Fed-Mart

202 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Glenn Goulding d/b/a Fed-Mart and Retail Clerks Union, Local 1167, Retail Clerks International Association, AFL-CIO. Case 31-CA-48 (formerly Case 21-CA-6514). June 8, 1967 DECISION AND ORDER On July 7, 1966, Trial Examiner Maurice M. Miller issued his Decision 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 Trial Examiner's Decision. Thereafter, the General Counsel and Respondent filed exceptions to the Decision and supporting briefs.' The Board has reviewed the rulings of the Trial Examiner made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the 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, with the following modifications. The Trial Examiner found that Respondent violated Section 8(a)(5) of the Act by (1) refusing to recognize and bargain with the Union as the majority representative of its employees; (2) unilaterally changing terms and conditions of employment without first notifying and affording the Union an opportunity to bargain; and (3) refusing to honor and maintain the collective-bargaining agreement executed by Respondent's predecessor, Garrity.'' While we agree with and adopt the Trial Examiner's findings with respect to Respondent's duty to bargain,; and its unlawful institution of unilateral changes, we are unwilling on the instant record to hold that the successor employer's statutory bargaining obligation extends beyond the fundamental duty to recognize and bargain in good faith with the labor organization that had been designated by the predecessor's employees. In this regard, the instant record is replete with uncertainties as to whether Garrity, Respondent's predecessor, had actually implemented and applied ' The Respondent's request for oral argument is hereby denied, as the record, exceptions, and briefs adequately present the issues and positions of the parties 2 In so holding, the Trial Examiner found that the Supreme Court's decision in John Wiley & Sons v Livingston, 376 U S 543 (1964), and subsequent circuit court decisions in Wackenhut Corporation v Plant Guards, 332 F.2d 954 (C.A. 9), and Steelworkers v Reliance, 335 F.2d 891 (C.A. 3), support the view that a successor is bound ipso facto by the contract entered into by its predecessor ' The Trial Examiner found, and we agree, that the Respondent is the successor of Garrity In determining successorship "[t]he critical question is whether Respondent continued essentially the same operation, with substantially the same employee unit " Maintenance, Incorporated, 148 NLRB 1299, 1301 Here, the continuity of operations was in no way disrupted by the transfer from Garrity to Respondent In assuming control, the terms and conditions of employment existing under any contract or contracts it had executed with the Union. Specifically, the record shows that Garrity signed a Memorandum Agreement on December 7, 1964. By the terms of that Agreement, Garrity agreed to adopt the "existing" 1959-64 General Merchandise Agreement negotiated between the Union and Food Employers' Council, and effective December 15, 1964, to apply the new 1964-69 contract. Although Food Employers' Council and the Union had reached agreement on the new 1964-69 contract some 9 months before Garrity executed the Memorandum Agreement, the new contract was not in effect at that time, and there is no showing that Garrity had ever adopted either its terms or the terms of any collective-bargaining agreement at all. It is true that the General Counsel introduced the 1964-69 contract as being the agreement in effect at the time of the hearing. However, this evidence falls far short of establishing that Garrity ever implemented either the 1959-64 or the 1964-69 contract, and what terms and conditions of employment were actually in effect when Respondent commenced operations. In our opinion, these considerations, together with the short time that Garrity operated the store after execution of the Memorandum Agreement, give rise to uncertainties as to the existence of the basic agreements, whether Garrity actually executed these contracts through arms length bargaining with the intention to be bound thereby for any reasonable length of time, and whether Garrity's employees ever enjoyed the benefits set forth in the agreements. Against this background, it is our judgment that the circumstances with which we are here confronted furnish no reasonable basis for considering the extent to which Section 8(a)(5) imposes a duty on a successor-employer to meet the contract obligations to which its predecessor had become bound through the process of good-faith bargaining.4 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, Respondent made no significant changes in personnel, or in the nature of the business Thus, Respondent's subsequent refusal to recognize and bargain with the Union as the bargaining representative of its employees is in violation of Section 8(a)(5) of the Act Valleydale Packers, Inc, of Bristol, 162 NLRB 1486, Randolph Rubber Company, Inc, 152 NLRB 496, Skaggs Drug Centers, 150 NLRB 518 As we agree with the Trial Examiner's successorship finding, we need not pass on other grounds relied on by the Trial Examiner in finding an unlawful refusal to bargain ' Since the Trial Examiner predicated his backpay finding on Respondent's assumption of Garrity's contract, we shall eliminate the backpay provision from the remedial order We also find merit in General Counsel's exception to that part of the Trial Examiner's Recommended Order that required service of a copy of the Board's Decision in this case on Fed-Mart, the franchisor, since Fed-Mart is not a party to this proceeding 165 NLRB No. 22 FED-MART Glenn Goulding d/b/a Fed-Mart, Fontana, California, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Refusing to recognize and bargain collectively with Retail Clerks Union, Local 1167, Retail Clerks International Association, AFL-CIO, as the exclusive bargaining representative of Respondent's employees in the following appropriate unit: All employees employed by the Respondent at his Fontana, California, store, exclusive of guards, watchmen, professional employees, and supervisors as defined in the Act. (b) Instituting changes in wages, vacation, sick leave, group life insurance, and hospital plan, or other terms and conditions of employment of its said employees, without first notifying, consulting, and bargaining with the Union concerning such changes. (c) In any like or related manner interfering with, restraining, or coercing his employees in the exercise of their right to self-organization, to form, join, or assist unions, 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 such activities, except to the extent that such right may be affected by an agreement requiring union membership as a condition of employment, as authorized in Section 8(a)(3) of the National Labor Relations Act, as amended by the Labor-Management Reporting and Disclosure Act of 1959. 2. Take the following affirmative action, which we find will effectuate the policies of the Act: (a) Upon request, bargain collectively with the above-named labor organization as the exclusive representative of all employees in the appropriate unit as found above, and, if an understanding is reached, embody such understanding in a signed agreement. (b) Post at its store in Fontana, California, copies of the attached notice marked "Appendix.'", Copies of said notice, to be furnished by the Regional Director for Region 31, after being duly signed by the Respondent's representative, shall be posted by Respondent immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all APPENDIX 203 NOTICE TO ALL EMPLOYEES Pursuant to a Decision and Order of the National Labor Relations Board and in order to effectuate the policies of the National Labor Relations Act, as amended, we hereby notify our employees that: WE WILL NOT refuse to recognize and bargain collectively with Retail Clerks Union, Local 1167, Retail Clerks International Association, AFL-CIO, as the exclusive bargaining representative of the employees in the following appropriate unit: All employees employed by the Employer at his Fontana, California, store, exclusive of guards, watchmen, professional employees, and supervisors, as defined in the Act. WE WILL NOT institute changes in wages, vacation, sick leave, group life insurance, and hospital plan, or other terms and conditions of employment of our employees, without first notifying, consulting, and bargaining with the Union concerning such changes. WE WILL NOT in any like or related manner interfere with, restrain, or coerce the employees in the exercise of their right to self-organization, to form, join, or assist unions, 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 such activities, except to the extent that such right may be affected by an agreement requiring union membership as a condition of employment, as authorized in Section 8(a)(3) of the National Labor Relations Act, as amended by the Labor-Management Reporting and Disclosure Act of 1959. WE WILL, upon request, bargain collectively with the above-named labor organization as the exclusive bargaining representative of all employees in the appropriate unit as found above, and, if an understanding is reached, embody such understanding in a signed agreement. places where notices to employees are customarily GLENN GOULDING D/B/A posted. Reasonable steps shall be taken by the FED-MART Respondent to insure that said notices are not (Employer) altered, defaced, or covered by any other material. (c) Notify the aforesaid Regional Director, in writing, within 10 days from the date of this Order, what steps have been taken to comply herewith. IT IS HEREBY FURTHER ORDERED that the complaint be, and it hereby is, dismissed, insofar as it alleges violations not found herein. ' 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 Decision and Order" the words "a Decree of the United States Court of Appeals Enforcing an Order " Dated By (Representative) (Title) 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. If employees have any question concerning this notice or compliance with its provisions, they may communicate with the Board's Regional Office, 10th Floor, Bartlett Building, 215 West Seventh Street, Los Angeles, California 90014, Telephone 688-5840. 204 DECISIONS OF NATIONAL LABOR RELATIONS BOARD TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE MAURICE M. MILLER , Trial Examiner : Upon a charge and amended charge filed on February 26 and March 31, 1965, respectively , and duly served , the General Counsel of the National Labor Relations Board caused a complaint and notice of hearing to be issued and served upon Glenn Goulding d/b/a Fed-Mart , designated as Respondent in this Decision. The complaint was issued July 30, 1965; therein, Respondent was charged with unfair labor practices affecting commerce within the meaning of Section 8(a)(1) and (5) of the National Labor Relations Act, as amended (61 Stat. 136, 73 Stat. 519). Within Respondent's subsequently filed answer, certain factual allegations which the complaint set forth were conceded; Respondent's commission of any unfair labor practice, however, was denied. Pursuant to notice , a hearing with respect to the issues was held at Los Angeles, California , on October 19 and 20, 1965, before me . The General Counsel , Complainant, and Respondent were represented by counsel . (When the hearing began , Respondent's counsel requested that General Counsel forthwith produce for inspection copies of all statements taken by Board representatives in connection with this matter , together with copies of whatever signature cards union representatives had procured from Respondent's workers . Counsel's motion for production was denied . See Section 102.118 of the Board's Rules and Regulations Series 8, as amended; Harvey Aluminum (Incorporated), 142 NLRB 1041, 1042, fn. 1, in this connection .) Each party was afforded a full opportunity to be heard , to examine and cross -examine witnesses , and to introduce evidence pertinent to the issues. Since the hearing's close, timely briefs have been received from counsel for the General Counsel and Complainant; these have been duly considered. FINDINGS OF FACT Upon the entire testimonial record, documentary evidence received, and my observation of the witnesses, I make the following findings of fact: 1. THE BUSINESS OF RESPONDENT Throughout the period with which this case is directly concerned, Glenn Goulding, functioning as a sole proprietor, has maintained and conducted a retail discount department store business , doing business pursuant to franchise under the "Fed-Mart" trade name; his principal office has been maintained within his sole retail store, located in Fontana, California . General Counsel's complaint herein-dated July 30, 1965, as previously noted-alleged that Goulding, in the course and conduct of his retail department store business during the 12-month period scheduled to end December 20, 1965, "will do" a gross volume of business in excess of $500 ,000, and "will annually purchase and receive" substantial quantities of goods from suppliers located within the State of California, which goods "will be purchased and received" by said suppliers directly from various out-of-State enterprises. Upon the complaint's jurisdictional allegations-which counsel for Goulding never controverted , and which, therefore , may be taken as true-I find that Respondent is now, and at all times material has been , an employer within the meaning of Section 2 (2) of the Act engaged in commerce and business activities which affect commerce within the meaning of Section 2 (6) and (7) of the Act, as amended. With due regard for the jurisdictional standards which the Board presently applies-see Siemons Mailing Service, 122 NLRB 81 ; Carolina Supplies and Cement Co., 122 NLRB 88 ; and related cases-I find assertion of the Board's jurisdiction in this case warranted and necessary to effectuate statutory objectives. II. THE LABOR ORGANIZATION INVOLVED Retail Clerks Union , Local 1167, Retail Clerks International Association , AFL-CIO, designated as the Complainant or Union within this Decision , is a labor organization within the meaning of Section 2(5) of the Act, as amended , which admits certain of Respondent's employees to membership. III. THE UNFAIR LABOR PRACTICES A. Issues The controversy with which this case is concerned developed when Respondent , Glenn Goulding d/b/a Fed- Mart, refused to honor or maintain in force a collective- bargaining contract previously negotiated and signed by George Garrity d/b/a Fed -Mart and Retail Clerks Union, Local 1167, Complainant herein . The questions presented may be summarized as follows: 1. Whether Respondent should be considered Garrity's successor-bound by his predecessor's collective- bargaining contract with Local 1167, Complainant herein-so that his conceded refusal to honor that contract or follow its terms violated Section 8(a)(5) of the statute. 