Savoy Laundry, Inc.

306 DECISIONS OF NATIONAL LABOR RELATIONS BOARD APPENDIX NOTICE TO ALL EMPLOYEES Pursuant to the Recommendations of a Trial Examiner 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, if requested to do so by Local 223, of the International Ladies' Garment Workers' Union, sign and execute forthwith a collective-bargaining contract with Local 223 incorporating the terms of our previous agreement. If no such request is made, WE WILL, upon request,, bargain collectively with Local 223 of the International Ladies' Garment Workers' Union, as the exclusive representative of our employees in the following appropriate unit with respect to rates of pay, wages, hours of employment, and other terms and conditions of employment, and, if an agreement is reached, embody such agreement in a signed contract. The appropriate unit is: All production employees at the Waterbury plant, exclusive of office clerical employees, maintenance employees, professional employees, ship- ping employees, order pickers, factory clerical employees, guards, and all supervisors as defined in Section 2(11) of the Act. WE WILL NOT by refusing to bargain with the collective-bargaining repre- sentative of, our employees, by repudiating agreements reached in collective bargaining, or by refusing to sign or execute collective-bargaining contracts on which agreement has been reached, by engaging in threats of reprisal in em- ployment, or threats to close or to move the plant, or promises of benefit, or by making unilateral changes in employment conditions without consulting the collective-bargaining representative, or in any other manner interfere with', restrain, or coerce our employees in the exercise of their right to self-organization, to form labor organizations, to join or assist Local 223 of the International Ladies' Garment Workers' Union, 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 as guaranteed in Section 7 of the Act, or to refrain from any and all such activities. All our employees are free to become or remain, or to refrain from becoming or remaining, members of Local 223 of the International Ladies' Garment Workers' Union, or any labor organization of their own choice, or to designate such labor organization. as their collective-bargaining representative. WATERTOWN UNDERGARMENT CORPORATION, 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. Savoy Laundry, Inc. and Food, Beverage and Express Drivers Local Union No. 145, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Case No. 2-CA-8082. May 24, 1962 DECISION AND ORDER On February 7, 1962, Trial Examiner Ramey Donovan issued his Intermediate Report in the above-entitled proceeding, finding that the Respondent had engaged in and is engaging in certain unfair labor practices and recommending that it cease and desist therefrom and 137 NLRB No. 21. , SAVOY LAUNDRY, INC, 307 take certain affirmative action, as set forth in the Intermediate Report attached hereto. 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 [Chairman McCulloch and Members 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 Intermedi- ate Report, the exceptions and the briefs, and the entire record in the case, and hereby adopts the findings,' conclusions, and recommenda- tions of the Trial Examiner with the following modifications. 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 the Respondent, Savoy Laundry, Inc., Stratford, Connecticut, its officers, agents, successors, and assigns, shall : 1. Cease and desist from : (a) Discouraging membership in Food, Beverage and Express Drivers Local Union No. 145, International Brotherhood of Team- sters, Chauffeurs, Warehousemen and Helpers of America, or in any other labor organziation of its employees, by discharging or in any other manner discriminating in regard to their hire or tenure of em- ployment or any term or condition of employment. (b) Granting wage increases to its employees in order to under- mine the Union's authority and the rights of the employees to bar- gain through an exclusive bargaining agent. (c) Refusing to bargain collectively with the above-mentioned Union as the exclusive representative of all the employees in the fol- lowing appropriate unit : All production and maintenance employees at Respondent's Strat- ford, Connecticut, plant, excluding office clerical employees, profes- (a) We find merit in the exception of the General Counsel to the finding of the Trial Examiner that 21 employees were discharged . The record shows that the complaint was amended at the hearing to include the name of Alice Robinson and to allege that 22 em- ployees were discriminatorily discharged As the Trial Examiner has found that the Respondent terminated the employees named in the complaint , and his failure to include the name of Alice Robinson is an inadvertent omission , we shall include the name of Alice, Robinson in our Order. (b) Also, the General Counsel excepted to the Trial Examiner's failure to indicate one the chart in the Intermediate Report that Agnes Fields signed a union card , was on strike„ and was discharged We correct the omission (c) The General Counsel excepted to the Trial Examiner's failure to include in the Recommended Order any requirement that Respondent cease and desist from granting uni- lateral wage increases . As the record supports a finding that the Respondent violated Section 8 ( a) (5) of the Act by granting unilateral wage increases , we so find and shall include an appropriate cease-and-desist order 308 DECISIONS OF NATIONAL LABOR RELATIONS BOARD sional employees, watchmen, guards , drivers, and supervisors as de- fined in the Act. (d) In any other manner interfering with, restraining , or coercing its employees in the exercise of the right of self-organization , to form labor organizations, to bargain collectively through representatives of their own choosing, and to engage in any other concerted activities for the purpose of collective bargaining or other mutual aid or pro- tection, or to refrain from any and all such activities , except as author- ized in Section 8(a) (3) of the Act. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Take reasonable and businesslike steps to resume its wholesale shirt operations on a scale comparable or equivalent to such opera- tions as conducted by Respondent in the period prior to February 20, 1961. (b) Offer reinstatement to their former or substantially equivalent jobs, as available , to the following employees: Lucille Wright Margaret Simpson Hattie Dawson Easter Mae Byrd Elaine Anderson Alice Robinson Jessie Banks Hattie Moore Agnes Fields Nazie Ree Bobo Lola Sanders Lola Rodriguez Eliza Wright Anna Barnes Betty Lou Thigpen Sherry Tutt Sarah Fernandes and make them whole for any loss of pay suffered by reason of the discrimination against them , from the date of their discharge on February 23 or 24, 1961 , to the date of the offer of reinstatement or until such time as each secures, or did secure, substantially equivalent employment with another employer , less any intermediate earnings. (c) Create a preferential hiring list containing the names of any employees above-named for whom there are not sufficient job openings and, as job openings occur thereafter , offer reinstatement to said em- ployees to their former or substantially equivalent jobs. The Re- spondent shall notify the Union and the listed employees of the establishment of such list. (d) Make whole Bertha Jones, Rosetta Madison, Elsie Rucker, Dorothy Teasley, and Ethel Whitley for any loss of pay suffered by reason of the discrimination against them , from the date of their discharge on February 23 or 24, 1961 , to the date of their reinstate- ment, less any intermediate earnings. (e) Bargain collectively, upon request, with Food, Beverage and Express Drivers Local Union No. 145, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, as exclusive bargaining representative of its employees, and, if under- SAVOY LAUNDRY, INC. 309 standing be reached, embody such understanding in a signed agreement. (f) Preserve and, upon request, make available to the Board and its agents, for examination and copying, all payroll records, social se- curity payment records, timecards, personnel records and reports, and all other records necessary to determine the amounts of backpay due under the terms of this Order. (g) Post at its Stratford, Connecticut, plant, copies of the notice attached hereto marked "Appendix." 2 Copies of said notice, to be furnished by the Regional Director for the Second Region, shall, after being duly signed by Respondent's representative, be posted immediately upon receipt thereof, and be maintained by it for 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 said notices are not altered, defaced, or covered by any other material. Mail copies of said notices, signed by Respondent's representative, immediately upon receipt thereof to the Union and to each of the listed employees. (h) Notify the Regional Director for the Second Region, in writ- ing, within 10 days from the date of this Order, what steps the Respondent has taken to comply herewith. IT IS FURTHER ORDERED that the Board reserves to itself the right to modify the backpay and reinstatement provisions of this Order, if made necessary by circumstances not now apparent. 2 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 voids "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 NOT discourage membership in Food, Beverage and Express Drivers Local Union No. 145, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of Amer- ica, or in any other labor organization of our employees, by dis- charging or discriminating against them in regard to their hire and tenure of employment. WE WILL NOT grant unilateral changes in wages of our employ- ees without consulating and bargaining in advance with the fore- going labor organization. WE WILL NOT in any other manner interfere with, restrain, or co- erce our employees in the exercise of the right of self-organization, 310 DECISIONS OF NATIONAL LABOR RELATIONS BOARD to form labor organizations, to join or assist the above-named Union, or any other labor organization, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection as guaranteed in Section 7 of the Act, or to refrain from any and all such activities, except as authorized in Section 8(a) (3) of the Act. WE WILL take reasonable and businesslike steps to resume our wholesale shirt operations on a scale equivalent or comparable to such operation prior to February 20, 1961. WE WILL offer reinstatement to their former or equivalent jobs as available to the following employees : Lucille Wright Sarah Fernandes Agnes Fields Margaret Simpson Hattie Dawson Sherry Tuft Elaine Anderson Easter Mae Byrd Jessie Banks Hattie Moore Alice Robinson Nazie Ree Bobo Lola Sanders Lola Rodriguez Eliza Wright Anna Barnes Betty Lou Thigpen WE WILL create a preferential hiring list containing the names of any employees aforenamed for whom there are not sufficient job openings and as job openings occur we will offer reinstatement to these employees to their former or substantially equivalent jobs. WE WILL make whole the above-named employees for any loss of pay from the date of their discharge on February 23 or 24, 1961, to the date of the offer of reinstatement, less any intermedi- ate earnings. WE WILL make whole the following named employees for any loss of pay from the date of their discharge on February 23 or 24, 1961, to the date of their reinstatement, less any intermediate earnings: Bertha Jones Dorothy Teasley Rosetta Madison Ethel Whitley Elsie Rucker WE WILL make whole for any loss of pay any employee named in the fourth preceding paragraph, above, for whom no job openings are available that are the same or substantially equivalent to their former jobs and who have not been offered reinstatement, by paying her a sum of money equal to the amount she would nor- mally have earned as wages from the date of her discharge on February 23 or 24, 1961, until such time as she secures, or did secure, substantially equivalent employment with another em- ployer, less any intermediate earnings. SAVOY LAUNDRY, INC. 311 WE WILL bargain, upon request, with Food, Beverage and Ex- press Drivers Local Union No. 145, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, with respect to the unit consisting of all production and main- tenance employees at our Stratford, Connecticut, plant, excluding office clerical employees, professional employees, watchmen, guards, supervisors, and drivers. SAVOY LAUNDRY, INC., 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, 745 Fifth Avenue, New York, New York, Telephone Number PLaza 1-5500, if they have any question concerning this notice or com- pliance with its provisions. INTERMEDIATE REPORT STATEMENT OF THE CASE Upon a charge filed on August 4, 1961, by Food, Beverage and Express Drivers Local Union No. 145, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America , herein called the Union, and upon a complaint issued by the General Counsel of the National Labor Relations Board on September 29, 1961, a hearing was held before Ramey Donovan the duly designated Trial Examiner, at Stratford, Connecticut, on November 8, 15, 16, and 17, 1961. All parties were represented at the hearing. The complaint alleges that all production and maintenance employees of Respond- ent, employed at its Woodend Road plant in Stratford , Connecticut , exclusive of office clerical employees , professional employees , watchmen , guards, and super- visors, constitute an appropriate bargaining unit and that since January 27, 1961, a majority of employees in said unit have been represented by the Union as their exclusive bargaining agent. It is alleged that after recognizing the Union as the exclusive bargaining agent of its employees Respondent shut down and discontinued its wholesale shirt laundry operations without prior notice to the Union and termi- nated 22 named employees, 5 of whom Respondent subsequently reinstated. The terminations and refusals to reinstate are alleged to be attributable to the employees' union activities. Further allegations are that on described dates Respondent uni- laterally changed wage rates of various employees in the unit without notice to the Union. The alleged purpose of the aforedescribed discharges, failure to reinstate, and unilateral changes in wages was to undermine the Union and to destroy its majority status Respondent's conduct