Liberty Electronics Corp.

LIBERTY ELECTRONICS CORP. , ETC. 605 APPENDIX NOTICE TO ALL EMPLOYEES Pursuant to the Recommended Order of a Trial Examiner of the National Labor Relations Board, and in order to effectuate the policies of the National Labor Rela- tions Act, we hereby notify our employees that: WE WILL NOT discourage membership in International Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers of America, AFL-CIO, and Beer Drivers Local 253, AFL-CIO, International Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers of America, AFL-CIO, or any other labor organization, by discharging any of our em- ployees, or in any manner discriminating in regard to their hire or tenure of employment, or any term or condition of employment. WE WILL NOT directly, or by implication, threaten employees with the with- drawal of existing privileges or with other forms of reprisals , because of their union membership or activities. WE WILL NOT interrogate employees concerning union affiliation or activities in a manner constituting interference , restraint, or coercion in violation of Sec- tion 8 (a) (1) of the Act. WE WILL offer to Albert Sells immediate and full reinstatement to his former or a substantially equivalent position , without prejudice to his seniority or other rights and privileges, and make him whole for any loss of pay suffered as a result of the discrimination against him. WE WILL NOT in any other manner interfere with, restrain, or coerce our em- ployees in the exercise of their right to self-organization , to form labor organiza- tions, to join or assist the above-named unions, or any other labor organization, to bargain collectively through representatives of their own choosing , to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection, or to refrain from any or all such activities. PEARL BEER DISTRIBUTING COMPANY OF JEFFERSON COUNTY, INCORPORATED, Employer. Dated- ------------------ By------------------------------------------- (Representative ) ( Title) NOTE.-We will notify the above-named employee if presently serving in the Armed Forces of the United States of his right to full reinstatement upon application in accordance with the Selective Service Act and the Universal Military Training and Service Act of 1948 , as amended, after discharge from the Armed Forces. This notice must remain posted for 60 consecutive days from the date of posting and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board 's Regional Office, 6617 Federal Office Building, 515 Rusk Avenue , Houston, Texas, 77002, Telephone No. Capitol 8-0611 , Extension 271, if they have any questions concerning this notice or compliance with its provisions. Liberty Electronics Corp.; Flight Electronic Supply Corp.; Ogelsby Corp., d/b/a Liberty Electronics Corp .; McCool Cor- poration, d/b/a Flight Electronic Supply Corp .; and Wyle Laboratories and Warehouse, Processing & Distribution Work- ers' Union, Local 26, International Longshoremen's and Ware- housemen's Union. Case No. 31-CA--1523. July 11, 1963 SUPPLEMENTAL DECISION AND AMENDED ORDER On September 27, 1962, the Board issued a Decision and Order I finding that Liberty Electronics Corp, and Flight Electronic Supply 3138 NLRB 1074. 143 NLRB No. 64. (606 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Corp., herein referred to as Liberty and Flight, respectively, had engaged in certain conduct in violation of Section 8 (a) (3) and (1) of the Act, and ordering that these Respondents, their officers, agents, successors, and assigns, cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act, in- cluding the reinstatement of employees with backpay. On Decem- ber 21, 1961, prior to the issuance of the aforementioned Decision and Order, Liberty and Flight entered into a written agreement with Wyle Laboratories,2 a California corporation, under which the busi- ness, assets, property, and leaseholds of Liberty and Flight were to be transferred to Wyle.' On the same day as the Board issued the above-mentioned Decision and Order, the General Counsel filed a motion to reopen the record in this proceeding for the purpose of joining Wyle as party Respondent and for the purpose of making any remedial order which the Board issued against Liberty and Flight applicable to Wyle as successor to Liberty and Flight. On October 11, 1962, Wyle filed an appearance requesting that the mo- tion be set down for a hearing and that the ruling on the General Counsel's motion be deferred until such hearing takes place. On October 22, 1962, the Board issued an order reopening the record in this proceeding; remanding the case to the Regional Director for the purpose of holding a further hearing as to the issues raised by the above motion and answer ; and directing the Trial Examiner to prepare a Supplemental Intermediate Report containing findings of fact, conclusions of law and recommendations respecting such issues. On November 13, 1962, a supplemental hearing was held before Trial Examiner Martin S. Bennett. The General Counsel and Wyle ap- peared at the hearing and were afforded an opportunity to be heard, to examine and cross-examine witnesses, and to adduce evidence bear- ing on the issues being litigated. On January 29, 1963, the Trial Examiner issued his Supplemental Intermediate Report in the above-entitled proceeding, finding that Wyle is a successor to Liberty and Flight and recommending that the Board's Order against Liberty and Flight be made applicable to Wyle, as set forth in the attached Supplemental Intermediate Report. Thereafter, Wyle filed exceptions to the Supplemental Intermediate Report and a supporting brief. The Board has reviewed the rulings of the Trial Examiner made at the reopened hearing and finds that no prejudicial error was