McLoughlin Manufacturing Corp.

140 DECISIONS OF NATIONAL LABOR RELATIONS BOARD McLoughlin Manufacturing Corporation; Lady Jo, Inc.; J. Sidney Smith , Individually and as a Director and Officer of McLoughlin Manufacturing Corporation and Lady Jo, Inc.; Walter Eckerling, Individually and as a Director and Officer of McLoughlin Manufacturing Corporation and Lady Jo, Inc. and International Ladies' Garment Workers' Union, AFL-CIO. Case 25-CA-2397. April 26,1967 DECISION AND ORDER On August 1, 1966, Trial Examiner John P. von Rohr issued his Decision in the above-entitled proceeding, finding that the Respondents had engaged in and were engaging in certain unfair labor practices and recommending that they cease and desist therefrom and take certain affirmative action, as set forth in the attached Trial Examiner's Decision. Thereafter, the General Counsel, Respondents, and Charging Party filed exceptions to the Decision and supporting briefs. Respondents then filed an answering brief. The National Labor Relations 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 Trial Examiner's Decision, the exceptions and briefs, and the entire record in the case,' and hereby adopts the findings, conclusions, and recommendations of the Trial Examiner only to the extent consistent herewith: As set forth more fully in the Trial Examiner's Decision, Respondents have dealt with the Union as collective-bargaining representative of their employees for many years. The last contract between the parties expired on January 1, 1965. In April 1965, Respondents decided to go out of business and close their plant in Peru, Indiana. Respondents so notified the Union and discussed both the decision and its impact upon unit employees. In the implementation of this decision, Respondents terminated a substantial part of their work force and subcontracted some of the unfinished work. However, in June 1965, Respondents were presented with an offer to locate their business at a new plant in Uniontown, Alabama. In accepting this offer, Respondents maintained their decision to close the Peru plant, but changed their overall business plan from liquidation to relocation. The record reveals that Respondents neither notified nor negotiated with the Union concerning subcontracting and their subsequent decision to relocate. The Trial Examiner found that, in failing to notify and bargain with the Union with respect to the subcontracting and relocating, Respondents violated Section 8(a)(5) of the National Labor Relations Act, as amended. He also found that the economic conditions advanced by Respondents as giving rise to the initial decision to close and liquidate had persisted for many years and that the decision was prompted by Respondents' opposition to the Union and to the exercise of statutory rights by the employees. Accordingly, the Trial Examiner found that Respondents' decision was discriminatorily motivated and that the employee terminations occurring within the 10(b) period were violative of Section 8(a)(3) and (1). He further found that the subsequent decision to transfer the operation was made to avoid bargaining with the Union and that Respondents thereby violated Section 8(a)(3), (5), and (1) of the Act. 1. We do not agree with the Trial Examiner's finding that Respondents were discriminatorily motivated in closing the Peru, Indiana, plant and in subsequently relocating in Uniontown, Alabama. The Peru plant was antiquated and inefficient, and operational problems had adversely affected the Company's profit picture. Although conditions relating to the inadequacy of the plant itself were of long duration, the leases on Respondent's premises and on much of its equipment were about to expire. Some of the economic problems stemmed from what Respondent regarded as restrictive union practices. The time of negotiations for a new collective- bargaining contract was therefore appropriate for a decision as to continued operations. As found by the Trial Examiner, there is no evidence of opposition to the employees' exercise of their statutory rights. Nor is there evidence of overt hostility to the Union. Rather, Respondents have dealt amicably with the Union for many years. It was Respondents' economic and operational difficulties arising in part from an onerous contractual provision, and their inability to obtain relief therefrom and the Union's overall intransigent attitude with respect to the negotiation of a new agreement that appear to have been the determining factors in the decision to close the plant. The last collective-bargaining contract between Respondents and the Union contained a seniority provision which had resulted in an unduly large turnover of employees, causing Respondents great hardship. Respondents regarded this contract provision as imposing a prohibitive cost on their method of doing business, relief from which was necessary for remunerative operation. During the contract term and in negotiations for a new agreement, Respondents made it unequivocally clear to the Union that relief therefrom was vital to its continuing ' As the record and briefs adequately present the issues and the positions of the parties , Respondent's request for oral argument is denied 164 NLRB No. 23 McLOUGHLIN MFG. CORP. in business . However, the record reveals that the Union declined to consider this matter in mid- contract term , and after requesting negotiation for a new agreement near the end of the contract period, the Union stalled and rebuffed Respondents for 3 months before agreeing to meet and bargain. Even then , the Union displayed an unwillingness to afford Respondents any hope for relief. In these circumstances we cannot conclude that because a condition of employment imposed by a collective- bargaining agreement was the economic "straw" which "tipped the scale" in the decision to close, Respondents' motive for closing was to defeat employees' statutory bargaining rights and, therefore , was unlawful.y The only additional evidence bearing upon motive is Respondents' failure to notify the Union of their decision to subcontract some of the pending orders preliminary to closing and their subsequent decision to relocate. We do not find this failure alone a sufficient basis upon which to conclude that Respondents were unlawfully motivated in making these decisions . Accordingly, we conclude that a discriminatory motive is not established by the evidence herein , and therefore find that Respondents did not violate Section 8 (a)(3) of the Act. 2. Nor do we agree with the Trial Examiner's Decision , in the circumstances of this case, that Respondents were so remiss in their bargaining duty as to require that a remedial order be issued by this Board . It is well settled that before an employer definitely decides to contract out, move, or relocate its business , it is obligated to bargain not only with respect to the effect of that decision but also as to the decision itself.3 However, this "do[es] not foreclose the possibility that there might be circumstances which the Board could or should accept as excusing or justifying [such ] unilateral action ...."4 We are satisfied that such circumstances are present here. Thus, as noted above, Respondents ' decision to close the Peru plant was prompted by pressing economic and operational reasons. Respondents informed the Union that they planned to "phase out" the business and liquidate in 30 to 45 days,s and the parties agreed to apply the severance and vacation pay provisions of their existing contract as compensation to the employees about to be discharged . Although Respondents did not tell the Union that subcontracting of outstanding orders would be utilized in closing down the Peru plant, it is clear that at least by July 6 the Union's president , a member of the negotiating committee, was aware that this was being done. Yet the Union did not object or otherwise take any steps to negotiate concerning this method of liquidation utilized .6 In these circumstances we find insufficient evidence that Respondents failed in their obligation to bargain about subcontracting unfinished work preparatory to closing the Peru plant. 