is alleged to be violative of Section 8(a)(1), (3),and (5) of the Act. In its answer Respondent denied the aforedescribed allegations in the complaint. Both the General Counsel and the Respondent filed briefs with the Trial Ex- aminer and these have been carefully considered. Upon the entire record, and from my observation of the witnesses , I hereby make the following: FINDINGS OF FACT AND LEGAL CONCLUSIONS 7. THE BUSINESS OF THE RESPONDENT At all relevant and material times Respondent has maintained its principal office and place of business at Woodend Road in Stratford, Connecticut, where it is en- gaged in performing wholesale, retail , and related laundry services. Both in the year 1960 and in the year 1961 Respondent, in the course of its business, purchased and caused to be transported and delivered to its plant, uni- 312 DECISIONS OF NATIONAL LABOR RELATIONS BOARD forms, linens, and other goods and materials valued in excess of $50,000 of which goods and materials valued in excess of $50,000 were transported and delivered to its plant in interstate commerce directly from States of the United States other than the State in which it is located, and were transported and delivered to it, and received from other enterprises, including inter alia Buckley Bros., located in the State of Connecticut, each of which other enterprises had received the said goods and materials in interstate commerce directly from States of the United States other than Connecticut. Respondent is and has been at all times material herein an employer engaged in commerce within the meaning of the Act. H. THE LABOR ORGANIZATION The Union, aforedescribed, is a labor organization within the meaning of Section 2 (5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES The Facts 1. Savoy's operations Savoy is a family corporation whose sole stockholders and officers are the brothers Stephen, Rudolph, Orlando and Frank Vazzano. The Vazzano brothers and their father, Joseph, constitute the board of directors. Savoy's operation is housed in a one-story building owned by the Vazzano brothers operating as the Vazzano Realty Corporation. The record indicates that Savoy has been in business at least 20 years and, in the period prior to February 20, 1961, Savoy rendered three types of services. These were: a retail household service that involved house-to-house pickup and delivery of household laundry, including shirts, underwear, and other family laundry that Savoy washed and finished as required; there was also a wholesale shirt service whereby Savoy picked up shirts from drycleaning establishments and hand laundries, such as Chinese laundries, and washed and finished the shirts for these wholesale customers. A few of these wholesale shirt accounts were independent laundry routemen who had their own customers and who had their shirt work performed by Savoy. Another type of work engaged in by Savoy was a linen supply service wherein Savoy supplied sheets, towels, aprons, shirts, and work uniforms to restau- rants, hotels, motels, beauty parlors, barbershops, and factories, delivering the clean items of apparel, and picking up soiled items and laundering and finishing the same. Generally, Savoy owned the articles furnished to its linen service customers but in some instance the customers owned the articles which Savoy laundered for them. The Vazzano brothers, aforedescribed, actively manage the entire Savoy operation. Although one brother may assist in any aspect of the plant operation as the need may arise, they generally supervise the following types of activities: Stephen manages the office (located on the premises) and the paper work entailed in the business and he also functions as a salesman for new accounts; Rudolph testified that he supervises the production operation, including the receiving room, where all articles coming to the plant are received; the washroom, where all articles handled by Savoy are washed; flat work (e.g, sheets); shirt pressing, wrapping, and sorting; he also super- vises wholesale drivers and retail household drivers; the principal type of produc- tion work that Rudolph supervises relates to shirts; Orlando is also engaged in the supervision of production as a cosupervisor or assistant to Rudolph; Frank Vazzano, assisted by a driver supervisor, supervises and directs the linen supply drivers as well as inventory and routing. Without describing in detail the actual production work at Savoy it can be said that the various work that comes to the plant is received in the receiving room and is sorted, marked, and recorded by employees; the laundry is placed in receptacles and is taken to the section of the plant known as the washroom where there are four washing machines; the laundry is loaded in a washing machine according to weight, there being no specialization of washing machines as to what is washed therein, i.e., there is no machine that washes only household retail shirts as distinguished from any other type of laundry; after the laundry is washed it is placed in other machines that damp dry it and thereafter it is sorted and assembled for further processing; all shirts are pressed on four pressing machine units which. prior to February 20, 1961, were operated by two three-girl teams of "shirt pressers" and two four-girl teams of "shirt pressers"; wearing apparel, such as underwear and related articles, is pressed on a pressing machine operated by a "presser"; flat work is ironed on large flat work SAVOY LAUNDRY, INC. 313 ironers, also known as mangles; uniforms are pressed on pressers operated by two "coat pressers"; following the various aforedescribed finishing operations, the articles are wrapped or packaged and are ultimately delivered to customers by Savoy's drivers in Savoy trucks. 2. Union organizing On January 25, 1961, Margaret Simpson, a shirt presser employee of Savoy, contacted Cleary, secretary-treasurer of the Union, and asked about joining the Union On January 27 and 28, a total of 27 employees came to the union office and signed union authorization cards. One more employee signed a card on February 2, 1961. The morning of January 30, 1961, Byrd, a shirt presser employed by Savoy for many years, reported for work about 8 a.m. which was approximately 1 hour later than her regular starting time. Over the years Byrd's record for tardiness had been bad and when she came in late on January 30, Orlando Vazzano told her that she was discharged for coming in late.' Stephen Vazzano concurred in the discharge. When the other girls saw Byrd crying as she came through the plant to pick up her work clothes they asked her what had happened. Byrd said she had been discharged for coming in late. Considerable commotion ensued among the female employees and many of them stopped working as they gathered around Byrd, or Orlando and Stephen Vazzano. One or both of the Vazzanos told the girls to go back to work or to get out of the plant. When one girl suggested to Stephen Vazzano that the girls would resume work if he put Byrd back to work, he spoke to Byrd and endeavored to have her return to work. She refused to do so. Stephen again told the girls to go back to work. He stated that he had gone along with a union before but that he was not going along with it this time.2 Addressing Hattie Moore, one of the shirt pressers, he told her that she in particular had complained in the past about having union dues deducted from her pay but Moore denied that this was so. Within about 10 or 15 minutes in the period shortly after 8 a.m., substantially all the employees who had signed union cards and who had stopped work left the plant and stood outside. Either on that day or the following morning the plant was picketed by employees who had been involved in the incidents of January 30 described hereinabove.3 Having been notified by the employees of the occurrences on January 30, Cleary and Heanue, a business representative of the Union, came to the Savoy plant on January 30 They went to the office, identified themselves and a conversation be- tween Cleary and Stephen Vazzano then ensued Although not in exact agreement as to everything that was said, the three participants above referred to did not vary substantially in their versions of what occurred. I find that Cleary said he repre- sented a majority of the employees and had authorization cards signed by them. He said in substance that he would like to discuss what had occurred on that day (January 30) Vazzano replied that there was nothing to discuss and that as far as he was concerned the employees who walked out had quit their jobs. Although asked, by Cleary, Vazzano refused to name his attorney. The union representatives left after being unsuccessful in discussing matters with Vazzano or in securing the name of an attorney with whom they could discuss the situation. On January 31, 1961, the Union filed an unfair labor practice charge, dated January 30. against Savoy with the Connecticut State Board of Labor Relations, here- inafter called the State Board. The charge alleged that Byrd had been discriminato- rily discharged for union activities and the subsequent events relating to the other employees on January 30 were also set forth. On February 3, 1961, the Union filed a petition for certification as collective-bargaining agent of the Savoy employees with the State Board. The petition was dated February 2. The State Board scheduled a consolidated hearing on the charge and the petition for February 15, 1961. 'The events of January 30 were described by employee witnesses Margaret Simpson, Lola Rodriguez, Eliza Wright, Easter Byrd, Sarah Fernandes, and by Stephen Vazzano I have synthesized the testimony of the various witnesses as to what was said and done on January 30, adopting and crediting or rejecting various aspects of testimony 2 The reference to a prior union apparently referred to a period some years previously when another union had represented the Savoy employees 3 More precise information as to the individual employees who had signed cards for the Union and who participated in the walkout or strike and the employees who did not par- ticipate is set forth at a later point in this report together with other pertinent data as to their subsequent employment history. The January 1961 events are beyond the Section 10(b) period of the August 4, 1961, charge and are referred to herein simply as background and as part of the overall picture. 314 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 3. Collective bargaining About February 3, 1961, Cleary received a telephone call from Jacobson who identified himself as attorney for Savoy. Jacobson asked what the problem was and Cleary told him it was a matter of representation and that he had signed up a majority of the employees and wanted recognition as bargaining agent. Jacobson said that he would talk to the Vazzanos and would be in touch with Cleary. Immediately before the State Board hearing, scheduled for February 1S, Jacobson again called Cleary. Jacobson said he thought the matter could be straightened out if Cleary would meet with him that morning before the hearing. Accordingly, that morning Cleary and Heanue and another union business representative met with Jacobson and Stephen Vazzano. Cleary testified credibly that at the inception of the February 15 meeting Respond- ent's representatives inquired as to what the Union wanted. Cleary said at that point he was interested in having the Union recognized as the bargaining agent for the plant employees. After some discussion of various categories of employees it was agreed that a card check would be made by Gaspic, an agent of the State Board who was also the secretary of that agency. Gaspic had entered the meeting sometime after it had commenced. Cleary produced the authorization cards that he had previously secured from the employees, together with a list of the names on the cards. The signed cards were checked by Gaspic and Stephen Vazzano against the Savoy payroll and W-2 tax forms. Vazzano conceded the authenticity of the cards 4 There was discussion of various categories of employees who worked at Savoy and the Union stated that it was not interested in the drivers. The four Vazzano brothers were concededly supervisors and there was also discussion about the possibly super- visory status of a man who worked in the washroom. At the February 15 meeting the Union and Savoy entered into and signed an agreement whereby Savoy recognized the Union as the sole bargaining agent for shirt pressers, feeders, folders, floor workers, mangler operators, and press opera- tors; it was provided that Savoy would not discriminate against employees because of union membership or union activities and would negotiate and sign a contract with the Union retroactive to February 20, 1961, including a union-security clause. It was further agreed that all employees would return to work on Monday, Febru- ary 20, and that all employees, hired on or after January 30 to replace regular em- ployees, would be dismissed by February 20 .5 By agreement of all concerned the State Board hearing of February 15 was post- poned indefinitely. It was agreed that the picketing cease and this was carried out. A further understanding was that Heanue would accompany the returning employees on February 20 and advise them that they were returning to their old jobs and that they should cooperate with their employer and harbor no resentment. Cleary and Stephen Vazzano agreed to begin contract negotiations on the following day, February 16. On Thursday and Friday, February 16 and 17, Cleary, Heanue, Jacobson and Stephen Vazzano, the latter sometimes accompanied by his brother Orlando, and/or some other brother, negotiated concerning the terms of a contract. Cleary had brought copies of a contract that the Union had with the Zwerdling Baking Com- pany and the parties used their respective copies of this contract as a general model as to format and customary contract provisions Going through the model con- tract article by article the parties agreed on many provisions; some articles of the Zwerdling contract were found to be inapplicable to a laundry; other articles were modified. By the afternoon of February 17 the Union and the Employer were in agreement on substantially all contract terms except direct wages and wages had not as yet been discussed Among the contract provisions that had been discussed and resolved was that of seniority. In the