2. Assuming, arguendo , that Respondent should not be considered bound to honor or maintain in force Garrity's contract , should he, nevertheless, be considered bound to recognize and bargain with Complainant herein, so that his conceded refusal to follow such a course violated Section 8(a)(5), previously noted. 3. Whether Respondent's effectuation of certain unilateral changes with respect to wage rates , and various other terms and conditions of work , constituted violations of Section 8(a)(1) and (5) of the statute. 4. Assuming, arguendo, that Respondent's course of conduct merits proscription , what remedial directives should be considered necessary and proper to promote the statute's purpose. Though Respondent concedes his refusal to honor and maintain in force the contract which his predecessor, Garrity, signed-coupled with a refusal to recognize and bargain with Complainant which purports to represent his workers-he contends that no statutory duty properly chargeable to him as Garrity's successor was breached thereby. This contention , basically, generates the several related questions with which this Decision will be concerned. B. Facts 1. Background On May 1, 1964, George Garrity and Fed-Mart Corporation negotiated and signed a Fed -Mart Franchise and Supply Contract, whereby Garrity became Fed-Mart's franchisee . That same day, these parties, further, signed a lease contract, whereby Garrity subleased from Fed-Mart certain premises on Foothill Boulevard , Fontana, FED-MART 205 California, where the retail discount department store business with which this case is concerned was conducted. (The Franchise and Supply Contract provided that May 31, 1966, would be its termination date. There was a proviso, however, whereby "either party" was permitted to terminate the contract "without cause" by giving 7 days' written notice of such termination. Further, either party was given the right to terminate the contract for cause by giving 24 hours' written notice; failure to comply with any covenant or condition set forth within the contract or Garrity's concurrent sublease, previously noted, was defined to constitute "cause" for termination. Fed-Mart's sublease covering the Fontana, California, store contained a May 31, 1964, termination date; presumably 1966 was intended. The sublease contained provisions comparable with those in Garrity's franchise contract regarding the reciprocal rights of Fed-Mart and the sublessee to cancel their lease commitments.) During early September 1964, Retail Clerks Union, Local 1167, started to organize Garrity's employees. And sometime during October, thereafter, the Complainant did persuade a majority of Garrity's Fontana workers to designate or select it as their collective-bargaining representative. Subsequently, following a series of developments which need not be detailed, the Local filed a charge with Region 21 wherein George Garrity d/b/a Fed-Mart was charged with a refusal to bargain contrary to statute. On December 2, 1964, Garrity signed a settlement agreement, calculated to dispose of the charge, whereby he agreed to recognize and bargain with the Complainant herein, upon request, as the exclusive representative of all his employees within a bargaining unit defined as follows: All employees employed by the Employer at his Fontana, California store, excluding guards, watchmen, professional employees and supervisors as defined in the Act. Subsequently, the settlement was signed in Complainant's behalf by Respresentative Wendell C. Rasor of the Union's Southern California Organizing Committee. On December 7 it received the Regional Director's concurrence. Pursuant to the settlement agreement's provision, Garrity posted-within his Fontana store office-a notice confirming his readiness to bargain collectively, upon request, with the Complainant herein as the exclusive representative of his workers within the bargaining unit designated, with respect to rates of pay, hours of employment, or other conditions of work, coupled with his readiness to embody any understanding reached in a signed agreement. Following Garrity's execution of the settlement agreement, Local 1167 began negotiations with him which resulted in their mutual execution of a memorandum agreement dated December 7, 1964. The document in question provided, inter alia, that: 1. All of the terms and conditions of the "Retail Food, Bakery, Candy and General Merchandise Agreement, 1959-1964" shall be continued in full force and effect between the parties hereto until the expiration or termination of this Memorandum Agreement. 2. The Employer hereby agrees to accept and adopt in full any final agreement or contract resulting from the pending collective bargaining negotiations between Retail Clerks Union, Local 1167, and Food Employers Council, Inc., respectively, for a successor contract to the said 1959-64 Agreement and to execute in writing such final agreement or contract upon demand by Local 1167. All terms and provisions of such successor agreement or contract shall be effective Dec. 15, 1964. This Memorandum Agreement shall be deemed to be replaced and superceded by such successor contract upon its execution by the Employer. The record shows, and I find, that Food Employers Council, Inc., and Complainant herein had, substantially, negotiated a successor contract to their 1959-64 agreement, before Garrity's memorandum agreement was signed. The contract in question, Retail Food, Bakery, Candy and General Merchandise Agreement, 1964-69, which had previously been reduced to writing and signed, was finally published later. This published document, proffered by General Counsel for the record, constituted the successor contract which Garrity-so I find-had committed himself to sign. While negotiations with respect to Local 1167's memorandum agreement were under way, Garrity told Complainant's representatives, I find, that he "might be forced" to cease doing business, because of cancellation clauses within his Fed-Mart contracts. (Representatives of Complainant, testifying in this connection, declared that they had understood these contracts contained "thirty day" cancellation clauses. However, the documents themselves, previously noted within this Decision, reveal that Fed-Mart's Sublease and Franchise and Supply Contract actually gave both parties privy thereto a right of cancellation or termination, without cause, upon 7 days' written notice.) Garrity, I find, did not say Fed-Mart had actually served the requisite notices; nor did he say that he would definitely cease doing business. So far as the record shows, he merely characterized such a development as possible. 2. Goulding replaces Garrity Late on the morning of December 12, 1964, 5 days following Garrity's execution of the memorandum agreement previously noted, Fed-Mart did serve Garrity with the designated notice. Thereby, his Franchise and Supply Contract, together with his Sublease, were terminated and canceled, respectively, with December 19 as their terminal date. On December 20, following some brief negotiations, Joseph Glenn Goulding, designated Respondent herein, reached a consensus with Fed-Mart regarding a new Franchise and Supply Contract and Sublease for the latter firm's Fontana store; the record reveals, however, that the parties did not, really, sign these documents until January 5, 1965, at Fed-Mart's San Diego headquarters. When both documents were signed, they provided for a term scheduled to commence December 20,1964, and end May 31, 1966. They dealt with the premises within which Garrity had previously been doing business ; Garrity, however, was not a contractual party. (The contracts in question, proffered for the record, had been prepared on standard Fed-Mart forms. Save for the name of the franchisee-sublessee , and their respective terms, the contracts which Garrity and Goulding successively signed with Fed-Mart were identical in major respects.) Before taking over the store, Goulding had visited the premises on or about December 12; while there-so his testimony shows-he had seen the notice to employees which Garrity had previously posted within his office, pursuant to the settlement agreement , sometime during December's first week. While a witness, Goulding further conceded 206 DECISIONS OF NATIONAL LABOR RELATIONS BOARD that-before he took over as Fed-Mart's franchised dealer within the Fontana store-he knew that Garrity had agreed to recognize and bargain with Local 1167, and that he (Garrity) had, in fact, shortly thereafter, signed Complainant's proffered memorandum contract. On December 16, Goulding drafted and signed a letter for transmittal to Complainant herein; the letter was directed to Complainant at 5250 Santa Monica Boulevard, Los Angeles, California, however. It bore a notation that it was to be sent "Certified Mail," with return receipt requested. (The document-which General Counsel proffered for the record-bears the receipt stamp of Retail Clerks Organizing Council of Southern California, dated December 28, 1964; nothing in the present record suggests any reason for the letter's presumptively delayed receipt. Determination would seem to be warranted, however, that it was forwarded, ultimately, to Complainant Union's Colton, California, headquarters. I so find.) Thereby, Goulding advised Retail Clerks Union, Local 1167, that, effective December 20, 1964, he would "own" the Fontana, California, Fed-Mart franchise store. Local 1167, further, was notified that Goulding would "not accept any successor commitment" with reference to any "labor relations contract" which Garrity had signed. (The Union had, previously, learned about the changed-store "ownership" situation. On or about December 15, one of Garrity's Fontana workers had telephoned Union Secretary-Treasurer Butler, reporting a rumor that the store had been sold. Butler, thereupon, had telephoned Garrity, who had stated that Goulding was "taking over" the business.) On Saturday, December 19, the Fontana store, with respect to which Garrity still functioned as Fed- Mart's franchised dealer, closed at 6 o'clock, its regular closing time. Special crew workers then took an inventory, which they completed at approximately 2 o'clock the following morning. Later during the morning of Sunday, December 20, the store opened with Goulding as its franchised owner-operator. The Fontana store-throughout both dealership periods with which we are concerned-has been maintained and known as the "Fed-Mart Franchise" store; its building frontage has, throughout, borne a sign with "Fed-Mart" shown as its name. When Respondent became Fed-Mart's franchised dealer, he retained most of the store's merchandise on hand, save for some damaged goods. No prominent public notice regarding the dealership change has ever been published or posted. (The record warrants a determination that no sign was ever posted, within or without the store, announcing any management or ownership change. The only notice published seems to have been a small, formal advertisement, buried within a local newspaper's "Legal Notices" section.) The store's various departments-sandwich, groceries, sporting goods, housewares, hardware, automotive, jewelry, soft goods, etc., have been maintained by Respondent without change from Garrity's dealership. The products sold, likewise, have remained substantially the same, though Respondent has increased his stock-in-trade and has added some new products, specifically, major appliances such as television, radios, and refrigerators, for which new floor space, previously vacant, was designated. Respondent has continued to sell the same "Fed-Mart" or "FM" brand name products, such as coffee, flour, cooking oil, shortening, and motor oil, as Garrity did. The basic nature of the business, likewise, has remained the same. Garrity had operated a retail discount department store pursuant to franchise; Respondent has continued this business. During his first month or two, Goulding made no change regarding the store's physical layout. Thereafter, some of the store's departments-cameras, jewelry, dry goods, housewares-were relocated. The checkstands, however, have not been moved. Respondent has, likewise, continued to use the same shopping carts bearing the standard "Fed-Mart" name, which had been part of the store's furnishings during Garrity's dealership. Garrity's workers, all of them, save for his immediate family, continued in Goulding's employ; Respondent, so his testimony shows, merely "let it generally be known" through casual remarks, within the store, that he planned no personnel changes. The record shows that Respondent hired no new workers, with the possible exception of his wife, until sometime in February 1965; thereafter he hired three full-time and two part-time workers. Since Respondent became Fed-Mart's franchise dealer, his employees have performed duties substantially identical with those they had previously performed, during the period of Garrity's dealership. Under Garrity, the employees had had to wear a blue vest with a red stripe; they have continued to wear the same uniform. Likewise, both dealers have required employees to wear plastic name tags bearing the designation "Fed-Mart" thereon, with the employees' name below that. Under Garrity, Leland Redfern had functioned as the store's only supervisor, responsible to the franchise dealer; Redfern has been retained as the store's only supervisor under Goulding's dealership. 