Royal Oak Tool & Machine Co.

ROYAL OAK TOOL & MACHINE COMPANY, ETC. 1361'_ words "in commerce or in an industry affecting commerce" must I think, reason- ably be read as limiting the reach of the Act. Had it been the design to extend to all employers or persons the protection from secondary activity on the part of unions that Section 8(b)(4) affords, the clause under scrutiny would surely have omitted any such qualifying language and would have forbidden inducement or encouragement of any individual employed by any person to engage in a strike for a prohibited objective and similarly have forbidden unions to threaten, coerce, or restrain any person to bring about a like result. I think that it must be concluded, and I so conclude, that "an industry affecting: commerce" means an enterprise or business affecting commerce. Lacking evidence- that any of the general contractors or subcontractors, other than members of the. Association, operate enterprises or businesses affecting commerce , I find that an es- sential element of the unfair labor practice alleged has not been established. I will recommend, therefore, that the complaint be dismissed. Upon the basis of the foregoing findings of fact, and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW 1. The Respondent is a labor organization within the meaning of Section 2(5)• of the Act. 2. Silver, Carlson, Conradson's, Rayback, and Alpine are employers engaged in. commerce or in businesses affecting commerce within the meaning of Section 2(6) and (7) of the Act. 3. The evidence does not establish that the Respondent induced or encouraged any individual employed by any person engaged in commerce or in an industry affecting commerce to engage in a strike or a refusal to perform any services or, that the Respondent has threatened , coerced, or restrained any person engaged in, commerce or in an industry affecting commerce , in either case, for a forbidden ob- jective. It is recommended that the complaint be dismissed in its entirety. Royal Oak Tool & Machine Company, and R 0 Manufacturing: Company and Wendell G. Mouw, Garrett H. Mouw, and Robert J. Walls and International Union, United Automobile, Aircraft and Agricultural Implement Workers of America,. AFL-CIO, and its Local 157. Case No. 7-CA-92779. August $9;. 1961 DECISION' AND ORDER On January 18, 1961, Trial Examiner Lee J. Best issued his Inter-- mediate Report in the above-entitled proceeding, finding that the, Respondents had engaged in and were engaging in certain unfair labor practices and recommending that they cease and desist therefrom and' take certain affirmative action, as set forth in the Intermediate Report attached hereto. Thereafter, the General Counsel, the Respondents,, and the Charging Party filed exceptions to the Intermediate Report,, together with supporting briefs. Pursuant to the provisions of Section 3(b) of the National Labor- Relations Act, the Board has delegated its powers in connection with,. this case to a three-member panel [Members Leedom, Fanning, and: Brown] . 132 NLRB No. 108. 11362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 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 Inter- mediate Report, the exceptions and briefs, and the entire record 1 in the case and hereby adopts the findings,' conclusions,' and recommen- dations 4 of the Trial Examiner, with the modifications below. ORDER Upon the entire record in this case, and pursuant to Section 10(c) ,of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that Royal Oak Tool & Machine Com- pany, R 0 Manufacturing Company, Wendell G. Mouw, Garrett H. Mouw, and Robert J. Walls, their officers, agents, successors, assigns, shall : 1. Cease and desist from : (a) Refusing to bargain collectively with International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, as the exclusive bargaining representative of all production employees included in the unit herein found to be appropriate for the purposes of collective bargaining, as recognized in the aforesaid existing collective-bargaining agreement dated January 17,1959. ' The Respondent has requested oral argument . The request is denied as the record, including the exceptions and briefs,`dequately presents the issues and the positions of the parties. 2 We find inappropriate the Trial Examiner 's statement that the existing contract con- lstitutes a bar to redetermination of the representative status of the incumbent Union with .respect to the R 0 employees inasmuch as contract-bar rules are inapplicable in an un- fair labor practice proceeding involving refusal-to-bargain charges. Furthermore, we do .not adopt his assumption that the Board would find that the employees of R 0 constitute a separate appropriate unit for the purpose of collective bargaining, as any such unit ,determination must be left to an appropriate proceeding at a proper time. We are satis- fied that the Respondents refused to bargain in the existing appropriate unit. S We agree with the Trial Examiner that the Respondents violated Section 8(a) (1) .and (5 ) of the Act by refusing to bargain with the Union. We do not agree, however, -that R 0 Manufacturing Company, called R 0 herein, is the alter ego of Royal Oak Tool & Machine Company, called Royal Oak herein . Rather, we find that the two companies con- stitute a single employer for purposes of bargaining with the Union under the circum- stances of this case , in view of their common ownership, interlocking officers and directors, .and the fact that R 0 produces the same product, with virtually the same employees, as were produced by the grinder division of Royal Oak prior to the "spin off." See, for ,example, Family Laundry, Inc., at al., 121 NLRB 1619. 