollack noted that Judge Aronovitz
also seemed to have held this view of the arbitrator's
power. Indeed, "the immediate cause of the union's peti-
tion to compel arbitration was B & K's refusal to
comply, in the future, with Article 23 of its predecessor's
agreement with the union, which provided that '[t]his
agreement shall be binding upon the parties, their succes-
sors and assigns."' Id. at 2177. His injunction against B &
K from tranferring the homes pending the outcome of
the arbitration would have made no sense unless Judge
Aronovitz thought that the arbitrator might legally hold
B & K subject to article 23. Finally, Judge Pollack stated
that nothing in Judge Aronovitz' holding-whether or
not any of the substantive provisions of the agreement
are binding is a question for the arbitrator to decide-
suggests that it was limited to grievances that arose
before May 5, 1977.
B & K has appealed from the judgment and order of
Judge Pollack to the United States Court of Appeals for
the Second Circuit. On Feburary 15, 1979, the court of
appeals granted a motion staying the enforcement of
Judge Pollack's judgment until June 6, 1979, or until a
final decision of the Board, whichever is earlier.
E. Discussion and Conclusions
Prior to the commencement of the hearing before me,
the Union made two motions: The first, to dismiss the
complaint as time barred under Section 10(b) of the Act
because the acts complained of occurred more than 6
months prior to June 28, 1978, when B & K filed its
unfair labor practice charges; the second, to defer this
proceeding to the arbitration award.
The motion to defer was referred to me by order of
Administrative Law Judge Herman, dated November 29,
1978, which stated:
Bearing in mind the Supreme Court's admonition
in Howard Johnson Co. v. Hotel Employees, 417 U.S.
249, 256, to "proceed cautiously" in this area and
that "[plarticularly in light of the difficulty of the
successorship question the myriad factual circum-
stances and legal contexts in which it can arise, and
the absence of congressional guidance as to its reso-
lution, emphasis on the facts of each case as it arises
is especially appropriate," disposition of this Motion
appears best left to the judge conducting the hear-
ing.
Spielberg Manufacturing Co., 112 NLRB 1080, 1082
(1955), holds that the Board will defer to an award in ar-
bitration if "the proceedings appear to be fair and regu-
lar, all parties had agreed to be bound, and the decision
of the arbitration panel is not clearly repugnant to the
purposes and policies of the Act." Both General Counsel
and the Union agree that the first two conditions have
been met, but disagree as to whether the award is "clear-
ly repugnant," General Counsel contending that it is. Al-
though I do not find the award "repugnant" to the Act,
I nonetheless deny the Union's motion. It is obvious that
arbitrator Turkus dealt solely with the issue that was
presented to him by the district court's order-what
terms and provisions should be binding upon B & K, if
any-and he made only that determination, assiduously
avoiding the Burns defense raised by B & K. Since he
did not consider whether his own award, and the
Union's demand on B & K to comply with that award
on June 20, 1978, violated Section 8(b)(3) of the Act, the
Board will not defer. Monsanto Chemical Company, 130
NLRB 1097, 1099 (1961); National Maritime Union of
America (Commerce Tankers Corporation), 196 NLRB
1100 (1972).
The motion to dismiss under Section 10(b) was denied
by Administrative Law Judge Herman, by order dated
November 29, 1978, on the ground that the Union's re-
fusal to bargain was alleged to be a continuing violation
of the Act and was not "barred by the mere fact that the
complaint alleges that [it] commenced on a date more
than 6 months prior to the filing of the charges . . . the
complaint stands no differently in law from one which
might have alleged the commencement date as exactly 6
months prior to the filing of the charges. See Local
Lodge No. 1424, IAM v. N.L.R.B., 362 U.S. 411." The
Union renewed its motion at the hearing. Because Gen-
eral Counsel alleges that a number of actions taken by
the Union occurred within 6 months of the filing of the
charges, I adhere to the position of Administrative Law
Judge Herman and deny the Union's motion. However,
because I find no violation of law within the 10(b) period
or any other period for the reasons set forth herein, I
will recommend dismissal of the complaint.