Zwerdling contract seniority was on a departmental basis. Cleary testified credibly that during the February 16 and 17 negotiations Stephen Vazzano opposed departmental seniority, pointing out by way of example that the shirt pressers were difficult to secure and that they could perform practically any 'The testimony of Cleary , Gaspic, and Vazzano is in substantial agreement regarding the February 15 meeting As we have seen , a walkout or strike had taken place on Tannery 30 The strikers remained away from work from that date until February 20 and picketing of the plant took place Between January 30 and February 20 Savoy had hired 22 new girls plus 1 girl who had worked for Savoy in the past but who was not working in the period prior to the strike, plus 2 strikers who had returned after January 30 One girl who had signed a union card on January 27 or 28 had not struck SAVOY LAUNDRY, INC. 315 job in the plant if necessary; Vazzano said that the Company wanted overall plant seniority so that it could retain its shirt pressers during slack periods by placing them on other work instead of laying them off. Accordingly, the parties had agreed to have plant rather than departmental seniority. I credit Stephen Vazzano's testimony that tentative agreement had also been reached during the February 16-17 period that Savoy would contribute $2.80 per employee to the union welfare fund, ap- parently depending on the number of days per week that an employee worked 6 Toward the close of the February 17 session, Cleary orally submitted the union wage demands to the Savoy representatives and it was agreed that Savoy would con- sider the demands before the next negotiation meeting that was to commence at noon on the following day, Saturday, February 18. Stephen Vazzano testified that in the evening of February 17 he and his three brothers met together. Since all the brothers had not fully participated in the negoti- ations with the Union, Stephen stated that he brought them up to date concerning the negotiations. He referred to commitments made on vacations, welfare fund contributions, and other matters. He stated that the welfare fund involved 7 cents per hour on the basis of a 40-hour week or a total of $2.80. According to Stephen, he and his brothers then sat down and made a compilation of how many girls pressed shirts, how many checked the shirts, how many sorted and wrapped the shirts, and so forth, and figured out the cost. Stephen testified that the resulting figure showed a loss. After going over the figures the brothers agreed to discontinue their wholesale shirt service. Stephen testified that for several years he had been advocating the discontinuance of wholesale shirt operations. At the hearing he was asked at this point of his testimony whether at the meeting with his brothers he had also men- tioned what the wage increase demands were that the Union had made that after- noon He said that he did but went on to state that the cost compilation made by himself and his brothers was on the basis of "our present [existing] rate of pay . . we didn't take into consideration what the demands were, because at the present rate of pay, we already figured we were losing money." 7 There is a sharp conflict in testimony between the witnesses regarding the Union's wage demands and as to what was said and done at the February 18, Saturday, meeting. The existing rates for the shirt pressers, the largest single classification in the bargaining unit, was 15 cents per hour and 1 cent a shirt for each girl in the four-girl pressing units and 20 cents per hour and 1 cent a shirt in the three-girl On this point I have considered Vazzano's testimony and the third from the last sheet in General Counsel 's Exhibit No 9 which is a typewritten insert under article 17 and some penciled notes of Jacobson on the back of the second from last sheet in the afore- named exhibit 7 As we shall see, Savoy terminated 21 employees on February 23 and 24, and 21 alleged discrinnnatees are named in the instant complaint The Union filed a charge with the State Board on February 24 alleging "lack of good faith after recognition of the Union , . . [ and] the discharge of employees . using the above means to circumvent the Union " The State Board held hearings on the January 30 and February 24 charges on April 28 and May 5 , 15, and 25, 1981 . At the State Board hearings Savoy was repre- sented by Burton Jacobson , Esq , and John Clancy, Esq ; Jacobson was a witness for Savoy in the instant hearing and Clancy was counsel , together with Jacob Mandelbaum, Esq The Trial Examiner has taken official notice of testimony of witnesses at the State Board hearings in considering their testimony at the instant hearing At the instant hearing the parties specifically agreed to the incorporation into the record of the testi- mony of Stephen Vazzano and Vines, Savoy's regular accountant Both Stephen Vazzano and Vines also testified at the instant hearing Cleary and Rudolph Vazzano also testified at both hearings . Since the entire transcript of hearings before the State Board was physically a part of General Counsel 's Exhibits Nos 21 and 24 , I have referred on occa- sion not only to the testimony of Vines and Stephen Vazzano therein but also to the testimony of Cleary and Rudolph Vazzano where I believed that they were testifying accurately. The portions referred to were with reference to the same subject matters as were present in the instant hearing and the witnesses' testimony was of the same general tenor at both hearings, the issues regarding business operations being identical Such portions of the witnesses ' testimony at the State hearing that I have referred to have not been determinative of my findings and conclusions herein For the most part , the State Board testimony supplied some supplementary information For instance , in the instant transcript I found no statement regarding the weight of a shirt as compared with a sheet. Rudolph Vazzano testified before the State Board regarding the respective weights and I have used his figures thereon. I have made one passing reference to the fact of Orlando Vazzano having testified at the State hearing. 316 DECISIONS OF NATIONAL LABOR RELATIONS BOARD units. Employees in other classifications in the bargaining unit, who were on an hourly rate, apparently received $1, $1.05, or $1.15 per hour. Cleary testified that his wage demands did not involve an hourly rate increase for the shirt pressers but did ask an increase of two-thirds of a cent per shirt in the three-girl units and one-half a cent per shirt in the four-girl units. For the hourly paid employees Cleary states that he asked that the rates be raised to $1.171/z, $1.27, and $1.47, respectively. During the course of discussions on the wage rates on February 18 Cleary testified that the Union dropped its demands and indicated its willingness to accept one-third of a cent increase for the three-girl shirt units and one-fourth of a cent increase for the four-girl units and that Cleary informed the company representatives that he would recommend to the employees that they accept a 10-cent increase across the board for the hourly paid workers. Cleary states that the Company offered no increase for the shirt pressers and a 5-cent increase for the hourly employees. He testified that the Company said nothing about going out of the wholesale shirt business but admits that Jacobson did tell him at one point that if the union demands for wage increases were too high his client would close down.8 Stephen Vazzano and Jacobson testified that the Union demanded 30 cents per hour and 2 cents a shirt in the three-girl units and 25 cents per hour and 11/2 cents for the four-girl units, plus increases in the hourly rates. It is denied that the Union lowered its demands. The company witnesses also claim that on February 18 they informed Cleary of the Savoy decision to discontinue processing wholesale shirts because Savoy was losing money on this phase of its work. They further assert that they informed Cleary of their willingness to discuss a contract for the girls who would not be affected (terminated) by the discontinuance of wholesale shirt work. According to Vazzano, Jacobson, and D'Amore, the latter being a partner of Jacobson who was present on February 18, Cleary said he was not interested in bargaining for such a small number of employees. Admitted by all concerned is the fact that at the close of the February 18 session Cleary said that the girls who had gone out on January 30 would report for work on Monday, February 20, pur- suant to the February 15 agreement, previously described in this report. Stephen Vazzano states, however, that in this connection he told Cleary that on Monday, February 20, Savoy was notifying its wholesale shirt customers that it would no longer handle such business; he also asserts that he told Cleary that the girls working on wholesale shirts would be laid off by the end of that week. As a result of my appraisal of the witnesses, and their testimony, I find that the original union wage demands were as described by Jacobson and Vazzano with respect to the shirt pressers and as described by Cleary regarding the hourly workers. The Union's strength was principally among the shirt pressers and as a matter of bargaining technique, if nothing more, I am unconvinced that Cleary's original demands for the shirt pressers were as modest as he testified. However, I also find that when confronted with the Company's refusal to offer any increase for the shirt pressers, the Union did lower its demands and that the figures testified to by Cleary were proposed by the Union. I also find that Savoy, having determined prior to the February 18 session that it would discontinue its wholesale shirt busi- ness, informed Cleary of this decision on February 18. There was little, if any- thing, to be gained by not informing the Union of this decision. As a matter of fact, if there was any possibility that Savoy would continue its entire wholesale shirt operation it would apparently be on the basis of no-wage increase for the shirt pressers. In this regard the strongest cudgel of bargaining that the Company could use would be to advise the Union that it was contemplating the closing of its whole- sale shirt service. On the other hand, if the decision to discontinue substantially all wholesale shirt work was firmed up prior to the meeting, about the only reason for concealment in such circumstances would normally be the employer's fear of an immediate strike which would affect the employer prior to the target date for closing. Such a fear was nonexistent in the instant case since the union employees had been on strike since January 30 and the Employer thereafter had operated with non- strikers and replacements and was prepared to continue to so operate until it dis- continued the wholesale shirt work. Also, in view of the fact that the Union ultimately reduced its demands for the shirt pressers to one-third of a cent increase 8 At the State Board hearing Cleary was asked by counsel for the Union whether there was "anv discussion concerning the closing down of the shirt business by this Company " He replied: "No Other than Mr Jacobson saying to me that if the price is too high these people would close down." He also testified, " I told what the hourly pav work- ers wanted . . the shirt girls asked for 6 cents per shirt . . . and, of course, this was just completely out of the question and this was where the discussion took place about going out of the shirt business. . . . SAVOY LAUNDRY, INC. 317 for the girls in one group of units and one-fourth of a cent increase in the other group of units, it is apparent that the Company had shown some rather potent bargaining cards on February 17. I believe that the retreat on the Union's part was attributable to the fact that the Company had stated its decision regarding discon- tinuing wholesale shirts and the terminations of shirt pressers entailed thereby. In connection with the foregoing, I view the Union's reference on February 17, to having the strikers report for work on February 20, as due to the fact that (1) the Company, on February 15, had agreed in writing to do so; (2) there was nothing to be lost by having the girls rehired; and (3) there was always some possibility that the Company would not carry through with the announced shutdown, particularly after its regular employees had returned to work. From Savoy's standpoint also there was nothing detrimental in rehiring the girls for a few days since it could perform its work as well or better with them than with those new employees hired during the strike; and Savoy had previously committed itself to do so. 4. The terminations All the employees who had gone on strike on January 30 reported back to work on Monday morning, Februar"" 20. They were accompanied by Union Business Representative Heanue 9 As agreed , Savoy, on February 20, discharged the replace- ments who had been hired during the strike and the strikers resumed their former work tasks on that same day. From no source did the returned employees hear anything about an impending shutdown of the wholesale shirt service. On Febru- ary 20 and 21, Savoy instructed its drivers to inform the various dry cleaners, hand laundries, and other wholesale shirt customers that Savoy was discontinuing whole- sale shirt operations and that the customers should take their work elsewhere. This instruction was carried out. Savoy did not solicit or secure wholesale shirt work thereafter . However, Savoy continued to do the wholesale shirt work for Avon Cleaners, an establishment not located on Savoy's premises but which was owned by Vazzano brothers . Stephen Vazzano also stated that Savoy continued to do wholesale shirts for Superior Cleaners and Sanitary Cleaners, both organizations being owned by one individual who also owned two other similar establishments. According to Stephen, the reason why Savoy continued to do wholesale shirts for the Superior complex was because of the flatwork it secured from the same source, "-we felt that we should do his wholesale shirts because of the flatwork " On February 23 and 24, Thursday and Friday, Savoy terminated the 21 female employees named in the complaint . Their termination slips read , "Closing whole- sale shirt department-lack of work." When Rodriguez, an employee of Savoy for 48 years, received her termination paper she said, "God forgive Steve. . . ." Frank Vazzano then took Rodriguez aside and , according to Rodriguez' uncon- troverted and credible testimony, said , "Lola, believe me, we like all you girls, but you all just had the wrong union , that union is for truckdrivers, not for laundry." When Cleary learned that the employees had been terminated he endeavored, with- out success, to contact Jacobson, Savoy's attorney . The efforts to reach Jacobson by telephone continued over a period of days but contact was not made.10 As we have seen the Union filed an additional charge with the State Board, dated February 24. The next contact between the parties was brought about as a result of a telephone call to Cleary in May 1961, from a Teamster Union representative in New York City. By this means Attorney Mandelbaum of New York was introduced to Cleary, Cleary met with Mandelbaum and Attorney Kenny on June 7.11 Mandelbaum said that he would see to it that the Union secured a contract covering not only the plant employees but also the drivers. At Mandelbaum's request Cleary acquiesced in a postponement of the then current State Board hearings on the Union's charges. The parties met again on June 13 . Mandelbaum's concrete offer was a 5-cent raise for 9 One employee, Golumbaski, who had signed a union card, had not gone on strike Two other signers, Butler and Dawson, engaged in the January 30 strike but returned to work before February 20. 