141 Respondents' decision to relocate did not add anything to their prior decision to liquidate, so far as impact on unit employees was concerned, for the parties had already bargained concerning plant closure and the permanent elimination of unit jobs. Moreover, the offer of a new plant by Uniontown, Alabama, was conditioned upon Respondents' hiring local residents. There was neither evidence nor any contention that any of the Indiana employees would have wished to transfer to the new plant in Uniontown, Alabama. In the absence of union animus and of any charge that Respondents otherwise violated the Act, we are not convinced in the present circumstances that a remedial order is required to effectuate the policies of the Act even if we were to find a technical violation in Respondents' failure to discuss plant relocation with the Union.7 Accordingly, we shall dismiss the complaint in its entirety. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the complaint herein be, and it hereby is, dismissed. ' Israel Taub, d/b/a Dove Flocking and Screening Co , 145 NLRB 682, 694, cf Ethel J Hinz, rl/b/a Myers Ceramic Products, 140 NLRB 232 ' Ozark Trailers, Incorporated, 161 NLRB 561 Also, see Fibreboard Paper Products Corp , 138 NLRB 550 , enfd sub nom East Bay Union of Machinists, Local 1304, et 'al , 322 F 2d 411 (C A D C ), affil 379 U S 203, Town & Country Manufacturing Co , Inc , 136 NLRB 1022, enfd 316 F 2d 846 (C A 5) N L R B v Benne Katz, et al , d/b/a Williamsburg Steel Products Co , 369 U S 736, 747 5 The adequacy of these negotiations is not before us, as this occurred more than 6 months before the filing of the charge. See White Consolidated Industries, Inc , 154 NLRB 1593 8lbid ° Saul Harberg, d/b/a Ilfeld Hardware & Furniture Co, 157 NLRB 1401, New York Mirror, 151 NLRB 834, 839 Member Zagoria would find that Respondents violated Section 8(a)(5) by failing to notify and bargain with the Union, but agrees that no remedial order is required in the circumstances of this case TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE JOHN P. vol, ROHR, Trial Examiner: Upon a charge filed on December 10, 1965, the General Counsel for the National Labor Relations Board, by the Regional Director for Region 25 (Indianapolis, Indiana), issued a complaint on February 28, 1966, against McLoughlin Manufacturing Corporation, Lady Jo, Inc., J. Sidney Smith, and Walter Eckerling, herein called the Respondents, alleging that they have engaged in certain unfair labor practices affecting commerce within the meaning of Section 8(a)(1), (3), and (5) of the National Labor Relations Act, as amended, 61 Stat. 136, herein called the Act. The Respondents' answer denies the allegations of unlawful conduct alleged in the complaint. Pursuant to notice , a hearing was held before me in Peru, Indiana, on April 19 and 20, 1966. All parties were 142 DECISIONS OF NATIONAL LABOR RELATIONS BOARD represented by counsel and were afforded opportunity to adduce evidence, to examine and cross-examine witnesses, and to file briefs. Briefs have been received from the General Counsel and the Respondent and they have been carefully considered.' Upon the entire record in this case and from my observation of the witnesses, I hereby make the following: FINDINGS OF FACT AND CONCLUSIONS 1. THE BUSINESS OF THE RESPONDENTS McLoughlin Manufacturing Corporation is an Indiana corporation which maintained its plant and only place of business in Peru, Indiana, until approximately August 1965, where it engaged in the manufacture, sale, and distribution of women's sportswear and related products. Lady Jo, Inc., is an Alabama corporation with its plant and place of business located in Uniontown, Alabama, where it is and has been engaged in the manufacture, sale, and distribution of women's sportswear and related products As hereinafter found, Respondents McLoughlin and Lady Jo are, and have been, a single-integrated enterprise engaged in the business of the manufacturing and sale of women's sportswear and related products, with principal offices and place of business in Uniontown, Alabama. During the 12-month period preceding July 28, 1965, and the period succeeding July 28, 1965, the Respondents purchased, transferred, and delivered to their Peru, Indiana, and Uniontown, Alabama, facilities, goods and materials valued in excess of $50,000, which were transported to said facilities directly from States other than the States of Indiana or Alabama. During each of the same periods, the Respondents produced and shipped from their Peru, Indiana, and Uniontown, Alabama, facilities, finished products valued in excess of $50,000, which were shipped from such facilities to points outside the State in which such facilities are located. The Respondents do not contest the jurisdiction of the Board and I find that they have been and are engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED International Ladies' Garment Workers' Union, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act III. THE UNFAIR LABOR PRACTICES A. Background; the Issues Respondent McLoughlin Manufacturing Corporation, hereinafter called McLoughlin, has been engaged in the business of manufacturing women's apparel at its plant in Peru, Indiana, since 1954. Since the inception of its business in that year the Union has been the collective- bargaining representative of McLoughlin's employees in a unit consisting of all employees, excluding all office, clerical, guards, professional, and supervisory employees. The latest contract between the parties was effective from April 6, 1962, to January 1, 1965, at which time it expired. After a series of collective-bargaining meetings, the Respondent advised the Union on April 6, 1965, that it was ceasing operations and liquidating the business. The Peru plant continued to operate until about the expiration of its lease on August 31, 1965, at which time it shut down completely and all employees were terminated. In June 1965, the officials of McLoughlin took steps to open a plant in Uniontown, Alabama. As detailed hereinafter, the McLoughlin officials formed Respondent Lady Jo in July 1965, as an Alabama corporation and shortly thereafter commenced operations in Uniontown. As will be subsequently indicated, the operations of Lady Jo in Alabama were substantially the same as those previously performed by McLoughlin in