Although the complaint alleges that the Union's refus-
al to bargain commenced on May 5, 1977, the General
Counsel now pinpoints July 14 as the date when the re-
fusal to bargain began. Until that date, B & K had never
requested that the Union bargain with it, had never dis-
avowed the collective-bargaining agreements, and had
conducted its affairs so as to leave the Union with the
impression that B & K intended to comply with the
agreements. Admittedly, the Union must have been con-
cerned when, earlier in July, Keller refused to commit B
& K in writing to a "successors and assigns" clause; but
other than that incident, all signs pointed, at least argu-
ably, to B & K's adoption of all the prior terms and con-
ditions of employment. The Union had received assur-
ances from Handy in May that B & K intended to abide
by the contracts and that it would soon send in the
LOCAL 1115, HOSPITAL EMPLOYEES 1241
checked-off dues; the dues were continuing to be
checked off and B & K was complying with other terms
of the agreement; and Keller had stated that he needed
time until he could begin to give fringe benefits.
These matters, many of them raised by Gluck as griev-
ances in violation of the prior agreements, were dis-
cussed on July 14. General Counsel refers in his brief to
that discussion as "some bargaining." Indeed, Gluck
made concessions to Keller by deferring his demands for
the payment of the fringe benefits to permit Keller time
to improve the finances of the homes. It is unclear that
on July 14, Gluck meant, in agreeing with the "hiatus"
in payments, that he was waiving those payments for a
period of time, or merely giving Keller more time to
make the payments due from May 5, 1977. In either
event, Gluck was giving something. To the contrary,
Keller, who had on May 5, 1977, unilaterally established
the employees' initial terms and conditions of employ-
ment, as he was entitled to do under Burns, refused to
make any further effort to resolve the issues raised by
the Union, including the reopening of the Krest View
contract, insisting upon a "wait and see" position which
depended on the future, indeterminate cash flow and fi-
nances of B & K.
An impasse was reached when the parties again dis-
cussed the "successors and assigns" clause. Because of
Keller's and Cabot's numerous statements, that Keller
planned to sell or lease the nursing homes as soon as pos-
sible, the Union desired to obtain an immediate commit-
ment to protect itself and the employees of the homes, a
matter of utmost importance, since Gluck expressed his
fears that a successor might "destroy the bargaining
unit." B & K, on the other hand, refused to make the
kind of commitment that the Union demanded. I cannot
find that the Union refused to bargain. The statutory
duty to bargain in good faith, which the Union is ac-
cused of violating, requires the Union to demonstrate a
"'serious intent to adjust differences and to reach an ac-
ceptable common ground."' Continental Insurance Co. v.
N.L.R.B., 495 F.2d 44, 48 (2d Cir. 1974); see also Glomac
Plastics, Inc. v. N.L.R.B., 592 F.2d 97-98 (2d Cir. 1979).
That the Union reached an impasse over its refusal to
withdraw its demand for a written "successors and as-
signs" clause is of no moment. That is a mandatory sub-
ject of bargaining, and the Union was entitled to bargain
the clause to impasse. United Mine Workers of America
(Lone Star Steel Company), 231 NLRB 573 (1977). The
other matters of discussion-vacations, holidays, sick
leave, and health insurance-were equally mandatory
subjects of bargaining.
At the end of the July 14 meeting, when the impasse
was evident, Gluck and his attorney advised Keller and
Cabot that they were going to litigate the dispute. At
this point, Cabot announced that B & K could invoke
Burns and requested that the parties attempt to find out
whether they could not resolve their differences. It is at
this point, at the very end of the meeting, that General
Counsel claims that B & K requested the Union to bar-
gain, and the Union refused to agree to this specific re-
quest. However, it is difficult to assess what Cabot meant
at that time-both sides were then firmly committed to a
position on the "successors and assigns" clause, although
at least Gluck showed some movement on the fringe
benefits. How much more Cabot expected of Gluck,
without some give-and-take on B & K's part, involves
sheer speculation. It is clear that both Cabot and Keller
offered nothing to resolve the Union's dilemma, and that
it would have been pointless for the parties to proceed
further, if none of them were willing to alter their views.
General Counsel also argues that the Union refused to
bargain by insisting at this time that its contracts with
Krest View Inc. and Towne House Inc. were binding
upon B & K, in violation of Burns. Although the Union
was relying upon the same terms and conditions which
were contained in those agreements, it is unclear wheth-
er Gluck was not altering his position that B & K would
be held to each and every term of its predecessors' con-
tracts. Certainly, General Counsel had not demonstrated
by a preponderance of the evidence that Gluck's agree-
ment to the "hiatus" proposal was not a change and that
the Union was refusing to bargain.
