Edward H. McLaughlin, Etc.

586 DECISIONS OF NATIONAL LABOR RELATIONS BOARD welfare funds were in jeopardy and when Maupai offered to guarantee the payments agreement failed because Pierson 's request for a withdrawal of the charge was countered by Maupai's request for assurance against a work stoppage on the next job. I therefore find that Local 825 neither caused the work stoppage at the Manor on July 8 by inducing or encouraging Esposito and Williams to refuse to perform serv- ices nor that it induced or encouraged them to continue to refuse to perform any services . To make either finding I would have to reject in toto the testimony of Esposito, Williams, and Pierson , not on the ground that it is contradicted by other testimony or by inconsistent independent evidence but on the ground that, as mem- bers and officers of a labor organization , their testimony is unworthy of belief. My rejection of that proposition is utter. I find no evidence to support the allegation that Respondent induced or en- couraged any employee of Ernst to engage in a strike or a refusal to perform any services in violation of Section 8(b) (4) (1 ) (B) of the Act. CONCLUSIONS OF LAW 1. Respondent is a labor organization within the meaning of Section 2(5) of the Act. 2. R. G. Maupai Co., Inc., and John Ochs are employers engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 3. Respondent has not induced or encouraged any individual employed by any person engaged in commerce or in any industry affecting commerce to engage in a strike or a refusal to perform any services nor has Respondent threatened , coerced, or restrained any person engaged in commerce or in an industry affecting commerce, in either case, for an object proscribed by or in violation of Section 8(b) (4) (i) and (ii) (B) of the Act. [Recommendations omitted from publication.] Edward H. McLaughlin, McLaughlin Industrial Distributors, Inc., Contract Builders Hardware , Inc., and Union Hardware & Metal Company, all formerly Union Hardware & Metal Company and Warehouse, Processing & Distribution Work- ers' Union, Local 26. Case No. 01-CA-4054. January 06, 1962 DECISION AND ORDER On October 16, 1961, Trial Examiner William E. Spencer issued his Intermediate Report in the above-entitled proceeding, finding that the Respondents had engaged in and were engaging in unfair labor prac- tices and recommending that they cease and desist therefrom and take certain affirmative action, as set forth in the Intermediate Report at- tached hereto. Thereafter the Respondents, the General Counsel, and the Union filed exceptions to the Intermediate Report and briefs in support thereof. 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 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, the briefs, and the entire record' ' The Respondents ' request for oral argument is hereby denied as the record , including the exceptions and briefs , adequately pre,,ents the issues and positions of the parties 135 NLRB No. 60. EDWARD H. McLAUGHLIN, ETC. 587 in the case, and hereby adopts the findings, conclusions, and recom- mendations of the Trial Examiner, with the following modifications in the portions of the Intermediate Report entitled "The Remedy" and "Recommended Order." The Trial Examiner recommended, in order to remedy the viola- tions of Section 8(a) (3), that the Respondents be directed to offer to the discriminatees immediate transfer and hire in accordance with the provisions of the August 22, 1960, contract 2 relating to hire and trans- fer of employees or such modifications thereof as shall be agreed upon in collective bargaining with the Union. Thus, the recommended criteria for such transfer and hire appear to be partly contingent upon the Respondents' compliance with the portion of the instant order de- signed to remedy the unlawful refusal to bargain. This may postpone the restoration of the employees' rights until such time as the Re- spondents and the Union reach agreement. Such -a delay is unwar- ranted. Accordingly, we see no reason to depart from our usual order of reinstatement in cases similar to the instant one 3 and shall modify the Trial Examiner's recommended order to require that the employees listed in the appendix be offered immediate transfer and hire, with- out prejudice to their seniority and other rights and privileges, dis- missing, if necessary, all persons who would not have been employed or transferred but for the Respondents' discriminatory selections. Such transfer and hire shall be offered, without discrimination against any employee because of union affiliation or activities, in accord with the Respondents' usual method of operation, following a system of seniority, or other nondiscriminatory basis. If there is then no suffi- cient employment immediately available for all discriminatees, any discriminatees remaining shall be placed upon a preferential hiring list prepared in accord with the above principles, and shall thereafter, in accordance with such list, be offered employment as such employ- ment becomes available and before other persons are hired for such work.4 We shall also order the Respondents to make whole the employees named in the appendix attached hereto against whom it has discrimi- nated for any losses they may have suffered because of the Respond- ents' discrimination, by payment to each of them of a sum of money from the date of such discrimination to the date of the offer of rein- statement or placement on a preferential list. As it is possible, however, that one or more of these employees might not have been retained on the Respondents' payrolls if the Respond- ents' selection had been made on a nondiscriminatory basis, this possi- 9 That contract was for a period of 2 years. S See, e g., Sidele Fashions, Inc, et al., 133 NLRB 547 4 Walsh-Lumpkin Wholesale Drug Company, 129 NIiRB 294, 296, 297. United Butcher8 Abattoir, Inc, 123 NLRB 946, 959. 588 DECISIONS- OF NATIONAL LABOR RELATIONS BOARD bility will be taken into consideration in determining the amounts of backpay due to these employees in compliance with our Order herein. ORDER5 Upon the entire record in this case, and pursuant to Section 10(c) of the Act, the National Labor Relations Board hereby orders that the Respondents and each of them, their officers, agents, successors, and assigns, shall : 1. Cease and desist from : (a) Refusing to bargain collectively with the Union as the ex- clusive bargaining representative of all their employees in the follow- ing unit, which we have found to be appropriate herein : All Respondents' warehouse and maintenance employees, includ- ing leadmen 'and warehouse clerical employees, excluding all others incldilig office and clerical employees, guards, production control employees, professional employees, and supervisors as defined in the Act. (b) Discouraging membership in the Union, or in any other labor organization of their employees, by discriminating in any manner in regard to their hire, transfer, tenure, or any term or condition of employment. (c) In any other manner interfering with, restraining, or coercing their employees in the right to self-organization, to form labor organi- zations, to join or assist the Union, or any other labor organization, to bargain collectively through representatives of their own choosing, and to engage in concerted activities for the purpose 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 membership in a labor organi- zation as authorized in Section 8(a) (3) of the Act, as amended by the Labor-Management Reporting and Disclosure 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 the Union as the exclu- sive representative of their employees in the previously described appropriate unit, with respect to hire and transfer of employees, rates of pay, wages, hours of work, and other terms and conditions of employment, and, if an understanding is reached, embody such under- standing in a signed agreement. (b) Offer immediate hire and transfer to their respective payrolls, without loss of seniority or other rights and privileges, to those em- ployees whose names appear in the appendix attached hereto, and make them whole for any loss of pay they may have suffered as a result 5 Section 2(a). (b), (c), and (d) of this Order do not apply to Edward H. McLaughlin, Sr., in his individual capacity. EDWARD H. McLAUGHLIN, ETC. 589 of the discrimination against them, in the manner set forth in the sec- tion of the Intermediate Report entitled "The Remedy," as modified above. (c) Place all persons whose names appear in the appendix other than those who are offered transfer and hire in conformity with Sec- tion 2 (b) above, on a preferential hiring list in the manner as set forth in the section entitled "The Remedy," as modified above, of the Intermediate Report. (d) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social secu- rity payment records, timecards, personnel records and reports, and all other records necessary to analyze the amounts of backpay due under the terms of this order. (e) Post at their operations in Pico Rivera and Los Angeles,' Cali- fornia, respectively, copies of the notice attached hereto marked "Appendix." Copies of said notice, to be furnished by the Regional Director for the Twenty-first Region, Los Angeles, California, shall, after being duly signed by representatives of the Respondents, be posted by the Respondents immediately upon receipt thereof, and be maintained by them for a period of 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken to insure that such notices are not altered, defaced, or covered by any other material. (f) Notify the Regional Director for the Twenty-first Region, in writing, within 10 days from the date of this Order, what steps the Respondents have taken to comply herewith. 