10 Without being able to fix the time other than the fact that it apparently occurred sometime between February and April 28, 1961, the latter being the date of the first State Board hearing, Jacobson said that Cleary did speak to him on the telephone When Cleary asked for further discussions on the labor problem Jacobson states that he told Cleary that one of the Vazzanos was in Florida and since the brothers always acted in concert, it was not feasible to meet. 11 Clancy and Kenny, a Bridgeport law firm, was representing Savoy in the State Board hearings, apparently in conjunction with Jacobson By June 1961 and in the instant hear- ing Savoy was represented by Mandelbaum and by Clancy and Kenny. 318 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the hourly employees, and he showed Cleary some wage rates for drivers in a New York contract. Cleary rejected the 5-cent proposal , saying that this was the same proposal previously made by Savoy; he commented that the drivers ' rates in the contract produced by Mandelbaum were below the Bridgeport rates and Cleary said he had a contract in Bridgeport with a "favored nations" clause . Mandelbaum stated that if the Union rejected his offer he would bring the labor dispute before the National Labor Relations Board and would defeat the Union in that forum Thereafter Savoy moved the State Board to dismiss the union charges because of lack of jurisdiction . Eventually, the Union filed the instant charge with the National Labor Relations Board on August 4, 1961. 5. Analysis and conclusionary findings a. Unit and majority In conjunction with the question of appropriate bargaining unit and majority, as well as with regard to alleged discriminatory terminations and alleged refusal to bargain, it is appropriate to view the personnel complement of Savoy on January 30 to February 23, 1961. On the following list, the striker replacements hired after January 30 were not included since they were all discharged on February 20 and were not in Savoy's employ on February 23 and 24 when the 21 employees named in the complaint were terminated.12 Name Date of hire Classification Wright, F ----------------------------- 2/19/60 _________ Shirt presser, U-S-D. Robinson , F--------------------------- 9/20/60--------- Do. Thigpen , F ---------------------------- 12/15/60________ Do Fernandez , F-------------------------- 1944__________- Do Byrd, F 13----------------------------- 1947___________ Do Moore, F------------------------------ 1/12/59_________ Do Bobo, F------------------------------- 10/9/5__________ Do Rodriguez , F-------------------------- 1943___________ Do Banks, F------------------------------ 12/17/56________ Do Simpson, F ---------------------------- 5/26/58_________ Do Barnes , F----------------------------- 1951 ___________ Do. Tutt , F------------------------------- 8/10/59--------- Do Whitley, F---------------------------- 10/10/57________ Do Jones , F------------------------------- 11/18/57________ Do Fields, F ----------------------------- 9/3/58__________ Shirt shaker Butler, F ------------------------------ 5/54----------- Shirt wrapper, U-S 14 Presutto , F--------------------------- 1/18/60_________ Shirt wrapper Teaskey, F---------------------------- 12/23/57________ Shirt checker, U-S-D. Anderson, F --------------------------- 9/19/60_________ Do Sanders, F --------------------------- 9/23/59_________ Do Wright , F----------------------------- 10/3/60_________ Do G Miles, F-------------------------- 9/17/56--------- Shirt checker L. Miles , F---------------------------- 6/10/57_________ Do Kascal, F ------------------------------ 5/54----------- Shirt wrapper and folder Golumbaski , F------------------------ 5/17/60_________ Floor girl and coat folder, U 13 Madison, F ---------------------------- 1/6/60---------- Floor girl, U-S-D. Rucker, F ----------------------------- 5/13/57_ ________ Do Wallace , F---------------------------- 12/15/58________ Wearing apparel presser, U-S Bailey , F----------------------------- 4/27/59_________ Folder-ironer, U-S. Garcia , F----------------------------- 7/15/56__ _______ Do. i2 The Trial Examiner has used the following symbols on the list of employees, Last names ire used except when more than one employee bears the same name ; "Al" and "F" after each name denotes male or female, respectively ; "U" denotes signer of union cai d on January 27 or 28; " S" denotes a January 30 to February 19 striker, absence of one or both symbols indicates a nonunion employee and/or a nonstriker , "D" indicates an employee discharged on February 23 or 24 ; absence of this symbol indicates an employee who was not discharged 13 This employee was dischai ged for cause on January 30 ; she was offered i einstatonient a short time thereafter on the same date but refused to return to work at^that time and was apparently a striker 14 This employee returned to work during the strike and was not discharged. 15 This employee did not strike ; she was not discharged on February 23 or 24. SAVOY LAUNDRY, INC. 319 Name Date of hire Classification Long, F------------------------------- 5/17/56_________ Folder-ironer, U-S. B Vazzano, F 16----------------------- 9/53---------- Office Parnoff, F----------------------------- 1955___________ Mender and floor girl Ilagan, M ----------------------------- 1942___________ Driver Caputo, M ---------------------------- 5/19/54--------- Do Golumbaski, M_______________________ 3/19/56 _________ Do IIanlon ---------------- ---------------- 12/10/58-_______ Do Edwards, M--------------------------- 7/22/60_________ Driver-supervisor Renzo, M----------------------------- 1/16/61_________ Driver Diaz, M ------------------------------- 5/14/54_________ Coat presser. Copeland, M-------------------------- 5/60 ------------ Do A Poremba, M_______________________ 6/12/54_________ Washroom J Poremba, M________________________ 1939___________ Do Ramoh, M---------------------------- 1/7/57__________ Do Zihala, M ----------------------------- 9/19/60_________ Do Giardini, M-------------------------- 3/28/60_________ Do Barr, F-------------------------------- 1946___________ Floor girl McCarthy, F-------------------------- 9/8/60_-_______ Do Dawson, F--------------------------- 12/6/60_________ Floor girl, U-S-D 17 Pettway, F---------------------------- 1/17/61_________ Floor girl Gulia, F------------------------------ ---------------- Temporary worker R Vazzano, F------------------------- ---------------- Do On the basis of the evidence I find the appropriate bargaining unit to be all produc- tion and maintenance employees of Savoy, excluding office clerical employees, pro- fessional employees, watchmen, guards, supervisors, and drivers The Union stated and it was understood and agreed to by Savoy on February 15, 1961, that drivers were not included in the unit. The drivers had evinced no interest in inclusion in the unit; as contrasted with the inside plant workers, the drivel s spent substantially all their time away from the plant; unlike the plant workers the drivers were paid on a commission basis. The drivers were in fact a functionally distinct group.18 The production employees were part of an integrated laundry operation performing the customary functions and duties of laundry workers. Although the Union's peti- tion for certification filed with the State Board enumerated substantially all production and maintenance employee job classifications except washroom workers, I am per- suaded that the parties understood and agreed that the washroom employees were included in the unit. When the recognition agreement was executed on February 15, 1961, it used the unit language that was set forth in the Union's petition. However, Gaspic, agent of the State Board and its secretary, who participated in the February 15 conversations between the Union and Savoy, testified without contradiction that the parties discussed and intended to include the washroom employees in the unit. He stated that once the parties had resolved the question of whether one of the washroom men was or was not a supervisor and had agreed to include him in the unit as a non- supervisor ". . . there was no question of these people [washroom] being included within the unit." Further, 100 percent exactitude in unit description language is not a prerequisite to an otherwise valid request to bargain and minor variations in a unit are not fatal to an otherwise appropriate unit.19 Within the purview of the foregoing considerations I find that by January 29, 1961, the Union represented 28 employees in the appropriate unit of 43 employees. 20 Since the strikers were employees on January 30 I find that the Union represented a major- ity of the appropriate unit on that date. However, since January 30 was more than 6 months prior to the filing of the charge I consider it unnecessary to make a finding whether on that date the Union made an appropriate demand for bargaining and whether Respondent refused to bargain at that time. As of February 15 when Savoy recognized the Union as the bargaining agent in the appropriatae unit and the strikers to This employee is a sister of the Vazzanos 17 This employee returned to work during the strike ; she was discharged on Febru ary 23 or 24 1s Bugle Coat, Apron & Linen Service, Inc, et al, 132 NLRB 1098 19 United Butchers Abattoir, Inc, 123 NLRB 946 20 In addition to the inclusions and exclusions discussed above, I have also excluded from the unit two temporary employees. Weyerhaeuser Timber Co, 81 NLRB 472, 474-475; Augusta Chemical Go, 124 NLRi3 1021, 1022; W. P. Fuller & Co, 122 NLRB 814, 816. 320 DECISIONS OF NATIONAL LABOR RELATIONS BOARD were prepared to return to work and Savoy had agreed to discharge all replacements, I find that the replacements had been no more than temporary employees; I also find that the strikers were employees and that the Union represented a majority in the appropriate unit.21 The status of the Union as collective-bargaining agent continued thereafter, including the February 20 to 23 period when the strikers were back at work. Whether or not Savoy fulfilled its legal obligation to bargain with the Union is intermeshed with the question of the legality of the discontinuance of the bulk of the wholesale shirt operations and the consequent terminations. These matters will now be considered. b. The discontinuance of the bulk of the wholesale shirt business It was Stephen Vazzano's testimony in the instant hearing, as described above, that the four Vazzano brothers made computations on paper on the night of Febru- ary 17 that convinced them that under their prevailing costs of processing wholesale shirts Savoy was losing money on this aspect of its business; they thereupon either that night or the following morning determined to close their wholesale shirt operations. This decision regarding wholesale shirts therefore was made prior to the next meeting with the Union, scheduled to start at 12 noon on February 18. For some reason, unexplained, Stephen Vazzano when first testifying in the instant hearing regarding the important events of February 17 and 18, made no mention of Vines, Savoy's accountant for 20 years. The evidence adduced before the State Board and Vines' testimony in both hearings convince me that Vines was consulted and met with the Vazzanos on the morning of February 18. At that time he went over the figures produced by the Vazzanos and concurred in the decision that whole- sale shirt operations were being conducted at a loss and that the operation should be discontinued 22 With a covering letter of March 7, 1961, Vines sent Savoy a two-page cost compila- tion showing a loss on the wholesale shirt operation.23 The foregoing constituted the documentation of Savoy's contention before the Connecticut State Board of Labor Relations that it had discontinued its wholesale shirt operation and had terminated employees because of economic reasons. The reference in Vines' letter to a "time motion study" was explained by Vines at the State Board hearing. When Vines met with the Vazzanos on the morning of February 18 they gave him, on pieces of paper, various figures that they had com- piled relating to the wholesale shirts. Vines said that Rudolph Vazzano had figured out the normal production of the four shirt pressing units and the cost of the opera- tion. Rudolph's testimony at the same hearing indicates that on February 17 he had used direct labor costs and applied it to the number of employees working on shirts and their production. In any event, this was the time-motion study that Vines testi- fied he had referred to in his letter. -As we have seen , one girl who had signed a union card did not strike , two others who had signed union cards returned to work prior to the end of the strike Although it does not necessarily follow that the three foregoing employees had repudiated the Union for collective-bargaining purposes by reason of their aforedescribed actions (e g , stringent personal economic requirements may have prompted an early return to work), the Union still represented a majority in the unit if the number of union adherents was reduced from 28 to 25. 