Of course, the bargaining obligation of an employer
under Burns, and of a union under Little Rock Mailers
Union No. 89, 219 NLRB 707 (1975), and District 1199 E,
National Union of Hospital and Health Care Employees
(Greater Pennsylvania Nursing Center, Inc.), 238 NLRB
No. 8 (1978), upon which General Counsel so heavily
relies, is only that a party must bargain. A successor em-
ployer is free to set his own terms of employment before
he hires hs complement of employees, but once he be-
comes a "successor," he must then bargain with the
Union which represented the employees of his predeces-
sor. In accord with normal rules of bargaining, the suc-
cessor need not submit to the Union's demands that he
change the initial and unilaterally established terms, but
bargain he must. Similarly, the Union may not refuse to
bargain on the ground that the successor is bound to
comply with the predecessor's contract; bargain it must.
But the Union is not required to offer proposals which
are any different from the conditions of employment it
had achieved up to then-as long as it bargains in good
faith. The Union's persistence in demanding the same
fringe benefits, wage increments, dues deductions, and
other provisions does not, therefore, violate Section
8(b)(3) of the Act. "
Even if the General Counsel was correct in its asser-
tion that the Union refused to bargain on July 14, that is
almost a year prior to B & K filing of the charges herein.
Assuming arguendo that the Union refused to bargain
then, by insisting on B & K's compliance with the agree-
ments of its predecessors, the refusal to bargain on that
basis did not continue and occur with 6 months of the
filing of the charges.
On July 14, 1977, the Union commenced its action for
an injunction against the transfer of B & K without bind-
ing its transferee to the Union's contract. The Union
claimed it had a contract because B & K either assumed
" There is no evidence that B & K ever bargained about the Union's
request to reopen the Krest View contract. Under the reopener, all mat-
ters were subject to arbitration, upon impasse. & K never specifically
disavowed the arbitration clause of the contracts, and it is questionable
whether it was entitled under Board law to disavow arbitration after it
had hired its complement of employees Sarco Farmers Market, 237
NLRH 373 (978)
1242 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the contract or was the alter ego of Krest View and
Towne House. In either case, the Union was entitled to
test its theories without being found in violation of the
Act.' 2 Howard Johnson supra, states that a successor is
obliged to comply with the predecessor's collective-bar-
gaining agreement if it expressly or impliedly assumed
the obligations contained therein, 417 U.S. at 255; and
Board cases are legion that an alter ego is bound by its
alter ego's agreement. See, e.g., Nelson Electric Company,
241 NLRB No. 88 (1979). It matters not that Judge
Aronovitz rejected both of the Union's theories; and it
similarly matters not that during the course of the hear-
ing before him, Cabot alleged that B & K was willing to
negotiate the terms of an agreement, which Elster reject-
ed, stating that the Union already had a contract. Cabot's
offer was, in the context of the July 14 meeting, a barren
one and, at the hearing, was made solely for tractical
purposes. Elster's reply could easily be anticipated, be-
cause Elster was advocating the Union's position that B
& K was an alter ego or had adopted the contract. In
those circumstances, the colloquy at the hearing does not
rise to the level of a request and refusal to bargain. Fur-
ther, the hearing was held in August 1977, far outside
the applicable 10(b) period.
The Union's alternate theory to support the injunction
was based on Wiley-that B & K was the kind of succes-
sor, and became the successor in such circumstances,
that for the purpose of industrial stability and accommo-
dation with the principles of the Federal labor laws, B &
K should be bound to comply with arbitration clause of
its predecessor's contracts so that an arbitrator (not the
court and especially not the Board) might determine
which terms and conditions of employment, if any, are
binding upon it. If the arbitrator determined that article
23 of the agreements was binding upon B & K, then, ac-
cording to the Union's position, and injunction in the
Florida district court should be granted. From August
17, 1977, the date when Judge Aronovitz rendered his
decision ordering arbitration, and June 28, 1978, the date
when B & K filed its unfair labor practice charges, the
Union's sole object was to pursue the Wiley arbitration' 3
in an effort to convince the arbitrator, as it did success-
fully, that many of the terms and provisions of its agree-
ments covering the nursing homes were then binding
upon B & K.' 4
When General Counsel contends that the Union's vio-
lation of the Act was a continuing one and that the arbi-
tration award is repugnant to the Act, he is actually ar-
guing that any legal action based upon Wiley is a viola-
LZ United Aircraft Corporation, 192 NLRB 382, 384 (1971), modified sub
nom. Machinists v. United Aircraft Corp., 534 F.2d 422 (2d Cir 1975)
13 The Union filed no appeal from the Order of Judge Aronovitz re-
jecting its alter ego and assumption claims.