com- mitted. The rulings are hereby affirmed. The Board has considered 2 Ogelsby Corp , d/b/a Liberty Electronics Corp , and McCool Corporation , d/b/a Flight Electronic Supply Corp , named in the caption of this proceeding , are wholly owned subsidiaries of Wyle Laboratories, formed shortly after January 31, 1962 , to operate Liberty and Flight. On November 1, 1962, McCool was dissolved and its operations taken over by Ogelsby . Ogelsby Corp .. McCool Corporation , and Wyle Laboratories are referred to herein as Wyle. 8 The transfer was consummated on January 21, 1962 LIBERTY ELECTRONICS CORP., ETC. 607 the Supplemental Intermediate Report, the exceptions and brief, and the entire record in the case, and hereby adopts the findings, conclu- sions, and recommendations of the Trial Examiner with the modifi- cations noted below.4 THE REMEDY Having found that Wyle is a successor to Liberty and Flight, and, as such, is responsible, together with Liberty and Flight, to remedy the unfair labor practices herein, we shall amend our original Order in this proceeding by making the affirmative provisions thereof ap- plicable to Wyle. However, since Wyle has not itself violated the Act, we shall not order it to cease and desist from the unlawful con- duct which was engaged in by Liberty and Flight 5 AMENDED 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 : 4 Wyle, in contending that it should not be responsible for remedying the unfair labor practices of Liberty and Flight, relies, inter aha, on Rule 65 ( d) of the Federal Rules of Civil Procedure , which the Supreme Court , in Regal Knitwear Company v N.L R.B, 324 U S. 9, held was applicable to orders issued by the Board . Rule 65 ( d) provides that "Every order granting an injunction and every restraining order shall set forth the reasons for its issuance ; shall be specific in its terms ; shall describe in reasonable detail, and not by reference , to the complaint or other document , the act or acts sought to be restrained ; and is binding only upon the parties to the action , their officers, agents, servants, em- ployees and attorneys , and upon those persons in active concert or participation with them who have received actual notice of the order by personal service or otherwise " Wyle contends , in substance, that since it was not a party to the original proceeding and did not receive any notice in the form of a charge or complaint that it had engaged in conduct violating the Act, and since there is no -contention that it participated with Liberty and Flight in the unfair labor practices herein, the procedural requirements of Rule 65 ( d) have not been met. We find no merit in this contention . Our conclusion that the Board's original Order against Liberty and Flight is applicable to Wyle is not predicated on a finding that Wyle itself violated the Act but rather on Wyle's successorship to Liberty and Flight ; moreover, as noted, Wyle was given due notice of, and fully par- ticipated in, all the proceedings relating to the issue of whether it is a successor to Liberty and Flight In view of these circumstances , we find that Wyle was not denied due process of law and that the procedural mandate of Rule 65 (d) has been complied with 6 As described more fully in the Supplemental Intermediate Report, on May 31, 1962, Liberty and Flight wrote to Wyle demanding rescission of the agreement of transfer be- cause of certain alleged misrepresentations by Wyle. There is no indication as to the present status of this claim for rescission. We shall therefore make the affirmative pro- visions of our original Order applicable to Wyle only in the event that the agreement between Wyle and Liberty and Flight has not been rescinded . Further, since the Trial Examiner found that there may have been a reduction of personnel at Wyle's plants, we shall order that Wyle reinstate the hereinafter named employees, dismissing, if necessary, all persons hired after the discriminatory terminations on August 30, 1961; that, in the event that there is insufficient work for the remaining employees and those to be offered reinstatement, all available positions shall be distributed among them without discrimina- tion against any employee because of concerted activities, in accordance with a system of seniority or other nondiscriminatory basis ; and that those employees , if any, for whom no employment is available after such distribution , shall be placed on a preferential hiring list, with ,priority in accordance with a system of seniority or other nondiscriminatory basis , and such individuals shall be offered reinstatement as such employment becomes available and before other persons are hired for such work. 608 DECISIONS OF NATIONAL LABOR RELATIONS BOARD A. The Respondents Liberty Electronics Corp. and Flight Elec- tronic Supply Corp., Inglewood, California, their officers, agents, and assigns, shall : 1. Cease and desist from : (a) Discouraging membership in Warehouse, Processing & Distribu- tion Workers' Union, Local 26, International Longshoremen's and Warehousemen's Union, or in any labor organization of their em- ployees, by discharging employees or by discriminating in any other manner in regard to hire or tenure of employment , or any term or condition thereof, except to the extent permitted under Section 8 (a) (3) of the Act, as amended. (b) In any other manner interfering with, restraining, or coercing its employees in the exercise of their right to self-organization, to form labor organizations, to join or assist the above-named or any other labor organization, to bargain collectively through representatives of their own choosing, to engage in concerted activities for the purpose 'of collective bargaining or other mutual aid or protection, and to re- frain