23 Although not called as a witness by Respondent at the instant hearing (he was called by the General Counsel), Vines was by no means a hostile witness toward his client, Savoy He also stated that as far as he was aware, he was still the regular accountant of Savoy 23 The letter read as follows: Recently you requested me to review cost figures that you prepared relating to the operations of the wholesale shirt department. As you know, the Company does not maintain cost figures of any of its operations, nor are the costs in any way allocated to departments A study of the wholesale shirt department was mentioned by several of the officers three years ago, and again about a year and a half ago, but never completed because the officers were com- pelled to do all kinds of work to complete their production and service schedules Recently, a time motion study was made of the operations of the wholesale shirt department and the figures which you prepared and which I have examined leads me to feel that a reasonable attempt was made to ascertain a true picture of the costs of operating this department. As a result of this study, and the figures you have submitted, I feel that you are justified in discontinuing all further operations of the wholesale shirt department Furthermore , a continuation under its present status or any expanded method would only result in a greater loss. SAVOY LAUNDRY, INC. 321 The statement in the Vines' letter, that "A study of the wholesale shirt department" had been adverted to by several Savoy officers on two occasions in preceding years but was never completed because the officers were too busy, merits comment. Vines' testimony on this point consisted of saying that two-unnamed Vazzanos "were under the impression that there was a loss in earlier years" but another unnamed Vazzano favored the continuance of the shirt work "so they postponed it and they said they were busy and so on and so forth. . " 24 Stephen Vazzano, when testifying on direct examination by Respondent's counsel at the instant hearing, undertook to give a complete account of the decision to dis- continue wholesale shirts and the reasons therefor. He described how the Vazzanos met on February 17 and 18 and how the decision to discontinue the aforementioned operation was reached. He stated that the decision "was a God send because I have been trying to do it for the last three or four years... . Q. You mean amongst your brothers . . . you had been insisting for over a period of three or more years? A. Yes, sir. Stephen was later asked: Q. And amongst the remaining co-owners, were there one or more, one or more or any who subscribed to your thinking? A. No. This witness also testified that on the night of February 17 when the brothers had computed that wholesale shirts were being handled at a loss he remarked to his brothers, ". . . you know, every year when I give papa the annual report, he is always telling us we should make more money . . . maybe this is the answer to his question." In appraising all the foregoing evidence, the witnesses, and the record as a whole, the following observations are in order. The testimony of Vines and his letter of March 7, 1961, written to and quite apparently at the request of his client, Savoy, seeks to convey a picture of the discontinuance of wholesale shirts as a normal busi- ness move. The discontinuance is depicted as having been preceded by a time-motion study and a history of an uncompleted cost study dating back 3 or 4 years in a period when the owners were at all times sharply divided in opinion as to the desir- ability of continuing wholesale shirts. Rudolph Vazzano, one of the owners, inti- mately close to the entire shirt operation, particularly wholesale shirts, conveys a picture of some 20 years in the business and an absence of anything unusual by way of concern on his own part or on the part of anyone else about wholesale shirts. This witness, in effect, describes the February 17, 1961, cost computation by himself and his brothers as coming like a bolt from the blue in its revelation that they had been handling wholesale shirts at a financial loss. Stephen Vazzano's projection is that he was a lone advocate, over a period of years, for the discontinuance of the wholesale shirts, presumably for economic reasons; his brother coowners were ap- parently unaffected by Stephen's economic arguments until February 17, during the negotiations with the Union. As I view the evidence, Savoy was a relatively small corporation, family owned and family managed. Between them the Vazzanos were intimately close to all phases of the business. This was not a corporate giant with 30 plants scattered throughout the country, producing a variety of diversified products with thousands of employees. 24At the State Board hearing Stephen Vazzano testified that he (3 years ago and 1i/., years ago) had mentioned to Vines his "desire" to make a study of "allocation of costs to departments" but that such a study was never commenced until the night of February 17 At the hearing the reason given by Stephen for not making the study at an earlier date was the fact that the brothers were too busy running the laundry business Rudolph and Orlando Vazzano were the only Vazzanos, except for Stephen, who testified at the State Board hearings Orlando did not testify regarding the February 17 decision to discontinue wholesale shirts and his testimony makes no reference to any concern or interest in a study of wholesale shirt costs by Stephen or anyone else in prior years Rudolph was thoroughly familiar with the entire shirt operation, including, of course, wholesale shirts. In his 20 years in the business lie testified that "we" first discovered that we were losing money on wholesale shirts on the night of February 17 when he and his brothers made the cost computation. Rudolph makes no mention of any suggested study of wholesale shirt costs by Stephen or himself or anyone else prior to February 17. Nor does he refer to any position taken by Stephen in the past regarding the wholesale shirt business. 649856-63-vol. 137-22 ,322 DECISIONS OF NATIONAL LABOR RELATIONS BOARD In such a large corporation costs and the state of any particular phase of the opera- tions could only be known by means of a detailed and formal system of cost ac- ,counting. Savoy's owners, I believe, could and did determine rather readily during the many years of Savoy's operation the state of the financial health of the business Stated in its most simple form the financial picture was the gross income minus total costs (everything that had to be paid out, including overhead) which would show net income. As income-tax payers, if for no other reason, Savoy and the Vazzanos were obviously aware of these facts. However, Respondent contends that since Savoy did not maintain its books on a .cost accounting basis with respect to each type of work that it performed, it did not know until February 17, 1961, that it was losing money on wholesale shirts. But, in a matter of hours on the evening of February 17, the four brothers with scrap paper and pencil were able to make a computation of the income derived from wholesale shirts, the costs to Savoy in producing such income, and to conclude that they were losing money on such shirts. The details as to wholesale shirts was no mystery to the Vazzanos and with such factual details in mind the computation was one of elementary arithmetic. Aside from the demonstration afforded by the events of the night of February 17, the Vazzanos' close familiarity with the details of their busi- ness, including wholesale shirts, is clear when it is borne in mind that the cost ac- counting reports submitted by two accountants, Vines on March 7, 1961, and Col- man on November 7, 1961, were primarily based on figures and information supplied by the Vazzanos to the accountants in oral conversations as well as upon the 1960 income-tax return, rather than upon original records and audits. What the account- ant did was to set up the figures in a somewhat more elaborate and formalized man- ner and to use accountancy formats and terminology. The accuracy of the foregoing conclusion as to the firsthand knowledge of the Vazzanos regarding wholesale shirt cost factors is borne out if we refer to some of the items on the report of Colman, a certified public accountant 25 Testimony in the record shows that Vazzanos, on February 17, knew that Savoy processed and sold approximately 26 14,000 shirts a week and the approximate percentage of wholesale shirts; they knew the approxmiate percentage of wholesale and retail shirts; they, particularly Rudolph and Stephen, knew the labor picture on wholesale shirts- they knew exactly how many employees pressed the shirts, how many checkers were employed, how many washed, and how and what they washed and so forth; they knew the wage rate of every employee working on the shirts; they could add, multiply, and subtract; in short they knew their wholesale shirt productive labor costs; they also knew the salary that each Vazzano was receiving; they knew the salary of the one office employee, their sister, Beatrice; they knew the building rent they were paying as Savoy to Vazzano Realty, owned by themselves; they were familiar with utility bills and other expenses; they 27 knew how many trucks they had, the number 's Colman was not Savoy's regular accountant In fact, he had never performed any work for Savoy prior to November 1961 With regard to the circumstances of his reten- tion by Respondent, Colman was asked, "Isn't it a fact, Air Colman, that you knew that the report was being prepared in order to justify the Respondent's contention in this pro- ceeding that it was justified, on economical grounds, in discontinuing the wholesale shirt operation 9" And lie answered, "I would say, yes" ,Colman's report will be examined at a later point as to reliability, accuracy, and re- lated factors Briefly described, it consists of 10 pages, with the following table of con- tents: "Letter of Transmittal , Exhibit A-Condensed statement of income and profit and loss for year ended December 31, 1960-by Divisions ; Exhibit B-Statement of Income and profit and loss-wholesale shirt division ; Schedule 1-Computation of sales- wholesale shirt division; Schedule 2-Productive labor costs; Schedule 3-Laundry supply costs . . ; Schedule 4-Packaging supply costs ; Schedule 5-Machinery deprecia- tion ; Schedule 6-Collection, delivery and sales promotion expenses ; Schedule 7-Rent expense, Schedule 8-Insurance expense, Schedule 9-Salaries, administrative and maintenance " ='4 In using the term "approximately" I mean that they, offhand, could not say the exact number but had an accurate enough idea of the number subsequently used by the accountants n Although all the brothers specialized in one or more particular phases of Savoy's business, they also had a general knowledge and participated in some degree in all phases of the business. While certain aspects of the business may not have been known precisely by each brother, they jointly possessed such knowledge Stephen, moreover, the treasurer, in charge of the office and books and financial affairs, as well as being close to plant pro- duction and personnel, had a thorough overall knowledge of the business, including labor costs, sales, prices, material, equipment, and overhead SAVOY LAUNDRY, INC. 323 of drivers, the earnings of the drivers, the routes, the bills for gas and oil, and so forth; they knew they had four shirt pressing machines, four washing machines, flat- work ironers, and so forth; and they knew the cost of the machines and when they were purchased. Even without the confirmation supplied by what the Vazzanos were able to do by way of computation on the night of February 17, it is apparent that they at all times had, almost at their fingertips, all relevant cost data affecting wholesale shirt opera- tions. The February 17 computation, although not produced at the hearing, quite clearly was not confined to totaling sales income and subtracting therefrom only productive labor costs and a few other simple items. Such a computation would show a very substantial profit if we use the figures referred to by the Vazzanos in their testimony and used by their accountants in their reports. In fact, the testimony of the Vazzanos is that their February 17 computation, when originally made and then modified on the same night, showed substantial loss figures, both higher than those subsequently produced by Vines and Colman. The computation, therefore, was apparently a fairly sophisticated one with allocations for overhead, depreciation, and so forth. Nor is this surprising. The brothers were businessmen. They had been in the business about 20 years. Stephen, particularly, as the treasurer, officeman, and financial manager, had I believe, a very good knowledge of business costs and every- thing pertaining thereto. There is no basis for assuming that the Vazzanos acquired for the first time on February 17 the aforedescribed information and the pertinent ability for determining the financial status of their wholesale shirt operation. With regard to these matters of information, knowledge, and ability, the situation was the same on February 17 as it was for many years previous. Nor am I persuaded that prior to February 17 Savoy was unaware of the profit-and-loss picture of its various operations. From its inception Savoy charged a certain price for shirts, another price for towels, other prices for each of the articles it laundered, including a specific price for a retail shirt and another price (18 cents in 1960-61) for a wholesale shirt. Twenty years ago the prices were not the prices of 1960. During the interval prices were changed from time to time. There was a reason why the price of wholesale shirts in 1960 was -18 cents and not 17 or 16 or 19 cents. The prices of materials used in the laundry changed from time to time Costs of machinery and trucks and utility rates changed from time to time. Wage increases for employees were given over the years. Decisions were made about whether a wage increase for employees would or should be given this year or that year and whether it should be 2 cents or 3 or 5 or 7 cents. These and many other factors were encountered and dealt with by Savoy over the years. Savoy