6In 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." APPENDIX NOTICE TO ALL EMPLOYEES Pursuant to a Decision and Order of the National Labor Relations Board, and in order to effectuate the policies of the National Labor Relations Act, we hereby notify our employees that : WE WILL, upon request, bargain collectively with Warehouse, Processing & Distribution Workers' Union, Local 26, as the exclu- sive representative of all our employees in the unit described below, with respect to the hire and transfer of employees, rates of pay, wages, hours of employment, or other conditions of employ- ment, and if an understanding is reached, embody such under- standing in a signed agreement. The bargaining unit is: All our warehouse and maintenance employees, including leadmen and warehouse clerical employees, excluding all others including office 590 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and clerical employees, guards, production control employees, pro- fessional employees, and supervisors as defined in the National Labor Relations Act. WE WILL NOT, by refusing to bargain with the aforesaid labor- organization, or by discriminating in regard to hire or transfer, or any term or condition of employment, or in any other manner, interfere with, restrain, or coerce our employees in the exercise of the right to self-organization, to form labor organizations, to, join or assist the above-named Union, or any other labor organi- zation, to bargain collectively through representatives of their own choosing, and to engage in collective bargaining or other- mutual aid or protection, or to refrain from any or all such activi- ties except to the extent that such right may be affected by an agreement requiring membership in a labor organization as authorized by the National Labor Relations Act, as amended by the Labor-Management Reporting and Disclosure Act of 1959. WE WILL offer the following employees immediate transfer and hire to positions they would have occupied absent discrimination,., without prejudice to their seniority and other rights and privi- leges, and make them whole for any loss of pay they may have: suffered as a result of the discrimination against them. G. Andersen A. Craine J. Jensen C. Anderson K. Craine J. Johnson E. Anderson A. Cuadrado D. Juneman I. Andrews M. Dassero J. Keim T. Andrews J. Dicken W. Kennicutt J. Armstrong H. Dobbs J. King J. Baker R. Dobbs 0. Kreutzer H. Barclift A. Dominguez H. Lewis S. Berry R. Dowis A. Loera P. Boag A. Downey R. Lugar W. Boone R. Dunbar D. Lynch C. Brose F. Dyer R. Magness H. Brown D. Easum ' J. Martin W. Bushard R. Faith N. Martinich F. Campbell D. Farewell S. Matlack N. Cantrell J. Farrace E. Mayberry W. Carlson E. Gardner L. McCrea R. Casias G. Gettle J. McGrath P. Cassidy G. Hall E. McGuire F. Catanese L. Hamilton R. McIntyre M. Catron F. Hancock G. McKay L. Chastain R. Harding J. McNamara E. Chastine J. Hernandez R. McNamara J. Cimo L. Higginson A. Millar R. Cobb M. Hillegass A. Mitchell D. Coffin W. Hinton J. Mitchell W. Corbett A. Hoffman J. Morgan J. Coulson 0. Holte M. Muella P. Cowan P. Holte J. Mumford EDWARD H. McLAUGHLIN , ETC. 591 M. Muro R. Recob J. Stipec R. Nichols Al. Reynolds IV. Tarr S. Nielniec J. Reyon D. Thiebaud R. Nugent S. Riccio L. Thompson J. Olson M. Richards M. Thorsen R. Ostrom P. Risser Al. Tullock A. Panclc L. Robbins E. Ullinger A. Parker J. Sawaya G. Vandiver J. Phillips 0. Schaefer C. Vinski R. Phillips B. Schieler J. Watford A. Podrasky J. Scholes E. Wesling E. Polley Al. Schraeder II. Wheaton E. Prester F. Senter D. Wooden E. Prouty R. Serren E. Wooden N. Raney F. Slocum G. Wright L. Ratcliffe D. Stewart All our employees are free to become, remain, or refrain from be- coming members of the above-named Union or any other labor organi- zation, except to the extent this right may be affected by an agreement in conformity with Section 8 (a) (3) of the Act. EDWARD H. MCLAUGHLIN, Employer. Dated---------------- By------------------------------------- (Representative) (Title) MCLAUGHLIN INDUSTRIAL DISTRIBUTOR, INC., Employer. Dated---------------- By------------------------------------- (Representative ) ( Title) CONTRACT BUILDERS HARDWARE, INC., Employer. Dated---------------- By------------------------------------- (Representalive ) ( Title) UNION HAIZDWAIu & METAL COMPANY, Employer. Dated---------------- By------------------------------------- (Representative ) (Title) This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board's Regional Office, Eastern Columbia Building, 849 South Broadway, Los Angeles 14, California (Telephone Number Richmond 9.4711) if they have any question concerning this notice or compliance with its. provisions. INTERMEDIATE REPORT AND RECOMMENDED ORDER STATEMENT OF THE CASE The hearing in this proceeding in which the General Counsel of the National Labor Relations Board, herein called the Board , alleged, in substance , that the Respondents , as alter ego of or successors to Union Hardware & Metal Company, 592 DECISIONS OF NATIONAL LABOR RELATIONS BOARD violated Section 8(a)(1) and 8 (a)(5) of the National Labor Relations Act, as amended, herein called the Act, by refusing to bargain with Warehouse, Processing & Distribution Workers' Union, Local 26, herein called the Union, and in violation of Section 8(a)(1) and (3) of the Act, discriminated against a group of named employees because of their union affiliation and activities, was heard by William E. Spencer, the duly designated Trial Examiner, in Los Angeles, California, on certain dates beginning April 18, 1961, and closing April 27. In Respondents' duly filed answer the allegations of unfair labor practices were denied. All parties parti- cipated in the hearing, engaged in oral argument at the close of the evidence, and on or before June 30, 1961, filed briefs. Thereafter, on July 27 and August 29, respectively, the Charging Party filed a motion to reopen the record for the receipt of additional evidence (denied) and a motion for reconsideration of the said denial (denied). Upon the entire record in the case, my observation of the witnesses, and consid- eration of the briefs filed with me, I make the following: FINDINGS IN FACT 1. THE BUSINESS OF THE RESPONDENTS Union Hardware & Metal Company, herein called Old Union, a California cor- poration, until November 30, 1960, was engaged in the warehousing and sale of hardware and metals at wholesale at its principal office and place of business in Los Angeles, California. For the period January 1, 1960, through November 3, 1960, it shipped from its place of business directly to points outside California hard- ware items valued in excess of $50,000. McLaughlin Industrial Distributors, Inc., herein called Industrial Distributors, a California corporation incorporated October 14, 1960, since on or about January 2, 1961, has been engaged in the warehousing and sale of industrial hardware at whole- sale, at its warehouse located in Pico Rivera, California. Between November 30, 1960, and January 15, 1961, it purchased and transferred to its place of business in Pico Rivera, California, directly from points outside California, goods and materials valued at $23,293 20. Contract Builders Hardware, Inc., herein called Contract Builders, a California corporation incorporated on November 14, 1960, since on or about January 2, 1961, has been engaged in the warehousing and sale of contract builders hardware at whole- sale at its warehouse in Los Angeles, California. Between November 30, 1960, and January 15, 1961, it purchased and transferred to its place of business in Los Angeles directly from points outside California, goods and materials valued at $31,034.34. Union Hardware & Metal Company, herein called New Union, a California corpo- ration incorporated on December 21, 1960, to be engaged in the warehousing and sale of hardware to franchised dealers at wholesale, with its principal office and place of business in Pico Rivera, California, anticipates that during the period ending No- vember 30, 1961, it shall purchase and cause to be transported from States other than California to its Pico Rivera place of business, warehouse goods valued in excess of $50,000. On the basis of the foregoing stipulated facts, it is found that Old Union at all times material herein was, and Industrial Distributors, Contract Builders, and New Union are, engaged in commerce within the meaning of the Act, and that the volume of their business, considered singly or jointly, meets, or reasonably projected meets, all re- quirements of the Board's formula for asserting jurisdiction. Edward H. McLaughlin, Sr., was, until November 30, 1960, president of Old Union and chairman of its board of directors; is sole stockholder and chairman of the board of directors of Contract Builders ; a stockholder and chairman of the board of directors of Industrial Distributors; and chairman of New Union's board of directors and its sole stockholder when such stock is issued . His status as an employer engaged in commerce within the meaning of the Act is reserved for findings and conclusions below. H. THE LABOR ORGANIZATION INVOLVED Warehouse, Processing & Distribution Workers' Union, Local 26, herein called the Union, is a labor organization within the meaning of the Act. III. THE UNFAIR LABOR PRACTICES A. The refusal to bargain 