from any or all such activities, except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment, as authorized in Section 8 (a) (3) of the Act, as amended. B. The Respondents, Liberty Electronics Corp., Flight Electronic Supply Corp., Ogelsby Corp., d/b/a Liberty Electronics Corp., Mc- Cool Corporation, d/b/a Flight Electronic Supply Corp., and Wyle Laboratories, jointly and severally, and their officers, agents, succes- sors, and assigns, shall : 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Offer to the 17 employees named in the attached Appendixes immediate and full reinstatement to their former or substantially equivalent positions, without prejudice to their seniority or other rights and privileges, and make` them whole from September 22, 1961, for any losses suffered by reason of the discrimination against them in the manner set forth in the section of the original Inter- mediate Report entitled "The Remedy," as modified by the original Decision and Order and the Supplemental Decision and Amended Order herein. (b) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to determine the amount of backpay due under the terms of this Order. LIBERTY ELECTRONICS COItP., ETC. 609 (c) Post at their respective plants copies of the applicable attached notices marked "Appendix A" and "Appendix B." I "Copies of said no- tices, to be furnished by the Regional Director for the Twenty-first Region, shall, after being duly signed by an official representative of each of the said Respondents, be posted by the respective Respondents immediately upon receipt thereof, and be maintained by them for 60 consecutive days from the date of posting, in conspicuous places, in- cluding all places where notices to its employees are customarily posted. Reasonable steps shall be taken by the Respondents to insure that such notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director for the Twenty-first Region, in writing, within 10 days from the date of this Amended Order, what steps have been taken to comply herewith. 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 "A Supplemental Decision and Amended Order" ithe words "A Decree of the United States Court of Appeals, Enforcing an Order." APPENDIX A NOTICE TO ALL EMPLOYEES Pursuant to a Supplemental Decision and Amended 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 or activity on behalf of Warehouse, Processing R Distribution Workers' Union, Local 26, International Longshoremen's and Warehousemen's Union, or any other labor organization of our employees, by discriminit- ing in any manner in regard to hire or tenure of employment, or any term or condition thereof, except to the extent permitted under Section 8 (a) (3) of the Act, as amended. WE WILL NOT in any 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 the above-named or any other labor organization, to bargain collectively through rep- resentatives of their own choosing, to engage in concerted activi- ties for the purpose of collective bargaining or other mutual aid or protection, and to refrain from any or all such activities, ex- cept to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment, as authorized in Section 8(a) (3) of the Act, as amended. WE WILL jointly. and severally with Ogelsby Corp., d/b/a Liberty Electronics Corp.; McCool Corporation, d/b/a Flight 610 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Electronic Supply Corp.; and Wyle Laboratories, offer to the employees named below immediate and full reinstatement to their former or substantially equivalent positions , without prejudice to seniority or other rights and privileges, and will make them whole for any loss of pay suffered as a result of our discrimination against them. Flight Electronic Supply Corp. : Shirley A. McCright Margie Harbeck Jean Marie Donahue Elvin E. Talley Jacqueline King Roger B . Williams Liberty Electronics Corp. : Kenneth Gene McBride Gwendaline Lynes Valerie E. Glover Irene Davis Glen T. Harbeck Betty Fletcher Esther Gallegos Jackie Jackson Rene L. Thezan Fred Martinez Alice Miller All our employees are free to become or remain , or refrain from becoming or remaining, members of the above-named or any other labor organization. LIBERTY ELECTRONICS CORP. AND FLIGHT ELECTRONIC SUPPLY CORP., Employers. Dated---------------- By------------------------------------- (Representative ) (Title) NoTE.-We will notify any of the above-named employees presently serving in the Armed Forces of the United States of their right to full reinstatement upon application in accordance with the Selective Ser- vice Act and the Universal Military Training and Service Act of 1948, as amended, after discharge from the Armed Forces. This notice must remain posted for 60 consecutive days from the date of posting, and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board's Regional Office, 849 South Broadway, Los Angeles, California, 90014, Tele- phone No. Richmond 9-4711, Extension 1031, if they have any ques- tion concerning this notice or compliance with its provisions. APPENDIX B NOTICE TO ALL EMPLOYEES Pursuant to a Supplemental Decision and Amended Order of the National Labor Relations Board, and in order to effectuate the policies LIBERTY ELECTRONICS CORP., ETC. 611 of the National Labor Relations Act, we hereby notify our employees that : WE WILL, jointly and severally with Liberty Electronics Corp. and Flight Electronic Supply Corp., offer to the employees named below immediate and full reinstatement to their former or sub- stantially equivalent positions, without prejudice to seniority or other rights and privileges, and make them whole for any loss of pay suffered as a result of our discrimination against them. Flight Electronic Supply Corp. : Shirley A. McCright Jean Marie Donahue Jacqueline King Liberty Electronics Corp. : Kenneth Gene McBride Valerie E. Glover Glen T. Harbeck Esther Gallegos Rene L. Thezan Margie Harbeck Elvin E. Talley Roger B. Williams Gwendaline Lynes Irene Davis Betty Fletcher Jackie Jackson Fred Martinez Alice Miller OGELSBY CORP., D/B/A LIBERTY ELECTRONICS CORP., Employer. Dated---------------- By------------------------------------- (Representative ) (Title) MCCOOL CORPORATION, D/B/A FLIGHT ELECTRONICS SUPPLY CORP., Employer. Dated---------------- By------------------------------------- (Representative ) (Title) WYLE LABORATORIES, Employer. Dated---------------- By------------------------------------- (Representative ) (Title) NoTE.