3. Complainant's redesignation On January 3, 1965, Local 1167 representatives met with store workers at the union office. Seven Fed-Mart workers were present; Secretary-Treasurer Butler and Business Agent Smith spoke in Complainant's behalf. They detailed the highlights of the contract which Garrity had signed, said that the contract in question was still in force, and characterized Fed-Mart as a "union" store. During the meeting, however, the store workers were requested to sign new union authorization cards. The Complainant's spokesman explained that they believed the store had been sold or soon would be sold; that they wanted "new cards" because the Union wished to continue to function as their representative; and that, if the workers wished such representation to continue, they should sign new cards. Cards were then distributed which all employees present, save one, signed; the cards were then returned to Complainant's representatives. (The seventh worker, Judith Logo, testified in Respondent's behalf that she, likewise, had signed a card, but that she had subsequently requested its return . Smith denied receiving any card signed in January 1965, from her, and no such card with her name was submitted for the record. For reasons which I propose to detail subsequently, within this Decision, this testimonial conflict need not, in my opinion, be resolved ) The next day, Smith met two more store employees, personally. They were told, likewise, that Complainant wished to continue to represent them despite the store's ownership change. Smith asked them to sign new authorization cards if they wished the Union to continue functioning as their representative. Both signed cards which they returned to Smith, forthwith. 4. Complainant seeks recognition FED-MART 207 On January 6, Secretary-Treasurer Butler sent a letter to Goulding. He acknowledged receipt of Goulding's December 16 letter. With Goulding's refusal to "accept any successor commitment" based on Garrity's contract with Local 1167 in mind, Butler declared that: ... Local 1167 as the authorized collective bargaining agent of your employees, requests that negotiations for a collective bargaining agreement be immediately commenced. Goulding's reply was requested for the purpose of making "necessary arrangements" for a meeting. About January 10, Butler telephoned Goulding, repeating his request that a meeting be arranged to "go over" Complainant's contract covering the Fontana store. Goulding replied that he was busy and could fix no definite date for such a conference. On January 11, Smith and Local Business Agent William Brooks spoke with Goulding on the store's selling floor. Smith identified himself as Complainant's representative for the geographical area within which the Fontana store was located; he declared that Complainant represented the store's employees and raised a question regarding Goulding's knowledge with respect to Local 1167's relationship with the store. Goulding, I find, replied that he and Garrity had discussed the matter. When Smith asked whether Goulding knew about Complainant's contract with Garrity, Goulding replied that he would not "recognize" that contract, although he would continue to pay the wage rates therein specified. Smith, I find, declared that he would contact Goulding further. (Before this-some time during December 1964, immediately following his takeover of Fed-Mart's Fontana franchise-Goulding had instituted a group life insurance and hospital plan for store workers; Garrity had provided no such program. Local 1167 was given no notice regarding the plan's effectuation; Goulding had not bargained with Complainant concerning such matters.) On January 13, Butler and Smith met Goulding at the store. Butler told Respondent that they had come to "discuss the contract" with him. Goulding asked whether they represented his employees; Butler replied that Local 1167 did, and that he had cards to prove it. Goulding, thereupon, expressed doubt that Complainant represented a majority of the store's workers and requested to see the cards; Butler, however, though he had the batch of cards in his hand, declared that he would only allow an impartial person, such as a priest, to examine them. Respondent, concedely, rejected this offer, saying that he "wasn't interested" in such third party verification, but did agree to meet again. On January 19, Goulding met Butler and Courtney Lainhart, Complainant's president, at Local 1167's office. There, Goulding repeated his declaration of disbelief with respect to the Union's representative status. Butler produced the newly signed cards, and showed them to Goulding, but would not allow him to examine them; he repeated his offer to submit the cards to an impartial person, but Goulding failed to accept this proposal. Butler, further, presented Goulding with a copy of the memorandum agreement which Garrity had signed, a copy of the old areawide collective-bargaining contract, and some papers showing the cost of Complainant's health and welfare plan. Goulding said he would send the contract documents to his counsel, and would subsequently notify Complainant regarding his position. (When Goulding had taken over Fed-Mart's dealership on December 20, 1964, there had been 14 store employees. Between that date and January 4, 1965, three workers had resigned. On January 7, when Respondent received Complainant's demand for recognition-and, indeed, throughout the rest of the month-Goulding was employing 11 nonsupervisory workers. Eight of these, so the record shows, had redesignated Complainant as their bargaining representative, with their January 3 and 4 cards.) Following their last conference, Complainant's representative did not hear from Goulding for some time. On February 15, Butler sent Respondent a letter within which he mentioned their January 19 meeting "for the purpose of negotiating a contract" covering the Fontana store workers, and requested a meeting forthwith so that negotiations might be concluded. (Meanwhile, back on or about January 12, Goulding had posted a notice to employees whereby he promulgated a regular sick-leave policy. Subsequently, on February 3, consistently with a similar posted notice, he had promulgated a vacation policy. Complainant had received no prior notice with respect to Goulding's institution of these employee benefits, nor had Respondent bargained with Local 1167 concerning such changes in working conditions.) The next day, Goulding telephoned Butler; he declared that he desired a representation election. Butler replied that Complainant would not concur, since its position was that it had a contract which covered the Fontana store. 5. Goulding's final refusal to bargain Several days thereafter, Complainant received a letter from Respondent's counsel; he declared Goulding's position to be that Local 1167 did not "represent a majority" of his Fed-Mart Store employees; therefore, counsel declared, Goulding felt under no legal obligation to recognize Complainant as their bargaining representative. This letter was referred to Complainant's counsel, who thereupon filed the charge with which this case is concerned. Since then, during the months of February, March, and July 1965, specifically, Respondent has given most of his Fontana store workers two 30-cent raises. Neither of these wage adjustments, so Goulding concedes, were discussed with union representatives. C. Conclusions 1. The unit appropriate for collective bargaining Within his complaint, General Counsel has designated the group of workers which he claims to be appropriate for the purpose of collective bargaining at Respondent's store-pursuant to Section 9(b) of the statute-as follows: All employees employed [by Respondent herein] at [its Fontana, California] store excluding guards, watchmen, professional employees and supervisors, as defined in the Act. Though Respondent, within its answer, had formally challenged the correctness of this bargaining unit definition, counsel for the proprietorship did finally declare, during record discussion, that Goulding's denial with respect to this portion of General Counsel's complaint would be retracted. With matters in this posture, the group which General Counsel, within his complaint, has designated as proper for collective-bargaining purposes 208 DECISIONS OF NATIONAL LABOR RELATIONS BOARD would seem to warrant such designation; I conclude that this group does, indeed, constitute a unit appropriate for collective-bargaining purposes, within the meaning of Section 9(b) of the statute. 2. The union's status as bargaining representative General Counsel contends that Complainant herein, since October 1964, at least, has been designated or selected by most of the Fontana store's workers, within the group previously described, as their representative for collective-bargaining purposes. Pursuant to Section 9(a) of the statue, so General Counsel contends, Complainant has, therefore, been entitled to recognition, since then, as the exclusive representative of Respondent's employees within the designated bargaining unit, for the purpose of collective bargaining with respect to their rates of pay, wages, hours of employment, and other terms and conditions of employment. This contention, so the record shows, rests on several grounds. a. The significance of the settlement agreement Determinations have been made, previously, that Garrity, pursuant to certain December 1964 negotiations with Board representatives, signed a settlement agreement, within which he agreed to recognize and bargain with Complainant as the representative of his store employees. And, shortly thereafter, he did sign Complainant's proffered collective-bargaining contract. Less than 1 month later, however, Respondent herein-functioning as Fed-Mart's newly franchised owner-dealer, and prospectively the new employer of those Fontana store workers whom both the settlement agreement and Complainant's collective-bargaining contract covered-declared that he would "not accept any successor commitment" with respect to Garrity's previously negotiated contract, and disavowed any obligation to bargain. General Counsel contends that settlement commitments, which, in this respect, should be considered comparable with Board certifications bottomed upon representation proceedings, run with a business; such settlement commitments, therefore, should, like certifications, preclude the successors of parties privy thereto from challenging the representative status of labor organizations designated therein, for some "reasonable period of time" following their negotiation and execution. Consistently with well-settled decisional doctrine, this Board has frequently held that, following the negotiation and execution of settlement agreements, wherein employers commit themselves to bargain collectively in good faith with designated unions, signatory employers privy thereto are legally obligated to continue to recognize and bargain with the unions concerned for a reasonable period of time. N. J. MacDonald & Sons, Inc., 155 NLRB 67. See Poole Foundry and Machine Company v. N.L.R.B., 192 F.2d 740, 743 (C.A. 4), wherein the court stated that: We, accordingly, agree with the Board's contention that [Respondent] by entering into the settlement agreement, thereby securing a withdrawal of the charges of unfair labor practices, is bound to bargain in good faith with the Union for a reasonable period of time after such agreement, without questioning the Union's lack of a majority .... While not an admission of past liability, a settlement agreement does constitute a basis for future liability and the parties recognize a status thereby fixed. . . . An entire structure or course of future labor relationships may well be bottomed upon the binding effect of a status fixed by the terms of a settlement agreement. If a settlement agreement is to have real force, it would seem that a reasonable time must be afforded in which a status fixed by the agreement is to operate. Otherwise, settlement agreements might indeed have little practical effect as an amicable and judicious means to expeditious disposal of disputes arising under the terms of the Act. Thus, it follows that [Respondent], after having solemnly agreed to bargain with the Union, should not be permitted, within three and one-half months after the agreement, to refuse so to bargain, even if, as here, the Union clearly did not represent a majority of the employees. [Emphasis supplied.] Such a decisional principle, necessarily, must be predicated upon, and comport with, a corollary doctrine: Since any labor organization's right to recognition as the statutory representative of some workers' group for collective-bargaining purposes, which a settlement agreement of the sort with which we are now concerned confirms, derives