could not know what it would charge for various services unless it knew its own costs and expenses; why did it charge 18 cents for wholesale shirts and not 17 or 19; or charge 25 cents for retail shirts and not 24 or 26. The same is true of wage rates and wage increases and other matters The Vazzanos, as I have previously pointed out, had the pertinent data, information, and the arithmetical ability to compute their income, costs, and overhead and I believe that in running their business, prior to February 17, 1961, they knew the fiscal picture with regard to wholesale shirts as well as they knew the picture on their other services. Moreover, there is the question of what Stephen Vazzano was referring to and talking about for 3 or 4 years when he was arguing to his brothers that wholesale shirts should be discontinued. He surely had some reason for his position and he .surely presented that reason. He did not advocate the discontinuance on the ground that Savoy made too much money on wholesale shirts or that he was emotionally or physically allergic to shirts that were processed at a wholesale price as distin- guished from shirts processed at a retail price. He no doubt spoke as a businessman and as the financial expert in the family. He either said that we are losing money on wholesale shirts or that we are not making money on wholesale shirts or that we are not making enough money on wholesale shirts. It is hard to believe that he did not have facts and figures to cite in support of his position. If, on the first occasion, Stephen could not or did not document his position, be had 3 or 4 years when, as a minority of one, he would logically present a factual financial picture to support his view and convince his brothers. Mustering the figures, as I have shown, was well within his competence within a matter of hours. No accountant was necessary for this arithmetical exercise. While it cannot be determined from the record exactly what financial picture ,of wholesale shirts Stephen had presented to his brothers in advocating discontinu- ance over the years, I am convinced that he did present such a dollar and cents pic- ture. I also believe that it is reasonable to conclude that in view of Stephen's experience and ability as both the financeman , the businessman, and operating -official in a 3 to 4-year period, he, in substance, presented as good an income and 324 DECISIONS OF NATIONAL LABOR RELATIONS BOARD, cost compilation and analysis, orally or on paper, as was presented on February 17. But why did not Stephen's view as to discontinuance prevail until February 17, 1961? This cannot be answered with certainty. Perhaps it was felt that discon- tinuance of wholesale shirts would lose other business that was profitable; 28 or perhaps Stephen's cost picture with regard to eliminating wholesale shirts included corresponding cuts in managerial salaries such as those of a brother or brothers who devoted substantial time to wholesale shirts. What we do know, however, is that Savoy continued its wholesale shirt business over the years and made no plans for discontinuing it until, on February 17, 1961, it received the wage demands of the Union.29 Since I believe, as previously stated, that the Vazzanos knew throughout the years where they stood profit-and-loss wise on wholesale shirts as well as on linen supply and other aspects, it is apparent that they were prepared to operate and did operate wholesale shirts on such a basis. I do not believe that Stephen Vazzano and his. brothers first learned of the wholesale shirt financial picture on February 17. At this point, before discussing Colman's report, it is my opinion that if the wholesale shirt picture was as portrayed by Colman, this picture was known in substance, if not in Colman's detailed format, prior to February 17. If the wholesale shirt picture was actually more favorable than portrayed by Colman, it, too, was known prior to February 17. Finally, if the wholesale shirt picture as a matter of cost accounting was as portrayed by Colman, it was a picture in which the net income of Savoy and its owners could not be improved by eliminating wholesale shirts and this fact was known by the Vazzanos. Before considering the report of Accountant Colman, it may be noted, in con- nection with some of the conclusions set forth above, that when over 20 employees struck Savoy on January 30, 1961, and remained on strike until February 20, the impact was felt particularly with respect to wholesale shirts. For instance, all 14 shirt pressers were among the strikers. Although, as previously stated, I am satis- fied that the Vazzanos were aware of Savoy's financial picture with respect to whole- sale shirts, as well as its other operations, no effort was made to close or to taper off wholesale shirt operations on January 30 and immediately thereafter. This not- withstanding the fact that Stephen Vazzano testified that on January 30 as far as Savoy was concerned the employees who had walked out had quit and were no^ longer Savoy's concern. The situation was an obvious one for the discontinuance of wholesale shirts if Savoy had been and was losing money on the wholesale shirt operation or if discontinuance would improve the financial situation. Instead, Savoy went to considerable effort to hire 23 new employees, plus rehiring 2 strikers, and was in substantially the same position personnelwise as before the strike. During this period Savoy had taken the position that it had nothing to discuss with the Union and was apparently unimpressed that the Union was in a position to establish itself as bargaining agent for the employees. But, on the morning of the first State Board hearing, February 15, Savoy decided to meet with the Union. The Union established its status as bargaining agent at the meeting and Savoy recognized the Union at that meeting. It was agreed that 25 At the time of the hearing Savoy was still doing some wholesale shirts for stores that also gave them amounts of flat work and this was the reason given at the hearing for the continuance of some wholesale shirt work 19 The alternative view to my prior discussion of Stephen's advocacy of discontinuance over the years, is to reject his testimony on this aspect and to conclude that he never made such proposals In my view this would mean that although Stephen knew the business status of wholesale shirts, it was such that it never prompted any advocacy of discontinu- ance until February 17. Accountant Vines, in testifying before the State Board in May 1961, stated: . . . Stephen Vazzano frequently raised the point that they are losing money in the wholesale shirt department. . . .. At another point, Vines was being asked about his cost study. He said: This is based upon a study of the wholesale department . . we were concerning ourselves with the wholesale department . . . e s s s s s s Q. Why only wholesale? A. Because that was the problem child they had Q How did you know that without making an analysis of the entire shirt department9 A That was not a question of my referring to figures, I knew it, we discussed it numerous times It wasn't something that was a method that was just created and' it went back a number of years. SAVOY LAUNDRY, INC. 325 a contract would be negotiated and that the strikers would be reinstated and the replacements terminated. There was no mention of discontinuing any operations. Savoy, during the next few days, in fact agreed to a 7-cent an hour welfare fund contribution for each employee, including of course those employees working primarily on wholesale shirts. Stephen Vazzano, the chief company representative, was aware of the financial picture of Savoy and of that of each of its operations. Savoy had been under no obligation to agree to what was, in effect, a 7-cent increase and I do not believe that it went along with the proposition without reconciling it with its own financial status. Other Vazzano brothers in addition to Stephen were participants in the negotiations. The parties, by the late afternoon of February 17, were in substantial agreement on all the terms of a contract, with the exception of wages. Before the Union presented its wage demands towards the conclusion of the February 17 meeting, the prospects for a contract appeared excellent. In fact, it is difficult not to conclude that if the Union had made no wage demands or possibly if the demands were of a token nature only, a contract would have been concluded, at least if it is assumed that on February 15 to 17 the parties had been negotiating in good faith. As I have found, the initial wage demands of the Union were not inconsequential and that evening, February 17, the Vazzanos decided that their wholesale shirt financial picture was such that they would discontinue the operation. This decision entailed the termination of virtually the entire union strength in the plant. Since it is my opinion that Savoy was aware of the financial situation with respect to its wholesale shirt operation prior to February 17 and had continued to operate this particular activity over the years, the existing financial picture, whatever it was, was not the determining factor in the discontinuance decision of February 17. The financial approach was used, I believe, as the justification for a decision to avoid consummation of a contract with the Union. The Respondent's desire to avoid having the Union in its plant as a representative of the predominantly female employees who had joined the Union was apparently due to the previously expressed belief that the Teamsters Union was not appropriate for production workers in the laundry business and to the belief that the Union was going to prove itself to be a costly and troublesome factor in the plant operation. I believe that the Union's wage demands of February 17, on top of the 7-cent payment to the union welfare fund, triggered Savoy's thinking along these lines, assuming that prior to that point Savoy had negotiated in good faith. (1) Fixed costs and overhead and continuing costs If we now approach the situation from a different aspect we consider Savoy's contention that it was losing money in its wholesale shirt operations. The strongest position of Respondent on this score is Accountant Colman's report of November 1961, postdating the February 17, 1961, decision of Savoy by about 8 months. At this point, we will assume, arguendo, the accuracy and reliability of the report and will confine ourselves to considering what conclusions may be validly drawn from the report. In this connection, it is my opinion, that our primary concern is not whether or not as a matter of cost accounting Savoy was losing money on its wholesale shirts. What is pertinent is whether the elimination of wholesale shirt operations increased the net income of Savoy, i.e., the family owners of Savoy, or decreased the net income and whether Savoy may reasonably be assumed to have been aware of such important ultimate results. If a business eliminates a certain operation or depart- ment it does not improve its financial position unless it eliminates as many of the department's cost and overhead factors as possible. If the elimination of a depart- ment makes possible the sale of the eliminated premises or the cessation of rental payments on the previously occupied premises there is a saving. This is true if existing profitable operations are expanded or new profitable operations take the place of the eliminated operation. This is also true if the salaries of the depart- ment manager as well as employees are eliminated. But where various items of overhead and costs are not eliminated by the discontinuance of an operation, the remaining operations must bear these burdens in addition to their own original proportion of overhead and costs and net income may not improve or may deteriorate. Exhibit B of Colman's report lists production costs of the wholesale shirt opera- tion. One of the items is machinery depreciation, $6.305.89. The machinery con- sisted of the following: four pressing units, 90 percent of whose depreciation or $3,240 was allocated by Colman to wholesale shirts. At the time of the State Board hearing in May 1961 Savoy still had these four units and there is no evidence in the instant bearing that this situation had changed Savoy in fact is still using such units or some of them for its present wholesale shirt business, previously 326 DECISIONS OF NATIONAL LABOR RELATIONS BOARD described, and for household laundry such as retail shirts and for uniform shirts in its linen service. Whether fully utilized or not, this machinery's entire yearly depre- ciation in the amount of $3,600 is now, or should be, under Colman's approach, allo- cated to Savoy's remaining operations. Colman's report allocates 34.8 percent of other plant machinery's depreciation, or $3,065.89, to the wholesale shirt division. With the elimination of the latter, the entire depreciation for this nonshirt machinery, or $8,810.03, is now borne by the remaining operations.30 A listed production cost for wholesale shirts under the heading of productive labor is "supervision (50% of one man) $7,000." This, of course, is a reference to one of the Vazzano brothers (or 25 percent of each of two brothers) who received a salary of $14,000 each. There is no evidence that any of the owners received a cut of $7,000 in salary with the expiration of wholesale shirts so this cost is borne by the remaining operations of Savoy. Another productive labor cost assigned to wholesale shirts is "2 employees-washing, $7,228." None of the employees employed in washing at Savoy were terminated when the wholesale shirt operations were dis- continued and as far as appears they continued to be employed in washroom work. Their salary therefore is to be allocated to the remaining Savoy operations in the period after the wholesale shirt termination. An item listed by Colman under production costs of the wholesale shirt operation was entitled, "Collection, Delivery & Sales Promotion Expense." Under this appears truck expense, including depreciation allocated to wholesale shirts in an amount of 34 8 percent, based on sales volume. Since,the depreciation figure is $3,107.29, the wholesale shirts bear about $1,081. At the time of the May 1961 State Board hearing Rudolph Vazzano testified that Savoy still owned the wholesale shirt truck although it was not being used. Therefore, the truck depreciation item had not been eliminated