-We will notify any of the above-named employees presently serving in the Armed Forces of the United States of their right to full reinstatement upon application in accordance with the Selective Service Act and the Universal Military Training and Service Act of 1948, as amended, after discharge from the Armed Forces. This notice must remain posted for 60 consecutive days from the date of posting, and must not be altered, defaced, or covered by any other material. Employees may communicate directly with the Board's Regional Office, 849 South Broadway, Los Angeles, California, 90014, Tele- phone No. Richmond 9-4711, Extension 1031, if they have any question concerning this notice or compliance with its provisions. 717-672-64-vol. 143-4 0 612 DECISIONS OF NATIONAL LABOR RELATIONS BOARD SUPPLEMENTAL INTERMEDIATE REPORT STATEMENT OF THE CASE The original Decision and Order in this case issued on September 27, 1962 (Liberty Electronics Corp. and Flight Electronic Supply Corp., 138 NLRB 1074). Therein, the Board in substance adopted the Intermediate Report and Recommended Order which issued on June 1, 1962, following hearings on December 7, 8, 13, 14, 19, and 20, 1961. This report stems from a motion of the General Counsel, filed September 27, 1962, to reopen the record for the limited purpose of (1) joining as parties Respondent Ogelsby Corp., d/b/a Liberty Electronics Corp.; McCool Corporation, d/b/a Flight Electronic Supply Corp.; and Wyle Laboratories;' and (2) making any remedial order in the case also applicable to the latter, herein called the added Respondents. The motion was predicated upon the purported sale of the assets of the original Liberty and the original Flight 2 to Wyle who assumed the unfair labor practice liabilities of the former, and the continuation of the businesses with substantially unchanged personnel by Wyle, Ogelsby, and McCool, the latter two being sub- sidiaries of Wyle. On October 22, 1962, the Board ordered that the record be reopened and served copies of said order with notice of hearing thereon upon Ogelsby, McCool, and Wyle, as well as on the original Respondents. The Board further ordered that a Supplemental Intermediate Report be issued containing findings of fact, conclusion of law, and recommendations with respect to the issues raised. Such hearing was duly held before Trial Examiner Martin S. Bennett at Los Angeles, California, on November 13, 1962. The General Counsel and the Charging Party were represented by counsel as were Ogelsby, McCool, and Wyle. Oral argument was waived and briefs have been received from the General Counsel and from the added Respondents. Upon the basis of the record, and from my observation of the witnesses, I make the following: FINDINGS OF FACT A. Introduction The General Counsel does not contend that there has been any collusion between the original and added Respondents or that the latter are an alter ego of the former. He relies rather on a business transaction undertaken with fairly complete knowl- edge of the pending unfair labor practice case together with a contractual under- taking to assume all liabilities, debts, or obligations with respect thereto. The added Respondents concede liability for backpay up to January 31, the date of closing of the transaction. B. Sequence of events November 1961: Negotiations commenced for the sale to the added Respondents of the assets and leaseholds of the original Respondents. December 21, 1961: December 20 was the last day of the unfair labor practice hearing in the case against the original Respondents, Liberty and Flight. Edward Sanders, attorney for the added Respondents, testified that he was on notice as of December 21 that the hearing had ended and that a decision by the Trial Examiner was awaited. On the same date, a 26-page agreement was signed between Wyle Laboratories on the one hand, and the old Liberty, the old Flight, and two other corporations, Na- tional Electronic Components, Inc., and Atlas Electronics, Inc.; the latter concerns were affiliated with the two original Respondents. All stock in these four corpora- tions, but for that of qualifying directors, is held by one Irving Zeiger and his wife, except in the case of National where one of Zeiger's attorneys, Blau, owns less than a majority. Accordingly, Zeiger signed in behalf of all four corporations. The record discloses that Wyle Laboratories is a California corporation based at El Segundo, California, where it (1) operates an independent testing laboratory in the aerospace field, and (2) operates two manufacturing divisions. One, Wyle Manufacturing, manufactures environmental test equipment for aerospace testing; the other, Rinsom Research Division, manufactures digital components and systems. The original Respondents were engaged in the' distribution and warehousing of elec- tronic components and this constituted a new field of operation for Wyle. Ogelsby 'The last three-named Respondents have been added as parties Respondent for the reasons set forth hereinafter. 