Northwest Galvanizing Co.

26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Northwest Galvanizing Co. and International Brotherhood of Boilermakers , Iron Shipbuilders, Blacksmiths, Forgers, Welders and Helpers of America, Local 104. Case 19-CA-3585 October 31, 1967 DECISION AND ORDER BY CHAIRMAN MCCULLOCH AND MEMBERS FANNING AND BROWN Upon charges filed on February 6, 1967, by Local 104, International Brotherhood of Boiler- makers, Iron Shipbuilders, Blacksmiths, Forgers, Welders and Helpers of America, herein called the Union, the General Counsel of the National Labor Relations Board, by the Regional Director for Re- gion 19, issued a complaint dated April 28, 1967, against Northwest Galvanizing Co., herein called the Respondent, alleging that the Respondent had engaged in and was engaging in unfair labor prac- tices within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the National Labor Relations Act, as amended. An amendment to the complaint was issued on June 5, 1967. Copies of the charge, complaint, amendment to the complaint, and notice of hearing before a Trial Examiner were duly served upon the Respondent. The complaint alleges in substance that the Respondent is a successor to Isaacson Iron Works, Inc., Young Iron Works Division (herein called Isaacson), and that Respondent violated the Act in that it unlawfully refused to recognize and bargain with the Union which had been accorded recogni- tion by Isaacson as the exclusive bargaining representative in an appropriate unit. The com- plaint further alleges that Respondent violated the Act by refusing to assume and honor the collective- bargaining agreement in effect between Isaacson and the Union, by instituting unilateral changes in wage rates and benefits, by negotiating directly with employees, and by transferring unit employees to another plant without sufficient notification to the Union and without affording the Union an opportu- nity to bargain over said move. On May 12, 1967, Respondent filed an answer admitting certain al- legations in the complaint, affirmatively pleading certain facts and denying the commission of any un- fair labor practices alleged in the complaint, as amended. On July 24, 1967, all parties to this proceeding entered into a stipulation by which they waived a hearing before a Trial Examiner and the issuance by him of a Trial Examiner's Decision and Recom- mended Order and agreed to submit the case to the Board for findings of fact, conclusions of law, and an order, based upon a record consisting of the charge, the complaint, the answer, the exhibits, and the stipulation of facts. On August 7, 1967, the Board approved the stipulation and ordered the proceedings transferred to the Board. Thereafter, the General Counsel, the Charging Party, and the Respondent filed briefs, and the Charging Party filed a reply brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its powers in connection with this case to a three- member panel. Upon the basis of the stipulation, the briefs, and the entire record in this case, the Board makes the following: FINDINGS OF FACT 1. THE BUSINESS OF THE RESPONDENT The Respondent, a Washington corporation, maintains its principal place of business at 429 South 96th Street, Seattle, Washington, where it is engaged in the galvanizing of metal. During the past year, the Respondent, in the course and conduct of its business operations, has purchased and caused to be transported and delivered to its places of busi- ness in Seattle, Washington, directly from points outside the State of Washington, goods and materi- als valued in excess of $50,000. We find that the Respondent is engaged in commerce within the meaning of Section 2(6) and (7) of the Act and that it will effectuate the policies of the Act to assert ju- risdiction herein. II. THE LABOR ORGANIZATION INVOLVED Local 104, International Brotherhood of Boiler- makers, Iron Shipbuilders , Blacksmiths , Forgers, Welders and Helpers of America, is a labor or- ganization as defined in Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES In their stipulation, the parties stated that: Respondent has operated a galvanizing plant at 429 South 96th Street, Seattle, Washington (herein called the main plant), since 1964. In 1965, Respond- ent began an expansion program which eventually necessitated the construction of a new building at the main plant and the acquisition of additional equipment and employees. Prior to October 1966, the main plant consisted of a building which housed two assembly lines (utilizing six men each) and Respondent's offices, and a separate building on the premises where special sandblasting jobs were per- formed. Respondent operated three shifts a day with a foreman in charge of each. The main plant had a total complement of approximately 35 production employees who were not and have never been represented by any labor organization. 168 NLRB No. 6 NORTHWEST GALVANIZING CO. 27 The Isaacson Corporation has a plant at 8531 East Marginal Way South, Seattle, Washington, consisting of a number of buildings where it is en- gaged in the manufacture and fabrication of metal objects. Since 1947, the Union has had collective- bargaining agreements with Isaacson covering em- ployees of Isaacson's galvanizing shop, fabrication shop, and forge shop and melt shop, with a comple- ment^of 150 employees. Several other labor or- ganizations have collective-bargaining agreements covering other units of Isaacson employees. Isaac- son is a member of Washington Metal Trades, Inc., an employer association which represents Isaacson in collective bargaining with the Union. The last such collective-bargaining agreement ran from April 1, 1965, to April 1, 1968. Respondent is not a member of Washington Metal Trades, Inc. The Isaacson galvanizing shop, located in a separate building within the Isaacson plant com- plex, was comprised of one production line with 13 