4 The Trial Examiner properly held that it is the duty of the Respondents to bargain in good faith with the Union with respect to R 0 employees in the appropriate unit agreed upon in the existing contract. We do not, however, agree with the Trial Examiner's implication that this duty to bargain is coextensive with the term of this contract. We find that their duty to bargain continues for a reasonable period of time after the issuance, ,or enforcement, of the Board's order directing the Respondents to bargain in good faith with the Union. Poole Foundry and Machine Company, 95 NLRB 34, 36, enfd. 192 F. 2d '540 (C.A. 4), cert. denied 342 U.S. 954. ROYAL OAK TOOL & MACHINE - COMPANY, ETC. 1363 (b) In any like or related manner interfering with, restraining, or coercing their employees in the exercise of the right to self-organiza- tion, to form, join, or assist International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL- CIO, and its Local 157, or any other labor organization, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purposes of collective bargaining or other mutual aid or protection, and to refrain from any or all of such activities, except to the extent that such right may be affected by an agreement requiring membership in a labor organiza- tion as a condition of employment as authorized in Section 8(a) (3) of the Act, as modified by the Labor-Management Reporting and Dis- closure Act of 1959. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Upon request, bargain collectively with International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, as the exclusive representa- tive of all production workers in the aforesaid appropriate unit, as defined in the existing collective-bargaining agreement dated January 17, 1959, and, if an understanding is reached, embody such under- standing in a signed agreement. (b) Post at the plant of Royal Oak Tool & Machine Company at 29800 Stephenson Highway, Madison Heights, Michigan, and at the plant of R 0 Manufacturing Company at 31171 Stephenson Highway, Madison Heights, Michigan, copies of the notice attached hereto marked "Appendix." 5 Copies of said notice, to be furnished by the Regional Director for the Seventh Region, shall, after being duly signed by a duly authorized representative of -Royal Oak Tool & Machine Company and R•O Manufacturing Company, and by each of the individual Respondents, be posted by the Respondents immedi- ately upon receipt thereof, and be maintained by them for 60 con- secutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by each of the Respondents to insure that such notices are not altered, defaced, or covered by any other material. (c) Notify the Regional Director for the Seventh Region, in writ- ing, within 10 days from the date of this Order, what steps the Re- spondents have taken to comply herewith. 5 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 "Pursuant to a Decision and Order" the 'words "Pursuant to a Decree of the United States Court of Appeals, Enforcing an Order." 614913-62-vol. 132-87 1364 DECISIONS OF NATIONAL LABOR RELATIONS BOARD APPENDIX NOTIOE TO ALL EMPLOYEES Pursuant to a Decision and Order of the National Labor Relations Board, and in order to effectuate the policies of the Labor Manage- ment Relations Act, as amended, we hereby notify our employees that : WE wuL bargain collectively in good faith. with International Union,' United Automobile, Aircraft and Agricultural Imple- ment•Workers of America, AFL-CIO, and its Local 157, as the exclusive representative of all our production employees in the bargaining unit described below, as defined in the currently ex- isting collective-bargaining agreement dated January 17, 1959,, with respect to rates of pay, hours of employment, and other con- ditions of employment, and, if an understanding is reached, em- body such understanding in a signed contract. - The bargaining unit is: All factory, production, and maintenance employee's of R 0 Manufacturing Company and Royal Oak Tool & Machine Company, except foremen, supervisors, confidential salaried employees, office employees, and plant guards. WE wu.L NOT refuse to bargain with their exclusive representa- tive or in any- like or related manner interfere with, restrain, or coerce our employees, in the exercise of their right to self- organization, to form, join, or assist International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, or any other labor organi- zation, 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 any or all of such activities, except to the extent that such right may be affected by an agreement requiring member- ship in a labor organization as a condition of employment as authorized in Section 8(a) (3) of the• Act, as modified by the Labor-Management Reporting and Disclosure Act of • 1959. All of our employees are free to become and remain or to refrain from becoming or remaining members of the above-named Union, or any other labor organization, except to the extent that such right may be affected by an agreement requiring membership in a labor organiza- ROYAL OAK TOOL & MACHINE COMPANY, ETC. 1365 tion as a condition of employment as authorized in Section 8(a) (3) of the National Labor Relations Act, as amended. ROYAL OAK TOOL & MACHINE COMPANY, Employer. By --------------------------------------------- (Representative ) . ( Title) R 0 MANUFACTURING COMPANY,. Employer. By --------------------------------------------- (Representative) (Title) (WENDELL G. MOUW) (GARRETT H. Mouw) (ROBERT J. WALLS) Dated---------------- This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced, or covered by any other material. INTERMEDIATE REPORT AND RECOMMENDED ORDER STATEMENT OF THE CASE This proceeding, with all parties represented, was heard before the duly designated Trial Examiner at Detroit, Michigan , on September 19, 20, and 21 , 1960, upon a complaint issued by the General Counsel of the National Labor Relations Board and answers filed thereto by Royal Oak Tool & Machine Company (herein called Royal Oak), R 0 Manufacturing Company (herein called R 0), and individual Respondents Wendell G. Mouw, Garrett H. Mouw, and