Peru, Indiana. The complaint alleges that the Respondent engaged in the foregoing conduct "surreptitiously and unilaterally," without giving the Union notice of its intention and without giving the Union the opportunity to bargain over the removal or relocation of operations, thereby violating Section 8(a)(5) of the Act. The complaint further alleges that the termination of the McLoughlin employees at Peru on and after June 10, 1965, was in violation of Section 8(a)(3) and (1) of the Act. B. Contract Negotiations Leading to McLoughlin's Notice that it Would Cease Operations On March 4, 1964, which was within the effective period of the last contract, Walter Eckerling, vice president of McLoughlin, wrote the Union and requested that it consider a modification of the contract's seniority clause, indicating that this provision led to an undue turnover of employees, this resulting in a hardship to the Respondent. In a meeting held on March 17, 1964, the Union rejected Respondent's proposal to modify this provision of the contract. On October 30, 1964, the Union, pursuant to Section 8(d) of the Act, advised Respondent McLoughlin that it wished to meet for the purpose of negotiating a new agreement. Pursuant to this request, the Union presented its proposals for a new contract to the Respondent at a collective-bargaining meeting held on November 17, 1964. Eckerling testified without contradiction that he met with Norbert Ceicel, the Union's bargaining representative, at the Henrici Coffee Shop in Chicago again in the latter part of November. Eckerling said that at this time Ceicel explained that the Union was presently bargaining with the Garment Industries of Illinois, an employer association of which Respondent was not a member, and that he could consider no other terms than his November 17 proposals until the Association negotiations had been completed. According to the undenied testimony of Eckerling, he thereafter telephoned Ceicel in December 1964, and mid-January 1965, and requested that the parties meet to negotiate a contract. Each time he was put off by Ceicel who advised him that the Association negotiations were still not completed.2 ' Pursuant to the agreement of the parties , I hereby receive in evidence G C Exh 8 and Resp Exh 3 These exhibits include all of the various Respondent records which were submitted to me after the close of the hearing G C Exh 8 consists of 78 individual payroll sheets and Resp . Exh 3 of seven ledger earnings records of the employees listed therein I also hereby receive in evidence G C Exh 7, which is an agreement between McLoughlin Manufacturing Corp and the Union, dated April 6, 1962 The receipt in evidence of the latter document was inadvertently omitted in the transcript ' I credit this testimony of Eckerling Ceicel conceded telling Eckerling that "we had an association contract which expired four months before his contract did and that it would be best if we waited to see what the outcome of those negotiations were " McLOUGHLIN MFG. CORP. 143 Ceicel and Eckerling met again at the Henrici Coffee Shop on February 5, 1965.3 Eckerling began by again proposing a modification in the seniority clause 4 and indicated that Respondent would be agreeable to some manner of wage increase if the Union would agree to a change in the seniority provision. Continuing with further details of this meeting, Eckerling credibly testified that "I then told him that due to business conditions ... we were in a position of discontinuing operations until we could get some sort of relief . however, that we would be continuing for the rest of the year on the same basis as the contract which had expired in December 31, 1964, with the provision that there be an amendment to the seniority clause and that if we could see our way clear to continue beyond that point that we would be willing to entertain an increase in both the piece work rates and the minimum wage .. Eckerling said that at this point Ceicel "exploded," stating that unless he (Eckerling) accepted the terms of the Union's proposed contract he was "through." Eckerling said, however, that after some further heated discussion, Ceicel finally agreed to reconsider some of the Union's proposals. The meeting ended with an agreement to meet on February 12 for further bargaining.5 Apparently the parties did not meet on February 12,6 but on February 22 Ceicel and the employee bargaining committee met with J. Sidney Smith, president of McLoughlin, in Peru. Ceicel credibly testified that at this meeting the Union presented the Company with new written proposals, these including reductions in its previous wage demands and vacation proposals.7 Eckerling did not attend this meeting because he was delayed by car trouble en route from Chicago. However, Smith apprised him of the Union's latest proposals and he conceded that they contained modifications of the Union's November 19 proposals. Ceicel testified that he met with Eckerling on two or three occasions between February 22 and March 19. Eckerling first testified that he met with Ceicel on March 19, but later said that his only contact with Ceicel after February 22 was by telephone to arrange a meeting for April 6. However, even if Ceicel is credited, his testimony reveals that nothing of importance transpired at these meetings. The final meeting between the parties was held at Respondent's plant in Peru on April 6, 1965. The Union was represented by Ceicel and the members of the employee bargaining committee. Both Eckerling and Smith were present for the Company. There is no material dispute in the testimony as to what transpired at this meeting. Eckerling began with the statement that the Company had decided to close up its operation and go out of business. He thereupon advised the Union that he had spoken to the stockholders and they had decided to take this action because competition was too great, no dividends had ever been paid, and they felt that to continue in business "would only erode the rest of the company's assets." In relating what he told the Union at this meeting, Eckerling also testified, "Mr. Smith and I had only derived from the corporation our salaries, which was roughly $13,000 per year apiece, and we felt there was no use continuing on because the union's position had been firm-they made it clear to us that they would not alter their position." Upon completion of Eckerling's announcement to close the plant, Ceicel expressed surprise and asked if there was anything the Union could do to get the company to change the decision. Eckerling responded by saying "no," that this was an "irreversable" decision.8 At this point Smith mentioned that the Company's lease for the plant equipment would expire on May 15. Ceicel asked to see the lease and Smith left the room to get it. According to the credited testimony of Maxine Clark, Eckerling then stated that "he blamed the International Union more than he did the Local union ...." Ceicel responded that "this was what the girls had wanted" and that he had no recourse except to present them to him. After Smith returned to the room with the lease Ceicel requested to see the Company's books as proof of the need to go out of business.9 Eckerling said that he would not grant this request, that 3 years ago he had given the Union its books for examination but that it hadn't done any good.10 Eckerling thereupon announced that he intended to take a job as a salesman with some company to sell the same type of products as produced by McLoughlin and Smith was going to accept a job as plant manager for a company in the South. He stated further that the Company contemplated that it would wind up its operation in about 30-45 days. Finally, the, subject of severance pay was brought up. It appears that the parties agreed that this would be worked out in accordance with the provisions of the last contract. The meeting concluded with no bargaining negotiations having taken place, the Union accepting the fact that the Company would close down. C. Events Leading to the Establishment of the Alabama Operations Eckerling testified that following his meeting with Ceicel on February 5, 1965, he telephoned Smith and 3 Eckerling was more certain than Ceicel as to where and when these earlier meetings were held. I credit his testimony in this regard. 