14 In the brief B & K submitted to the arbitrator, B & K tried to en-
force its argument that Burns forbade any award directing B & K comply
in the future with any of its predecessor's agreements by stating its will-
ingness to bargain collectively with the Union. That statement, I fiid,
was directed to the arbitrator and was not a request in good faith with
the Union. Besides, B & K, by its opposition to the Florida district court
action and opposition to any award by the arbitrator, and the Union, by
pressing its claim, were clearly at loggerheads over the application of ar-
ticle 23 and, in light of the earlier bargaining history, the offer of B & K
was again no more than a tactical move in litigation to impress the deter-
miner of the facts.
tion of the Act, because the applicant is always seeking
an arbitration against a purported successor to determine
the scope, if any, of his obligations under his predeces-
sor's contract. General Counsel is also arguing that the
arbitrator may never find that the successor is bound by
any terms of its predecessor's agreement, because Burns
requires only that the successor bargain and held that the
successor cannot be bound to its predecessor's agree-
ment. For the same reasons, the General Counsel argues
that a union which is successful in a Wiley arbitration re-
fuses to bargain in violation of Section 8(b)(3) of the Act
by demanding that the successor comply with the award
or by moving to confirm the award in court. I have been
unable to find any authority for these propositions.
Indeed, explict in the decisions of the district courts of
Florida and New York involving the parties to this pro-
ceeding, and Gypsum Co., and Boeing is a finding that
Burns did not overrule Wiley.
In Howard Johnson, the Court wrote:
[T]he real question in each of these "successorship"
cases is, on the particular facts, what are the legal
obligations of the new employer to the employees
of the former owner or their representative? The
answer to this inquiry requires analysis of the inter-
ests of the new employer and the employees and of
the policies of the labor laws in light of the facts of
each case and the particular legal obligation which
is at issue, whether it be the duty to recognize and
bargain with the union, the duty to remedy unfair
labor practices, the duty to arbitrate, etc. There is,
and can be, no single definition of "successor"
which is applicable in every legal context. A new
employer, in other words, may be a successor for
some purposes and not for others. [417 U.S. at 262-
263, fn.9]
Focusing on what kind of successor B & K is, for the
purposes of Wiley, under Section 301 of the Labor Man-
agement Relations Act,' 5 as the Union argues, there can
be no doubt that there was a "substantial continuity of
identity in the business enterprise," (376 U.S. at 551) and
a complete "continuity in the identity of the work force
across the change in ownership," (414 U.S. at 263). Thus,
the Court's concern in Wiley "with affording protection
to those employees who are in fact retained in 'the tran-
sition from one corporate organization to another' from
sudden changes in the terms and conditions of their em-
ployment," and the Court's "belief that industrial strife
would be avoided if these employees' claims were re-
solved by arbitration rather than by the relative strength
. . of the contending forces." The decision in 417 U.S.
at 264, quoting Wiley, 376 U.S. at 549, quoting United
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S.
574, 580 (1960), justified the positions of Judge Arono-
vitz in ordering arbitration and Judge Pollack in con-
firming the arbitrator's award. B & K was clearly a suc-
cessor for the purposes of determining whether it should
I' Sec 301(a) provides for: "[s]uits for violations of contracts between
an employer and a labor organization representing employees in an indus-
try affecting commerce."
LOCAL 1115, HOSPITAL EMPLOYEES 1243
arbitrate whether it was bound by any provisions of its
predecessors' agreements.
General Counsel argues, however, that the policies of
Section 8, as enunciated in Burns, focus on whether an
employer in a refusal-to-bargain case is a successor and,
if so, whether it is required by Section 8 of the Act to
assume the obligations of the collective-bargaining agree-
ment of its predecessor. Burns held inter alia, that the
Board was not empowered under Section 8(d) of the Act
to order the employer to assume those obligations, em-
phasizing that "[a] potential employer may be willing to
take over moribund business only if he can make changes
in corporate structure, composition of the labor force. . .
and nature of supervision." (406 U.S. at 287-288). Merely
because the Board may not order B & K in an 8(a)(5)
complaint proceeding to comply with its predecessors'
agreements does not limit the power of the district court
to find that the arbitration clause of the predecessor's
agreement is binding upon the successor, to order a
Wiley arbitration, and to confirm a Wiley arbitration
award. That is what Wiley is all about; it is not a moot
court exercise which may be summarily disregarded in
an unfair labor practice proceeding. 6
It is true that the Supreme Court found it "plainly in-
consistent . . . to say that the basic policies found con-
trolling in an unfair labor practice context may be disre-
garded by the courts in a suit under §301, and thus to
permit the rights enjoyed by the new employer in a
successorship context to depend upon the forum in
which the union presses its claims." (417 U.S. at 256.) It
would be equally inconsistent with the fundamental
policy of Wiley, found controlling in a suit under §301, to
permit the right of the Union to determine what provi-
sions of the nursing homes survive against the successor
to be abrogated by the 8(b)(3) violation sought by Gen-
eral Counsel in this proceeding.