Robert J . Walls. The complaint,. as amended, alleges in substance that each and all, of the Respondents , since on and after May 20, 1960, refused to bargain collectively with International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157 (herein collectively called the Union ), as the exclusive bargaining representative of certain employees in an appropriate unit consisting of all factory, production, and maintenance employees of Royal Oak Tool & Machine Company and R 0 Manufacturing Company, except foremen, supervisors, confidential salaried employees, office employees, and plant guards; thereby interfering with, restraining, and coercing such employees in the exercise of the rights guaranteed in Section 7 of the Act; and thereby 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 Rela- tions Act (herein called the Act). Allegations of the complaint pertaining to com- merce and jurisdiction of the Board were admitted, but all allegations of unfair labor practices were denied. All parties were afforded full opportunity to be heard , to examine and cross- examine witnesses, to introduce evidence pertinent to the issues involved , to argue orally upon the record, and to file written briefs with the Trial Examiner. Oral argument and briefs submitted by counsel for the General Counsel, the Charging Party, and all of the Respondents have been given due consideration. The principal issue litigated was whether Respondent R 0 Manufacturing Company (a new corporation) is obligated and required under Section 8 (a) (5) of the Act to continue recognizing and bargaining with the Union under an existing collective bargaining agree- ment with respect to employees acquired from Royal Oak Tool & Machine Company in a "spin off" of assets transferring all property, choses in action, employees, etc. from its Grinder Division to the new corporation. 1366 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Upon the entire record in the case, and from observation of the witnesses, I make the following: FINDINGS OF FACT 1. BUSINESS OF THE RESPONDENTS Royal Oak Tool & Machine Company is a corporation organized and existing since 1925 by virtue of the laws of Michigan with its principal office and place of business at 29800 Stephenson Highway in the city of Madison Heights, county of Oakland, State of Michigan, where (since 1952) it has been and presently is engaged in the manufacture, sale, and distribution of dies, jigs, tools, and fixtures for the auto- motive trade. During the calendar year 1959, which period is representative of all times material herein, this Respondent sold and shipped finished products valued in excess of $50,000 directly to points outside the State of Michigan. I find, therefore, that Respondent Royal Oak is an employer within the meaning of Section 2(2) engaged in commerce within the meaning of Section 2(6) and (7) of the Act. R 0 Manufacturing Company is a corporation organized and existing under and by virtue of the laws of Michigan since January 5, 1960, with its principal office and place of business at 31171 Stephenson Highway, county of Oakland, State of Michi- gan, where it is engaged in the manufacture, sale, and distribution of standard tool grinding equipment known as R-0 Universal Form Relieving Fixture & Grinder (hereinafter called the R-O Grinder). During the period from January 5 to May 31, 1960, which is representative of all times material herein, this Respondent sold and shipped finished products valued in excess of $50,000 directly to customers out- side the State of Michigan. I find, therefore, that Respondent R 0 is an employer within the meaning of Section 2(2) engaged in commerce within the meaning of Section 2(6) and (7) of the Act. Wendell G. Mouw (an individual) is president, a' director, and one of the majority stockholders of Royal Oak Tool & Machine Company. He is also treasurer, a di- rector, and one of the majority stockholders of R 0 Manufacturing Company. I find, therefore, that individual Respondent Wendell G. Mouw, as an agent of both Respondent Royal Oak and Respondent R 0 within the meaning of Section 2(13), is an employer within the meaning of Section 2(2) of the Act engaged in commerce within the meaning of Section 2(6) and (7) of the Act. Garrett H. Mouw (an.individual) is a vice president, a director, and one of the majority stockholders of Royal Oak Tool & Machine Company. He is also one of the directors and majority stockholders of R 0 Manufacturing Company. I find, therefore, that individual Respondent Garrett H. Mouw, as an agent of both Re- spondent Royal Oak and Respondent R 0 within the meaning of Section 2(13), is also an employer within the meaning of Section 2(2) engaged in commerce within the meaning of Section 2(6) and (7) of the Act. Robert J. Walls (an individual) is a vice president, a director, and one of the majority stockholders of Royal Oak Tool & Machine Company. He is also secretary, a director, and one of the majority stockholders of R 0 Manufacturing Company. As such, I find, therefore, individual Respondent Robert J. Walls, as an agent of both Respondent Royal Oak and Respondent R 0 within the meaning of Section 2(13), is an employer within the meaning of Section 2(2) engaged in commerce within the meaning of Section 2 (6) and (7) of the Act. -H. THE LABOR ORGANIZATION INVOLVED International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, is a labor organization within the meaning of Section 2(5) of the Act, existing in whole or part for the purpose of representing employees in dealing with employers concerning grievances, labor dis- putes, wages, rates of pay, hours of employment, and conditions of work. III. THE UNFAIR LABOR PRACTICES A. The collective-bargaining agreement From its inception, the principal business of Royal Oak Tool & Machine Com- pany has been the manufacture of tools, dies, jigs, and fixtures primarily for use by automotive manufacturers. It