4 According to Eckerling, the seniority provision operated in such a manner as to cause a large number of layoffs of experienced employees during the "valleys" of Respondent's business operations. Claiming that the laid-off employees were picked up by other employers, thereby requiring the Respondent to train new employees, Eckerling said he sought a provision which would spread out the work among all the employees during the slack production periods. s Eckerling testified without contradiction that during this meeting he also pointed out that the Union's proposed contract to the Respondent was not entirely in accord with the terms agreed upon between the Union and the Illinois employer association. 6 The agreement to meet on February 12 is noted in Eckerling's affidavit (G.C. Exh. 6). ' Concerning the reduced wage demands, Ceicel testified as follows: "In our original proposals we had asked for a 10% increase, then later in the contract a 5% increase, whereas we were on February 22 asking for a 3% increase, and a year later another 3% increase, and a year later a 4% increase." " The credited and corroborative testimony of Ceicel and Maxine Clark, the latter an employee member of the union negotiating committee who impressed me as a credible witness. It may be noted that Eckerling first testified that he advised the Union that this was an "irrevocable" decision. However, in answer to a leading question from his attorney, he subsequently denied using the word "irrevocable." From the credited testimony, I am convinced and find that Eckerling described the Company's decision as either "irreversable" or "irrevocable." 0 The credited and unrefuted testimony of Ceicel and Clark. 10 The testimony reveals that the Respondent made its books available to the Union during negotiations for the last contract for the purpose of persuading the Union that it was not economically feasible to meet various of its demands. Eckerling testified that this opening of the books was to no avail, that the Union nevertheless engaged in a strike and that he was thereupon forced to accede to the Union's demands. 144 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Cedelle Schlefke, the latter then secretary and a director of McLoughlin, and advised them that "if the union remained firm in its position I would recommend liquidation of McLoughlin." While no official action was taken at this time, a special meeting of the stockholders and directors subsequently was held on April 3, 1965. (It will be recalled that in the meantime, on February 22, the parties met again, at which time the Union presented reduced demands.) The minutes of this meeting state as follows:" That Mrs. Schlefke then said that she requested this meeting inasmuch as the business had at no time made any money and, from all indications and reports which she had received from Mr. Eckerling with regard to the conditions of the plant, which appears to be an old barn not suited for our needs, and in negotiations with the union and experiences in negotiations with the union some three years back, that it is likely to get worse instead of better and it might be well to give consideration to selling the business as a going business or make arrangements to liquidate the business by the time the lease expires. The minutes reflect further that the following resolutions were adopted at this meeting: (1) that Eckerling was instructed to take whatever action he deemed necessary and advisable to use such methods as may be available for selling the business as a going operation; (2) that in the event, in Eckerling's judgment, a sale may not be affected, then the assets of the business be liquidated; and (3) that upon termination of the business and the liquidation of all assets, the liabilities be liquidated with any overplus to be apportioned among the shareholders. Eckerling's testimony, including his pretrial affidavit, reflect that in fact Eckerling took preliminary steps to dispose of the McLoughlin Corporation prior to the stockholders' meeting of April 3, 1965. Thus, on or about April 1, 1965, Eckerling contacted the Manufacturers and Contractors Service of New York, New York, a concern which engaged in the sale of factories and businesses, herein called MCS, and at that time "put the business (McLoughlin) up for sale." 12 It is also noted that McLoughlin owned only approximately 30-35 percent of the plant equipment, the remainder of which was leased. Eckerling testified that prior to listing the plant for sale with MCS he obtained permission from the lessors to include the leased equipment in the contemplated sale, thus enabling the plant to be sold "as a going business." MCS was not successful in finding any purchasers for the McLoughlin plant and business. However, in early June 1965, MCS advised Eckerling that the city of Uniontown, Alabama, was interested in acquiring new industry and that it was offering certain inducements to have a qualified employer establish a plant in that city.13 Upon receipt of this information, Eckerling and Smith made a trip to Uniontown in early June 1965, and at that time engaged in discussions with responsible city officials. Eckerling testified that "I think a letter of intent [to accept the Uniontown proposal] was signed at that time." The same officials made a second trip to Uniontown in latter June or early July and on this occasion reached final agreement that a plant would be established in Uniontown, Alabama, and that a bond issue would be advertised to finance the cost of a new factory building. The consideration for the establishment of this business by the Respondent officials, as finally embodied in a lease agreement executed on October 14, 1965, included the following: that the city would finance the cost of a new factory valued at $250,000; that it would furnish the company with rent-free facilities until the new plant building was completed; that it would reimburse the Company for all of its expenses in moving the necessary machinery and equipment to Uniontown, Alabama; that it would install the machinery, equipment, and wiring at no expense to the Company; that the new factory building would be provided rent free for the