2 This term will be used to distinguish them from Ogelsby d/b/a Liberty and McCoo1 d/b/a Flight. LIBERTY ELECTRONICS CORP . , ETC. 613 and McCool are California corporations, 100 percent owned by Wyle Laboratories, which were formed by Wyle shortly after January 31, for the sole purpose of operat- ing Liberty and Flight, respectively. Section 9 (k) of this December 21, 1961 , agreement provides that "Liberty," a term describing all four contracting corporations, "knows of no organizational ac- tivity among its employees other than in connection with the Warehouse Workers' strike." It is clear and I find that this refers to the strike during which the 17 com- plainants were discriminatorily discharged , as found by the Board. Various supplemental amendments relating to the consideration for the transaction and related topics were executed on Deecmber 22, 1961 , and January 4 and 31, 1962. The January 4 amendments provided that the closing date would be no later than January 31, and the transaction was closed on that date. The foregoing documents plus another document dated January 31, 1962 , and described below, constitute all relevant papers whereby the assets , leaseholds, and leasehold improvements of the original Respondents were acquired by the added Respondents. The Liberty lease was for approximately 5 years plus options. The Flight leases were for slightly over 2 years plus options and covered two buildings. Mid-January 1962: As set forth, the added Respondents were on notice as of December 21, 1961 , of the pending unfair labor practice case and the forthcoming decision. Between that date and the closing date, January 31 , 1962, Wyle investi- gated further concerning the unfair labor practice case. It may be noted that the consideration for the transaction consisted of 36,500 shares of stock in Wyle which approximated the net worth of the original Respondents of $800 ,000, as determined by an independent audit. It was anticipated that if this audit of the assets of the original Respondents disclosed their value to be less than $800,000, the number of shares of Wyle stock to be transferred would be reduced proportionately. Attorney Edward Sanders , whose law firm represents the added Respondents, spe- cializes in taxation and corporate law practice and has had no experience in the field of labor law. He attended all but one of the negotiating meetings leading up to the purchase by Wyle of these assets . Sanders uncontrovertedly testified that in mid-January 1962, and prior to the closing date , he met with Attorney Leon Cooper who, together with an industrial relations consultant , represented the original Re- spondents in this matter . Sanders endeavored to ascertain the extent of the monetary liability in the unfair labor practice case and was told by Cooper that "there was a very good chance that the companies would prevail in the matter ." They diccussed the amount of backpay in the event of an adverse finding and , "we came away from that meeting with a figure somewhere in the neighborhood of eighteen or twenty thousand [dollars] as being the liability . . . that Wyle could expect to have to pay at the very worst." The record does not disclose whether this was an accurate appraisal. Sanders admitted that Cooper acquainted him with the fact that the case involved the issue of strikers and their alleged discharge and that Cooper summarized the evidence and the issues for him. He also told Cooper that he was relying on the information given him by Cooper. Sanders further testified that he came away with the opinion that the monetary liability would stop increasing as of January 31, 1962, the closing date; he later testified that he decided that the added Respondents would be liable for backpay only through January 31. The issue of reinstatement of the strikers was not discussed and Sanders did not recall whether Cooper expressed an opinion as to continuing liability of the added Respondents for backpay. He also testified that the audit of the assets of the original Respondents showed them to be worth in excess of $800 ,000; it appears that this excess was adequate to absorb the anticipated $ 18,000 to $20 ,000 backpay liability and as a result Wyle did not attempt, prior to the closing date, to obtain a reduction in this amount from the $800,000 purchase price. Therefore, according to Sanders, Wyle had the $ 18,000 to $20 ,000 figure in mind when it executed the closing agree- ment on January 31, 1962 . As Sanders put it, "That was the buyer's understanding of that particular paragraph [paragraph 1 of the January 31 agreement, infra]." Sanders further admitted that he was satisfied to rely upon the statement of Counsel Cooper of the original Respondents ; that he investigated no further ; and that he made no investigation as to the "possible right of reinstatement" of the strikers. While he knew that the Board maintains a Regional Office in Los Angeles and as- sumed that a-transcript of the testimony existed , he did not inspect the pleadings and did not contact the Regional Office . No other legal opinions were obtained , although Wyle did take up the matter with its labor consultant , one Kameroff, prior to Janu- ary 31 , 1962. The latter did not testify herein and his views are not reflected in the transcript. 