operates a tool and die shop (hereinafter called the tool and die division) in which approximately 80 to 90 highly skilled craftsmen known as tool- and die-makers are employed to lay out and build tools and dies from customer blueprints to extremely close tolerances. At various times, however, Royal Oak has supplemented its regular work by engaging in the production of ROYAL OAK TOOL & MACHINE COMPANY, ETC. 1367 wire-splicers for utility companies, the heat-treating of steel, and the production of a universal form relieving fixture and grinder with accessories requiring the employ- ment of ordinary production ad maintenance employees rather than highly skilled tool- and die-maker craftsmen. Tool- and die-making employees make the jigs and fixtures used by the unskilled production employees in much the same way as automotive manufacturers use the products of Royal Oak's tool division. By reason of increasing demands for its grinders, Royal Oak in 1946 established separate space and facilities within its plant for production of the R-O Grinder. In this grinder division it employed approximately eight production employees under the supervision of a production leader (Ellwood C. Hemlin). It also employed William A. Johnson as sales manager of the grinder division, and set up a separate accounting system for that division. As a signatory member of the Automotive Tool and Die Manufacturers Associa- tion, Royal Oak recognized and entered into a collective-bargaining agreement with the Union (which will expire on October 1, 1961), as exclusive representative of its factory, production, and maintenance employees, except foremen, supervisors, confidential salaried employees, office employees, and plant guards, for the purpose of collective bargaining with respect to rates of pay, wages, hours of employment, and other conditions of employment . This agreement contains a union-security clause and provision for a checkoff of current membership dues from the pay of employees engaged both as skilled craftsmen and as unskilled production employees. In addition to a wage scale and other provisions pertaining to specific classifications, the agreement provides , as follows: - PRODUCTION EXHIBIT (1) Production employees shall have their own separate seniority list and classifications which shall cover the various occupations in production work; (2) Production employees shall be covered by the main body of this Agree- ment, except as amended by this Exhibit; (3) Production wage rates shall be determined by negotiations between the Management and the Union in the shop involved. B. Spin-o$ of the grinder division In 1959 the management of Royal Oak Tool & Machine Company decided to sever its grinder division from the tool and die division by transferring it to a sepa- rate corporation to be created for the purpose of continuing the grinder operations as a separate business venture. The first step was to obtain an advance ruling from the Internal Revenue Service concerning the tax consequences involved . By letters to the Commissioner of Internal Revenue dated August 6, 1959, and October 1, 1959, attorneys for Royal Oak submitted a full statement of facts and procedure regarding the proposed transaction and included the following: Statement of the Business Reasons for the Transaction Due to the dissimilarity of the two businesses conducted, it is desirable from a business standpoint to separate them. A primary objective of the separation is to separate the employees of the two divisions into separate bargaining units. This is desirable because the skilled workers in the Tool Division are represented by the Tool and Die Workers Association, and the high wage rates applicable to these workers are inappropriate to the semi-skilled and unskilled workers em- ployed by the Grinder Division. While it is contemplated that the Grinder Division employees will be organized after the transfer of its operations to a separate corporation, it is assumed that they will not fall within the jurisdiction of the Tool and Die Workers Association, and that consequently the wage rates of this division will be able to be kept at a level commensurate with the work being performed, thereby permitting the Company to meet competition. A second purpose sought to be achieved by the division is the more effective advertising of the Grinder Division products under a separate corporate name which would reflect the nature of, and more closely identifiable with the product. Having obtained a favorable ruling from the Internal Revenue Service on Octo- ber 22, 1959, the board of directors of Royal Oak Tool & Machine Company at a regular meeting on December 22, 1959, designated James S. Thorburn as its agent, attorney, and nominee to form, incorporate, and file necessary articles of incorpora- tion with the Michigan Corporation and Securities Commission to create a new com- pany bearing the name R 0 Manufacturing Company to have as its purpose the 1368 DECISIONS OF NATIONAL LABOR RELATIONS BOARD owning and operating of a business engaged in the manufacture, distribution, and sale at wholesale and retail of metal products and to have an authorized capital stock of 100,000 common no par value shares, and that 1,000 of those shares shall be issued to the Royal Oak Tool & Machine Company at a price of $1 per share forthwith.' Garrett H. Mouw, Wendel G. Mouw, Robert J. Walls, John W. Barnowski, and James S. Thorburn were designated as the first board of directors of the proposed new corporation. Garrett H. Mouw, as vice president and general manager of Royal Oak Tool & Machine Company was authorized to segregate assets necessary to the operation of the grinder division, determine their book value, and proceed to do all things necessary to pass title to said assets to R 0 Manufacturing Company in exchange for stock certificates of R 0 Manufacturing Company in total number of shares equal to the total book value