first year; and that no ad-valorum taxes would be assessed against the Company for 10 years. As will be detailed below, there is no question but that the business operations which the Respondents subsequently conducted in Alabama were the same as those performed by McLoughlin in Peru, Indiana, prior to the closing of the latter plant. Preliminary to the actual move to Alabama, however, the Respondent officials on about July 2, 1965, incorporated Lady Jo, Inc., as an Alabama corporation. The plan, which ultimately was put into effect, simply was that McLoughlin Manufacturing Corporation was to act as the sales agent, while Lady Jo, Inc., was formed to handle the manufacturing end of the business. The officers, directors, and stockholders of both corporations are virtually identical. Thus, Smith and Eckerling hold the positions of president and vice president, respectively, in each company." The board of directors of each company is comprised of Smith, Eckerling, and Schlefke. Among themselves these directors hold 100 percent of the stock of McLoughlin and 80 percent of the stock of Lady Jo. One Norman Belgrade, a former stockholder in McLoughlin, presently owns 20 percent of the stock in Lady Jo. 15 While the record does not reflect exactly when the Uniontown facilities started operating, Eckerling testified that the first employees were hired on July 12, 1965. As of January 1966, there was a total complement of 65 production and maintenance employees. D. The Transfer of the Business; the Operations in Alabama Eckerling conceded that all, or substantially all, of the equipment and machinery at McLoughlin's plant in Peru, Indiana, was shipped to its facilities in Uniontown, Alabama. The physical transfer of this equipment began on July 7, 1965, this while the Peru plant was still in operation. The final shipment occurred on or about the last day of August 1965. As previously indicated, McLoughlin owned 30-35 percent of the plant equipment. However, "Present at this meeting were Smith, Eckerling, Schlefke, and Attorney J. E. Yaffee. 12 The quoted portion above is from Eckerling's affidavit. 13 Although Eckerling's affidavit states that MCS first notified him of this proposition in May 1965, he testified that such notification was received by him in early June 1965. The minutes of a meeting of McLoughlin's board of directors held on May 24, 1965, reflect that as of this date consideration was given only complete liquidation of the business. 14 Schlefke originally was secretary in both companies. However, she resigned as secretary of Lady Jo on September 7, 1965. Lady Jo presently only has the two officers named above. 15 Eckerling testified that Belgrade was an original stockholder in McLoughlin, but that in 1959 he sold the stock to Schlefke and himself (Eckerling) at a loss. Eckerling said that Belgrade was made a 20-percent stockholder of Lady Jo at a very nominal figure" in order to allow him to recoup his loss from the sale of the McLoughlin stock. McLOUGHLIN MFG. CORP. 145 the balance of the leased equipment was also transferred to Alabama with the permission of the lessors.16 I turn now to a description of the business as it operated in Uniontown, Alabama. The evidence leaves no doubt that the combined operations of McLoughlin and Lady Jo in Alabama were the same as that performed by McLoughlin in Indiana. Indeed, Eckerling stated in his pretrial affidavit, "We concede we moved our plant from Peru, Indiana to Uniontown, Alabama." Thus, in performing the manufacturing end of the operations, Lady Jo produces the same product (women's sportswear) and uses the same equipment and machinery as that formerly produced and utilized by the McLoughlin plant in Indiana. The products manufactured by Lady Jo are sold by McLoughlin to the same customers to whom it sold when it operated in Indiana.17 McLoughlin furnishes all goods and materials to Lady Jo and it also schedules the type and quantity of goods to be produced. There is no transfer of title between the corporations with respect to either the raw materials or finished products. Smith, who acted as plant manager in charge of production at the Peru plant, continues to act in the same capacity at Lady Jo. Similarly, the cutting room foreman at Peru was transferred to act in the same capacity at Lady Jo. Eckerling was in charge of and concerned about only the sales end of the operations while the plant operated at Peru.18 He carried out precisely the same function for McLoughlin when this corporation was set up to handle the sales end in Alabama. Notwithstanding the device of setting up two separate corporations, from the integrated nature of the operations of the two companies, as well as the fact that each have the same officers and directors and virtually the same stockholders, it is unmistakably clear, and I find, that Lady Jo operates as a subsidiary or a division of McLoughlin and that as such these two companies operate as a single, integrated employer. 19 Further, in view of the unrefuted evidence set forth above, it is equally clear, and I find, that the business and operations of McLoughlin and Lady Jo in Uniontown, Alabama, were a continuation of the same business and operations as that conducted by McLoughlin in Peru, Indiana. E. Additional Facts; Concluding Findings It is undisputed that at no time did the Respondent ever give the Union notice of its intention to move the operation of McLoughlin Manufacturing Corporation from Peru, Indiana, to Uniontown, Alabama. It is also undisputed that the Peru employees were never offered employment at the Uniontown facilities. Union Representative Ceicel testified that his first indication that McLoughlin was opening in Alabama came through a report of the Union's auditor in late July 1965.20 The Union thereupon ordered an investigation to determine the authenticity of this report and finally was advised by its southeastern department in early September 1965, that the plant in fact had been moved to Uniontown, Alabama. Ceicel testified that he telephoned Eckerling at Uniontown shortly after Labor Day 1965, and that Eckerling at this time conceded that the plant had been moved. It is noteworthy that Ceicel had a telephone conversation with President Smith late in June 1965, concerning the matter of vacation pay for union members. Even at this late date Smith did not advise Ceicel of the contemplated move but merely stated, in response to Ceicel's query, that the plant would be closing very soon. 21 Turning now to the applicable legal principles involved, it is true, as the Respondent asserts, that an employer has the right to close his entire business with impunity, even if liquidation is motivated by vindictiveness towards the union. Textile Workers v. Darlington Mfg. Co. (Deering- Milliken), 380 U.S. 263. Thus, Respondent's announcement to the Union on April 6, 1965, that it intended to close its operations and go out of business did not in itself constitute an unfair labor practice.22 However, the factual situation, as well as Respondent's legal obligations, were completely changed when Respondent subsequently determined not to go out of business but to transfer its operations to another location.23 As has been noted, Respondent's investigation of