614 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Sanders did recommend to Wyle that the assets of the original Respondents be bought but not the stock in order to avoid any liability or obligation other than those that were disclosed and contracted for. Accordingly, there was no transfer of the original Liberty or Flight stock. January 31 , 1962: Counsel Blau of the original Respondents drafted a document in behalf of all the sellers which was accepted and approved by Wyle Laboratories. As Counsel Sanders testified , "It stated certain disclosures that had been made by the seller to the buyer." This was agreed to and accepted by Wyle and the disclosures pertinent herein are set forth in the following paragraph: 1. Certain former employees of Liberty have filed a suit against Liberty before the National Labor Relations Board for back pay and a reinstatement arising out of representations of alleged wrongful discharge and refusal to rehire be- cause of union activities. Wyle acknowledges it has been advised of such labor activities and claimant agrees to assume any debts , liabilities or obligations arising therefrom and shall indemnify and hold harmless Liberty and Zeiger against and in respect of the foregoing, including labor consultant's fees, at- torney's fees, and costs of defending said claim. January 31 , 1962: On January 31 , according to Vice President Edward Rubin of Wyle, Frank Wyle directed him to assume new and virtually full-time responsibilities as president of both Liberty and Flight. Soon thereafter, Ogelsby and McCool were formed by Wyle, which owned all their stock, for the purpose of operating Liberty and Flight, respectively. Thereafter, on November 1, 1962, McCool d/b/a Flight was merged into Ogelsby, leaving Ogelsby d/b/a Liberty as the sole survivor, and McCool was dissolved. The new Flight also ceased to exist as of that date. C. Transfer of personnel and continuation of the business In mid-January 1962, and prior to the closing date of January 31, applications for employment with Wyle were distributed to all employees of the original Liberty and Flight. The purchase agreement did not treat with this , but according to Vice President Edward Rubin, it was the intention of Wyle to hire as many as possible of these employees. As a result, no employee of Liberty and Flight was denied em- ployment because of any information supplied on this application form . There was no hiatus in the operation of these enterprises and there were no new hires in the period immediately following January 31. On January 31, or shortly thereafter , the notice appearing below was distributed to all employees at Liberty . A substantially similar notice , except for the identifica- tion of Flight, was distributed to employees of the latter . In addition, a number of talks were held by the new management with various individual employees. The notice, in part, read as follows: Date: 1-31-62 To: All Employees of Liberty Electronics Corp. From : EDWARD RUBIN [S] Edward Rubin. Subj : Acquisition by Wyle Laboratories. ------------------------------------------------------------------- At 4:00 this afternoon Wyle Laboratories concluded its acquisition of the assets of Liberty Electronics Corp. We have every confidence that this acquisi- tion will prove beneficial to you , the employees ; to the Company; and to Wyle Laboratories , the parent company. This confidence has been borne out in the contacts I have had with Liberty personnel during the last month. We have decided to keep the identification of the old company , so effective tomorrow morning all of you will become employees of Liberty Electronics Corp., a subsidiary of Wyle Laboratories. We have already received employ- ment applications from each of you, and these will be processed immediately. We are also pleased to announce that Liberty Electronics Corp ., as a subsidiary of Wyle Laboratories, has received a distributorship from Cannon Electronic Company. This includes appointment of the new company as a CAPS. Another, and highly significant event is the acceptance by North American Aviation of Liberty Electronics Corp . and Flight Electronic Supply Corp., as subsidiaries of Wyle Laboratories , as approved suppliers. At the outset, Wyle continued to employ all the production and maintenance em- ployees of Liberty and Flight. There was no attrition for some months, although some has since taken place . As of the date of this hearing, according to Vice President Rubin, the number of employees on the payroll has dropped approximately 20 per- LIBERTY ELECTRONICS CORP., ETC. 615 tent, this figure including the entire complement of personnel both within and with- out the production and maintenance unit. One operational change has been made. About 1 week after January 31, Wyle closed down one of the two Flight buildings and transferred three unit employees to its other building. This resulted from the elimination by Wyle of certain operations it deemed to be unethical. The added Respondents stress that they have abandoned this unethical work and the record dis- closes that this is the fact. Specifically, the original Respondents had acquired cer- tain old or surplus parts and had passed them off as new merchandise. Wyle had known of this activity prior to the transaction, but had been under the impression that it was abandoned some months earlier. Be that as it may, the new management con- tinued the legitimate warehousing and distribution of electronic components of the original Respondents.3 It also appears that the old management employees were taken over. Thus, those immediately below Rubin, viz, the operations manager, sales manager, and comp- troller were transferred from the old Liberty. The next echelon consisted of two, one of whom was taken over and the other not hired until July of 1962. Shortly after January 31, a booklet setting forth the personnel policies of "Liberty Electronics Corp., a subsidiary of Wyle Laboratories" was distributed to all employees of McCool and Ogelsby. The record indicates that certain conditions of employment have been carried over by the added Respondents. The added Respondents also have a vacation benefit which has a qualifying period of eligibility and in computing this benefit, credit is given