from that organization's prior designation or selection as their representative by a majority of the workers within the group, such designation or selection, once conceded, may not be challenged for a reasonable period of time following the settlement agreement's negotiation. Stated differently, the decisional principle noted necessarily means that the representative status of the labor organization designated within the settlement, upon which its right to recognition and its right to bargain must necessarily be predicated, will be conclusively presumed to continue for a reasonable period of time. With respect to signatory employers, directly privy to settlements, such a conclusive presumption, certainly, would seem patently warranted. So far as this case is concerned, determination seems clearly justified that no "reasonable period of time" had passed between the date on which the Board's Regional Director approved Garrity's settlement commitment and the date on which Respondent made patent his refusal to consider himself bound thereby. Less than 1 month had elapsed. With due regard for well-settled case law, then, there can be no doubt that Garrity himself, had his franchise dealership continued, could not have successfully challenged Complainant's representative status within such a short period following his specific commitment to recognize and bargain with Complainant herein. Respondent's counsel contends that his client, who succeeded Garrity as Fed-Mart's franchise dealer, should not be considered similarly foreclosed. Should such a conclusion be considered warranted, however, Respondent's freedom to challenge Complainant's representative status could not, properly, derive from a determination that Garrity's settlement provided no sufficient foundation for Local 1167's claim to such status. Rather, such a conclusion would have to rest upon some determination that Respondent should not be considered Garrity's successor for statutory purposes, bound to comply with the latter's previously fixed duty to recognize and bargain with Complainant Union herein. So far as I can determine, indeed, Respondent's defense, with FED-MART 209 respect to this facet of the present case, rests, precisely, upon the proposition last stated; no contention has been proffered, specifically, that General Counsel can no longer rely on Garrity's settlement commitment to "prove" the Union's representative status, merely because Fed-Mart had, shortly after his commitment was made, forced him to surrender his franchise. With due regard for decisional precedent, I find that Garrity's concession regarding the Union's representative status, which necessarily underlay his settlement commitment to recognize and deal with the labor organization designated, sufficed to - raise a conclusive presumption that Complainant continued to enjoy such a status for some "reasonable period of time" following the settlement negotiation. Whether such a presumption, which clearly would have foreclosed Garrity from challenging Complainant's representative status within the period with which we are concerned, had he retained his franchise, should properly be considered binding upon Respondent as Garrity's "successor" herein, will be -considered further within this Decision. b. The significance of Complainant Union's redesignation General Counsel, however, contends further that-whether or not Complainant may legitimately rest its current claim to representative status upon some conclusive presumption-the Respondent herein was statutorily bound nevertheless, just as any similarly situated employer would be bound, to recognize and bargain with Complainant Union pursuant to request, since the Union really had been designated and selected, by most of his Fontana store workers, as their bargaining representative. Such a determination, certainly, seems warranted. When Goulding received the Union's January 6 request that negotiations for a collective-bargaining contract be commenced forthwith, Local 1167 representatives held newly signed "authorization" cards from 8 of Respondent's 11 store workers. On their face, these cards, which were proffered and received for the record, do show that Complainant herein, when it first requested Goulding to bargain, did, really, represent a majority of his Fontana store workers. Respondent's counsel, nevertheless, would argue that Complainant's claim to representative status, bottomed upon such newly signed cards, cannot properly be considered proven, since the cards had not been validly procured. Specifically, counsel contends that these newly signed cards reflect no real purpose to redesignate Union as their signers' bargaining representative, since the store workers who signed such cards did so primarily because they shared some impression or belief, derived from the context within which their signatures were solicited, that Respondent's Fontana store was a so-called union store, still covered by Garrity's previously signed "union shop'; contract, so that they would have to redesignate Complainant as their collective-bargaining representative or they would "probably" lose their jobs. No more than one of Complainant's eight proven card signers, James Gronek, so testified, however. (With respect to his testimony General Counsel notes, persuasively, that-within a previous written statement-Gronek had said Goulding told him, around December 28 or December 29,1964, that there was "no more union" within the store. Gronek's witness-chair concession with respect to the correctness of his prehearing statement, despite his subsequent testimonial declaration that he was not sure regarding the date of Goulding's remark, suggests that whatever he was told by Local 1167 representatives, during the January 3 meeting, regarding the continued status of Goulding's Fontana store as a so-called "union store" reasonably could have been evaluated by him as nothing more than a statement of Complainant's position.) Beatrice Meyer, another card signer summoned to testify as Respondent's witness, did testify that she signed a second card on January 3 following specific representations that Garrity had previously signed Complainant's contract and that Respondent's Fontana store was "union" therefore; she declared further, however, that Goulding's workers were requested to sign new cards so that Complainant could "represent the shop" thereafter. The only other card signer who testified, Paul Gonzales, declared that, when he signed his second card, he did so because he then desired Complainant to represent him; that no one had directed him or forced him to sign; and that the possibility he might lose his job if he did not sign the card had never occurred to him. With matters in this posture, Respondent has not, I find, persuasively countered General Counsel's contention regarding the significance of Complainant's newly signed January cards. The language found within Complainant's cards is clear and definite; card signers specifically designate "Retail Clerks International Association by its agent Retail Clerks Union, Local 1167," their exclusive representative for collective-bargaining purposes. Thus, Respondent's counsel, had he wished to prove that most of those who signed Complainant's designation cards on January 3 and 4 did so because of their "mistaken impression" that a failure or refusal to sign would jeopardize their jobs, would have had to proffer testimony calculated to support such a determination. Sufficient witnesses for the purpose, however, were simply not presented. Further, whatever testimony Respondent did present clearly fails to show threats or coercion, chargeable to Local 1167's representatives, sufficient to vitiate a determination that Complainant's January 3 and 4 cards validly represented the shared desire of their signers. Several of Respondent's witnesses conceded that Complainant's spokesmen made no threats; that they (Goulding's workers) knew what they were doing; that no one said anything would happen to them if they failed or refused to sign; that they voluntarily signed the cards; and that they knew what kind of cards they were signing. The cards in question, therefore, constitute valid designations; whatever "unexpressed and unilateral misunderstandings" or mental reservations some of their signers may now profess they had cannot be considered sufficient to impair the cards' validity. N.L.R.B. v. Hyde's Supermarket, 339 F.2d 568 (C.A. 9); Colson Corporation v. N.L.R.B., 347 F.2d 128 (C.A. 8); Gary Steel Products Corporation, 144 NLRB 1160,1 so find. With matters in this posture, determination seems warranted, consistently with General Counsel's alternative contention, that, since January 4, 1965, and continuing to date, Complainant has in fact been the designated and selected representative of a majority of Goulding's employees for collective- bargaining purposes, within the bargaining unit previously described. By virtue of Section 9(a) of the statute, therefore, Complainant has been, and is now-so I find-entitled to recognition as the exclusive representative of all Goulding's employees within the described unit, for the purpose of collective bargaining 210 DECISIONS OF NATIONAL LABOR RELATIONS BOARD with respect to their rates of pay, wages, hours of employment, and other terms and conditions of work. 3. The refusal to bargain The present record, clearly, will support a determination that Goulding has, despite repeated requests for recognition, persistently refused to recognize and bargain with Complainant herein. Documentary material, proffered and received without protest, clearly reveals that, before Local 1167's representatives presented their first demand, they were notified that Respondent would "not accept any successor commitment" with reference to Garrity's previously negotiated contract. Nor does Goulding now, so far as the record shows, deny his subsequent refusal to recognize or deal with the Union's representatives. Respondent's counsel presently contends, merely, that his client's conceded initial refusal to honor Garrity's contract, coupled with his later refusal to discuss or negotiate some new contract with Complainant herein, breached no statutory duty. a. Since Respondent may properly be considered Garrity's successor for statutory purposes, he may be required to recognize and bargain with Complainant Union herein (1) Upon the whole record, General Counsel argues that Garrity's statutory duty to bargain with Complainant herein-which the franchise holder, realistically, conceded when he signed the settlement agreement previously noted, and confirmed when he subsequently negotiated and signed Local 1167's memorandum contract-devolved upon Goulding; Respondent, so the argument runs, became Garrity's successor, for statutory purposes, when he consummated his Franchise and Supply Contract with Fed-Mart, covering the Fontana store. Substantially, General Counsel contends that Goulding became the previous franchise holder's "successor" because he "took over" completely Garrity's retail discount department store dealership, pursuant to contractual commitments whereby no "basic change in the employing industry" resulted. Cf. Firchau Logging Company, Inc., 126 NLRB 1213,1219-20. With a quotation from the case cited, slightly modified to fit the facts herein, the question now presented for determination may be formulated as follows: The basic question herein is whether Respondent is a successor employer to [Garrity] and is therefore under a duty to bargain collectively [for a reasonable time], with the Union as the [recognized] representative of the employees in the appropriate unit . The theory of successorship is that the new operator of the business falls heir to the responsibilities and liabilities, if not privileges, of the original employer that stem from [his concessions regarding the Union's representative status, reflected within a settlement agreement previously negotiated and signed]. [ Such a settlement] runs with the employing industry and is normally not affected by a change in management or ownership .... The fundamental approach and test is whether the employing industry is substantially unchanged in terms of such factors as location, equipment, personnel, and mode of operation. When no substantial change with respect to the factors noted can be found, the Board has long held that prior certifications run with the employing industry; thus, neither changes of ownership nor possible minor changes in the nature or operation of the business, particularly when they occur within the first year following the certification, will relieve a successor of his duty to bargain with the certified labor organization Mole Oldsmobile, Inc., 152 NLRB 1384; Consolidated American Services, Inc., 148 NLRB 1521; Maintenance, Incorporated, 148 NLRB 1299; Johnson Ready Mix Co., 142 NLRB 437; Witham Buick, Inc., 139 NLRB 1209; Ugite Gas Incorporated, 126 NLRB 494; Alamo White Truck Service, Inc., 122 NLRB 1174; Investment Building Cafeteria, 120 NLRB 38. Further, see Cruse Motors, Inc., 105 NLRB 242; Miller Lumber Company, 90 NLRB 1361; The Northwest Glove Co., Inc , 74 NLRB 1697; cf. Herman Loewenstein, Inc., 75 NLRB 377, in this connection. (Similar determinations regarding the statutory duty of so-called successors to bargain have been made in cases where the certification, on which the labor organization relied, was more than 1 year old when the business concerned was transferred; where a record reveals no basis for good-faith doubt regarding the certified union's continued representative status, successor employers have been found obligated to recognize and bargain with it for the workers represented. Randolph Rubber Company, Inc., 152 NLRB 496; Rohlik, Inc., 145 NLRB 