The Denham Co.

434 DECISIONS OF NATIONAL LABOR RELATIONS BOARD No H. Denham and Geraldine A. Denham, d/b/a The Denham Company and Creamery, Condensery Employees & Drivers Union, Local 517, Interna- tional Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America. Case 20-CA-5734 December 24, 1970 DECISION AND ORDER BY MEMBERS FANNING, BROWN, AND JENKINS On July 13, 1970, Trial Examiner Richard D. Taplitz issued his Decision in the above-entitled case, finding that the Respondent had engaged in and was engaging in certain unfair labor practices within the meaning of the National Labor Relations Act, as amended, and recommending that it cease and desist therefrom and take certain affirmative action, as set forth in the attached Trial Examiner's Decision. He also found that the Respondent had not engaged in certain other unfair labor practices alleged in the complaint and recommended that those allegations be dismissed. Thereafter, the Respondent filed excep- tions to the Trial Examiner's Decision and a support- ing brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its powers in connection with this case to a three-member panel. 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,2 and recommendations of the Trial Examiner. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board adopts as its Order the Recommend- ed Order of the Trial Examiner and hereby orders that the Respondent, No H. Denham and Geraldine A. Denham d/b/a The Denham Company, Hanford, California, its officers, agents, successors, and assigns, shall take the action set forth in the Trial Examiner's Recommended Order.3 MEMBER JENKINS, dissenting, in part: I agree with my colleagues' findings that Respon- dent engaged in conduct violative of Section 8(a)(1) and that Respondent violated Section 8(a)(5) by making unilateral changes in the terms and working conditions of its employees. To remedy these viola- tions, I would, like my colleagues, direct Respondent to cease and desist from its unlawful conduct, make its employees whole for any losses they may have suffered by reason of the unilateral changes, and, of course, bargain with the Union, upon request. I would not, however, find unlawful Respondent's refusal to assume the collective-bargaining agreement negotiat- ed with the Union by Respondent's predecessor, nor would I require Respondent to honor that agreement. See my dissenting opinion in The William J. Burns International Detective Agency, Inc., 182 NLRB No. 50. i in affirming these findings , we do not rely on the Trial Examiner's discussion regarding the March 1968 Welfare Agreement This agreement terminated in September 1968 and, therefore , it is not pertinent to a determination of the existence of a current contract However, there is ample support in the record, for the Trial Examiner's finding that Swift and the Union had a written agreement as to wages and money benefits We note a typographical error in the fifth sentence in fn 23 of the Trial Examiner's Decision, which should correctly read " that Nardini's regular 2 These findings and conclusions are based , in part, upon credibility determinations of the Trial Examiner to which the Respondent has excepted The Trial Examiner's credibility findings are not contrary to the clear preponderance of all relevant evidence Accordingly, we find no basis for disturbing those findings Standard Dry Wall Products, inc, 91 NLRB 544, enfd 188 F 2d 362 (C A 3) 9 In footnote 31 of the Trial Examiner 's Decision substitute "20" for "10" days TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE RICHARD D. TAPLITZ, Trial Examiner: This case was tried at Fresno, California, on February 26 and 27, March 31, and April 1, 1970. The issues litigated were framed by a complaint dated November 3, 1969,1 as amended, alleging that No H. denham and Geraldine A. Denham, d/b/a The Denham Company, herein called the Company, violated Section 8(a)(1) and (5) of the National Labor Relations Act, as amended, and an answer as amended, filed by the Company, which admits many of the factual allegations of the complaint but denies that the Company violated the Act. The complaint, which was based on a charge filed on August 28 by the Creamery, Condensery Employees & Drivers Union, Local 517, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, herein called the Union, alleges in addition to various independent violations of Section 8(a)(1) of the Act that the Company violated Section 8(a)(5) of the Act in substance by refusing as a successor-employer to honor the bargaining obligations in effect between the Union and Swift & Company, herein called Swift. Specifically the complaint alleges that the Company unilaterally changed wages and employee benefits, bargained directly with employees and refused to meet and bargain in good faith. All parties appeared at the hearing and were given full opportunity to participate, to adduce relevant evidence, to examine and cross-examine witnesses, to argue orally and to file briefs. Briefs which have been carefully considered ' All dates are in 1969 unless otherwise specified 187 NLRB No. 53 THE DENHAM COMPANY were filed