1. Old Union and the Respondents On April 15, 1960, the Union, pursuant to the results of an election conducted by the Board, was certified as bargaining representative of employees of Old Union in a EDWARD H. McLAUGHLIN, ETC. 593 unit of warehouse and maintenance employees, including leadmen and warehouse clerical employees, and excluding all others including office and clerical employees, guards, production control employees, professional employees, and supervisors as defined in the Act. There is no contest of the appropriateness of the unit and the Union's certification as bargaining representative of employees therein. On about August 22, the parties executed a bargaining agreement. On about November 30, Old Union ceased its wholesale hardware business and before, or shortly thereafter, the Respondent Companies were formed. Some of Old Union's employees were employed by the Respondents, others were discharged or laid off by Old Union. The allegation that the Respondents unlawfully refused to bargain with the Union rests on the theory of the General Counsel and the Charging Party that the Respond- ents constitute the alter ego of, or are successors to, Old Union. From about 1900 to the sale of its inventory and some other assets consummated about November 30, 1960, Old Union has been owned and controlled in substantial part by members of the McLaughlin family. At times material herein this family embraced a comprehensive group of shareholders, including in-laws, nephews, nieces, cousins, etc. Edward H. McLaughlin, Sr., one of the Respondents, since 1942 has been its president and chief executive officer. It was at all times engaged in the ware- housing and sale at wholesale of hardware items and also owned all the stock of Metal Sales, Inc., a corporation engaged in the warehousing and sale of metals. Old Union conducted its business at a plant site owned by itself, consisting of real property of some 28 acres and structural improvements thereon containing some 500,000 square feet, and carried for sale at wholesale some 50,000 inventory items. The average total number of Old Union employees was some 585, but there were less than 200 employees in the bargaining unit during the period immediately preceding November 30, 1960. For a substantial period prior to November 30, there had been dissatisfaction among Old Union shareholders with the returns they were receiving on their invest- ment, talk of reducing inventories and closing out certain departments, and a receptivity shown to the sale of Old Union stock. On about August 8, John M. Morehart, a real estate operator, through an escrow arrangement, made Old Union an offer to buy all of its outstanding corporate shares.' This offer, not being affirmatively acted upon, was replaced by a new offer of Morehart Land Co, hereinafter called Morehart, with which the aforesaid John M. Moreheart was associated. This latter offer, also an escrow arrangement, was dated August 23, and was conditioned upon its acceptance by holders of 80 percent of the corporate shares of Old Union. The closing date for the deposit of acceptances by Old Union shareholders was, ultimately, September 30. This condition was met and the escrow closed on November 30. On that date, Morehart became the sole stockholder of Old Union and exercised its con- trol by the election of a new board of directors which, in turn, elected new executive officers. For reasons immediately apparent, no contention is made that Morehart is a successor to Old Union. Before the Morehart-Old Union transaction culminated with the closing of the escrow on November 30, McLaughlin, Senior, who earlier had indicated a desire to retire from the hardware business, indicated his intent to continue in this line of activity. McLaughlin, Junior, vice president of Old Union, fixed this time aF late September or early October. About the same time, as of October 1, Morehart made manifest its intent not to engage in the wholesale hardware business. This was im- mediately after the requisite number of Old Union shareholders had filed their acceptances of the Morehart offer. In this connection, it is noted that in its purchase of Old Union, Morehart did not require a covenant that the McLaughlins would refrain from engaging in a competitive business. On November 11, Morehart and Respondent McLaughlin Industrial Distributors, Inc., a California corporation, herein called Industrial Distributors, entered into an agreement whereby, conditioned upon the latter's purchasing the corporate shares of Old Union, it would cause Old Union to sell to Industrial Distributors, or its nominee, all assets of Old Union other than land, buildings, certain fixtures and equipment, the capital stock of Metal Sales, Inc., and various equipment, for a consideration payable in a named sum and assumption of all liabilities and obliga- tions of Old Union, with certain exceptions, including, as an exception, liabilities of Old Union in respect to its bargaining agreement with the Union. The agreement further provided for the transfer of Old Union's name and exclusive right to its use. 1 Morehart's wife owned some 958 shares of Old Union and her brother, Edward C. Scheller, Old Union's vice president in charge of operations and a member of its executive committee, owned the same number of shares. V A449-62-vol. 135-39 594 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Industrial Distributors had been incorporated on October 14, with the provision that its corporate stock when issued would issue in amount of 100 shares to McLaughlin, Senior, and 8,000 shares to each of 5 of his children, including McLaughlin, Junior. The shares issued to McLaughlin, Senior, constitute the sole voting stock of the corporation. McLaughlin, Senior, financed the purchase of stock by his children. Pursuant to the November 11 agreement between Morehart and Industrial Distrib- utors, and subsequent to November 30 when the transaction between Morehart and Old Union culminated, the Thompson-Diggs Company of Sacramento, as Industrial Distributors' nominee, purchased inventory items of Old Union in such categories as sporting goods, household appliances, rubber goods, electrical products, plumbing, mechanics' tools, and general hardware; Broadway Department Store purchased Old Union's inventory of toys; Respondent Contract Builders Hardware, Inc., herein called Contract Builders, purchased certain of Old Union's inventory stock of builders hardware; Respondent Industrial Distributors itself purchased certain of Old Union's inventory of industrial hardware; and certain miscellaneous assets of Old Union were sold to Republic Steel.2 The total of purchases by Industrial Distributors' nominees, other than Contract Builders, was some $1,145,000 in value. Contract Builders' purchases amounted to $128,998 in value and it also received a list of Old Union's customers of contract builders hardware. Contract Builders also purchased some $8,500 in value of Old Union's furniture, fixtures, and equipment. Industrial Dis- tributors' inventory purchases amounted to $357,793, and it also acquired some $65,000 in value of Old Union's furniture, fixtures, etc., retaining for its own use only some $18,000 thereof. Disposition of the assets of Metal Sales, Old Union's wholly owned subsidiary, was not involved in the Morehart-Industrial Distributors transaction. Mention has already been made of the incorporation of Industrial Distributors. Contract Builders, a California corporation, was incorporated November 14, 1960, and, as previously indicated, it was as a nominee of Industrial Distributors that it purchased the contract builders inventory of Old Union. Its sole stockholder is McLaughlin, Senior. Respondent Union Hardware & Metal Company, New Union herein, was incorporated December 21, and while no stock has been issued an application to issue has been filed and admittedly all stock is to be owned by McLaughlin, Senior. Also, through McLaughlin Distributors, New Union has, or is to acquire, the right to use Old Union's name and sign-the latter apparently already in use. It acquired none of the inventory of Old Union. Whereas Old Union owned the real estate and structures thereon where it con- ducted its business, the Respondents conduct their respective enterprises on leased properties geographically apart from the premises of Old Union and from each other, all in Los Angeles County, California. Since on or about January 2, 1961, Industrial Distributors and Contract Builders have been engaged in their respective enterprises, Industrial Distributors in the warehousing and sale at wholesale of industrial distributors items, Contract Builders in the warehousing and sale at whole- sale of contract builders items. New Union, not yet actively engaged in business, is to be engaged in the warehousing and sale of hardware at wholesale to franchised dealers. Of the some 50,000 inventory items handled by Old Union, only a small percentage was purchased by Industrial Distributors and its nominee, Contract Builders, and none by New Union. Of Old Union's business, there survives in Industrial Distributors and Contract Builders only two of its five principal depart- ments or lines of hardware: industrial and contract builders hardware. There is, however, a substantial survival in these two departments, though there has been some shrinkage in the total of inventory items carried in these two departments respectively by Respondents Industrial Distributors and Contract Builders and the total of such items handled by Old