employees, including a foreman, whose duties were approximately the same as those of Respondent's foremen, and a superintendent. On or about October 1, 1966, Respondent and Isaacson entered into a sales agreement whereby Respondent purchased Isaacson's galvanizing operation and equipment and Isaacson discon- tinued its galvanizing division. Under the agree- ment, Respondent, who had begun the construction of a new building at its main plant for the utilization of this equipment, was permitted to operate the equipment in place until Respondent's new building was completed but in any event was to vacate the premises by September 1967, so that Isaacson could use the area for expansion of its other depart- ments. Respondent also agreed to perform Isaac- son's galvanizing work for 5 years, to complete Isaacson's pending orders, to employ Isaacson's galvanizing division employees, and to retain, as consultant, Isaacson's superintendent for 90 days after the acquisition. Upon taking over on October 1, 1966, Respond- ent continued galvanizing operations at the Issac- son site without cessation. It retained Isaacson's 13 employees including the foreman , Christensen. Im- mediately upon takeover Respondent temporarily closed down for repairs one of its production lines at its main plant and transferred six of its main plant employees to the Isaacson site, including a foreman. Two new employees were hired. There- upon, Respondent began a two-shift operation in- stead of the one-shift formerly run by Isaacson. One shift was headed by Christensen and one by the foreman from Respondent's main plant. Respondent, contrary to the provisions of the col- lective-bargaining agreement between the Union and Isaacson, made no pension and welfare pay- ments for the former Isaacson employees, nor did Respondent require its employees to be members of the Union. The employees at the Isaacson gal- vanizing site were all placed on the Respondent's payroll and were paid according to Respondent's wage scales which amounted to an increase over their former contract wages. The Isaacson em- ployees were also placed under Respondent's em- ployee benefit program, which consisted of a King County Medical Service contract paid by Respond- ent with family benefits partially paid by em- ployees. These changes in terms and conditions of employment were made without prior consultation with the Union. When Respondent took over Isaacson's galvaniz- ing operation, it completed Isaacson's work orders. Further, it performed galvanizing for Isaacson on a contract basis. Respondent and Isaacson used the same type production line in the galvanizing process, except that different type cleaning tanks were used. The Union was first informed of the sale of Isaac- son's galvanizing operation in early October 1966, when Union Business Agent Charleson visited the galvanizing shop at the Isaacson site and was in- formed by Foreman Christensen of Respondent's purchase. Christensen also informed Charleson that the galvanizing equipment would eventually be moved to Respondent 's main plant when its new building was completed. Other than requests by Charleson directed to Christensen that a con- ference be set up with Respondent's president, Rouleau, no demands were made by the Union on Respondent until January 16, 1967. On January 16 and 24, 1967, William Roberts, the attorney for the Union, sent letters to Respondent and to Re- spondent's attorney, respectively, demanding acknowledgement from Respondent that it was bound by the collective-bargaining agreement covering the former Isaacson employees. The attor- neys for the Union and for Respondent met on January 31, 1967. Union Attorney Roberts again asked Respondent "to acknowledge the agreement in toto" and Respondent declined. Roberts refused to discuss portions of the contract separate from the contract as a whole. About May 1, 1967, Respondent began to close down its galvanizing operations at the Isaacson site and merged it with that at the main plant. The em- ployees from the Isaacson site were placed in vari- ous shifts under the main plant foremen. Ten of these employees were among the 13 employees for- merly working for Isaacson. The interspersing of these employees at the main plant raised the total' production personnel there to 50. Foreman Christensen, a shipping clerk, and two maintenance men were left at the Isaacson to expedite the dismantling of equipment to be sent to the main plant, the cleaning and the shipping of remaining stock to customers. Respondent will make use of various equipment formerly used by Isaacson and will hire about 15 additional employees. The General Counsel contends that "Not- 28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD withstanding Northwest's intention ultimately to in- tegrate the Isaacson operation with the existing facilities at its main plant, it continued the Isaacson operation upon its acquisition without hiatus, using the same galvanizing process and the same equip- ment with the same employees at the same location for at least 7 months of the 12-month period pro- vided in the purchase agreement. During that period at least, the represented unit remained clearly identifiable and not integrated with Northwest's other operations ... therefore Respondent must be viewed as a successor herein obligated to bargain with the union within the pur- view of Chemrock Corp., 151 NLRB 1074." Moreover, General Counsel contends, "Respond- ent is legally bound to the collective-bargaining agreement between its predecessor and the Union."' Finally, General Counsel urges that Respondent's unilateral changes in wages and other terms and conditions of employment, described above, and Respondent's failure to notify and bar- gain with the Union over the removal of the former Isaacson operation to Respondent's main plant, were violative of Section 8(a)(5) and (1) of the Act. The Charging Party filed a brief