1236; Auto Vent- shade, Inc., 123 NLRB 451; cf. Paramount Paper Products Co., 154 NLRB 1064; The Richard Kaase Company, 141 NLRB 245, enforcement denied 346 F.2d 24,30,31 (C.A. 6). Within the present case's factual context, however, no such, problem is presented.) A similar determination, so the argument runs, should be considered warranted where a labor organization's right to claim representative status has been acknowledged within a settlement; where the business concerned has, demonstrably, remained substantially the same, General Counsel contends that specific concessions made by a predecessor employer, regarding his duty to recognize and bargain with a union, should be considered binding upon his successor in title Settlements, like certifications, in 8(a)(5) cases, confirm a labor organization's designation or selection, for collective-bargaining purposes, by a majority of some employer's workers within a unit found or conceded to be appropriate for such purposes; when negotiated and signed, such a settlement, like a certification, binds its signatory to recognize and bargain with the union therein designated. Since settlements, like certifications, confirm a labor organization's representative status, they should, logically, carry similar consequences in so-called successorship situations . Specifically, they should be considered sufficient to create a duty, binding on both signatory and successor employers, to recognize and bargain with the labor organization designated therein, for some reasonable period of time. (Particularly, a successor employer found to have taken over some designated "employing industry" with notice that his predecessor in title had negotiated and signedla settlement, whereby such a predecessor had committed himself to recognize and bargain with a union, should clearly be found similarly committed.) This Board has, within a related factual context, found certifications and settlements sufficiently akin to warrant similar weight. See Mar-Jac Poultry Company, Inc., 136 NLRB 7851 And Board determinations that respondents properly found successors will be considered bound to recognize and bargain with designated unions for some "reasonable period" of FED-MART time-following their predecessors' execution of settlement agreements wherein the representative status of such labor organization is conceded-would certainly be consistent with the basic policies which have long been considered sufficient to bind successors confronted with Board certifications. For many years, Board decisions within this field have rested upon the general principle, developed with judicial concurrence, that bargaining relationships once rightfully established must be permitted to exist and function for a reasonable period, within which they can be given a fair chance to succeed. Franks Bros. Company v. N.L.R.B., 321 U.S. 702, 705; Centr-O-Cast & Engineering Company, 100 NLRB 1507; cf. Universal Gear Service Corporation, 157 NLRB 1167. By substantially foreclosing questions of representation in so-called successorship cases, thereby clearly defining the duty of successor employers to bargain with certified unions during their 1-year certification period, this Board has both encouraged the execution of collective-bargaining contracts and enhanced the stability of industrial relations. And similar purposes, clearly, would be served should the Board, through its Decision herein, confirm the duty of successor employers to bargain with designated labor organizations , for some reasonable period of time, bottomed upon their predecessors ' settle- ment commitments to recognize and bargain with particular unions claiming representative status. Though Respondent has challenged his designation as Garrity's successor for statutory purposes, the record presents as clear and compelling a case for successorship as any which the Board has decided. Goulding, pursuant to franchise, presently maintains the self-same business which Garrity maintained, within the same premises, functioning under the same business name. (In this connection the record reveals that, when Goulding acquired Fed-Mart's franchise, public notice with respect thereto was restricted to small newspaper advertisements buried within the legal notices section. No real notice, such as a sign posted within the store, was given to customers. As General Counsel suggests , persuasively, we may reasonably deduce, therefore, that the general public remained completely without knowledge regarding the change of store ownership.) Goulding retained all of Garrity's store workers, except for the latter's family members, and several weeks elapsed before any new employees were hired. Leland Redfern, Garrity's only supervisor within the store, was retained as the store's only supervisor following Respondent's take over. Store workers have continued to wear the same partial uniforms; they wear the same badges, and perform substantially the same duties. The nature of the business, that of a retail discount department store, has not changed, Respondent continues to carry the same "Fed-Mart" or "FM" brand- name lines which Garrity carried. Though Respondent now sells some additional products, his stock-in-trade, essentially, remains the same. The store's physical layout, with particular reference to the location of checkout stands and various departments, has also remained substantially the same. With matters in this posture, clearly, there can be no doubt that the specific "employing industry" with which we are concerned continued substantially without change despite Fed-Mart's franchise shift. Consistently with well-established precedent, previously noted, Respondent herein, since he presently continues his predecessor's business without substantial modification, may properly be considered Garrity's successor, for statutory purposes. 211 Counsel for Respondent contends that he should not be considered Garrity's successor because the record fails to show privity of contract between them. This contention, however, raises no substantial question. Within a recent case, Maintenance, Incorporated, supra, accord Consolidated American Services, Inc., supra, the Board was confronted with a factual situation substantially comparable with the case presented on this record. The respondent firms within the matters cited were each successful bidders for Federal Government contracts, pursuant to which they were to perform "custodial janitorial" or "maintenance" services. Their contracts were won directly from the Government, through low bids. There were no contractual dealings shown between the respondent firms and the Government's previous contractors, nor could any privity of contract be found between them. Within both cases, however, the record showed that the respondent firms had hired most of the previous contractors' workers, though neither firm had taken over the previous contractors' business identity or physical assets. The Board concluded, with respect to both cases, that, since the respondent firms had continued substantially the same business operations with substantially the same group of workers, they were bound to bargain with particular labor organizations which had been certified to represent those workers while they worked for the predecessor contractors, within the 12- month period prior thereto. Regarding the so-called privity of contract question, the Board noted within its Maintenance, Incorporated decision, that: The duty of an employer who has taken over an "employing industry" to honor the employees' choice of a bargaining agent is not one that derives from a private contract, nor is it one that necessarily turns upon the acquisition of assets or assumption of other obligations usually incident to a sale, lease, or other arrangement between employers. It is a public obligation arising by operation of the Act. The critical question is not whether Respondent succeeded to [the previous employer's] corporate identity or physical assets, but whether Respondent continued essentially the same operation, with substantially the same employee unit whose duly certified bargaining representative was entitled to statutory recognition at the time Respondent took over. This decisional principle, further, has been confirmed within similar factual contexts. Compare Witham Buick, Inc., supra, and Burlington Roadbuilders, Inc., 149 NLRB 791, 802-803. Within the last cited case, the Trial Examiner concluded, with Board concurrence, that: New Burlington was the successor of Old Burlington and, as such, it was obligated to carry on the bargaining relations of Old Burlington.... There was no change in the business itself. The fact that Old Burlington's plant and equipment were not sold directly by Old Burlington, but were obtained by New Burlington through the legal device of transferring them as a liquidating dividend to the shareholders who then conveyed them to New Burlington, is of no significance in the circumstances. General Counsel does not contend, nor is it found, that New Burlington was not a bonafide purchaser. However, there was no break in the continuity of the employing industry nor in the continuity of employment of the four men who worked in the shop at the time New Burlington commenced its operation .... The issue here is not whether Respondent was bound by a Board Order 212 DECISIONS OF NATIONAL LABOR RELATIONS BOARD against its predecessor as a successor or assign, or as a disguised continuance, but merely whether Respondent continued the enterprise of Old Burlington basically unchanged. Compare further, Trial Examiner Frey's recent decision (Poly-Seal Corporation, Standard & Molding Division, Case 5-CA-3031, October 1965), wherein he found the designated respondent a successor, committed to honor various statutory and contractual obligations by which its predecessor had been bound, though it had acquired the predecessor's business through a judicial sale. See West Suburban Transit Lines, Inc., 158 NLRB 794, likewise, in this connection. The Board decisions noted, which I am bound to follow, thus dictate a rejection of Respondent's contention that he cannot be considered Garrity's "successor" because the two franchise dealers shared no privity of contract. With his "successorship" established, Goulding was bound, so I find, for reasons previously noted, to comply with Garrity's settlement commitment regarding recognition and bargaining with the Complainant herein, since no "reasonable period of time" had yet passed, following the settlement's negotiation. (2) Further, with matters in their present posture, Goulding's , duty to recognize and bargain with Complainant may, with equal propriety, be bottomed on the designated organization's contractually recognized representative status. This Board has held, within a case which dealt, specifically, with a respondent firm which had purchased another firm's physical assets but purportedly had not assumed its seller's contractual commitments , that certain changes in wages, hours, and working conditions which the purchaser thereafter unilaterally effectuated, without regard for the provisions of a labor contract previously negotiated by the seller with its workers' collective- bargaining representative for a term which had not yet expired, violated Section 8(a)(5) of the statute. Chemrock Corporation, 151 NLRB 1074. The Board's conclusion derived, partially, from a determination that workers confronted with a transfer of ownership which did not substantially change their "employing industry" should be considered statutorily entitled to seek through bargaining to protect their contractually fixed economic relationship with the business which employed them. In this connection, the Board particularly noted a Supreme Court rationale , set forth in John Wiley & Sons v. Livingston, 376 U.S. 543, 549, specifically, to the effect that: Employees, and the union which represents them, ordinarily do not take part in negotiations leading to a change in corporate ownership. The negotiations will ordinarily not concern the well-being of the employees, whose advantage or disadvantage, potentially great, will inevitably be incidental to the main considerations. The objectives of national labor policy, reflected in established principles of federal law, require that the rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by some protection to the employees from a sudden change in the employment relationship. Though the Board did not, within its Chemrock decision, supra, decide whether or not the Union's nonexpired contract with the predecessor firm therein should be considered "binding" with respect to that firm's successor, it did consider the Supreme Court's quoted comment pertinent, and held that, under the circumstances presented, the purchaser of a business may not ignore the contractually recognized collective- bargaining representative of that business' workers, when dealing with them on matters related to the continuation of their employment and the terms and conditions of their work. Inter alia, the Board further noted the Supreme Court's observation, see N.L.R.B. v. Hearst Publications, Inc., 322 U.S. 111, 129, specifically, that where all the conditions of the relation (between an employer and workers claiming statutory coverage) require protection, protection ought to be given. The Board had, previously, found an employer- purchaser guilty of refusal to bargain, following its refusal to recognize and deal with a labor organization claiming a currently operative but partially reopened contract with its predecessor-seller. Skaggs Drug Centers, Inc., 150 NLRB 518. The Trial Examiner therein, having found that the purchaser respondent could properly be considered a successor employer, had referred