of the assets so transferred to be issued to and bearing the names of the stockholders of record of Royal Oak Tool & Machine Com- pany as of January 1, 1960, representing the same proportion of interest in R 0 Manufacturing Company that each of said stockholders held in Royal Oak as of the effective date .2 C. Organization of R 0 Manufacturing Company On December 23, 1959, at 10 a.m., James S. Thorburn (sole incorporator) held a meeting of the proposed stockholders of R 0 Manufacturing Company, reported that articles of incorporation had been filed in the office of the Michigan Corporation and Securities Commission,3 presented a set of bylaws for the regulation of the affairs of the new corporation, which were thereupon read and adopted. The meet- ing then proceeded to the election of a board of directors consisting of James S. Thorburn, Wendell G. Mouw, Garrett H. Mouw, Robert J. Walls, and John W. Barnowski. Following this meeting the aforesaid board of directors held its first meeting at 10:15 a.m., and unanimously elected officers of the new corporation, as follows: President-William A. Johnson Vice President-Ellwood C. Hemlin Secretary-Robert J. Walls Treasurer-Wendell G. Mouw On February 16, 1960, to be effective as of January 5, 1960, Royal Oak Tool & Machine Company by its president Wendell G. Mouw, executed and delivered to R 0 Manufacturing Company (a Michigan corporation), its successors and assigns, a bill of sale for "all the right, title and interest in and to all of the tangible and intan- gible personal property heretofore known as assets of the `Grinder Division' of Royal Oak Tool & Machine Company as reflected in the statement of Barnowski and McCarter attached hereto" aggregating $176,370.48, and consisting of cash on hand and in bank ($445.56), accounts receivable ($51,705.34), work in process ($113,419,89), prepaid expenses ($1,117.95), machinery and equipment ($9,365.54), and office equipment ($316.20). The aforesaid bill of sale also provided that "The second party hereto assumes and promises to pay all obligations of first party reflected in said statement attached and further assumes and promises to fulfill all purchase, customer and equipment orders and accounts payable," aggregating $176,370.48, and consisting of current liabilities in the sum of $94,818.88, long-term debt in the sum of $5,923.60, and capital in the sum of $75,628. From the effective date of aforesaid bill of sale on January 5, 1960, to the weekend of February 6 and 7, 1960, Royal Oak Tool & Machine Company for and on behalf of R 0 Manufacturing Company continued to operate its grinder division at 29800 Stephenson Highway, Madison Heights, Michigan, whereupon it was moved approxi- mately a half mile to a newly leased building at 31171 Stephenson Highway, Madison Heights, Michigan, where the new management of R 0 Manufacturing Company 1 By stipulation of the parties it appears that stock certificate No. 1 for 1,000 shares was actually issued to James S. Thorburn (the sole incorporator), as a nominee and agent of Royal Oak Tool & Machine Company for the purpose of obtaining a charter for the new corporation. 2 ,By stipulation of the parties it appears that stock certificate No. 2 for 75 ,628 shares was issued to Royal Oak Tool & Machine Company on February 16, 1960, and subsequently allotted by transfer, as follows : John W. Barnowski-12,950 shares ; Robert J Walls- 15,022 shares ; Wendell G. Mouw-23,828 shares ; and Garrett H. Mouw-23,828 shares 8 Articles of incorporation were received at office of Michigan Corporation and Securities Commission on December 28, 1959, and charter (articles of incorporation) was issued on January 5, 1960, by the State of Michigan. ROYAL OAK TOOL & MACHINE COMPANY, ETC. 1369 assumed, control and continued operations similar to those of said grinder division of the parent corporation . By letter of January 29, 1960, all employees of the grinder division were notified of the contemplated move and thereafter offered continued employment by R 0 Manufacturing Company with identical wages, employment rights, and privileges theretofore received ,at Royal Oak Tool & Machine Company. All employees accepted the proposition of transfer and reported for work at the new location without any loss of time or pay whatsoever. In addition to Sales Manager William A . Johnson, Production Leader Ellwood C. Hemlin, and Mrs. Margaret Archer (secretarial worker), the entire quota of approximately eight production employees from the grinder division voluntarily transferred and became employees of R 0 Manufacturing Company on February 8, 1960. On or about February 15, 1960, Shop Steward R. E. Williamson on behalf of the bargaining unit under the current collective -bargaining agreement filed a written grievance with Royal Oak Tool & Machine Company protesting the transfer of employees from its grinder division to the new plant of R 0 Manufacturing Company, alleging that it was attempting to remove men and jobs from a union shop to a nonunion shop. The Employer took no action on this grievance, but thereafter on March 17, 1960, posted a letter to the Union, as follows: LOCAL 157 UAW, AFL-CIO, 5961-14th Street, Detroit 8, Michigan. (Attention : Mr. Blaine Marrin, President). GENTLEMEN : This letter is in reply to your request regarding the facts leading up to the separation of the production of the R . O. Grinder from the tool and die jobbing business at Royal Oak Tool & Machine Company into a separate corporation. Approximately 12 years ago, Royal Oak Tool & Machine Company became an exclusive licensee to manufacture a cam relieving tool and grinder. The license was granted for two year periods of time and was subject to negotiation for renewal. As the years went by the volume of this business grew to the point where it was difficult to run the production on the Grinder in with the jobbing business, mainly because of the ever increasing space