Union. At this juncture we can only speculate as to what extent New Union will acquire and handle an inventory with items comparable to those handled by Old Union, though it may be inferred that it will sell to franchise dealers at wholesale retail hardware items such as were not ac- quired from the inventory of Old Union by Industrial Distributors or Contract Builders. Principal lines of hardware handled by Old Union, such as sporting goods and toys, are not represented in the business of the Respondents at the present time. As of November 25, 1960, there were some 161 employees of Old Union in the bargaining unit. As of the time of the hearing the Respondents had in their employ some 28 employees who would qualify for inclusion in such an appropriate unit. 2 Admittedly, prior to the closing of the escrow on the Morehart-Old Union transaction on November 30, but after the requisite number of Old Union shareholders had filed their consent to the Morehart offer, McLaughlin, Junior, was seeking nominees of Industrial Distributors who would purchase substantial amounts of Old Union's assets. EDWARD H. McLAUGHLIN, ETC. 595 Twenty-seven of these were employed by Old Union up to the time they were carried over to the payrolls of the respective Respondents. Admittedly, the Respondents have refused to recognize the Union as bargaining representative of their employees in an appropriate unit and have refused to bargain with it. This, in general, is the situation which gave rise to the complaint's allegations of alter ego, successorship, and the refusal to bargain. The evidence, perhaps in part because of the high level of competence with which the case was litigated, argued, and briefed, each of the opposing positions having been presented skillfully and persuasively, has been slow to produce in this Trial Examiner's mind the finality of judgment that is required of him. Having reached this stage, because I must, I shall continue this discussion under the headings of continuity of management, employment, and the nature of the business, inasmuch as it is by these steps, suc- cessively, that I have reached my ultimate conclusions on the issue of successorship and the refusal to bargain. 2. Continuity of management While McLaughlin, Senior, was the largest single shareholder in Old Union, he did not, through his financial interests, control Old Union. Nor can we reasonably assume control because the balance of the stock was owned by relatives either through blood or marriage. His own block of stock when added to that owned by his son, McLaughlin, Junior, his sisters and the latter's children, came to less than 27 percent of the total issued stock, and the relationship of other stockowners was too far removed for an assumption of McLaughlin, Senior, control. As a matter of fact I infer that one of the factors prompting McLaughlin, Senior, to favor the dissolution of Old Union and the formation of the Respondent Corporations was his desire to escape the potential restraints placed on his management of Old Union by the numerous stockholding relatives and to establish himself, in legal fact as well as in practice, completely in control of the business conducted, or to be conducted, by the new corporations.3 None of this, however, negatives the fact that McLaughlin, Senior, was the active directing genius of Old Union, and while there were complaints registered by relative stockholders on what they regarded as unsatisfactory returns on their investment, there is no evidence that any of them, directly or indirectly, challenged McLaughlin's management of the concern. They may have carped and complained, as relatives often do, but they constructed no roadblocks to the Mc- Laughlin management. As president and chief executive officer of Old Union since 1942, McLaughlin effectively managed and directed its affairs, though his control was subject to challenge, whereas his potential control of the respondent corporations placed his management of those corporations beyond effective challenge. This po- tential control is based on the fact that he owns all the stock of Contract Builders; owns, or will own when issued, all voting stock of Industrial Distributors; and will own, when issued, all stock in New Union. As evidence that these holdings do not represent a silent or inactive control are the positions he holds with the respondent corporations: member of the board of directors and board chairman of Contract Builders and Industrial Distributors; chairman of New Union's board of directors and its president. His active direction of labor relations of Old Union and what may reasonably be projected as his role with the Respondents is demonstrated by his designation of Lawrence Dill, vice president, assistant secretary, and personnel manager of Old Union, to terminate the employment of Old Union employees and, concurrently as to some, to select and hire from the pool of Old Union employees, employees for the Respondent. Dill, a member of New Union's board of directors, was Industrial Distributors' personnel consultant to January 31, 1961. Closely associated with McLaughlin, Senior, in his management and control of the Respond- ent Corporations, is his son, McLaughlin, Junior, vice president of Old Union, together with his father a member of the six-man executive committee of Old Union, who serves in these capacities with the Respondent Corporations: president and treasurer of Industrial Distributors and of Contract Builders, and a member of New Union's board of directors. The continuity of top management which, in practice, has effectively controlled and directed, and will direct and control, labor relations policies, is of such sub- stantial degree that I do not propose to burden this report with a further identifica- tion of managerial personnel carried over from Old Union to the Respondent Cor- porations. It is quite true, as pointed out in Respondents' brief, that of the many ' McLaughlin, Junior, testified that his father, prior to the dissolution of Old Union, had expressed a desire to get out of the hardware business and "would not remain with the company [Old Union] If he did not have control of it. 596 DECISIONS OF NATIONAL LABOR RELATIONS BOARD stockholders of Old Union, only a few hold stock in the Respondents, but in the absence of a showing-and there was none-that they actively participated in the management of Old Union and exerted some control over its labor relations policies, this has little bearing on the issue of "successorship" as that term is used in decisions under the Act. It is an identity in managerial control in which we are primarily interested, and from the entire evidence it appears that that identity is very substantial. A continuity in managerial control and direction, while a factor in determining the issue of successorship, is not necessarily a conclusive or even an essential factor. Obviously, if McLaughlin, Senior, upon the dissolution of Old Union had launched a new business enterprise, unrelated to the old, and taken the entire managerial personnel of Old Union into the new enterprise with him, this new enterprise would not be a successor to Old Union. On the other hand, as the courts have said, "The very nature of the certification of a union as a bargaining agent for a group of employees impels the conclusion that a mere change in employers does not operate to destroy the effectiveness of the certification." N.L.R.B. v. Albert Armato and Wire & Sheet Metal Specialty Co., 199 F. 2d 800, 803 (C.A. 7). See, also, a recent Board decision where there was a complete change in ownership, F. G. McFarland, et al., d/b/a McFarland & Hullinger, 131 NLRB 745. It is only in combination with other factors that a continuity in managerial control takes on, or may take on, decisive weight. 3. Continuity of employment Old Union ceased functioning as a wholesale hardware business on or about November 30, 1960, its activities as a hardware concern thereafter being largely a matter of "cleaning up." While the closing of the Morehart escrow on November 30 marked the change in ownership, it was apparent from the closing date for the filing of acceptances of the Morehart offer that the change would be effectuated. Between November 25 and December 22, Lawrence Dill, Old Union's personnel director for some 25 years, at the direction of McLaughlin, Senior, laid off bargaining unit em- ployees of Old Union according to seniority classifications. Concurrently, again at McLaughlin's direction and while still an officer of Old Union, and on Old Union's payroll, Dill hired 18 employees for Industrial Distributors and 3 for Contract Build- ers. In February and March 1961, on direction of McLaughlin, Senior, Dill hired seven employees for New Union. All of these employees hired by Dill for the Respondent Corporations, with a single exception, were former employees of Old Union. The continuity of employment was such that they did not receive the sever- ance pay paid to Old Union employees who were discharged by Old Union and not hired by the Respondents. In the selection of personnel for the Respondents Dill exercised his own discre- tion and judgment. He went on Industrial Distributors' payroll in January 1961, but does not appear to have been employed by Contract Builders. On the basis of his testimony, I find that while there was some change in the status of some of the employ- ees he hired for the Respondent Corporations, such as a reduction in rank from lead- man to rank-and-file employee, and some variations in the duties assigned to