to the Board's consistent prior holdings that such "successors" remain subject to their predecessor's duty to recognize and bargain in good faith with whatever "incumbent union" then represented such a predecessor's workers. Further, since Chemrock, this Board has found a successor firm, which purchased a new facility, guilty of a refusal to bargain because it unilaterally modified certain terms and working conditions governing workers therein, which had previously been established under a recently terminated contract which had bound their former employer. Overnite Transportation Company, Inc., 157 NLRB 1185. The successor-respondent had decreed the changes in question promptly following its succession, without first apprising the worker's contractually recognized bargaining representative, and without giving it a chance to bargain concerning such changes. The Board found that-when the successor-respondent extended to its newly purchased establishment particular terms and conditions which then prevailed within its previously held establishments-such action constituted a unilateral change. Within its decision, the Board declared that where, as in the case before it, the employees' economic relationship with their employer was vitally affected by such a change in corporate ownership, the only "protective balancing" which could be provided required a determination that the concerned workers should be given an opportunity to bargain, through their designated representative, before the new owners could be permitted to alter that relationship. It concluded, therefore, that the successor respondent, having taken over the particular "employing industry" with full knowledge that the workers currently employed therein had union representation, deprived such workers of statutory protection when it changed their economic and employment relationships before it notified their bargaining representative of proposed changes and gave such representative a chance to bargain concerning them. Most recently, the Board had reached a similar conclusion regarding a successor respondent's bargaining obligation, following its purchase of three retail grocery stores, within which meat market department employees were currently covered by a collective-bargaining contract, negotiated and signed by the predecessor-seller. K.B. & J. Young's Super Markets, Inc., 157 NLRB 271. The Board, within the case cited, declared specifically that one FED-MART reason for its concurrence with the Trial Examiner's recommendation, regarding the respondent firm's statutory obligation, derived from a determination that the respondent concerned had succeeded, for statutory purposes, the firm which had, prior to the sale, negotiated and signed a labor contract covering "meat market department" workers. Should the Board, therefore, conclude that Garrity's settlement had, really, been given some "fair chance" to succeed, since it had, in fact, promoted collective bargaining, and had led Garrity to sign a memorandum contract with Complainant herein, determination would still be warranted that Respondent, functioning as Garrity's successor, was statutorily bound to recognize and bargain with the labor organization which Garrity had, previously, contractually recognized. (Whether Goulding's, statutory duty to bargain compassed a further duty to honor the contract which Garrity had signed will be considered, subsequently, within this Decision. In Young's Super Markets, the Board found no necessity to pass upon this question. So far as I can determine, despite some passing Board references to the Supreme Court's Wiley v. Livingston, rationale, the question of Section 8(a)(5)'s thrust in this regard has not yet been decided.) The statutory duty of so-called successor firms to recognize and bargain with labor organizations privy to contracts, whether current or recently terminated, covering workers within the particular "employing industry" transferred, has not, seemingly, been derived from any presumption that the contractually recognized union continues to represent a majority of the workers covered. Rather, relevant decisions suggest that it has derived from Board recognition that the worker's contractually fixed relationship with his "employing industry" constitutes a relationship with respect to which protection, in transfer cases, ought to be given. The national labor policy, so the Board holds, requires that the "rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers" must be balanced by some protection for employees from a sudden change in the employment relationship. John Wiley & Sons v. Livingston, supra. Thus, workers who have previously made clear their desire to bargain collectively must be given their statutory right to claim the protection of continued collective bargaining, before any bona fide change in business ownership can be permitted to modify their prevailing relationship with the particular "employing industry" concerned. b. Since a majority of Respondent's workers have redesignated and selected Complainant as their representative, Respondent may be required to recognize and bargain with Complainant herein Without regard to so-called successorship considera- tions, however, General Counsel contends, alternatively, that since a majority of Goulding's employees redesignated Complainant as their collective-bargaining representative, subsequent to his purchase of Fed-Mart's franchise, Respondent should be considered statutorily bound to recognize and deal with Complainant herein. Previously, within this Decision, determination has been made that when Goulding received Complainant's request for recognition and bargaining, on January 7, 1965, specifically, that organization held signed designation cards from 8 of his 11 store employees. Thus, apart from 213 any successor liability to recognize the designated union, so General Counsel contends, the new franchise dealer was statutorily bound, just as would be any employer similarly situated, to recognize the majority representative of his store workers. Counsel for Respondent argues, however, that his chent's refusal to recognize Complainant Union reflects no 8(a)(1) or (5) violation, since: (1) Complainant's new designation cards were not validly procured, and (2) Respondent, had, further, good reason to doubt Complainant's claim to continued representative status. Previously, within this Decision, Respondent's first contention-regarding the validity of Complainant's new designation cards-has been rejected. By way of recapitulation: Well-established decisional doctrine teaches that such designations may not be disregarded or declared void without reliable, probative, and substantial evidence that threats or improper inducements, chargeable to union representatives, had been employed to obtain them. Smeco Industries, Inc., 151 NLRB 1240; Superior Rambler, 150 NLRB 1264; cf. Purity Food Stores, Inc., 150 NLRB 1523. Nothing in the present record, however, would warrant a determination that Respondent's workers, prior to Complainant's redesignation, were subjected to any threats or inducements, whether from Garrity or union representatives, sufficient to justify Board rejection of their choice. Within his brief, Complainant Union's counsel notes that: The comment that the store was a Union shop apparently had varying degrees of meaning to the employees present. Objectively, such a statement does not come within the meaning of threat or inducement in the cases examined. Further, it is horn- book law that the subjective reaction or unilateral misunderstanding of the employee to requests for authorization is not controlling as to the voluntariness of the authorization. With matters in their present posture, counsel's comment with respect to the record's significance must be considered cogent; his summary of Board decisional doctrine, further, correctly states the principle which must be considered determinative herein. Cf. Jas. H. Matthews & Co. v. N.L.R.B., 354 F.2d 432 (C.A. 8); Gary Steel Products Corporation, 144 NLRB 1160; Peterson Brothers, 144 NLRB 679, 682, in this connection. (Though the record does show that Garrity, Respondent's predecessor, may have told some store workers that they would have to join Complainant, there can be no doubt that his comments followed his execution of Complainant's memorandum contract. Since that contract did contain statutorily permitted union-shop provisions, Garrity could hardly be faulted for his remarks.) True, Garrity's suggestion that his workers join the Union, which he seems to have made shortly after he signed the memorandum contract, could conceivably have persuaded some Fontana workers to seek union membership without waiting out their 30-day contractual grace period; his failure to mention their right to wait out that grace period, however, cannot be said to have rendered his remarks coercive. Besides, nothing in the record will support a determination that Garrity made such suggestions to those particular workers who, subsequently, redesignated Complainant. And, assuming, arguendo, that some of these workers may have "heard" Garrity's suggestion shortly after he became a contract signatory, determination could hardly be considered warranted that Respondent's workers, when they 299-352 0-70-15 214 DECISIONS OF NATIONAL LABOR RELATIONS BOARD redesignated Complainant slightly less than 1 month later, did so because their previous employer's directive had coerced their judgment. Despite his conceded knowledge with respect to Garrity's settlement commitment, his further knowledge that Garrity had finally signed Local 1167's memorandum contract, and Complainant's proposal to submit its redesignation cards for verification by some neutral party, Goulding contended that he did not, really, believe Complainant represented a majority of his Fontana store workers. This claim rests, principally, upon three grounds: 1. Garrity had reported, to him, that he had told "some of the employees" they would have to join Complainant herein. 2. The Fontana store is small, so that Goulding could reasonably consider himself a beneficiary of relatively "close" rapport with his employees. As recipient of their relevant expressions of opinion, he believed that Complainant did not, during the period with which we are concerned, represent them. 3. Goulding's various "casual" conversations with store workers led him to believe that Complainant had misled them before their redesignation cards were signed. These contentions, however, provide no persuasive justification for Goulding's claim of good-faith doubt; with due regard for the record, Respondent's contention in this regard must be rejected. First: Whatever Garrity may have told Goulding must be considered hearsay; Respondent can hardly contend that his predecessor's statements provided any "reasonable basis" for his later claims. Though Respondent's testimony with respect to Garrity's report was received for whatever value it might have as tending to show his (Goulding's) subjective state of mind, its probative weight with respect thereto must be considered minimal. Within his brief, Complainant's counsel has suggested, cogently, that Goulding knew, or should have known, that Garrity, who had resisted his store' s unionization before he signed the settlement previously noted, which settlement included a bargaining order, would hardly have urged his workers to seek union membership, thereafter, except pursuant to some valid and binding contractual union- security clause. Since the record warrants a determination that his commitment to such a clause did, indeed, lead Garrity to make his suggestion, that suggestion can hardly be considered unlawful; certainly, it can provide no reasonable justification for Goulding's presently claimed belief that Complainant's representative status had been won through coercion. Second: Goulding's claim to knowledge regarding what his workers felt with respect to union representation could not, reasonably have been bottomed merely on his store's small size. His purported belief with respect to his workers' representation desires could only have derived from whatever specific conversations he may have had with them. These conversations, then-rather than some vague rapport between the franchise dealer and his employees bottomed on their close working relationship-must be considered. Third: Goulding's claim of good-faith doubt, which he purports to have derived from several informal conversations with store workers after he took over Fed-Mart's franchise, rests on testimony which can hardly be considered persuasive. While a witness, Respondent first testified that various workers made statements, shortly after he took over the store, from which he derived "impressions" that they did not desire union representation. When cross-examined, however, he was unable to say which employees had spoken to him during late December or early January; nor could he recall what they said. When pressed, he could merely report that some of them had asked him whether the store was "Union" still. Such queries, because of their equivocal character, can hardly be considered a manifestation of discontent with union representation. (During direct examination, Goulding had testified, generally: that some of his workers, their number unspecified, had questioned him as to what could be done to them if they did not pay their union dues; that some had reported receiving union letters which said that if they did not pay their dues there would be repercussions; and that some had declared the only reason they "signed" was because they were told to sign. During cross-examination , however, Respondent professed to recall conversations with no more than seven workers. Three of these, Johnson, Logo, and