required. An addition on the present building was out of the question inasmuch as our lease is up in ap- proximately two years. It is not a renewable lease and a major lease hold improvement for this short a period was economically unsound. The last year and a half we have had pressure from both old tool accounts as well as new ones that we were losing tool business and, in some instances, were not considered as a new source because, it appeared, we were not tool builders, but production machine builders. Our license to manufacture the Grinder was nearing its expiration date , there- fore, it was decided to separate the two entities . The cost of doing this was pro- hibitive unless we could qualify for a spin off corporation under the Internal Revenue Code, Section 601 .201 (F) I.R.B. 1955-2,941. This was approved in November of 1959 by the Treasury Department. It ,was also necessary to obtain approval of our banking source for extending and maintaining our line of operating capital after the division . This approval was made in late December of 1959. A leased building was obtained and actual moving took place the 8th of February, 1960. The employees involved in the production of the Grinder were offered jobs by the new Company a week before moving .- All accepted. Having terminated their employment at Royal Oak Tool & Machine Company on February 6th, they went to work as new hires at R-O Manufacturing Com- pany on February 8th. For your information, we are enclosing a letter dated January 29th which we posted on our bulletin board advising our employees of the move. • Yours very truly, ROYAL OAK TOOL & MACHINE CO., (S) W. G. Mouw, President. WGM/ve -encl. cc to Mr. J. Clark Thereafter, by letter of May 20, 1960, the Union made a demand for recognition and bargaining with respect to the employees now working for R 0 Manufacturing Company at 31171 Stephenson Highway, as follows: 1370 , DECISIONS OF NATIONAL LABOR RELATIONS BOARD Mr. W. G. Mouw, President, Royal Oak Tool & Machine Company, 29800 Stephenson Highway, Post Office Box 111, Royal Oak 3, Michigan. DEAR SIR: This is to notify you that under the terms of the Agreement entered into between our Union and the Automotive Tool and Die Manufacturers As- sociation dated January 17, 1959, our Local Union and the UAW International Union are taking the position that we represent those employees working in your plant located at 31171 Stephenson Highway. We are requesting a meeting with you to arrange representation for this par- ticular unit. Please advise the dates on which you are available to meet. Very truly yours, BLAINE MARRIN, President, Local 157 UAW. BM:es oeiu42afl-cio In reply to the foregoing demands of the Union, Royal Oak Tool & Machine Com- pany on June 1, 1960, posted a letter, as follows: UAW, AFL-CIO, LOCAL 155 [sic], 5961 14th Street, Detroit 8, Michigan. (Attention : Mr. Blain Marrin, President.) GENTLEMEN: In your letter of May 20, 1960, you stated that your local union and the UAW International Union are taking the position that you represent employees working in the plant located at 31171 Stephenson Highway. You referred to the plant as our plant, but you are mistaken, since the only plant in which this company operates is at 29800 Stephenson Highway. Perhaps, you refer to the plant of R-O Manufacturing Company at 31171 Stephenson Highway. As you know, that is a separate company and its em- ployees have no connection with this company. Any claim of representation of their employees should, of course, be directed to that company. In view of the fact we have no employees in the plant referred to in your letter, we presume there is no necessary for the meeting requested by you. Very Truly yours, ROYAL OAS TOOL & MACHINE CO., (S) W. G. Mouw, President. D. Contentions of parties By reason of the undisputed fact that all production employees of the grinder divi- sion are included in the bargaining unit agreed upon in the current collective-bargain- ing agreement, which will not expire prior to October 1, 1961, it is contended by the General Counsel that (1) the Respondents refused to bargain with respect to such employees by transferring them to the operations of R 0 Manufacturing Company without consulting the Union as their exclusive bargaining representative; (2) R 0 Manufacturing Company is the alter ego and/or successor of Royal Oak Tool & Ma- chine Company, because there has been a continuation of the employing industry, and the alleged change in ownership is not sufficient cause to abrogate the existing duty to bargain with the representative of employees in the appropriate unit agreed upon be- tween the parties with respect to wages, hours, and other terms and conditions of em- ployment, or the negotiation of an agreement, or any question arising thereunder; and (3) R 0 Manufacturing Company, as successor of the grinder division of Royal Oak Tool & Machine Company, has assumed a continuing obligation to bargain with the Union as the representative of employees involved under the existing col- lective-bargaining agreement, because the enterprise now engaged in remains substan- tially the same. To the contrary, it is contended by all Respondents that (1) the grinder division of Royal Oak Tool & Machine Company has passed out of existence by a bona fide bill of sale and transfer of assets and liabilities to R 0 Manufacturing Company as an independent and separate employer; (2) former employees of the grinder division are no longer a part of the appropriate unit agreed upon in the currently existing collective-bargaining agreement between Royal Oak Tool & Machine Company and ROYAL OAK TOOL & MACHINE COMPANY, ETC. 1371 the Union; (3) the employees of R 0 Manufacturing Company now constitute a separate appropriate unit of their own, and should separately determine whether that unit desires representation by the Union for the purposes of collective bargaining; and (4) R 0 