by May 1961 as a result of the wholesale shirt discontinuance. A further item under the above cost heading is "Salaries-officer (10% of one man), $1,400" This reference is to one of the Vazzano brothers, each of whom received a salary of $14,000. With the elimination of wholesale shirts, it is doubtful, and there is no contention or evidence to show, that one of the Vazzano's took a $1,400 cut in salary. Under "Overhead & Administrative Expenses" Colman lists rent of $10,000, with 35 9 percent, $3,590, allocated to wholesale shirts. With the elimination of whole- sale shirts the full $10,000 rental expense was borne by the remaining operations 31 Also listed under the above heading as wholesale shirt overhead and expense is, "Salaries-officer (50% of one employee) $1,560." Since this employee is Beatrice Vazzano, a sister of the owners, it is unlikely, and there is no evidence to show, that $1,560 was saved by discontinuing wholesale shirts. The employee's entire salary of $3,120 remained as overhead upon the remaining business. Another item allocated to wholesale shirts under "Administrative and Maintenance Salaries" is $13,441 50, being 34 8 percent (based on sales volume) of such salaries not other- wise applied. These salaries are those of the Vazzano brothers, plus a $5,025 salary of employee Paremba who is the principal employee in Savoy's laundry washroom. The $13,441.50 of overhead continued after the discontinuance of wholesale shirts. It appears that a total of approximately $41,605 in production costs and overhead that Colman had charged to wholesale shirts continued as costs and overhead after the discontinuance of wholesale shirts and thus is borne by the remainder of Savoy's operations. Taking the figures used by Colman, we find on Exhibit A of his report the figure of $218,457 as gross income for all Savoy operations excluding wholesale shirts. The total production costs and overhead of all operations excluding whole- sale shirts is given as $203,109. All nonwholesale shirt operations are therefore 30 At the May 15, 1961, State Board hearing, Vines was asked the following questions by the chairman of the State Board* Q Now, since the abandonment of the shirt operations has the company's business in other respects increased materially'1 A No, it has not Q It has remained about static1 A That's right 8' At the May 1961 State Board hearing Rudolph Vazzano was asked Q Has there been any attempt to rent or sublease any of the areas not in present use) A. No, sir. Q Would it he feasible' A. You couldn't rent it SAVOY LAUNDRY, INC. 327 shown by Colman as producing net income of $15,347. However, if we add to Colman's production costs and overhead for all operations except wholesale shirts the additional figure of $41,605 (original wholesale shirt costs and overhead that continued after wholesale shirts were discontinued) we have this picture: Total production costs and overhead (all operations except wholesale shirts and not including costs and overhead allocated to wholesale shirts)--------------------------------------------------- $203,109 Production costs and overhead originally allocated to wholesale shirts but which continued as costs and overhead for Savoy's remaining operations after wholesale shirt operation was discontinued------ 41, 605 Total production costs and overhead of Savoy after elimina- tion of wholesale shirts------------------------------ 244, 714 Gross income of Savoy from operations other than wholesale shirts-- 218, 457 Net loss of Savoy resulting from discontinuance of wholesale shirt operations------------------------------------- 26, 257 Having assumed, arguendo, that Colman's report showing income from and costs of wholesale shirts was accurate as to figures used and methods of allocation, we have nevertheless seen that because of fixed costs and overhead the elimination of wholesale shirts did not improve but worsened Savoy's financial status. There is, moreover, no evidence in the record that Savoy's net income improved as a result of the elimination of wholesale shirts. We will now examine Colman's report from a different aspect. The accountant, who did not audit the figures he used, relied upon Savoy's 1960 Federal income tax return (which had not been prepared by Colman) and information from the Vazzanos. His report used certain figures and various methods of apportionment that merit attention. I do not propose to set forth every item that aroused some question in my mind and where the explanation in conjunction with the record as a whole was reasonably plausible I have not adverted to it. (2) Accuracy and reliability aspects of Respondent's financial report In arriving at the important item of gross income from wholesale shirts, Colman used 6 selected weeks.32 He averaged the 6 weeks to obtain a weekly average of shirts processed, and then projected the average for a yearly total. There is no proof that the selected weeks were representative or otherwise. The only explana- tion offered for the selection is that in September 1961 when the Board agent was investigating the charge he apparently asked Stephen Vazzano for shirt price figures for the last 2 weeks in each quarter going back as far as Savoy's records would show. Savoy said its record did not go beyond June 1960 and it furnished informa- tion for the periods above described. During the investigatory stage of a case a spot check as aforedescribed would be almost routine and would be used with respect to a wide variety of industries or business It would be unrelated to any expert knowledge regarding the laundry business In any event, Colman's report was an undertaking by Savoy to prove that it was losing money on wholesale shirts and to support its defense to the charge and the complaint. As a part of that report it was incumbent upon Savoy and its account- ant to establish what they undertook by convincing evidence 33 Under the method adopted, an accurate picture of gross income from wholesale shirts required a total of all wholesale shirts for the year either by a projection of representative weekly or monthly figures or by adding the figures for every week or month for which records existed. I cannot determine from what is before me whether or not the weeks used by Colman were representative weeks.34 ,One of the items included by Colman under productive labor charged to wholesale shirts was "2 employees-washing, $7,228." Prior to the discontinuance of whole- 32 The weeks ending June 24 and 30 ; September 29 and October 6 ; December 24 and 29, all 1960 33 Questions asked or information requested by the Board agent during the investigatory stage were not determinative if indeed they were even relevant to Colman's obligation If the Board agent had asked only for the six highest shirt production weeks, it is un- likely that Colman would have or would have been obliged to annualise on such a basis 84 Rudolph Vazzano testified that the peak season for shirts is January, February, and' March, slowing down about May and June, very slow in the summer, and gradually pick- ing up in September onward. 328 DECISIONS OF NATIONAL LABOR RELATIONS BOARD sale shirts there were four and one-half men working in the washroom.35 Colman charged 34.8 percent of John Paremba's salary to wholesale shirts under another heading, "Administrative & Maintenance Salaries." This left three and one-half men in the washroom. Under "productive labor," two of these men were charged to wholesale shirts. Colman did this because this was what Stephen Vazzano told him was the appropriate allocation. The decision may have been correct but it raises some question. The washing machines were loaded according to weight although shirts were apparently not mixed with flatwork. In some respects shirts required more washroom handling. But Rudolph Vazzano testized before the State Board that an average of 32,000 pounds of all items went through the washroom per week, of which about 7,000 pounds were shirts.36 Shirts weighed half a pound. A piece of flatwork, e.g., a sheet, weighed 1 pound. If we use the average weekly number of wholesale shirts (13,440) that Colman used in computing wholesale shirt income, the average weekly weight of wholesale shirts was 6,720 pounds out of 32,000 pounds. Thus, while wholesale shirts constituted less than 22 percent of the weight of items washed, the pay of two out of three and one-half men handling the wash was allo- cated to wholesale shirts. Machinery depreciation is included among the items constituting wholesale shirt production costs. Colman charged 90 percent of the four shirt presses' depreciation, or $3,242, to wholesale shirts. The failure to allocate 100 percent of this item was attributable to the fact that the shirt presses were also used for retail household shirts and for linen supply uniform shirts. However, with respect to other machinery that included flat ironers and presses not used for shirts, Colman charged wholesale shirts with 34 8 percent of the depreciation or $3,065. Another approach to the accuracy and reliability of Colman's report is to use his basic figures and allocations but to apply them to the Savoy operations other than wholesale shirts. Colman did not make a cost study of any operation other than wholesale shirts. He had a gross income figure of Savoy from the income-tax return. He then computed income and cost of wholesale shirts and by subtracting the whole- sale shirt figures from Savoy's overall income and costs he showed a gross income and cost figure for the operations other than wholesale shirts. Savoy's 1960 income-tax return, used by Colman, shows gross income of $335,243. It also showed: Cost of Operations Payroll ------------------------------------------------- $136,819 Supplies-Laundry-------------------------------------- 20,835 Supplies-Linen----------------------------------------- 24,555 Dry Cleaning------------------------------------------- 6,964 Total cost of opers------------------------------------ 189,175 Since Colman's report allocates $60,675 of productive labor payroll to the whole- sale shirt operation, the linen payroll is properly charged with the balance of the $136,819 payroll or $76,141.37 Colman allocates a total of $11,545 to wholesale shirts under laundry and packaging supplies. Since total laundry supplies were $20,835, the balance of laundry supplies or $9,290 is properly charged to linen. The entire cost of linen supplies, $24,555, is chargeable to linen. I do not under- stand the dry cleaning figure of $6,964 since the record in the instant case and in the State Board shows consistent testimony by Savoy representatives that Savoy did not do dry cleaning. Avon Cleaners, owned by the Vazzanos, was engaged in dry cleaning. Whatever the explanation, it is clear that $6,964 was shown as one of Savoy's operating costs in its income-tax return. This dry cleaning cost is not a wholesale shirt cost and has not been so used by Colman; it is therefore chargeable to the other operations of Savoy, referred to herein as linen. Colman charged all but 10 percent of depreciation on four shirt pressing units to wholesale shirts. Therefore $360 is chargeable to linen. On the other machinery Colman charged 34 8 percent to wholesale shirts. Therefore, the balance of the 35 John Paremba, who put the washing formula in the machines set the timing of the washing machines, etc ; the common labor in the washroom were Rainoli (or Rinauldi) Zihall; Al Paremba; and Giardini (who spent half his time on nonwashroom duties) 36 Shirts would of course include retail, wholesale, and linen service shirts 37 Rather than continue to use the term "operations other than wholesale shirts," I shall here, and from this point on, use the term "linen" or "linen operations" as indicating all Savoy's operations (linen supply and household laundry) except wholesale shirts SAVOY LAUNDRY, INC. 329 depreciation on other machinery, or $5,700, is chargeable to linen. Colman used the same percentage allocation regarding machinery repairs and machinery insurance. The balance chargeable to linen on these two items is approximately $2,850 and $450, respectively. Under production costs and also under overhead, Colman charged a total of $4,238 in taxes to wholesale shirts, which was approximately 40 percent of total taxes of $11,134 listed as deductions on Savoy's income-tax return. The balance chargeable to linen would be $6,896. Under production costs Colman charged $22,285 to "Collection, Delivery and Sales Promotion." The last-mentioned schedule consisted of an item "Drivers .. . $10,125." The record shows six drivers, in Savoy's employ, including a driver- supervisor, none of whom were discharged on February 23 or 24, 1961. The item of $10,125 for drivers, charged to wholesale shirts, apparently represents the amount paid to one or one and one-half or two drivers on wholesale shirts. Since Savoy's income-tax return apparently included drivers under costs of operations, payroll, I will not in the present connection charge any drivers to linen. But, on truck expense ($19,646), since Colman charged 34.8 percent to wholesale shirts ($6,836), the sum of approximately $12,000 is chargeable to linen. Under the same heading appears "Advertising," of which 34.8 percent is charged to wholesale shirts or $548. The balance of $1,000 is chargeable to linen. The next item under the heading, "Salaries-Officer (10 percent of one man), $1,400," applied to wholesale shirts, is such that under this heading I will not apply a comparable item to linen. It will be covered under another heading. Under the same caption of "Collection, Delivery and Sales Promotion," charged to wholesale shirts are: "Claims-Allowances (50 percent attributable to shirt divi- sion), $1,585"; this would mean $1,585 is also chargeable to linen; "Sales Promo- tional (10 percent attributable to shirt division), $737"; this would mean $6,600 chargeable to linen; "Commissions, $616, representing 34.8 allocated to shirts"; this would mean approximately $1,200 chargeable to linen. As overhead, Colman allocates $6,797, 35.9 percent of total rent, including heat, utilities, and maintenance, to wholesale shirts. The balance, $12,200 may be charged to linen Insurance, other than on machinery and trucks, is allocated to wholesale shirts on a 34 8 percent basis or $1,531, which would mean $2,900 chargeable to linen. Stationery, printing, and office expense, on a basis of 50 percent of total, is charged to wholesale shirts in an amount of $672 which would mean $672, charge- able to linen. "Salaries, Administrative and Maintenance," are apportioned to wholesale shirts on a 34.8 basis or $13,441. The total of administrative and main- tenance salaries was $61,000, $56,000 of which was the salaries of the owners and the balance was a maintenance salary. Colman deducted from the $61,000 the amount of $22,400 since he had applied this amount under other headings such as productive labor supervision, collection, delivery, and sales promotion, and $14,000 for one man's nonshirt duties. He then applied 34.8 percent of unapplied ad- ministrative and maintenance salaries to wholesale shirts. Since, up to this point, I have not applied any administrative and maintenance salaries to linen, it appears proper to take the total of administrative and maintenance salaries, $61,000, deduct therefrom $21,481 ($7,000; $1,400; $13,441), charged to wholesale shirts, by Col- man and charged the balance or $39,159 to linen (all other operations of Savoy.) 