on behalf of the General Counsel and the Company Introduction and Issues For many years, Swift operated an ice cream manufactur- ing and wholesale business at a plant located at 520 Lacey Boulevard in Hanford, California, herein called the Hanford plant On July 28 or 29, 1969, the Company purchased the Hanford plant from Swift and since that time has engaged in business at the Hanford plant as a manufacturer and wholesaler of ice cream and related products From the early 1940's until the sale of its plant, Swift maintained a relationship with the Union The exact nature of that relationship is one of the central issues in this case, but certain facts are not in dispute The answer admits that on or about July 28, 1969, when Swift sold the Hanford plant to the Company, all production and maintenance employees and truckdnvers employed by Swift at the Hanford plant, excluding office clerical employees, guards, and supervisors as defined in the Act, constituted a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act The answer also admits that the same categories of employees employed by the Company at the Hanford plant constitute an appropri- ate unit In addition, the parties stipulated at the hearing that since on or about July 28, 1969, the Company performed substantially the same manufacturing, distribut- ing, and sales functions, with respect to ice cream and ice cream products as was previously performed by Swift and that the Company utilized substantially the same equip- ment at the same location Some evidence was introduced to indicate that after the purchase, the Company expanded from Swift's operation by bottling a soft drink known as Butchie Boy and by distributing frozen turkeys It is clear from that testimony, however, that these innovations were a very minor part of the Company's business and that the Hanford plant was under Swift and continued under the Company as primarily an ice cream manufacturing establishment The answer further admits that a majority of the Company's employees performing manufacturing, distrib- uting, and sales functions were, and are, the former employees of Swift employed in the bargaining unit described above Respondent's Exhibit 5 shows the names of 13 employees of Swift in the bargaining unit for whom payments were made for the Union's pension plan for hours worked in the month which ended with the sale of the Hanford plant to the Company No H Denham, who was the manager for Swift at the Hanford plant for several years immediately prior to the sale and who became the owner and manager of the Company at the time of the sale, admitted in his testimony that Respondent's Exhibit 5 showed all of the nonsalaried and nonsupervisory employ- ees just before the Company purchased the facility, that these were the same employees who became employees of the Company the following day and that there was no substantial change in the employee complement when the Company took over At another point in his testimony, 2 Paragraph XII(a) of the complaint which alleges that the Company engaged in surveillance of employees union activities was dismissed at the end of the General Counsels case on the unopposed motion of the 435 Denham admitted that all of these employees were members of the Union This credible testimony is consistent with that of the union representatives and employees and there is no contradictory evidence Thus, many of the background facts in this case are not in dispute The Company bought Swift's ice cream manufac- turing plant at Hanford, California, and continued manufacturing ice cream at the same location with substantially the same machinery, equipment, and employ- ee complement The sale changed Denham's status from the manager for Swift at the Hanford plant to the manager and owner of that plant In addition, at the time of the sale, all of Swift's employees in an appropriate production and maintenance unit were members of the Union It is also undisputed that shortly after the Company purchased the business from Swift, the Company lowered the wages of many of the employees, reduced their vacations, abolished contributions toward a pension plan, and reduced the scope of their employer-financed health insurance benefits The Company raised a number of issues as part of its defense and contended (1) that the Union approved of the changes implemented by the Company, (2) that even if under the noncontested facts it were found to be a successor to Swift, it had no obligation to honor any bargaining relationship that Swift had with the Union because (a) even though Swift followed the industry practice with regard to wages and benefits, Swift did not bargain with the Union and had no contract, either oral or in writing, with the Union, (b) the Union was unlawfully assisted by Swift, (c) a majority of employees in the bargaining unit renounced the Union shortly after the purchase, (d) the Union's actions with regard to Swift were such as to preclude good-faith bargaining and therefore relieved the Company of any duty to bargain Though the Company does not contest the fact that a majority of the employees in the unit were members of