Manufacturing Company is not the alter ego or successor of Royal Oak Tool & Machine Company, and assumed no obligation whatever under the exist- ing agreement to bargain with the Union as exclusive representative of employees formerly employed in the grinder division, because there has been a substantial change in the employing industry. Concluding Findings The facts in this case are clear and undisputed that the individual Respondents, Wendell 'G. Mouw, Garrett H. Mouw, and Robert J. Walls by and through a corporation (Royal Oak Tool & Machine Company) owned and controled by them as officers, directors, and majority stockholders, procured the creation of a new and separate corporation (R 0 Manufacturing Company) for the purpose of trans- ferring: to it an integral part of the parent corporation (its grinder division). - In consideration thereof a majority of the capital stock in the new corporation was issued to these same individual Respondents, thereby insuring their continued control of both corporations by the power to elect a board of directors in each case, who in turn would appoint corporate officials and management dictated by them. By reason thereof the management of both corporations is in effect the same. I find, therefore, that R 0 Manufacturing is the alter ego of Royal Oak Tool & Machine Company and the successor of the Royal Oak grinder division. Except for expansion and the fact that R 0 Manufacturing Company conducts its operations at a slightly removed location, the business engaged in is unchanged, supervised by the same management personnel, and controled by the same three majority stockholders holding intact all voting stock of both corporations. It is apparent, therefore, that ownership of both corporations is the same, as evidenced by the holding of a majority of-the voting common stock by the same three individuals .4 The Board has repeatedly held that the alter ego relationship exists where there is - an identity of stockholders of two or more companies; a perpetuation by the successor of the predecessor's business, operating and employment policies; and the continued employment by the successor of the predecessor's employees, supervisors, and managers. See Ozark Hardwood Company, 119 NLRB 1130 enfd. in N.L.R.B. v. Ozark Hardwood Co., 194 F. 2d 963 (C.A. 8); Atlanta Paper Company, et al., 121 NLRB 125; Auto Ventshade, Inc., 123 NLRB 451, 454, enfd. in N.L.R.B. v. Auto Ventshade, Inc., 276 F. 2d 303'(C.A. 5); Northwest Glove Company of Winona, 74 NLRB 1697; and D.L. & S. Manufacturing Co., Inc., et al., 123 NLRB 1524. The Board and the courts have even gone so far as to hold that a mere change in ownership (which is not the case here) is not sufficient to abrogate the duty of a successor company to bargain with the representative of employees involved. See N.L.R.B. v. Albert Armato, et al., 199 F. 2d 800 (C.A. 7), enfg. 97 NLRB 971; and California Footwear Company, 114 NLRB 765 (C.A. 7). The record in this case (General Counsel's Exhibit No. 14) shows, and it is admitted that at the time of the transfer of the grinder division to R 0 Manufacturing Company there was a valid existing collective-bargaining agreement in full force and effect to October 31, 1961, which specifically included all involved employees in an appropriate unit recognized and agreed upon by all parties thereto. Under such conditions Board certification is not required. Respondents have never denied the majority status of the Union in that unit, and in my opinion Respondents cannot by unilateral conduct prevent the existing contract from being a bar to redetermina- tion of the Union's representative status regardless of the desires of certain employees to the contrary. Consequently, I find that the obligation of Royal Oak Tool & Machine Company to bargain with the Union has devolved upon its successor company,,R 0 Manufacturing Company. See Hexton Furniture; 111 NLRB 342; Shamrock Dairy, Inc., et al., 119 NLRB 998; Royal Cotton Mill Co., 109 NLRB 186; Sanson Hosiery Mills, Inc., 92 NLRB 1102 enfd. in 195 F. 2d 350 (C.A. 5). The Respondents in their combined brief have cited the case of A. O. Smith Corporation, 80 NLRB 981, where the Board in a fact situation almost identical with the instant case approved a new appropriate unit upon a representation petition filed at the expiration of an existing collective-bargaining agreement. It must be noted, however, that in the Smith case the bargaining relationship was not disturbed 4 See Royal Brand Cutlery Company, et al., 122 NLRB 901; Investment Building Cafeteria, 120 NLRB 38; Butler Chemical Company, successor to Gulf Chemical Company, 116 NLRB 1041; Cruse Motors, Inc, 105 NLRB 242; Allen W Fleming, Inc., 91 NLRB 612 1372 DECISIONS OF NATIONAL LABOR RELATIONS BOARD following the transfer of the Electrical Company's welding division to A. O. Smith Corporation until the' existing contract expired, and a representation petition was filed by another union. It is not unlikely that the Board would similarly hold in a representation case at expiration of the contract between Royal Oak Tool & Machine Company and the Union that the employees of R 0 Manufacturing Com- pany constitute a separate appropriate unit for the purposes of collective bargaining; but under present circumstances I am convinced that the existing agreement is pres- ently a bar to redetermination of the representative status of the incumbent Union with respect to such employees. In the absence of more unusual circumstances than appear here, I am constrained to hold that the representative status of the Union with respect to employees of the appropriate unit agreed upon in the existing contract will continue until October 31, 1961, notwithstanding their transfer to operations of R 0 Manufacturing Company. It is therefore, the duty of R 0 Manufacturing Company to bargain in good faith with the Union in that respect until such time as a question of representation is properly raised. Since all of the Respondents admit refusal to continue bargaining negotiations with the Union with respect to production employees of the grinder division trans- ferred to the new plant on February 8, 1960, which was carried into effect without consulting the Union, I find that on and since that date the Respondents Royal Oak Tool & Machine Company, R 0 Manufacturing Company, Wendell G. Mouw, Garrett H. Mouw, and Robert J. Walls refused in violation of Section 5 of the Act to bargain collectively with International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, as the representative of production employees included in the appropriate unit agreed upon in the existing collective-bargaining agreement; thereby interfering with,' re- straining, or coercing employees in the exercise of the rights guaranteed in Sectioli. 