This is not to say that the later-brought legal proceed-
ing must bow before the results obtained in an earlier
action-somewhat a race to the courthouse steps. Al-
though the Union sought its relief in the Federal courts,
it cannot be said that it alone chose its forum. By ab-
staining from filing an unfair labor practice charge until
after Judge Aronovitz had issued his order and the arbi-
trator had issued his decision and award, B & K cannot
be held blameless for not enlisting the aid and assistance
of the Board's process. Instead, it awaited the outcome
of the Florida district court proceeding (and did not per-
fect its appeal therefrom) and the arbitration proceeding,
hoping that one or the other would obviate its filing of
unfair labor practice charges.
But even the choice of the forum, whether it was the
Union's or B & K's, should not dictate the results of the
instant proceeding, and the question remains whether the
philosophy of Burns-which emphasized freedom of col-
lective bargaining (a fundamental premise of the Federal
labor laws), and the freedom of new employers to pur-
chase businesses and make substantial changes in their
'6 General Counsel objects specifically to the arbitration award's con-
tinuance of the dues-checkoff clause, contending that such is authorized
under Sec. 302(c)(4) only when there is an existing bargaining contract
That argument begs the question. The arbitrator held that there was such
a contract.
operations-can live side-by-side with the somewhat "in-
consistent" reasoning of Wiley-which emphasized "'the
central role of arbitration in effectuating national labor
policy' and preventing industrial strife, and the need to
afford some protection to the interests of the employees
during a change of corporate ownership." Howard John-
son, 417 U.S. at 254-255, quoting from Wiley, 376 U.S. at
549.
Although Wiley involved a merger, this case is similar
in that the initial employing entities, Krest View Inc. and
Towne House Inc., have disappeared as viable entities.
To paraphrase Howard Johnson, unless the Union is af-
forded some remedy against B & K, it would have no
means to enforce the obligations voluntarily undertaken
by Krest View Inc. and Towne House Inc., to the extent
its promises were intended to survive a change of owner-
ship. Thus, the Union does not have a realistic remedy to
enforce their contractual obligations. Although the nurs-
ing homes had agreed that their contracts were binding
upon their successors and assigns, the Union had no op-
portunity to enforce that clause because the rescission by
Keller of Wilson's leases happened so quickly that, even
if the Union had learned of it, it very likely would have
been unable to take any action to prevent it. Howard
Johnson, 417 U.S. at 257, 258, fn. 3.
In any event, the Supreme Court has made it clear
that the mere existence of the successorship clauses
cannot bind B & K, "either to the substantive terms of
the agreements or to the arbitration clauses thereof,
absent the continuity required by Wiley, when it is per-
fectly clear the [successor] refused to assume any obliga-
tions under the agreements." Id. at 258, fn. 3. Here, there
is such continuity. B & K hired all of the employees of
the nursing homes, and the former employees continued
to perform the same work at the same workplace under
the same administrators as before the change in the cor-
porate employers. A patient in the home on May 4, 1977,
would have had no idea on May 6, 1977, that anything
had changed; nor would a visitor to that patient on both
days, because the name of the nursing home remained
the same. Again, to paraphrase and quote Howard John-
son, 417 U.S. at 259, the claims which the Union sought
to compel B & K to arbitrate were the claims of B & K's
employees "as to the benefits they were entitled to re-
ceive in connection with their employment. It was on
this basis that the Court in Wiley found that there was
the 'substantial continuity of identity in the business en-
terprise,' 376 U.S. at 551, which it held necessary before
the successor employer could be compelled to arbitrate."
Furthermore, B & K never refused to assume any obli-
gations under its predecessors' collective-bargaining
agreements. Indeed, it undertook to comply with many
terms of the agreements. Although B & K never assumed
the obligation to pay fringe benefits, 7 neither did it
wholly disavow those obligations, contenting itself to
bide its time to comply with them once its cash flow and
financial condition improved.