38 Also under "Overhead," Colman charges to wholesale shirts, legal and auditing, $528, and telephone, $783, both charges being allocated to wholesale shirts on a 34.8 percent basis. This would mean approximately $1,500 and $2,200, respectively, chargeable to linen. Colman charges $398 to wholesale shirts under "Interest." Since total deduction for interest on the income tax return is $1,146, the balance of $748 is chargeable to linen. We have, in the foregoing paragraphs, endeavored to use, for all Savoy operations, exclusive of wholesale shirts, the same areas of costs, overhead, and theory of allocation as were used by Colman with respect to wholesale shirts. The result, when the aforedescribed costs and overhead are totaled, is a figure of approximately $215,070 (Colman's figure is $203,109) allocated to linen and other services ex- cluding wholesale shirts. The income, costs, and net income attributed to linen and other services in Colman's report were the balances derived by substracting, from Savoy's gross income and total production costs and overhead, as shown on his income tax return, the wholesale shirt income and wholesale shirt production cost and overhead as computed by Colman. 38 The item of "payroll" on Savoy's tax return did not include administrative salaries since the latter item of $56,000 was listed under "Deductions " :330 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Exhibit A of Respondent's Exhibit No. 7 (Colman's report ) show the following: 39 Savoy's income tax return Wholesale shirts Linen and other opera- tions Gross income $335,243 $116, 786 $218,457 Total production costs and overhead --------- ---------- 334,574 131, 465 203,109 Net income before Federal income tax------------ 669 (14,679) 15,348 If the amount or $215 ,070, instead of $203,109, is used for costs and overhead, ,for linen, and other operations , the financial picture, using Colman's other figures, is .as follows: Wholesale shirts Linen and other Gross income-------------------------------------- $335,243 ($335,243) $116, 786 $218,457 Costs and overhead --------------------------------- 334,574 (346 535) 131,465 215, 070 Net income on tax return --------------------- 669 (*11,292) (14, 679) 3,387 * Net loss. The above net loss on Savoy's total operations is not compatible with the Federal income-tax return and is therefore incorrect . Since the only figures that are not open -to question in the instant proceeding are the income-tax return amounts, it would appear that the inaccuracy rests wih some of the other figures shown. The gross income shown for linen in Colman's report is wholly dependent upon the correctness -of the wholesale shirt gross income shown . The net income shown for linen depends on the correctness of the gross income for linen. The cost figure used by Colman for linen ($203,109 ) is dependent upon the correctness of his wholesale shirt cost. The cost figure for linen of $215 ,070, above, undertakes to be consistent with the source figures and methods used by Colman in arriving at his wholesale shirt cost. The importance of the accuracy of the figures for wholesale shirts is of course obvious. I have previously pointed out areas in Colman 's report that aroused doubts and uncertainty. Some change in even one of these areas might or might not reveal a more accurate picture. For instance, if a total of demonstrably representative weeks showed an average of 14,947 wholesale shirts instead of 13,440 and an average price of 17 cents instead of 16.7, the gross income of wholesale shirts would be $132,134 instead of $116,786 . This would result in the following picture: Wholesale shirts Linen and other Gross income ------------------------------------------- $335,243 $132, 134 $203,109 Costs and overhead ------------------------------------- 334, 574 131,465 203,109 Net income--------------------------------------- 669 669 The foregoing, of course, is not advanced as the correct status of Savoy's operations but it illustrates that with such changes as those shown or changes in other wholesale shirt figures in various combinations or in linen figures, a cost picture in harmony with the income tax net income can result. Considerations of the foregoing type would not merit attention if the record established convincingly the accuracy of the financial picture presented by Colman. I claim not expertise in this area or that I know the financial picture of Savoy, particularly with respect to income and costs of its wholesale shirts and other operations. But, because I find myself unconvinced that a reliable picture of Savoy's wholesale shirt operation has been presented by Respond- ent, I am unable to determine the true state of those operations or to conclude that the closedown of wholesale shirts was economically motivated. I find , therefore, that 311 have omitted reproducing the odd cents SAVOY LAUNDRY, INC. 331 Respondent has not established the economic defense advanced as justification for the discontinuance of the wholesale shirt operation.40 The evidence in the record , including the timing of the shutdown , persuade me that the wholesale shirt shutdown was a maneuver to defeat the Union. Respondent's original attitude toward the Union on January 30, 1961, was that Respondent desired to have no dealings with that organization. When the Union did not "go away" and when Respondent was faced with a State Board hearing, recognition and negotia- tions took place. However, when confronted with the union wage demands Respond- ent apparently once again concluded that the Union was one with whom , it would not do business.41 The solution used was the shutdown which, I find, constituted a violation of Section 8(a)(1), (3), and (5) of the Act42 The discharge of the employees named in the complaint was an inherent part of the illegally motivated shutdown of the wholesale shirt operations ; by eliminating the union nucleus Respond- ent not only frustrated the possible consummation of a contract covering such employees but dealt a lethal blow at the effective strength of the Union in the plant. The complaint alleges and the record shows that, on February 24, 1961, and at various dates thereafter Respondent unilaterally changed the wage rates of various employees without notice to the Union43 It is my opinion that, since the Union was and continued to be the statutory bargaining agent, it was entitled to be advised by Respondent of proposed changes in wage rates of employees who were within the bargaining unit. The Union was also entitled to be told, on February 18, 1961, and thereafter, that Respondent while ceasing the great bulk of its wholesale shirt work, would continue to perform such work for certain customers. The Union's failure to accept the substantial closing of wholesale shirt operations as a bona fide economic move (as shown by the filing of a new charge) and the failure of Respondent to make full disclosure that it would still perform some wholesale shirt work, plus the find- ings herein regarding the wholesale shirt closing, negate attaching determinative significance to Cleary's remarks on February 18 that (in effect), if the wholesale shirt employees were being discharged he was not interested in negotiating a contract for the employees still retained by Savoy. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent set forth in section III, above, occurring in con- nection with the operations of the Respondent 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 thereof. V. THE REMEDY Having found that Respondent has engaged in unfair labor practices, I will recom- mend that it cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. Respondent has continued to operate as a functioning business, including the per- formance of wholesale shirt work. It still retains its plant and equipment and the only significant difference in operations is as to the amount of wholesale shirt work solicited and performed. While the amount of Savoy's wholesale shirt work, which is a customer-service, may not be wholly within Respondent's sole control (as contrasted with an employer who, instead of repairing its own trucks, has adopted the practice of having such work performed by an outside garage), I am not persuaded that the 401n addition to the various factors previously discussed there are others that may be mentioned in passing Savoy still continued to perform some wholesale shirt work after the purported discontinuance. The reason advanced for this is the assertion that other work, such as fiatwork, was thereby obtained or retained by a sort of tie-in with whole- sale shirts It is not clear why, in some degree, the same situation might not prevail in other instances Finally, no evidence has been presented to show that as a result of the substantial elimination of wholesale shirt operations, the financial condition of Savoy has thereby been Improved. For reasons previously discussed, it would appear that the opposite is true 41 As one of the Savoy owners said to an employee when she and others were being laid off on February 24, 1961, ". . . you all just had the wrong union, that union is . . . not for laundry " 42 Respondent, of course, was under no obligation to agree to the Union's wage demands but it was under an obligation not to undermine the Union while professing it willingness to bargain further 93 General Counsel's Exhibit No 15 establishes that 13 employees received wage In- creases at various specified dates commencing February 24, 1961. 332 DECISIONS OF NATIONAL LABOR RELATIONS BOARD volume of business or available jobs is entirely beyond Respondent's control. Ac- cordingly, it is recommended that Respondent make reasonable and businesslike efforts to restore its wholesale shirt operations to substantially the same scope and volume as prevailed prior to February 23, 1961. With due regard to the experience and qualifications of the employees named in the complaint who have not been offered reinstatement, it is recommended that Respond- ent offer these employees reinstatement to their former or substantially equivalent jobs, as available, without prejudice to any rights or privileges previously enjoyed. In the event that there are not sufficient job openings for the said employees, it is recommended that Respondent create a preferential hiring list, notify the Union and the employees of such list, and offer to said employees on the list reinstatement to their former or substantially equivalent jobs, as such are available, without preju- dice to their rights and privileges previously enjoyed. With respect to those employees named in the complaint to whom Respondent has offered or does offer reinstatement to their former or substantially equivalent jobs, it is recommended that Respondent make them whole for any loss of pay suffered by reason of the discrimination against them. The employees' net earnings during the period from the date of their discharge to the date of the offer of rein- statement shall be deducted from gross backpay in -a manner consistent with Board policy44 As to those employees named in the complaint for whom, during the 12-month period commencing from the date of this report, no job openings are available in Respondent's employ that are the same or substantially equivalent to their former jobs, with due regard for reasonable standards of qualification, and who have there- fore not been offered reinstatement, it is recommended that they be made whole for any loss of pay suffered by reason of the discrimination against them by paying to each of them a sum of money equal .to the amount she would normally have earned as wages from the date of the original discharge on February 23 or 24, 1961, until such time as each secures, or did secure, substantially equivalent employment with other employers 45 In the event that the Board adopts the foregoing recommendations or in the event that Respondent undertakes compliance with these recommendations initially, it is recommended that the Board expressly reserve right to modify the backpay and rem- statement provisions if made necessary by a change of conditions in the future, and to make such supplements thereto as may hereafter become necessary in order to define or clarify their application to a specific set of circumstances not now apparent. Since the Union represented and represents a majority of the employees in an appropriate unit that was not confined to employees who were terminated in Febru- ary 1961 and since any effect that the terminations may have had upon the Union's strength was due to the illegal conduct of Respondent, it is recommended that Re- spondent bargain with the Union upon request 46 [Recommendations omitted from publication.] 49 F. W. Woolworth Company, 90 NLRP. 289 's Bonnie Lass Knitting Mills, Inc, 126 NLRB 1396; The R C Mahon Company, 118 NLRB 1537, Steward Hog Rinq Company, Inc, 131 NLRB 310; St. Cloud Foundry & Machine Company, Inc, 130 NLRB 911. 46 Frank Bros Company v N L R B , 321 U S 702; N L R B. v. Philamon Laboratories, Inc, 298 F. 2d 176 (C.A. 2). Westinghouse Electric Corporation (Naval Reactors Facility) I and Eastern Idaho Metal Trades Council, AFL-CIO, Peti- tioner. Cases Nos. 19-RC-2956 and 19-RC-2957. May 24, 1962 DECISION AND ORDER Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before Orville W. Turnbaugh, hear- 1 The name of the Employer appears as amended at the hearing 137 NLRB No 30.