Marovich, none of them January card signers, had merely asked whether the store was "Union" still. With respect to four January card signers, Dawson, Gronek, Merlo, and Sanders, Goulding could merely recall that two had queried the store's "Union" status, and that one had mentioned receiving a union letter; he could not remember the substance or tenor of his conversation with the fourth card signer. ) Thus, assuming, arguendo, that Goulding may really have had some casual conversations with various store workers, their tenor certainly cannot be considered reasonably sufficient to raise a good-faith doubt regarding Complainant's renewed representation claims. Cf. West Suburban Transit Lines, Inc., supra 798-800, and cases therein cited; Cameo Lingerie, Inc., 148 NLRB 535, 538-539; asserted doubts regarding representative status must rest on something more than unfounded assertions or speculation; good-faith doubt presupposes a rational basis in fact. N.L.R.B. v. Howe Scale Co., 311 F.2d 502, 504 (C.A. 7). No such showing has been made herein. Further, testimony proffered in Respondent's behalf, apart from that of Goulding himself, tends to show that whatever conversations he may have had, with possibly one exception, took place some time after January 7, when he received Complainant Union's first formal demand for recognition. I so find. Such conversations can hardly have influenced his prompt rejection of Local 1167's claim of majority representation. Taken as a whole, therefore, the record shows: That before Goulding took over Fed-Mart's franchise, he knew that Garrity, his predecessor, pursuant to a posted settlement notice, had shortly before conceded Complainant's representative status; that he was, further, aware of Garrity's contractual privity with Local 1167, since he knew that Garrity had signed that organization's memorandum contract less than 1 month previously; that he (Goulding) nevertheless rejected, thereafter, Complainant's offer to prove its January redesignation by a majority of Fontana store workers, through a card check which some neutral person could conduct; that he had, prior to Complainant's recognition demand, purchased a group life insurance and hospitalization plan for store workers, without notice or consultation with union representatives; that, following Complainant's demand for recognition, he (Goulding) had further unilaterally promulgated a sick leave policy and vacation program; and that, shortly thereafter, he had granted store workers the first of two substantial wage increases. With matters in FED-MART 215 this posture, Respondent's present claim, that his refusal to recognize and bargain with Complainant derived from some "reasonably based" good-faith doubt regarding its representative status, fails to persuade. Dispassionately considered, rather, Respondent's present claim of good-faith doubt-considered in the fight of his prior refusal to accept or acknowledge Complainant's suggestion regarding a method by which such a doubt could be resolved-constituted "nothing more than a stalling device" calculated to provide him with time within which Complainant's representative status could be subverted. Upon this record, I find that Complainant did, really, represent a majority of Respondent's Fontana store workers on January 7, 1965; that Respondent was then confronted with Complainant's demand for recognition and request for collective- bargaining; and that his refusal to deal with Complainant's representatives, thereafter, violated the statute. c. Since Respondent must be considered Garrity's successor; his statutory duty to recognize and bargain with Complainant compasses a duty to honor his predecessor's collective-bargaining contract Within his brief, General Counsel notes that, were Garrity still the Fontana store's franchise holder, he would be bound (pursuant to the terms of his memorandum contract) to maintain and comply with Local 1167's master collective-bargaining agreement, with a scheduled 1969 termination date. General Counsel contends, therefore, that Respondent herein-since he must he considered Garrity's successor for statutory purposes-should likewise be considered bound by that contract. General Counsel takes this position notwithstanding well-established Board decisional doctrine which clearly laid down a rule-before the Supreme Court's decision in Wiley & Sons v. Livingston, previously noted-that, absent some express assumption of previously signed contracts, successor employers are not bound by their predecessors' collective-bargaining agreements. United States Gypsum Company, 157 NLRB 652, 655-656; Triumph Sales, Inc., 154 NLRB 916, 920; Rohlik, Inc., 145 NLRB 1236, 1242, fn. 15; General Extrusion Company, 121 NLRB 1165; Jolly Giant Lumber Co., 114 NLRB 413; International Longshoremen's and Warehousemen's Union, Local No. 16, CIO (Juneau Spruce Corporation), 82 NLRB 650, 659; cf. Cruse Motors, Inc., 105 NLRB 242, 248. Within the present record's factual context, however, General Counsel submits that Wiley & Sons v. Livingston dictates a revision of current Board decisional principles, regarding the scope of the bargaining duty which the statute lays on so-called "successor" firms. The Supreme Court, within its Wiley & Sons v. Livingston decision, was required to determine whether a company, found a successor employer, should be considered bound to arbitrate certain claims bottomed upon a collective-bargaining contract which its predecessor had signed. The specific questions with respect to which arbitration had been sought were questions dealing with certain current and prospective contractual obligations which purportedly bound the successor, following the predecessor firm's disappearance through merger. The Court held at 548-549: ... that the disappearance by merger of a corporate employer which has entered into a collective bargaining agreement with a union does not automatically terminate all rights of the employees covered by the agreement, and that, in appropriate circumstances, present here, the successor employer may be required to arbitrate with the union under the agreement. It would derogate from "the federal policy of settling labor disputes by arbitration," ... if a change in the corporate structure or ownership of a business enterprise had the automatic consequence of removing a duty to arbitrate previously established; this is so as much in cases like the present, where the contracting employer. diasppears into another by merger, as in those in which one owner replaces another but the business entity remains the same [Emphasis supplied.] There follows, within the Supreme Court's opinion, the paragraph, previously quoted within this Decision, wherein the Court declares that "national labor policy, reflected in established principles of federal law" requires that the rightful prerogative of business owners to rearrange their businesses be balanced by "some protection" for workers from sudden changes in their employment relationship. With comments which-within the context of the present record-seem particularly cogent, the Court further declares, at 550, that: While the principles of law governing ordinary contracts would not bind to a contract an unconsenting successor to a contracting party, a collective bargaining agreement is not an ordinary contract. "... [I]t is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. ... The collective agreement covers the whole employment relationship. It calls into being a new common law-the common law of a particular industry or of a particular plant." ... Central to the peculiar status and function of a collective bargaining agreement is the fact, dictated both by circumstance . and by the requirements of the National Labor Relations Act, that it is not in any real sense the simple product of a consensual relationship. Therefore, although the duty to arbitrate ... must be founded on a contract, the impressive policy considerations favoring arbitration are not wholly overborne by the fact that Wiley did not sign the contract being construed. This case cannot readily be assimilated to the category of those in which there is no contract whatever, or none which is reasonably related to the party sought to be obligated. There was a contract, and Interscience, Wiley's predecessor, was party to it. We thus find Wiley's obligation to arbitrate this dispute in the Interscience contract, construed in the context of a national labor policy. [Emphasis added.] Superficially considered, Wiley & Sons v. Livingston dealt merely with a successor employer's duty to arbitrate questions or claims bottomed upon his predecessor's collective-bargaining contract. There can be no doubt, however, that, since the Supreme Court decided that Interscience's contractually fixed duty to arbitrate devolved upon its successor, the Court's decision necessarily reflects a determination that the contracting firm's successor could legitimately be considered bound by whatever substantive contractual provisions a designated arbitrator might be requested to construe. With respect to 216 DECISIONS OF NATIONAL LABOR RELATIONS BOARD this aspect of the case, the Supreme Court noted, at 554, that: All of the Union's grievances concern conditions of employment typically covered by collective bargaining agreements and submitted to arbitration if other grievance procedures fail. . . . Wiley argues, however, that the Union' s claims are plainly outside the scope of the arbitration clause: first, because the agreement did not embrace post-merger claims .... In all probability, the situation created by the merger was one not expressly contemplated by the Union or Interscience when the agreement was made in 1960. Fairly taken, however, the Union's demands collectively raise the question which underlies the whole litigation : What is the effect of the merger on the rights of covered employees? It would be inconsistent with our holding that the obligation to arbitrate survived the merger were we to hold that the fact of the merger, without more, removed claims otherwise plainly arbitrable from the scope of the arbitration clause.... Claimed rights during the term of the agreement, at least, are unquestionably within the arbitration clause; we do not understand Wiley to urge that the Union's claims to all such rights have become moot by reason of the expiration of the agreement. [Emphasis supplied.] Since the Supreme Court's decision, two circuit courts of appeals have, indeed, construed Wiley & Sons v. Livingston as holding that firms properly subject to characterization as successors remain bound to honor their predecessors' entire collective -bargaining contracts, whenever the circumstances of their succession reflect "substantial continuity of identity and operation" with respect to the business enterprises concerned , before and after such a change. United Steelworkers of America v. Reliance Universal, Inc. of Ohio, 335 F.2d 891 (C.A. 3); Wackenhut v. International Union, United Plant Guard Workers of America, 332 F.2d 954 (C.A. 9). The Wackenhut case, like the Wiley case, concerned a labor organization's attempt to enforce a trade agreement 's arbitration clause against the purchaser of a business. With respect to the question now under consideration , the court of appeals held, at 958, that: . the policy of the national labor laws obligates Wackenhut, as the successor employer, to honor the collective bargaining agreement entered into by its predecessor, General Plant. * The specific rule which we derive from Wiley is that where there is substantial similarity of operation and continuity of identity of the business enterprise before and after a change in ownership , a collective bargaining agreement containing an arbitration provision, entered into by the predecessor employer is binding- upon the successor employer. [Emphasis supplied.] Consistently , the court of appeals found Wackenhut, the successor purchaser of the business , "bound by the collective-bargaining agreement " which its predecessor seller had signed; Wackenhut was, specifically, found committed to arbitrate union grievances regarding the continued postpurchase viability of certain wage increase, union shop , and dues checkoff provisions . In United Steelworkers v. Reliance Universal, the Court of Appeals for the Third Circuit was confronted with a comparable question. Noting the relevance of Wiley & Sons v. Livingston, the court construed it to stand for the proposition that, under appropriate circumstances , certain obligations may be imposed upon the new owner of a business-regardless of whether that new owner had acquired the business through purchase and sale or merger-by reason of the collective-bargaining contract negotiated and signed by the preceding owner . Having found Wiley & Sons v. Livingston determinative, the court noted, at 894, that: The opposing parties here have argued for and against the proposition that the collective bargaining agreement is unqualifiedly binding upon Reliance, as would have been the case if there had been an assignment or novation substituting Reliance as a party to the instrument. [Emphasis supplied.] And within a footnote, the court found the Ninth Circuit's Wackenhut decision premised upon that circuit's construction of Wiley as authority for making a preexisting labor contract unqualifiedly binding upon a new proprietor. Though the Third Circuit professed not to share the Ninth Circuit's view regarding the breadth of the Wiley decision, it did conclude, at 895, that: The requirements of the contract remain basic guides to the law of the shop ... [and] ... the basic charter of labor relations . . . after the change of ownership. The court, however, went on to declare that an arbitrator, designated