To hold that B & K was required to arbitrate with the
Union under Wiley does no injustice to Burns, for under-
lying the latter decision was the Supreme Court's con-
': Towne House paid its employees for Memorial Day. Iq77
1244 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
cern that binding "an employer with the terms and con-
ditions of employment in the old collective-bargaining
contract may make . . . changes [in corporate structure,
composition of the labor force, work location, task as-
signment, and nature of supervision] impossible and
many discourage and inhibit the transfer of capital."
Burns, 406 U.S. at 287-288. Here, there are no such con-
cerns. There were no changes of the kind envisioned by
the Court. Of perphaps greater significance, the agree-
ments herein played no part, nor would they have
played a part, in Keller's decision to continue the oper-
ation of the homes. Keller cared not one bit what the ob-
ligations of the homes were. His sole interest was pro-
tecting the value of his real property, buildings, and
equipment; not to operate the homes, but to stabilize
their operations, dispose of them, and insure that the
rental payments would be made as due.
Thus, under the facts of this proceeding, the principles
of Wiley permitted the Union to seek the protection of
the Federal courts and the arbitration process and the
Union, by so doing, did not violate Section 8(b)(3) of the
Act; and I shall recommend the dismissal of the com-
plaint in its entirety. In doing so, I do not agree with
either of the defenses interposed by the Union. B & K is
not the alter ego of Krest View Inc. and Towne House
Inc. for the reasons set forth by Judge Aronovitz. Fur-
ther, Board law firmly establishes that the ownership of
the enterprises must be "substantially identical," Clinton
Foods, Inc. et al., 240 NLRB No. 179 (1979), and that
there must be some element of a disguised continuation
of the prior enterprises, Southport Petroleum Co. v.
N.L.R.B., 315 U.S. 100, 106 (1942); H.S. Brooks Electric,
Inc., et al., 233 NLRB 889 (1977), for there to be an alter
ego relationship. Both factors are absent here.
In addition, B & K did not assume its predecessor's
agreements with the Union. Although it is true that B &
K never disavowed the agreements, neither did it ex-
pressly assume them. The closest the evidence comes to
an adoption is Handy's statement to Gluck what B & K
would follow the agreements without change. The
record reveals, however, that Handy had no authority to
make that commitment. In addition, the administrator of
Krest View applied to the Veteran's Administration to
qualify the home for admission of patients referred by
the VA. The administrator checked a box in the applica-
tion indicating that Krest View had an agreement with
the Union and attached agreement to the application. Al-
though I find that Keller had knowledge of the applica-
tion, I am not persuaded that he paid that much attention
to the contents of the application and intended by the ap-
plication to bind B & K to the Union agreements.
I am persuaded, however, that Keller was aware of
the contents of the agreements; but he consistently took
the position that the fringe benefits would be complied
with once B & K's cash flow and financial condition im-
proved. His statements to that effect are ambiguous-he
meant either that when he was able, he would pay all
benefits due and owing from May 5, 1977; or that, once
he had the money, he would resume paying the benefits.
I find that he meant the latter' and that K & B never
assumed the union agreements in their entities.
In view of all the foregoing, I shall recommended that
the complaint herein be dismissed.
CONCLUSIONS OF LAW
1. B & K Investments, Inc., doing business as Krest
View Nursing Home and Towne House Convalescent
Center, is an employer engaged in commerce within the
meaning of Section 2(6) and (7) of the Act, and Krest
View and Towne House are each employers engaged in
commerce.
2. Respondent Local 1115, Joint Board, Nursing Home
& Hospital Employees-Florida Division, is a labor orga-
nization within the meaning of Section 2(5) of the Act.
3. Respondent did not, as alleged in the complaint,
refuse to bargain about the wages, hours, and other
terms and conditons of employment and has thereby en-
gaged in unfair labor practices within the meaning of
Section 8(b)(3) of the Act.
Upon the basis of the foregoing findings of fact and
conclusions of law, and upon the entire record, and pur-
suant to Section 10(c) of the Act, I hereby issue the fol-
lowing recommended:
ORDER 19
The complaint herein is hereby dismissed in its entire-
ty.
1s The administrator of Towne House initially testified that Keller
stated to the employees on May 6, 1977, that he could not pay the bene-
fits at that time, but would make it up to them when his finances became
more financially stable. Later, however, she testified in accord with my
findings.
19 In the event no exceptions are filed as provided by Sec. 102.46 of
the Rules and Regulations of the National Labor Relations Board, the
findings, conclusions, and recommended Order herein shall, as provided
in Sec. 102.48 of the Rules and Regulations, be adopted by the Board and
become its findings, conclusions, and Order, and all objections thereto
shall be deemed waived for all purposes.