the Uniontown situs and its final decision to transfer its operations to this location occurred during the period of early June 1965, to latter June or early July 1965, all this prior to the final closing of its plant in latter August 1965. It hardly need be said that during this period the Union remained the collective-bargaining agent for Respondents' employees. Likewise, it is fundamental that the Respondent had a statutory obligation to bargain with the Union in good faith as long as it remained in business. It is well settled that the decision to move or relocate a business, involving as it does the elimination of unit jobs, is a mandatory subject of collective bargaining within the meaning of Section 8(a)(5) of the Act, even assuming that such is economically motivated.24 Accordingly, I find that Respondent McLoughlin and its agents violated Section 8(a)(5) of the Act by unilaterally transferring the McLoughlin operations to Uniontown, Alabama, without giving the Union advance 16 Eckerling testified that the leases for this equipment were orally renewed between McLoughlin Manufacturing Corporation and the lessors. In this regard he testified only that, "It was agreed that we would pay for the equipment on a month to month basis." 17 These customers consist primarily of mail-order houses, such as Spiegels, Aldens. Montgomery Ward, and the like. 18 Eckerling did not reside at Peru. As vice president in charge of sales, Eckerling resided in Chicago and from there carried out the selling end of the business. 10 Eckerling conceded as much in the following testimony: Q. And Lady Jo, Incorporated is the manufacturing company for the McLoughlin Corporation, isn't that a fact, sir? A. It is a manufacturing subsidiary, working solely for McLaughlin Manufacturing Corporation. I am sorry-not a manufacturing subsidiary. I want to retract that because it is not a subsidiary. It is a separate manufacturing corporation, working solely for McLaughlin Manufacturing Corporation. 20 It appears that the auditor was at Respondent's plant in Peru to work on the matter of severance pay for the terminated employees. 21 The credited testimony of Ceicel. As previously noted, Eckerling and Smith had visited Uniontown in early June 1965, at which time they engaged in negotiations with the city officials concerning the proposed move. 22 There is no proof to establish, nor does the record warrant an. inference, that at this time the Respondent had any plan or intention to relocate at any other place. 23 See fn. 20 in the Darlington case, supra, where the Supreme Court commented upon the possible effect of an employer's failure to implement an announced decision to close his business. 24 Town and Country Mfg. Co., Inc., 136 NLRB 1022, enfd. 316 E1d 846 (C.A. 5); Garwin Corporation, et al., 153 NLRB 664: Industrial Fabricating Inc., 119 NLRB 162; Sidele Fashions, Inc., 133 NLRB 547; Fibreboard Paper Products Corporation v. N.L.R.B., 379 U.S. 203. 146 DECISIONS OF NATIONAL LABOR RELATIONS BOARD notice and an opportunity to negotiate over this decision.25 Additionally, the evidence reflects, and the Respondents concede, that McLoughlin unilaterally and without notice to the Union subcontracted certain of the unit work to outside parties during the approximate last 3 months of its operation.26 Under the same principle enunciated above, I find that Respondents thereby further violated Section 8(a)(5) of the Act. Aside from the violation found above, there remains for decision the question as to whether the Respondents' action constituted discrimination and a violation of employees' rights under Section 8(a)(3) and (1) of the Act, this turning on Respondents' motives for taking the action in kind. Eckerling testified to a variety of reasons for Respondents' decision to close the plant.27 Cited among them were such factors that the plant building was 75 years old and was not suitable to efficient operations, that a foundry across the street contributed dust and dirt to the area and'created a housekeeping problem, that the plant was faced with heating and wiring problems, and that there was no pool of trained employees available for the Company to draw upon when additional help was needed. However, since all of these conditions admittedly had persisted for many years prior to 1965, I must regard this testimony of Eckerling as largely self-serving in nature .2 11 Beyond the foregoing, Eckerling also indicated that a reason for closing the business was the fact that the stockholders had never received a return on their investment. i.e., that no dividends had ever been declared. This assertion by Eckerling, however, is in large part contradicted by other of his testimony, discussed below, which is considerably more revealing as to Respondents' true motivation for the precipitous decision to close its plant in April 1965. In view of Respondents' assertion that its actions were economically motivated, this discussion would not be complete without some reference to McLoughlin's financial and economic condition at the time of the decision to close the plant. As previously set forth, this decision was officially reached at a stockholders' meeting held on April 3, 1965. As has been also set forth, the minutes of this meeting state, inter alia, "That Mrs. Schlefke then said she requested this meeting inasmuch as the business had at no time made any money ..." (Emphasis supplied.) Although Respondent did not pursue any such contention at the hearing, it may be noted that McLoughlin made a profit of $3,309.11 in 1963; a profit of $8,820.76 in 1964: and a profit of $5,214.66 in 1965.29 Total retained earnings increased from $3,129.62 as of September 1, 1962, to $20,344.45 when it ceased operation in Peru at the end of August 1965. The excess of current assets over liabilities progressively increased from $83,215.51 in 1963 to $94,676.82 in August 1965. Additionally, it is noteworthy that: (1) in each of these 3 years two of the three officers and stockholders (Smith and Eckerling) each received an annual salary of $13,000, and (2) during this same period an additional $10,677.81 15 1 rind that the unfair labor practices herein initiated when the Respondent officials consulted with the Uniontown officials in early June 1965, and at that time reached preliminary agreement (as indicated by the letter of intent) to transfer the plant. It is clear that at this time, if not before, the Respondents determined not to carry out the previously announced decision to close the plant. xs The complaint was amended at the hearing to allege this conduct as an additional violation. was used to purchase fixed assets (machinery and equipment). In view of the foregoing, it is clear that McLoughlin operated profitably and was not in financial difficulty when it terminated its operations in Peru in August 1965. Turning then to the real reason for Respondent's decision to close its plant, I think this was clearly revealed in Eckerling's testimony when he was asked if he arrived at any conclusions as a result of his meeting with Ceicel on February 5, 1965. In response to this question (put by Respondent's counsel), Eckerling testified as follows: I came to the conclusion that the union had adopted a firm, fixed position