for tenure with the original Liberty and Flight. There is also evidence of certain parallel personnel policies, consistent with a policy as described by Vice President Rubin of attempting "to continue all the benefits that we felt were economically feasible." Thus, under both regimes, 5 days of sick leave are granted annually; insurance is fully paid; and, with minor changes, the vacation plans are similar. In other areas changes have been made. To sum up, the assets of the original Liberty and Flight were purchased by the added Respondents with full knowledge of the pending unfair labor practice case and the deal was closed subsequent to the litigation but prior to a decision. The added Respondents, with such knowledge, expressly undertook to assume all "debts, liabilities or obligations arising therefrom." Thereafter, with no hiatus, they con- tinued to operate the business in substantially unchanged form except for the elimina- tion of one ostensibly unethical phase thereof. It may be noted that on May 3, 1962, the sellers sent to Wyle Laboratories a "Notice of Rescission" of the agreement of December 21, 1961, on the alleged ground that execution thereof "was obtained through material misrepresentation." The 36,500 shares of Wyle stock were tendered therein and request was made for return of the assets and things of value contributed by the original Respondents to the trans- action. Subsequent developments are not disclosed and the record is silent as to any attempt by Wyle to rescind this agreement predicated upon any representation as to the amount of backpay involved in the unfair labor practices. One can only as- sume that Wyle does not concur in the position taken by the sellers in the May 3, 1962, letter. Conclusions It appears then that the present status of this transaction is as follows: The sellers, controlled by one person, Zeiger, have in effect exchanged their assets, consisting of inventory and leaseholds, for new assets consisting of stock in Wyle. On the other hand, the sellers may or may not wish their original assets back. There is also no showing whether the Wyle stock is in the hands of the original Respondents or has been distributed to the chief stockholder therein and beyond. This only points up the fact that assets have changed hands and that they may change again. The parties have directed attention to Symns Grocer Co , and Idaho Wholesale Grocery Co., 109 NLRB 346, and N.L.R B. v. Birdsall-Stockdale Motor Company, 208 F. 2d 234 (C.A. 10). A reading of these decisions warrants the view that they may not stand for as much as is attributed to them. It is true that in 1954 the Board, in reliance on the Birdsall-Stockdale decision, reversed its original decision in the Symns case which appears in 103 NLRB 622. The Board concluded that it could not reach as successors persons who purchased the business of a party litigant with knowledge of a pending unfair labor practice proceeding and continued the business in basically unchanged form. Reliance was placed upon its analysis of the decision 'Rubin contended that over one-half the profits of the business came from this un- ethical operation, but he was unable to state what percentage of sales this represented. 616 DECISIONS OF NATIONAL LABOR RELATIONS BOARD in Regal Knitwear Company v. N.L.R.B., 324 U.S. 9, and upon a consideration of Rule 65(d) of the Federal Rules of Civil Procedure.' Turning to the Birdsall-Stockdale decision, the Board had initially found that the original employer, Birdsall, refused to bargain with the union and ordered him to do so. Birdsall then proceeded to advise the union at the first meeting that the business might be sold and it was in fact sold prior to a second meeting. The purchaser, John- son, acquired physical properties and assets but unlike the instant case, there was no assumption of liability; the transaction was bona fide. While a reading of the Board's supplemental decision in the case, appearing in 101 NLRB 305, discloses that the purchaser had notice of the pending unfair labor practice charge, the circuit court did not rely on this premise. It stressed rather the language of Rule 65(d) and stated: Where successors and assigns are in active concert or participation with a defendent or respondent in the violation of an order, or are instrumentalities through which the defendant or respondent seeks to evade an order, they are brought within the scope of contempt proceedings by Rule 65(d), supra. The court went on to state that "Johnson was a bona fide successor, in nowise as- sociated with and acting wholly independently of its predecessor, Birdsall. Under such circumstances, equally important considerations of public policy require that Johnson should not be charged with the wrongs of his predecessor and should not be adjudged of wrongdoing on its part without complaint, notice, full opportunity to present its defense and the other essential requirements of due process of law." [Emphasis supplied.] It may be noted that the Regal Knitwear decision does not go as far as the court of appeals in Birdsall seems to indicate. The issue there was solely whether the language "successors and assigns" would be used in the enforcement of a cease-and- desist order. The court did point out that the scope of "successors and assigns" may not be enlarged beyond that defined by the Federal Rules of Civil Procedure. It also stated that "We have also said of an injunction to restrain violation of the Fair Labor Standards Act, which is somewhat analogous to Labor Board orders, that `Not only is such an injunction enforceable by contempt proceedings against the corporation, its agents and officers and those individuals associated with it in the conduct of its business, but it may also, in