them, the general nature of their work assignments was similar to, if not identical with, the work they performed for Old Union. Obviously, they qualified for hire by the Respondent Corporations because of their work experience as employees of Old Union, and because of that experience were qualified and able to do the work required of them by the Respondents, respectively. In short, there is no showin; that there was such a substantial change in the nature and conditions of employment under the Respondent Corporations that had they performed that work while em- ployed by Old Union they would have been removed from or would have failed to l' qualify as an appropriate unit. 4. Continuity of business We approach now what I regard as the most controversial, and perhaps the crucial, element in this case as regards successorship, and the one that has given me most pause. I approach it by way of hypothesis. Before Old Union acted on the Morehart offer, there was grumbling and dissatis- faction among its shareholders with the returns they were receiving on their invest- ment and talk of a reduction in inventories and the closing out of the toy and some other departments. There seems little doubt that had Old Union not sold out to Morehart it would have proceeded along these lines, lightening the overhead through the reduction in inventories and the closing out of the less profitable lines of hard- ware. Had it done so, drastically reducing its inventories and closing out departments EDWARD H. McLAUGHLIN, ETC. 597 until it was handling no more hardware items than are now being handled-or are expected to be handled-by the Respondent Corporations, and handling them on leased property in three separate divisions at different locations , all within a geo- graphical area practicable for bargaining on the basis of a single -employer unit, for all the said changes Old Union would have remained in the wholesale hardware busi- ness, with greatly reduced rank-and-file personnel but personnel which would con- tinue to function with substantially the same qualifications and duties previously required of it.' For example, there is no evidence that had the Respondent discon- tinued its toy, sporting , and household goods departments, and released such person- nel as were employed in those departments , it would lead us to conclude that the remaining employees would thereby have lost their identity as a homogeneous group entitled to collective bargaining through the labor organization they had chosen to represent them. I think there is little doubt that despite such drastic curtailment and reorganization of operations and their dispersal in three separate physical loca- tions, the bargaining unit would have remained substantially unaltered and bargain- ing obligations would remain fixed for at least a reasonable period after the Union's certification. The shrinkage of an appropriate unit where its identity and homoge- neity survive in substantial measure no more deprives the employees therein of their established right to collective bargaining through the labor organization they have chosen to represent them, than would the expansion of a unit where a representative nucleus of employees therein has chosen a bargaining representative .4 It does not appear to me that the situation with respect to the established right of employees in the appropriate unit to representation through the union of their choice is different where the shrinkage of the unit comes about because of a change in the identity of the employer, provided, of course, there is a substantial continuity in the nature of the enterprise. Such continuity, in my opinion, is established in the evidence. Respondents Industrial Distributors and Contract Builders acquired their initial sales merchandise from inventories of Old Union and, like Old Union, are engaged in the wholesale hardware business, Industrial Distributors in the selling of industrial hardware, Contract Builders in the selling of contract builders hardware, continuing, in effect, the business of Old Union in two of its five principal departments, and with some but not overwhelming disparity in the total of inventory items carried by Old Union in these two departments. In addition to the purchase of inventories of Old Union, Industrial Distributors obtained the accounts receivable and list of customers of Old Union, and assumed certain of its liabilities; and Contract Builders, as the nominee of Industrial Distributors, obtained a list of customers of Old Union; both purchased certain-but by no means all-furnishings and fixtures of Old Union. New Union, not yet actively engaged in selling, was assigned the use of Old Union's name and sign. Quoting from Respondent's brief: "Its business, when engaged in, will be in the limited field of the sale of hardware to such franchise dealers who are under written contract for the purchase of the majority of their needs from New Union hardware." While the franchise system will represent a departure from Old Union's methods of selling, an application of such new methods by Old Union would not have changed its essential character as a business engaged in selling hardware wholesale nor would it have affected the qualifications and duties of rank-and-file personnel to a degree that would have taken them out of the preestablished bargain- ing unit. That New Union obtained none of the inventory of Old Union has been noted but all of its employees thus far hired, with one exception, were chosen from employees of Old Union, and it is reasonable to infer from all the circumstances of its organization that as a business enterprise it will be closely allied with the other Respondent Corporations , in the scope and nature of its operations,5 and will be subject to the same overall labor and personnel direction. All of its employees thus far were hired for it by Dill, an executive officer of Old Union, at the direction of McLaughlin, Senior, and its acquisition of the use of Old Union's name and sign shows its intention to hold itself out to the public as a continuation of the business of that firm. There have already occurred some exchange, or loans, of personnel and equipment between it and Industrial Distributors. As to the physical dispersion of Respondents' operations, the total geographical area involved is such as to make bargaining on the basis of a single-employer unit 4I should think the 28 persons now employed by the Respondents constitute a repre- sentative nucleus in a warehouse unit, and these may very well be added to as to the business of the Respondents expands. The initial disparity in numbers between those employed by Old Union and the Respondents is not, I think, of such proportions as to be controlling. 5It would be hard to envisage New Union as a competitor of Industrial Distributors and Contract Builders. 598 DECISIONS OF NATIONAL LABOR RELATIONS BOARD practicable. New Union's operations are located some two blocks from Industrial Distributors' warehouse, and the location of Contract Builders is not far distant. That Old Union operated from warehouses and realty of considerable value, owned by itself, whereas the Respondents for their operations lease properties of much smaller dimensions, in my opinion, has no significant bearing on the issue - of sue- cessorship inasmuch as it has no impact on bargaining requirements , the matter in which we are here interested. I do not propose to enter here into a further detailed discussion of the financial transactions by which Morehart acquired the corporate shares of Old Union, set up its own board of directors and executive officers for Old Union , this being con- summated on November 30, 1960, whereas prior to that date, on November 11, Morehart and Respondent Industrial Distributors made an agreement by which the latter acquired certain assets of Old Union, assumed certain of its liabilities, and acquired exclusive right to the use of Old Union 's name. The operative fact in which we are here interested is that Morehart never actively engaged in the whole- sale hardware business in the sense that it constituted an intervening factor which defeats the theory of successorship running between Old Union and the Respondent Corporations .6 It is the continuity-or lack of it-of the business engaged in which primarily engages our attention. That continuity is illustrated by the November 28 letter drafted by McLaughlin, Senior, for distribution to Old Union customers , in which he announced the dissolu- tion of Old Union and the formation of Industrial Distributors and Contract Builders, and stated, inter alia: Both companies have been formed and are ready to serve you . So it is Busi- ness as Usual on industrial supplies and contract builders' hardware. These two new companies have purchased the respective inventories from the Union Hardware & Metal Company, and so there will be no interruption in service on industrial supplies and contract builders' hardware . Neither company will stock housewares, sporting goods or toys. The letter, continuing, stated that the "new Company" would continue to operate from Old Union's address until about January 1, 1961 , and would retain the same telephone number. From about November 30, the telephone switchboard respond- ing to Old Union's number answered in these words, "McLaughlin Industrial Dis- tributors, formerly Union Hardware and Metal Company, can I help you, sir?" Calling cards for representatives of Industrial Distributors and Contract Builders, printed in the Old Union shop, described , variously, the two new companies as successors of Old Union, or "formerly" Old Union. While I agree with Respondents' counsel that the issue of successorship is not to be resolved solely on the basis of conclusions found in these communications, in- asmuch as the uniformed-i.e., in the legal sense-opinions of the author or authors as to what constitutes successorship would not control , but the belief of the Re- spondents that they were carrying on the business of Old Union and their intention to do so, as expressed in these various communications , is not irrelevant, and such communications considered as transactions occurring on the premises of Old Union constitute indicia of successorship. It is of course not enough to sustain the theory of successors 'hip to show that certain inventories and assets of a defunct company have been acquired and inte- grated in the business of another company, for if this were enough the Broadway Department Store, which acquired Old Union 's inventory of toys and related goods, Republic Steel , and other established enterprises which acquired parts of Old Union inventories , would be successors to Old Union-which, obviously, they are not. The distinction is that the items acquired by these various corporations were merely integrated in much vaster preexisting inventories and formed neither the basis of a new enterprise nor the nucleus about which a new enterprise was built. Also, as to them, there are lacking such factors as continuity of managerial control and em- ployment, factors which are present, in substantial measure, here. 5. The alleged unlawful motive On the entire evidence I reject the argument and contention that the wholesale hardware business of Old Union was sold and the Respondent Corporations formed for the purpose of circumventing the obligation to bargain collectively with the 6I have also omitted from this discussion detailed reference to Metal Sales whose stock was owned by Old Union and which was engaged in the warehousing and sale of metals As a separate corporate entity it does not appear to impinge substantially , if at all, on the issue of the survival of Old Union's bargaining unit in the business of the Respondents. EDWARD H. McLAUGHLIN, ETC. 599 Union. There is some support for this contention . The Morehart offer of August 23 coincided with the execution of a bargaining agreement . Morehart's relationship through marriage with substantial shareholders in Old Union has been mentioned. We could infer that dissatisfaction in dealing with ,the Union increased Old Union's receptivity to such an offer and that Morehart through his connection was not uninformed in the matter. A more telling point is the exception made of Old Union's bargaining obligations in the assumption of Old Union's liabilities by Industrial Dis- tributors There is also the statement of McLaughlin, Junior, at a meeting which occurred between representatives of management and the Union in December, to the effect that the management of Old Union had not been very "happy" with the Union and could have gotten along without it, and that the Respondent Corporations wished to be free of the restrictions of the bargaining agreement in the hiring of personnel Finally, there is the alleged discrimination in hire by the Respondent Corporations, to be referred to in detail hereinafter. Assuming that there was such discrimination, this factor and those mentioned above demonstrate that the McLaugh- lin management was dissatisfied in its dealings with the Union and proposed, in the formation of the Respondent Corporations, to be free of any obligation to bargain with it. I am not convinced, however, that the restraint and antagonisms it felt in being required to bargain with the Union as representative of Old Union employees was a moving cause for such a drastic reorganization and realignment of Old Union's affairs as is represented in the Morehart transaction and the formation of the Re- spondent Corporations. In short, while I believe that in the formation of the Respondent Corporations McLaughlin hoped to be able to shuck off the bargaining obligations of Old Union, I do not believe that such hopes and expectations account for the sale of Old Union and the formation of the Respondents. Such unlawful motivation is not, however, an indispensable element in the proof of successorship. Indeed, a very strong case of successorship may be grounded in the "run-away shop" situation, but in all cases it is the preservation of bargaining rights in an appropriate unit which is the paramount consideration. McFarland & Hullinger, supra. 6. The Respondents as a single employer McLaughlin, Senior's, ownership and control of the Respondent Corporations is of such degree, and his representative capacity as their agent is so manifest, that it is my opinion that he is properly named as a Respondent and an Employer 7 jointly with Industrial Distributors, Contract Builders, and New Union. Successorship rests, in some degree, on a finding that the warehouse employees of the Respondents jointly constitute a unit appropriate for purposes of collective bargaining and a unit which is embraced in and defined by the appropriate unit in which the Union was certified as bargaining representative of Old Union's employees. I have found that the evidence supports such a finding. For an effective discharge of the bargain- ing obligations and because the facts warrant it, I further find that McLaughlin, Senior, Industrial Distributors, Contract Builders, and New Union constitute a single employer for purposes of collective bargaining and that their operations in commerce, considered jointly or singly, bring them within the Board's formula for asserting jurisdiction. 7. Concluding negotiations with the Union On November 21, Dill notified the Union that because of lack of work there would be a layoff of Old Union employees beginning November 25. On Novem- ber 22, McLaughlin, Senior, notified Old Union employees in writing that Old Union would cease doing business and all its employees would have their employment with Old Union terminated by the end of the year. This notification further stated that McLaughlin, Senior, had arranged to have Industrial Distributors bear the cost of severance pay for Old Union employees , but Dill testified that such severance pay was actually paid by Old Union. On November 23, in a meeting of management and union representatives, the Union received -its first official notice of-the formation of the Respondent Corporations . By letter dated December 2, the Union notified INK-Senior; 5f-its position that Respondents Industrial IUtributors and Contract Builders were bound by the Union's agreement with Old Union. There followed, in December, Tour meetings between union and management representa- tives. At the December 7 meeting,Brandlin, a son-in-law of McLaughlin , Senior, and a director and officer of Industrial Distributors , in response to the Union's position that its bargaining agreement with Old Union should continue in effect but that the Union would discuss possible amendments applicable to changed conditions, said P The Act's definition of "employer" includes " any person acting as an agent of an employer, directly or indirectly." Section 2(2). 600 DECISIONS OF NATIONAL LABOR RELATIONS BOARD that he would recommend that further negotiations be held. At a second meeting on December 12, Emil Steck, an attorney representing the Respondents, told the union representative that a new contract might be considered provided there were extensive modifications of the Old Union agreement. The Union indicated its willingness to negotiate. At a subsequent meeting, December 19, Steck advised the Union that the Respondents might be willing to enter into an agreement in which the Respondents would continue a bargaining relationship with the Union, and there was discussion concerning the application of seniority in selecting personnel for the Respondents. In addition to management representatives previously men- tioned, these meetings were attended by McLaughlin, Junior. On December 20, Re- spondents' attorney of record in this proceeding, Felix H. McGinnis, informed the Union that Steck no longer represented the Respondents and that he would meet with union representatives. At a meeting held that afternoon, McGinnis informed the Union of the Respondents' presents position that they did not succeed to Old Union's bargaining obligations, and negotiations were accordingly broken off. Respondents' refusal to bargain with the Union not being contested, no further com- ment is required at this point. 