7 of the Act. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The conduct of Respondents set forth in section III, above, occurring in connection with the operations described in section I, above, have a close, intimate, and sub- stantial relation to trade, traffic, and commerce among the several States, and tends, to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that all of the Respondents have engaged in certain unfair labor practices, it will be recommended that they cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. It will be recommended that the Respondents, upon request, bargain collectively with Inter- national Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, as the exclusive bargaining representative of all production employees in the unit recognized to be appropriate for the purposes of collective bargaining in the existing collective-bargaining agreement entered into between the Automotive Tool and Die Manufacturers Association (and member com- panies signatory thereto), and Locals 155 and 157, International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, on January 17, 1959. Upon the basis of the foregoing findings of fact, and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW 1. Each and all of the Respondents Royal Oak Tool & Machine Company, R 0 Manufacturing Company, Wendell G. Mouw, Garrett H. Mouw, and Robert J. Walls are employers within the meaning of Section 2(2) of the Act, as amended. 2. International Union, United Automobile, Aircraft and Agricultural Implement Workers of America, AFL-CIO, and its Local 157, is a labor organization within the meaning of 2(5 ) of the Act, as amended. 3. All factory, production, and maintenance employees of Royal Oak Tool & Machine Company and its successor, R 0 Manufacturing Company , except foremen, supervisors, confidential salaried employees, office employees , and plant guards constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9 (c) of the Act, as amended. 4. At all times since January 17, 1959, by reason of the aforesaid collective- bargaining agreement entered into between the parties herein , the Union has been SUPERIOR TOOL & DIE CO. 1373 and now is the duly designated and exclusive representative of all employees in the aforesaid appropriate unit within the meaning of Section 9(a) of the Act, as amended. 5. By failing and refusing at all times since February 8, 1960, to bargain in good faith with International Union, United Automobile Aircraft and Agricultural Im plement Workers of America, AFL-CIO, and its Local 157, as the exclusive bargain- ing representative of production employees in the aforesaid appropriate unit, the Respondents have engaged in and are engaging in unfair labor practices within the meaning of Section 8 (a) (1) and (5) of the Act, as amended. 6. The aforesaid unfair labor practices are unfair labor practices within the meaning of Section 2(6) and (7) of the Act, as amended. [Recommendations omitted from publication.], Superior Tool & Die Co. and United Steelworkers of America, AFL-CIO. Case No. 8-CA-2073. August 29, 1961 DECISION AND ORDER On December 23, 1960, Trial Examiner Sydney S. Asher, Jr., issued his Intermediate Report 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 Intermediate - Report attached hereto. The Trial Examiner also found that the Respondent had not engaged in certain other unfair labor practices and recommended that the complaint be dismissed with respect to' such allegations. Thereafter, the Respondent and the General Counsel filed exceptions to the Intermediate Report and supporting briefs. Pursuant to the provisions of Section 3(b) of the Act, the Board has delegated its powers in connection with this case to a three-member panel [Members Leedom, Fanning, and Brown]. The Board has reviewed the rulings made by the Trial Examiner at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Inter- mediate Report , the exceptions and- briefs, and the entire record in this proceeding, and hereby adopts the findings, conclusions,' and recommendations of the Trial Examiner' 1 We agree with the Trial Examiner that Respondent engaged in independent violations of Section 8(a) (1) but do not rely on his finding that Rector 's explanation to the assembled employees on August 28, 1959 , that they were subject to replacement during an economic strike was coercive and illegal . This was a correct statement of the law which Rector was privileged to make in the circumstances. Without adopting the Trial Examiner 's view as to the effect given by the Board to strike settlement agreements, as distinguished from settlements of unfair labor practice charges, we agree with him that it is appropriate in this case to consider the events antedating the strike settlement agreement between Respondent and Union of October 26, 1959 2 Member Leedom would not adopt the Trial Examiner's recommendation of a narrow cease-and-desist order. In view of the nature of the unfair labor practices found, lie be- lieves that a broad cease-and-desist order should be entered. 132 NLRB No. 110.