appropriate circumstances, be enforced against those to whom the business may have been transferred, whether as a means of evading the judgment or for other reasons.' Walling v. Reuter Co., 321 U.S. 671, 674 ... We do not undertake to decide whether or under what circumstances any kind of suc- cessor or assign will be liable for violation of a Labor Board order." [Emphasis supplied.] The court ultimately enforced the order as written but indicated that there was no concrete case before it. It closed by stating "We can not say that `successors and assigns' as well as `officers and agents' may not under some circumstances be among those reached by the order within the scope of Rule 65 and hence cannot say that it is not a permissible provision." To all of the foregoing is to be added another factor strongly stressed by the General Counsel herein, namely, the written undertaking by the added Respondents, who had been duly served with notice of the motion to join them as parties and then participated herein, to assume the debts, liabilities, and obligations arising from the discharge of the strikers and their potential reinstatement. That this contract was entered into in reliance upon a perhaps erroneous legal opinion as to the amount of liability is no defense. Old King Cole, Inc. v. N.L.R.B., 260 F. 2d 530 (C.A. 6), and N.L.R.B. v. Local 404, International Brotherhood of Teamsters, etc. (Brown Equipment & Manufacturing Co.), 205 F. 2d 99 (C.A. 1). It is readily apparent that a transaction such as this may lend itself to manipulation. In the instant case, one is confronted with an attempted rescission yet, in view of the one man control of the selling corporations, reaching the assets of the corporate shells may be impossible or at least a drawnout procedure. 4Rule 65(d) reads as follows: FORM AND SCOPE OF INJUNCTION OR RESTRAINING ORDER. Every order granting an injunction and every restraining order shall set forth the reasons for its issuance ; shall be specific in terms ; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained ; and is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise. PORAY, INC. 617 Moreover, although there is no such evidence here, a rule relieving the purchaser of all liability despite its contractual commitment invites chicanery because an agreement as that present here may readily be accompanied by a side agreement of different import. Furthermore, the purchaser has already received the estimated amount of this liability. The equities, it would seem, favor the innocent victims of the unfair labor practices in such an instance.5 Otherwise, all a seller has to do is misrepresent the nature of the unfair labor practices he has committed; the purchaser ostensibly accepts and relies upon this misrepresentation; and liability ends as of that moment. Finally, can it be categorically stated that the added Respondents are not "par- ticipating" in these unfair labor practices within the meaning of Rule 65(d) where the matter was an express matter of negotiation, contract, and financial arrangement between the Respondents? Is the failure and refusal to reinstate a discriminatee any less an unfair labor practice than the initial discharge, bearing in mind that due notice and an opportunity to litigate have been afforded? Why in logic is "par- ticipating" subject to a cutoff date when unremedied unfair labor practices are present? Certainly, the element of due process has been met in the present case. See Swetland v. Curry, 188 F. 2d 891 (C.A. 6). And, the same court that decided the Birdsall case appears now to have relaxed its approach thereto. N.L.R.B. v. McFarland & Hullinger, 306 F. 2d 219 (C.A. 10). Accordingly, in view of all the foregoing considerations, I find that Wyle, McCool, and Ogelsby are properly joinable herein as Respondents and so recommend. CONCLUSION OF LAW Wyle Laboratories, Ogelsby Corp., d/b/a Liberty Electronics Corp., and McCool Corporation, d/b/a Flight Electronic Supply Corp., are employers within the mean- ing of Section 2(2) of the Act and are parties Respondent herein. RECOMMENDATIONS It is hereby recommended that the original Order in this case be made applicable to the added Respondents with the exception of McCool which was dissolved on November 1, 1962. It is further recommended that the added Respondents, in the event the rescission has not been fully carried out, be ordered to reinstate the com- plainants and that both the added and the original Respondents jointly and severally make the complainants whole, in the manner previously ordered by the Board. It appearing that the added Respondents may presently have 20 percent less posi- tions than there are employees to be reinstated, those not reinstated in accordance with an objective nondiscriminatory plan are to be placed on a preferential hiring list, with backpay to be tolled from the date of reinstatement, or placement on such list. 6 This is not intended in any way to pas''s upon any private litigation between the seller and the purchaser or, more specifically, on the issue of contribution between them. Poray, Inc. and Metal Processors' Union, Local No. 16, AFL- CIO. Case No. 13-CA-5065. July 1I, 1963 DECISION AND ORDER On March 29, 1963, Trial Examiner Frederick U. Reel issued his Intermediate Report in the above-entitled proceeding, finding that the Respondent had engaged in and was engaging in certain unfair labor practices and recommending that it cease and desist therefrom and take certain affirmative action, as set forth in the attached Intermediate Report. The Trial Examiner also found that the Respondent had not engaged in certain other unfair labor practices alleged in the com- plaint and recommended that those allegations of the complaint be 143 NLRB No. 66.