8. Conclusions on the refusal to bargain On the basis of a combination of the three factors discussed above-continuity of management, continuity of employment, and continuity of the business engaged in- I have concluded that the evidence, considered as a whole, establishes that the Re- spondents constitute a successor to Old Union, within the meaning of the decisions under the Act. It is the extinction or survival of the bargaining unit that is given decisional emphasis, and for that reason I have not found it necessary to discuss the alter ego theory or to make findings on it. In N.L.R.B. v. Alamo White Truck Service, Inc., 273 F. 2d 238, 242 (C.A. 5), the court reversed the Board in its con- clusion of successorship, not for failure of proof of an alter ego relationship or because there had been a change in ownership, but because as the court viewed the evidence, there was a complete change in the interaction of the employee group and the management of the alleged successor. "We mean also," the court said, "that, although generally a fluctuation in personnel may be immaterial, here the particular workers employed by Alamo as a group had little in common with the group em- ployed by White, particularly in regard to unionism." The Board's recent decision in Diamond National Corporation, 133 NLRB 268, appears to me to be based some- what on the same rationale: in both cases the authorities appear to have been con- vinced that there were too many fluctuations in the employer-employee relationship for a presumption of continuing union representation. Here there is no showing that Respondents' employees voted for union representation or are affiliated with the Union, and no showing to the contrary. The fact remains that the Union was their duly certified bargaining representative at the time they were transferred from the payroll of Old Union to the payrolls, respectively, of the Respondents, and there- fore it cannot be said that they had "little in common" with Old Union employees "in regard to unionism." In short, the basis for a presumption of continuing union representation appears to me to be present here.8 My conclusion, then, is that the Respondents in their refusal to bargain with the Union as representative of their employees in an appropriate unit violated Section 8(a)(5) of the Act, and, derivatively, Section 8(a)(1) of the Act. B. Discrimination Of the total of some 161 employees in Old Union's bargaining unit as of Novem- ber 25, Dill, acting on instruction of McLaughlin, Senior, laid off or discharged some 134. Dill, again acting on instructions of McLaughlin, Senior, transferred to Re- spondents' payrolls or employed by and for the Respondents, the remaining 27. Leaving out of consideration the 27 employed for the Respondents, Dill adhered to the bargaining agreement in terminating the employment of Old Union employees With respect to the 27, the bargaining agreement was ignored and negotiations with the Union refused 9 It having been found that the Respondents were and are suc- cessors to Old Union, it follows the said action by the Respondents constituted a re- 8 Obviously, if the allegation of discrimination in hire is sustained, the case for a con- tinuing union representation relationship is fortified, but I have not relied on that aspect of the case in making these present findings. D Respondents' argument that the Union was required to follow the grievance procedure of its agreement with Old Union before it could initiate this cause before the Board and the courts is without merit. It could not prosecute its grievance procedure with Old EDWARD H. McLAUGHLIN, ETC. 601 fusal to bargain and a violation of Section 8(a)(5) of the Act. Whether the Re- spondents' action in refusing to apply the provisions of the bargaining agreement with respect to the transfer and hire of Old Union employees be regarded as an act of discrimination as well as a refusal to bargain is immaterial insofar as a remedial order is required, for in either posture of the issue the only remedy likely to effectu- ate the policies of the Act would be the restoration of the status quo. Coming to the second phase of the issue of discrimination , the allegation is that Dill, acting for the Respondents , in selecting Old Union personnel for transfer or hire, made his selections entirely outside that group of Old Union employees known to him to have signed checkoff authorizations , thereby discriminating against them. The bargaining agreement provided for a checkoff of dues only where the employee had signed an authorization for such checkoff . Of the 161 Old Union employees in the bargaining unit as of November 25, 104 had signed authorizations . Checkoff authori- zations were kept on file in Old Union's payroll department. There is no question that Dill, who represented Old Union in the administration of the collective agree- ment, including the checkoff provision, had access to the checkoff authorizations, and had knowledge of the identity of the persons signing them. Of the some 27 Old Union employees he selected for hire by the Respondents , not one had signed a checkoff authorization. As remarked in the General Counsel 's brief, where there was a ratio of approximately 5:3 as between Old Union employees who had signed, and who had not signed checkoff authorizations , the ratio among persons hired for the Respondents by Dill was 0:28. The Respondents' argument at this point is that there is no showing that Old Union employees selected by Dill for employment by the Respondents were not also mem- bers of the Union, and for lack of such a showing there can be no finding or dis- crimination. It is, of course, perfectly true that Dill would have no exact knowledge concerning the union affiliation or lack of it of persons not signing checkoff authori- zations. But as between a group of employees who had signed authorizations for a checkoff of their union dues and a group who had not signed such authorizations and whose dues, accordingly , were not checked off, what would a man of reasonable intelligence and sagacity infer as to the probability of union affiliation as between the one group and the other? And if an employer wished to free itself of the restraint of having to bargain with a union, as this employer undoubtedly did, and had a choice of recruiting its personnel from a group divided between those who had signed authorizations and those who had not, can there be any question where its choice would fall? I also think Respondents' able counsel has overlooked or mini- mized the importance of the fact that the signing of checkoff authorizations is a form of union activity, just as much protected against discriminatory action as any other form of union activity and discrimination practiced against a group of employees because of their union affiliations as evidence by the signing of checkoff authori- zations, discourages union affiliation , as would any action which would have the reasonable effect of intimidating employees in an open display of their union affili- ation and forcing them into secret and clandestine exercise of their membership privileges. In short, I find that if Dill, in his selection of Old Union employees for transfer to the payroll of the Respondents , discriminated against those who had signed checkoff authorizations, the Respondents thereby violated Section 8(a)(1) and (3) of the Act. Dill's own testimony is that he made his selections on the basis of such factors as the employee's demonstrated ability to perform work, the adaptability for pro- motion, health, and general knowledge of all Old Union employees acquired over a period of approximately 25 years during which he had hired most of the persons in the bargaining unit, had observed them, helped train them, transfer, and promote them. His testimony, of a general nature, did not include a detailed comparison be- tween those persons he selected for hire by the Respondents and those in equivalent classifications in the checkoff group, or an explanation of why none of the employees in the checkoff group measured up to the required qualifications, and in view of the stipulation that with a single exception all Old Union employees in the bargaining unit "reasonably performed the duties of the job in which they were employed by Old Union," I can find nothing in his testimony-unless it be accepted as a matter of credibility-to offset all reasonable inferences flowing from his failure to hire a single employee from the checkoff group. He was a generally agreeable and cooperative witness but I cannot accord him that degree of credibility. Respondents' attorney would explain away some of the disparity between the checkoff and noncheckoff group by subtracting from both groups all female employees Union out of business and the Respondents denying successorship or that the agreement had any application to their respective enterprises 602 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of Old Union, 34 in number. Dill testified that the Respondents, in conformity with prevailing policies of other companies in the area, adopted a policy against the em- ployment of women in their warehouses, taking into consideration also such factors as weight lifting, periodic illnesses, overtime requirements, lack of qualification for promotion, and general discontent with working conditions. Aside from the fact that such a policy would constitute a bargainable matter, and the Respondents having succeeded to the bargaining obligations of Old Union could not lawfully insitute such a policy unilaterally, the subtraction of these 34 and others among Old Union em- ployees for whom there was no equivalent employment with the Respondents would not decimate the checkoff group or so revise the ratio as to provide a persuasive explanation why it was passed over in toto in the selection of personnel for the Respondents.10 Upon the entire evidence I find that the Respondents , in their hire or transfer of Old Union employees in the bargaining unit to their respective payrolls, discriminated against employees who had signed checkoff authorizations as a group, thereby dis- couraging affiliation in the Union in violation of Section 8(a)(3) of the Act, and interfering with, restraining, and coercing employees in violation of Section 8(a) (1) of the Act. This conclusion is made in conjunction with, but also independently of, findings and conclusions on the issue of successorship and the refusal to bargain and is meant to stand as a conclusion of discrimination in hire regardless of the ultimate disposition of the aforesaid issues. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICE UPON COMMERCE The activities of the Respondents set forth in section III, above, occurring in con- nection with the operations of the Respondents described in section I, above, have a close, intimate, and substantial relation to trade, traffic, and commerce among the several States, and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY It has been found that the Respondents, in violation of the Act, refused to bargain with the Union as representative of their employees in an appropriate unit, and dis- criminated against a group of employees because of their union affiliation and activities. To remedy the refusal to bargain and to effectuate the policies of the Act, it will be recommended that the Respondents, upon request, bargain with the Union as representative of their employees in the unit in which the Union was certified as such representative, on all proposals which raise bargainable issues, including proposals relating to standards to be observed by the Respondents in the transfer to their respective payrolls of Old Union employees, and, if an understanding is reached, embody such understanding in a signed agreement. A strict restoration of the status quo in collective bargaining would require that the Respondents rescind and vacate all transfers of Old Union employees thus far effectuated, but because of the probable impact that such action would have on Respondents' operations, instead it will be recommended that the said rescinding and vacating of transfers be effec- tuated as provided below. To remedy the discrimination and thereby to effectuate the policies of the Act, it will be recommended that the Respondents offer immediate transfer and hire, without ,prejudice to their seniority and other rights and privileges, to all Old Union employees discriminated against because of union affiliation and activities, or in violation of the the bargaining agreement's provisions on the hire and transfer of employees or such modifications of that agreement as shall be agreed upon in collective bargaining with the Union, discharging where necessary employees previously hired or transferred to their payrolls, respectively, and make them whole for any loss of pay suffered because of the discrimination against them, by payment to them of a sum of money equal to that which they would have been paid in Respondents' employ from the date that, absent discrimination, they would have been transferred to Respondents' payrolls, respectively, to the date of Respondents' offer of hire or transfer, less their net earnings, if any, during such period Loss of pay shall be computed upon a quarterly basis in the manner established by the Board in F. W. Woolworth Com- pany, 90 NLRB 289. "Respondents' argument that no discrimination against the checkoff group was shown because none of them applied for employment with the Resnondent merits but scant atten- tion. None in the noncheckoff group applied, either, but 27 of them were hired The dis- criminatorv element lies in Respondents' restriction of the employment offer to the non- checkoff group. EDWARD H. McLAUGHLIN, ETC. 603 It will further be recommended that the Respondents place all employees whose names appear on the appendix attached hereto, who are not offered transfer and hire as provided above, on a preferential hiring list in accordance with their seniority and other provisions of the bargaining agreement relating to the hire and transfer of employees." The combination of factors upon which the findings of violations are based is of such character and scope that it is believed that a remedy coextensive with the threat of future violations requires a broad cease-and-desist order, and, accordingly, such an order will be recommended. 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 Union is a labor organization with the meaning of iSection 2(5) of the Act. 2. The Respondents jointly constitute, and each is, an employer within the meaning of Section 2(2) of the Act. 3. Old Union at all times material prior to November 30, 1960, was an employer within the meaning of Section 2(2) of the Act. 4. All Respondents' warehouse and maintenance employees, including leadmen and warehouse clerical employees, excluding all others including office and clerical employees, guards, production control employees, professional employees, and super- visors as defined in the Act, constituted and now constitute a unit appropriate for purposes of collective bargaining within the meaning of Section 9(b) of the Act. 5. The Union was on April 15, 1960, and through November 30, 1960, the exclu- tive representative of all employees of Old Union in the aforesaid appropriate unit, and at all times material since has been and is the exclusive representative of all employees of the Respondents in the aforesaid appropriate unit, for the purposes of collective bargaining within the meaning of Section 9(a) of the Act. 6. By refusing on and at all times since December 20, 1960, to bargain collectively with the Union as exclusive representative in the aforesaid appropriate unit, the Respondents have engaged in and are engaging in unfair labor practices within the meaning of Section 8(a) (5) of the Act. 7. By discriminating in the hire and tenure of employment against the group of employees named in the Appendix attached hereto, thereby discouraging membership in a labor organization, the Respondents have engaged in and are engaging in unfair labor practices within the meaning of Section 8 (a) (3) of the Act. 8. By the said acts of discrimination and refusal to bargain, the Respondents have interfered with, restrained, and coerced their employees in the exercise of rights guaranteed them in Section 7 of the Act, and thereby have engaged in and are engag- ing in unfair labor practices within the meaning of Section 8(a)(1) of the Act. 9. The aforesaid unfair labor practices are unfair labor practices affecting com- merce within the meaning of Section 2(6) and (7) of the Act. [Recommendations omitted from publication.] 11 The Respondents have argued at some length that Inasmuch as they have thus far ,tired only some 28 employees In the warehouse unit, they cannot be held to have dis- criminated against some 134 employees To the contrary, the act of discrimination had its impact on the rights of all 134 employees to be considered for employment irrespective of their union or nonunion affiliation, and to have their seniority and other rights under the bargaining agreement given effect As to which of the 134 employees have been dis- criminatorily denied employment by the Respondents thus far, It is the duty of the employer to "disentangle the consequences" of its discriminatory actions-a principle long established In Board and court decisions in the devising of appropriate remedies in like situations. APPENDIX G. Andersen P. Boag P. Cassidy J. Coulson C. Anderson W. Boone F. Catanese P. Cowan E. Anderson C. Brose M. Catron A. Craine 1. Andrews H. Brown L. Chastain K. Craine T. Andrews W. Bushard E. Chastine A. Cuadrado J. Armstrong F. Campbell J. Cimo M. Dassero J. Baker N. Cantrell R. Cobb J. Dicken H. Barclift W. Carlson D. Coffin H. Dobbs S. Berry R. Casias W. Corbett R. Dobbs 604 DECISIONS OF NATIONAL LABOR RELATIONS BOARD A. Dominguez J. Keim J. Mumford 0. Schaefer R. Dowis W. Kennicutt M. Muro B. Schieler A. Downey J. King R. Nichols J. Scholes R. Dunbar 0. Kreutzer S. Niemiec M. Schraeder F. Dyer H. Lewis R. Nugent F. Senter D. Easum A. Loera J. Olson R. Serren R. Faith R. Lugar R. Ostrom F. Slocum D. Farewell D. Lynch A. Pancic D. Stewart J. Farrace R. Magness A. Parker J. Stipec E. Gardner J. Martin J. Phillips W. Tarr G. Gettle N. Martinich R. Phillips D. Thiebaud G. Hall S. Matlack A. Podrasky L. Thompson L. Hamilton E. Mayberry E. Polley M. Thorsen F. Hancock L. McCrea E. Prester M. Tullock R. Harding J. McGrath E. Prouty E. Ullinger J. Hernandez E. McGuire N. Raney G. Vandiver L. Higginson R. McIntyre L. Ratcliffe C. Vinski M. Hillegass G. McKay R. Recob J. Watford W. Hinton J. McNamara M. Reynolds E. Wesling A. Hoffman R. McNamara J. Reyon H. Wheaton 0. Holte A. Millar S. Riccio D. Wooden P. Holte A. Mitchell M. Richards E. Wooden J. Jensen J. Mitchell P. Risser G. Wright J. Johnson J. Morgan L. Robbins D. Juneman M. Muella J. Sawaya Interurban Gas Corporation and Donald Gillingham. Case No. 7-CA-3202. January 29, 1962 DECISION AND ORDER On November 7, 1961, Trial Examiner Ramey Donovan issued his Intermediate Report herein, finding that the Respondent had engaged in and was engaging in certain unfair labor practices violative of Sec- tion 8 (a) (3) and (1) of the Act and recommending that it cease and desist therefrom and take affirmative action, as set forth in the Inter- mediate Report attached hereto. Thereafter, the Respondent filed exceptions to the Intermediate Report. 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 Trial Examiner's rulings and finds that no prejudicial error was committed. The rulings are affirmed. The Board has considered the Intermediate Report, the exceptions, and the entire record in the case, and hereby adopts the findings, con- clusions, and recommendations of the Trial Examiner. ORDER The Board adopts the Recommendations of the Trial Examiner with the modification that provision 2(d) read: "Notify the Regional Director for the Seventh Region, in writing, within 10 days from the 135 NLRB No. 67.