to determine disputes thereunder, might properly give weight to changed circumstances created by the transfer of ownership, which might make continued adherence to particular terms of that contract unreasonable or inequitable. These judicial determinations, though bottomed upon considerations of national labor policy laid down in Section 301 suits , persuasively suggest that a successor firm, charged with a refusal to bargain within the meaning of Section 8(a)(5) and 8(d) of the statute, may properly be required by this Board to honor, maintain , and comply with the predecessor's contract. Since Wiley & Sons v. Livingston, we may note, both the Wisconsin Supreme Court and that State's Employment Relations Board have considered that decision determinative in connection with refusal-to-bargain charges brought under that State's labor relations statute. Drivers, Warehouse and Dairy Employees Union Local No. 75 v. Wisconsin Employment Relations Board, 61 LRRM 2113; Retail Clerks Union Local 1116, et al. and Norm's I.G.A., 61 LRRM 1123; Local No. 126, General Teamsters, etc. O'Brien Transport Co., 60 LRRM 1528. Within the first case cited, the Wisconsin Supreme Court declared that Wiley stands for the principle that a collective-bargaining contract , in reference to a particular plant or business, survives a change in ownership of such business and binds the new owner and employer , if there is a relevant similarity and continuity of operations across the change in ownership. Though the court did find that Wiley did not compel the respondent purchaser, within the case before it, to recognize the labor agreement which the seller had previously signed , its determination derived from a record which, it found, revealed no substantial continuity of identity in the business enterprise before and after the change. Both Wisconsin Employment Relations Board decisions cited, though they reflect no provisions conferring affirmative relief for various reasons, recognize the relevance of the Supreme Court's Wiley rationale with respect to cases under the Wisconsin statute, when "successorship" can be proven. These State court and board pronouncements , likewise, FED-MART persuasively demonstrate the reasonableness of General Counsel's contention, herein, that Goulding's duty to bargain with Complainant Union compasses a present duty on his part to honor and maintain Local 1167's master contract, currently in force. Within his brief, General Counsel's representative suggests, cogently, that: It is submitted that if the stability of labor relations requires a continuity of bargaining rights, then the same policy considerations dictate a continuity of contract rights. There is no logical reason why a successor employer should be bound by one and not the other. If employees lost the rights secured for them in labor contracts every time a business changes hands, the prior negotiations would prove to be of minimal value. New negotiations would mean a gap in the terms and conditions of employment. Employees would be subjected to an uncertain fate which, of course, does not mean stability of labor relations. Within its Maintenance, Incorporated decision, previously noted, this Board had found a so-called "successor" firm duty-bound to bargain for substantially similar reasons. The Board's decision noted that: It would be virtually impossible for employees to achieve collective-bargaining rights in an employing industry which is periodically subject to a possible change of employers if with every change the employees must again resort to the Board's processes in order to demonstrate anew their desire to be represented by their formerly certified bargaining representative. In our opinion, it would best effectuate the policies of the Act if, in the circumstances here present, the Respondent is required to bargain with the Union and the Union is left free to devote itself to its function as bargaining agent for at least the normal operative period before the presumed majority status flowing from its certification may be questioned. For reasons previously noted within my Decision, this rationale persuades me that the purposes of the statute would likewise be served "in the circumstances here present" by a determination that Goulding remained duty- bound to honor and maintain Complainant's current contract. I so find. d. Respondent's changes in wages and conditions of work without notice to Complainant Union likewise constitute refusals to bargain Previously, within this Decision, reference has been made to Respondent's unilateral promulgation of a group life insurance and hospitalization plan, sick leave policy, and vacation policy. Further, reference has been made to Goulding's subsequent series of unilateral wage raises. Respondent's lack of concern regarding any possible union interest with respect to these matters is realistically conceded; clearly, Goulding's course of conduct reflected his consistent belief that he was not bound to deal with Complainant at all. That belief has, however, been found lacking in merit. Respondent, rather, has been found firm in his refusal to grant Complainant recognition, despite the present duty which I have found the statute lays upon him. Necessarily, any course of conduct, chargeable to him, which resulted in unilateral changes affecting terms or conditions of employment for his Fontana store workers must be considered equally violative of the Act. N.L.R.B. v. Katz, d/b/a Williamsburg Steel Products Co., 369 U.S. 736; RoyE. Hanson, Jr., Mfg., 137 NLRB 251. And I so find. General Counsel contends, 217 further , that the wage raises and fringe benefit grants with which we are now concerned were bestowed for the purpose of discouraging union membership . I find merit, likewise, in this contention. Determination seems warranted , upon the entire record, that Respondent's course of conduct was reasonably calculated to subvert Complainant 's representative status. Goulding, clearly , sought this goal through his program of wage raises and various fringe benefit grants. There can be no doubt, however, that wage increases and fringe benefit improvements , granted for the purpose of discouraging union membership , constitute interference, restraint, and coercion violative of the statute . N.L.R.B. v. Exchange Parts Company, 375 U.S. 405; N.L.R.B. v. Hyde's Supermarket , supra; I so find. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent set forth in section III, above, occurring in connection with his business operations described in section I, above, have a close, intimate , and substantial relationship 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 Since it has been found that Respondent did commit, and continues to commit, unfair labor practices, I shall recommend that the Board issue an order requiring that he cease and desist therefrom and take certain affirmative action, including the posting of appropriate notices, designed to effectuate the policies of the Act, as amended. Specifically, determination has been made herein that Goulding violated Section 8(a)(5) and (1) of the statute by: (1) his refusal to recognize and bargain with Complainant, upon request, as the representative of his Fontana store workers; (2) his refusal to honor Complainant's December 7, 1964, memorandum contract, coupled with his refusal, despite the requirements of the designated document, to further "continue in full force and effect" the labor organization's Retail Food, Bakery, Candy and General Merchandise Agreement, 1959-64, or to "accept and adopt in full" the Complainant's 1964-69 successor contract, negotiated with Food Employers Council, Inc.; and (3) his program of wage increases, coupled with his modification of various terms and conditions of work for Fontana store workers, without notice or consulation with Complainant herein. Confronted with a comparable situation, this Board has noted its duty to bear in mind that whatever remedy it may fashion for unfair labor practices should be adapted to the situation which calls for redress; remedies, so the Board holds, should be fashioned with a view toward restoring, as nearly as possible, the situation which would have prevailed but for the specific unfair labor practices found. Phelps Dodge Corporation v. N.L.R.B., 313 U.S. 177, 194; Chemrock Corporation, supra. I shall, therefore, recommend that Respondent bargain with the Union, upon request, and, further, that Respondent honor Complainant's December 7, 1964, memorandum contract with his predecessor. Consistently with this recommendation, I shall recommend that Goulding honor the designated labor organization's Retail Food, Bakery, Candy, and General Merchandise Agreement, 1959-64, so far as it may be applicable retroactively to the date when he took over Fed-Mart's 218 DECISIONS OF NATIONAL LABOR RELATIONS BOARD franchise dealership for the Fontana store, together with Complainant's current Retail Food, Bakery, Candy, and General Merchandise Agreement, 1964-69, for the balance of that document's stated term. Respondent's obligation, however, with respect to maintaining or complying with these contracts, should not be construed to require his withdrawal from Fontana store workers of any benefits they may have been given, beyond those which the several contracts designated might require. Consistently with my recommendation regarding retroactivity, Respondent should be required to make his Fontana store workers whole for any loss of pay or other benefits which they may have suffered by reason of Respondent's unlawful refusal to honor the several contracts previously designated since December 20, 1964. Chemrock Corporation, supra. Whatever backpay Respondent's Fontana store workers may be entitled to receive, shall be computed in the manner set forth in F. W. Woolworth Company, 90 NLRB 289, and shall include interest, computed in the amount and manner which Isis Plumbing & Heating Co , 138 NLRB 716, sets forth. Though Goulding's franchise grantor, Fed-Mart, has not been designated a respondent herein, the possibility that it may be concerned, legitimately, with the scope of the Board's remedial order in this case cannot, realistically, be disregarded. (Pursuant to its standard Franchise and Supply Contracts and Subleases, Fed-Mart retains rights of cancellation and termination, with or without cause. The franchise grantor, certainly, should be notified that, under certain circumstances, the exercise of those rights will not extinguish rights which the National Labor Relations Act confers upon workers who might be affected thereby; nor will their exercise by Fed-Mart, under such circumstances, leave successor franchisees free to deal with labor relations matters without regard for their statutorily fixed obligations.) The franchise grantor, therefore, should, in my view, be given formal notice that franchise recipients taking over Fed-Mart dealerships, under circumstances comparable with those found present herein, will be considered subject to certain statutory obligations vis-a-vis whatever bargaining representative the workers concerned may have selected. I shall recommend, therefore, that the Regional Director formally serve Fed-Mart with a copy of this Decision, and that whatever order the Board may issue regarding this matter be served on the franchise grantor.' ' Consistently with Motions to Correct the Transcript filed by counsel for General Counsel and the Complainant Union, the In the light of the foregoing findings of fact and upon the entire record in this case, I make the following: CONCLUSIONS OF LAW 1. Joseph Glenn Goulding d/b/a Fed-Mart, designated as Respondent herein, is an employer within the meaning of Section 2(2) of the Act, engaged in commerce and business activities which affect commerce within the meaning of Section 2(6) and (7) of the Act, as amended. 2. Retail Clerks Union, Local 1167, Retail Clerks International Association, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act, as amended, which admits employees of Joseph Glenn Goulding to membership. 3. All employees employed by Joseph Glenn Goulding, d/b/a Fed-Mart, at his Fontana, California, store, exclusive of guards, watchmen, professional employees and supervisors as defined in the Act, constitute a unit appropriate for the purposes of a collective bargain, within the meaning of Section 9(b) of the Act, as amended. 4. At all times material herein, subsequent to December 20, 1964, Complainant has been entitled to recognition as the exclusive representative of Respondent's Fontana store employees, within the unit described above, pursuant to the provisions of Section 9(a) of the Act, as amended, for the purposes of collective bargaining with respect to rates of pay, wages, hours of work, and other terms and conditions of employment. 5. By his refusal to honor, maintain, or give any effect to Complainant's December 7, 1964, memorandum contract with his predecessor franchisee; his further refusal to honor, maintain, or effectuate those successive contracts between Complainant and Food Employers Council, Inc., which the memorandum contract designated incorporates or adopts by reference; his concurrent refusal to bargain collectively with Complainant as the exclusive representative of his Fontana store employees on and after January 7, 1965; and his unilateral modification of wage rates and various terms and conditions of work affecting those Fontana store workers, Respondent has engaged in and is engaging in unfair labor practices affecting commerce within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the Act, as amended. [Recommended Order omitted from publication.] transcript is corrected as follows p. 217, 1 16 should read December 9, 1964, instead of September 9, 1965