in its negotiations with us, or rather with me, and that the company, under these conditions, could not continue to operate, that taking into consideration past history of my negotiations with Mr. Ceicel, that this would be his final offer to me, and that I felt that it was incumbent upon me to advise the rest of the stockholders of the McLoughlin Manufacturing Corporation to the effect that I, personally, would not recommend that the corporation continue on in business because it could only lose its entire investment within a short space of time. As set forth in full earlier in this Decision, the same reason thus testified to by Eckerling is also reflected in the minutes of the stockholders' meeting of April 3, 1965, as a principal reason for discontinuing the business. But returning to Eckerling's stated position relative to his February 5 meeting with Ceicel, the fact is that the Union had not adopted a "firm and fixed position" at this time. Thus, as has been heretofore noted, the Union in fact presented the Respondent with reduced demands at the next meeting which was held on February 22, 1965. Moreover, assuming Eckerling's version that no further meetings were held between February 22 and April 5, it is unequivocally clear that the parties had not reached an impasse in the negotiations at any time prior to April 5. Indeed, there is no basis for assuming that the Union would not further reduce its demands at the April 5 meeting or at any meetings which might follow. However, it will be recalled that no bargaining took place at the April 5 meeting, the Respondent simply taking this occasion to announce its "irrevocable" decision to close the plant. Although there is no evidence of overt hostility to the Union, the facts of this case speak for themselves. Clearly, the underlying basis for closing its operations in Peru and for discharging all of the Peru employees was because of its opposition to the Union and because of its opposition to the exercise by its employees of their organizational and other statutory rights. I so find. I further find that the subsequent transfer of the McLoughlin operations from Peru, Indiana, to Uniontown, Alabama, all of which was purposefully accomplished in secret from the Union, was motivated by a purpose to avoid the exercise by the employees of their statutory rights and to avoid continued bargaining with the Union as their statutory =7 It must be assumed that these reasons also are allegedly applicable for Respondents' ultimate decision to transfer the operations to Uniontown. 28 In any event , my findings concerning Respondents' basic reason for closing the plant are noted below. 2' This represents an approximate profit of its investment in each of the following years as follows: 4 percent in 1963, 9 percent in 1964, and 5 percent in 1965. McLOUGHLIN MFG. CORP. 147 representative . 30 Since such conduct constituted discrimination which discourages union membership and activities and further constituted an unlawful evasion of the duty to bargain, I find that Respondents thereby violated Section 8(a)(3) and (5) of the Act. Such disregard of the employees ' statutory rights also was in violation of Section 8(a)(1) of the Act. It is true , of course , that Respondent may have wished to increase its profits . To this extent , Respondent's conduct quite obviously was related to economic considerations. However, as has been noted above, Respondent here engaged in a course of conduct which basically was motivated by antiunion considerations. In this connection , quite relevant here is the following comment of the Trial Examiner which the Board adopted in Garvin Corporation, 153 NLRB 664, 677-678: ... Respondents were not justified in taking antiunion reprisals simply because the Union's actions impinged upon their freedom to conduct business. Antiunion conduct is not immunized merely because it is economically motivated . Such motivations is one of the stock arguments advanced to explain away unlawfully discriminatory conduct . Furthermore, experience shows that union animus springs more often than not from economic considerations and resentments for intrusions upon managerial "prerogatives ." Nevertheless "an employer may not discriminate against an employee ... even though the employer believes that he has good business reasons to justify his discrimination. Republic Aviation Corp. v. N.L.R.B., 324 U.S. 793." Equally relevant to the situation presented in the instant case is the statement of the Board in Industrial Fabrication , Inc., 119 NLRB 162, 172: This is not the case of an employer who decides to go out of business rather than deal with his employees' statutory representative . Nor is it the case imagined by the Trial Examiner , where an employer rearranges his business conduct for economic reasons apart from a consideration of his employees ' lawful and protected exercise of their statutory rights. Rather, this is the case of an employer who surreptitiously continues in business at a different location and under an assumed name in order to thwart the statutory guarantees and evade his obligations to the Union , while attempting to cloak his unlawful manipulations by various devices and stratagems so as to give the false appearance of having gone out of business for economic reasons. We find that Mackniesh, Industrial, Sales, and Paragon thereby violated Section 8 (a)(5), (3), and (1) of the Act. There remains for consideration the General Counsel's contention that the discriminatees herein should include employees who were laid off between April 5, 1965, and June 10, 1965 . Recognizing that a complaint may not issue with respect to any unfair labor practices committed by the Respondents prior to June 10, 1965 (the charge was filed on December 10, 1965), the General Counsel asserts that the employees laid off prior to June 10, were not permanently terminated until the close of the plant on or about August 31, 1965.31 However, since there is no allegation in the complaint with respect to employees who were terminated prior to June 10, 1965, the Respondent has not been charged with the commission of any unfair labor practices with respect to employees who were terminated prior to that date.32 Moreover, the employees who were terminated prior to June 10, 1965, were so terminated in implementation of Respondents' decision to close the plant and sell the business. As indicated heretofore, and aside from the question of Section 10(b), this initial decision of the Respondent was not an unfair labor practice under the Supreme Court's decision in the Darlington case, supra. As I have further found, Respondents' conduct herein did not become unlawful until it decided, in early June 1965, under all the circumstances herein found, to transfer its operations from Peru to Uniontown. Due to the lateness of filing the charge, the issue cannot be raised in this case as to whether Respondents' latter conduct converted its previous acts into conduct proscribed by the Act. Accordingly, and in view of all the foregoing, I find no merit in General Counsel's contention as aforesaid. I do find, however, that Respondents have committed unfair labor practices within the meaning of Section 8(a)(3) and (1) of the Act by the termination of all employees who were discharged on and after June 10, 1965, these including those employees who were laid off prior to June 10, 1965, but who were recalled and terminated again on or after the said date. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Respondents set forth in section III, above, occurring in connection with their operations set forth in section I, above, have a close, intimate, and substantial relation to trade, traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that McLoughlin Manufacturing Corporation and Lady Jo, Inc., constitute a single, integrated employer, I shall recommend that all Respondents be held jointly and severally responsible for effectuation of the remedial provisions of the Recommended Order. I shall recommend the customary cease-and-desist order and the affirmative relief conventionally ordered in cases of this nature to rectify the effects of the violations.33 Respondents shall offer all employees discriminated against as a result of the removal of the McLoughlin plant in Peru, Indiana, to Uniontown, Alabama, these consisting of all employees terminated on and after June 10, 1965, at the Peru plant, reinstatement to their former of substantially equivalent positions at the Uniontown, Alabama, plant without prejudice to the employees' a0 The Respondents' brief states: "To expect the Company to volunteer to the Union the details of the negotiations with Uniontown could serve no legitimate purpose. The Union had no right to participate in our negotiations with the town officials or in the lease which has been made with the Town of Uniontown for the opening of a new enterprise." Respondents clearly misconceive their bargaining obligations under the Act. See the cases cited in fn. 24. a' In this regard, the General Counsel points out that some 25 employees were laid off subsequent to April 5 but were called thereafter. as The complaint alleges only that "Commencing on or about June 10, 1965, and continuing thereafter ... Respondent terminated all employees previously employed at their Peru, Indiana, plant." There was no amendment to this allegation at the hearing. as Garwin Corporation, et al., supra. 298-668 0-69-11 148 DECISIONS OF NATIONAL LABOR RELATIONS BOARD seniority and other rights and privileges, dismissing, if necessary, all employees at the Uniontown plant. Further, Respondents shall also offer to pay the said employees the travel and moving expenses entailed in moving themselves and their families and household effects from Peru to Uniontown. In addition, I shall recommend that the Respondents shall make whole the employees referred to above for any loss of earnings they may have suffered by reason of the discrimination against them by payment to each of them a sum of money equal to the amount each would normally have earned from the date he was terminated as a result of the decision to relocate the Peru plant to the date of a valid offer of reinstatement at the Uniontown, Alabama, plant, less his net earnings during the said period. Backpay shall be computed with interest on a quarterly basis in the manner prescribed by the Board in F. W. Woolworth Company, 90 NLRB 289, and Isis Plumbing & Heating Co., 138 NLRB 716. To facilitate the computation, the Respondent shall make available to the Board, upon request, payroll and other records necessary and appropriate for such purposes. I shall further recommend that the Respondents notify these employees of their rights to reinstatement on application if they are serving in the Armed Forces of the United States. In Garwin Corporation, supra, the Board reexamined and modified its previous remedial policy in discriminatory plant removal cases. Since the violations herein found are similar to those found by the Board in the Garwin case, I deem myself bound to follow the Board's remedial policy as set forth in that decision. Accordingly, and for the reasons set forth in the Garwin case, I shall recommend that Respondents be required to bargain with the Union as the representative of the employees in the appropriate unit at the Uniontown, Alabama, plant. If, upon compliance with the Recommended Order herein, the Union can reestablish its majority at the Alabama plant, the normal contract-bar rules shall apply.34 If, on the other hand, the Union is unable to reestablish its majority, I shall recommend that any collective-bargaining agreement resulting from this Recommended Order to bargain shall be deemed to act as a bar to a timely petition, filed pursuant to Section 9(c)(1)(A) of the Act, for a period of only 1 year from the date of execution of any such contract. Because of the character and scope of the unfair labor practices engaged in by the Respondents, I shall recommend that they cease and desist from in any other manner interfering with , restraining, and coercing their employees in the exercise of the rights guaranteed them by Section 7 of the Act. Upon the basis of the foregoing findings of fact, and upon the entire record in this case , I make the following: CONCLUSIONS OF LAW 1. Respondents McLoughlin and Lady Jo constitute a single, integrated employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act and the Union is a labor organization within the meaning of Section 2(5) of the Act. 2. All employees of Respondents employed at the Uniontown, Alabama, plant, excluding office, clerical, guards, professional, and supervisory employees as defined in the Act, constitute a unit appropriate for collective bargaining within the meaning of Section 9(b) of the Act. 3. At all times relevant herein, the Union has been the exclusive representative, for the purpose of collective bargaining within the meaning of Section 9(a) of the Act, of the employees in the aforesaid unit at Respondents' Peru, Indiana, and Uniontown, Alabama, plants. 4. Respondents have violated Section 8(a)(5) and (1) of the Act by unilaterally, and without prior notice to and consultation with the Union, closing down the Peru, Indiana, location and facilities, and removing the same to Uniontown, Alabama, where they continued under the names of McLoughlin Manufacturing Corporation and Lady Jo, Inc., said removal and transfer having been undertaken in order to deprive employees of their rights guaranteed by Section 7 of the Act and to avoid bargaining and otherwise dealing with the Union as the collective- bargaining representative of said employees. 5. Respondents have violated Section 8(a)(3) and (1) of the Act by closing down and removing the location of the Peru, Indiana, plant and thereby terminating the employment of the employees under the circumstances herein found. 6. The aforesaid unfair labor practices are unfair labor practices within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.] as For the above purposes, the Union will be taken to represent at the Uniontown, Alabama, plant plus the other employees at that an actual majority at the Alabama plant, only if, upon compliance plant who have in the meantime voluntarily joined the above- with the order of reinstatement herein, the total number of the named Union constitute a majority of all the employees in the former Peru, Indiana, employees who have accepted employment appropriate unit at that plant.