which, in sub- stance, supports the contentions of the General Counsel. Respondent argues that it is not a successor to the Isaacson Corporation. Respondent contends that: The entire transaction between Respondent and Isaacson contemplated that Isaacson was selling equipment used in only a very minor part of Isaacson's business affecting less than 10 percent of Isaacson's employees who were covered by the labor contract and that it was contemplated that the Respondent, as soon as it was physically able, would remove the equip- ment from the Isaacson property where Isaac- son continues to engage in the major portion of its business and employ the major number of its employees. From the very beginning the transaction was understood to contemplate a total removal of the galvanizing equipment and operation from the Isaacson plant to the exist- ing plant of Respondent. When the Isaacson equipment was removed to Respondent's plant and 10 of Isaacson's former employees were brought there to be integrated into Respond- ent's operations, the former Isaacson em- ployees represented only 20 percent of the Respondent's employees engaged in the gal- vanizing business. There is no identity of ownership, management, supervision, key per- sonnel, names, customers or public image of the business. The buyer and the seller are as they were prior to October 1, 1966, separate independent organizations carrying on two un- related businesses. Respondent also regards as significant the fact that the galvanizing operation taken over from Isaacson employed only 13 of the 150 Isaacson employees covered by the contract.2 It points out that the con- tract in question was "negotiated in a multiem- ployer contract negotiation conducted by an agency to which the Respondent has never belonged."3 It is well settled that, where there is substantial continuity in the identity of the employing enter- prise, the purchasing employer is bound to recog- nize and bargain with the incumbent union.4 We have considered General Counsel's argument that at least during the 7-month period, when Respond- ent conducted galvanizing operations at the Isaac- son plant, the factual setting was similar to those in which the Board has found successorship. Indeed, under other circumstances, these factors might well be controlling. However, in view of the somewhat unique circumstances of this case, we find that a contention of successorship with bargaining liability cannot be sustained. We deem it highly significant that Respondent here did not purchase a business, but purchased for addition to its already existing business the equip- ment utilized as a small part of the overall Isaacson operation. This is not a case in which the buyer as- sumes control of the seller's business and later de- cides to move elsewhere. The equipment purchase was part of a long term expansion program of Respondent which temporarily utilized the premises of the seller of that equipment until its own facilities were sufficiently expanded to permit consolidation thereof with its own identical opera- tion. Moreover, the additional galvanizing em- ployees of Isaacson represented a 25-percent incre- ment to Respondent's employees engaged in the same operation. While not determinative, we note that the employees working in the galvanizing operation purchased by Respondent constituted less than 10 percent of the employees in the Isaac- son bargaining unit which in turn was bargained for I In support of this contention , the General Counsel relies on the Supreme Court decision in John Wiley & Sons, Inc v David Livingston, 376 U S 543, and the decision of the Ninth Circuit Court of Appeals in Wackenhut Corp v Plant Guards, 332 F 2d 954, both involving Section 301 actions. In view of our disposition of the case, we find it unnecessary to pass on this contention 2 The Charging Party, in its reply brief, contends that the Stipulation of Facts does not support the inference that the employees in the galvanizing shop were part of a much larger unit We conclude that the stipulation amply supports Respondent 's contention in this regard 3 Respondent makes various other contentions to support its position that its conduct does not fall within the proscriptions of Section 8(a)(5) However, since we view the above-cited arguments as dispositive of the case, we confine our discussion to these contentions 4 Randolph Rubber Company, Inc , 152 NLRB 496, and cases cited therein NORTHWEST GALVANIZING CO. on a multiemployer basis.5 Under all the circum- stances, we view the transaction as an addition to Respondent's existing business rather than a con- tinuation of the seller's operation. Accordingly, we find that Respondent has not become the successor to Isaacson, but rather has merely engaged in an ex- pansion of its own business. Our decision here is not to be construed as hold- ing that the purchaser of a business can avoid his legal duty to recognize and bargain with the union that represented the employees of the seller by the simple and expedient method of announcing in ad- vance his intent to move.6 Nor do we hold that a purchase must encompass the entire business of a seller.' We do hold that, to find successorship sup- ' But cf Downtown Bakery Corporation, 139 NLRB 1352, enforce- ment denied 330 F 2d 921 (C A 6) 29 porting a bargaining obligation, the totality of the circumstances must warrant a finding that the purchase-sale transaction was merely a change in the ownership of an existing and continuing busi- ness operation. Since any violation of the Act by Respondent rests upon a finding that Respondent is a successor to Isaacson, and since the record herein establishes that Respondent is not Isaacson's successor, we shall dismiss the complaint in its entirety. ORDER IT IS ORDERED that the complaint herein be, and it hereby is, dismissed. ' Cf Die Supply Corp , 160 NLRB 1326 7 Cf Royal Brand Cutlery Company, 122 N L R B 901