the Union at the time of the sale, the Company is in effect asserting that the Union did not represent an uncoerced majority of the employees The Company contends that a majority of the employees renounced the Union shortly after the purchase The complaint alleges and the answer denies that the Company sought to undermine the Union in violation of Section 8(a)(1) of the Act by giving the impression of surveillance of union activities, by threatening to close the plant unless the employees abandoned the Union, by promising the employees increased wages to induce them to abandon the Union, by interrogating employees, and by promising employees assistance in obtaining withdrawal cards from the Union 2 Upon the entire record3 of the case and from my observation of the witnesses and their demeanor, I make the following FINDINGS OF FACT I THE BUSINESS OF THE COMPANY As indicated above, the Company purchased Swift's Company 3 Certain corrections in the transcript are duly noted 436 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Hanford plant on or about July 28, 1969. The complaint alleges and the answer, as amended, admits that during the period from July 28, 1969, through October 27, 1969, in the course and conduct of its business operations, the Company received in excess of $25,000 for ice cream products supplied under contract with the United States Army at Fort Ord, California, and the United States Navy at the naval air station at Leemore, California, and that projected on an annual basis, the Company's revenues from its sales to the United States Army and the United States Navy for a 12-month period could reasonably be expected to exceed $100,000. By the opening of the hearing, the Company had further actual experience and it was stipulated that during the period October 1, 1969, through February 20, 1970, the Company supplied the U.S. Army in Fort Ord, California, ice cream and ice cream products valued at approximately $70,000. It was further stipulated that the Company is the sole exclusive supplier of ice cream and ice cream products to the United States Army at Fort Ord on a regular and usually daily basis pursuant to a contract with the United States Government and that the United States Army at Fort Ord, California, annually purchases over $100,000 worth of goods directly from suppliers located outside the State of California. The basic jurisdictional standards established by the Board are set forth in the case of Siemons Mailing Service, Inc., 122 NLRB 81. In that case the Board held that an employer will meet the Board's jurisdictional standards if through an indirect outflow of goods it sells goods or services valued at over $50,000 to users meeting any of the Board's jurisdictional standards except indirect outflow or indirect inflow. However, in that case the Board also said, "We will also continue our past practice of treating sales of goods or services to enterprises or organizations which are themselves exempted from the Board's jurisdiction as indirect outflow, where such enterprises' or organizations' operations are of the magnitude necessary for assertion of jurisdiction over comparable nonexempt organizations." The United States Army is an exempt organization under the Act. It is of such a magnitude that a comparable nonexempt organization would certainly be subject to the Board's jurisdiction. As the Company has sold goods valued in excess of $50,000 to the U.S. Army at Fort Ord during the past year and the Army at that location annually purchases goods valued at over $100,000 directly from suppliers located outside of California, the Company meets the Board's jurisdictional standards. St. Francis Pie Shop, Inc., 172 NLRB No. 16; Wayne R. Sherwood d/b/a Grounds Service, 130 NLRB No. 165.4 4 In view of this finding, it is unnecessary to consider either the General Counsel's alternative theory that the Board should assert jurisdiction on the ground that the Company's operations have a substantial impact on national defense or the allegation in the amended complaint that jurisdiction can be based on the Company's projected business with Challenge Cream and Butter Association. S At that time,'the Union was part of Local 431 of the Teamsters 6 The details of this understanding are discussed more fully, infra Though the industry contracts for the prior years were not put in evidence, the contracts from 1966 to 1968 and from 1968 to 1970 each have a clause which states Article 55, More Favored Conditions Section 1 I find that the Company is an employer engaged in commerce within the meaning of Section 2 (6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The complaint alleges, the answer admits, and I find that the Union is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. The Relationship Between Swift and the Union 1. The bargaining relationship In the early part of 1940, the Union undertook an organizational drive at Swift's Hanford plant.5 Ted C. Wills, the secretary-treasurer of the Union, discussed the Union with the employees, received authorization cards designating the Union as the collective-bargaining agent for them and showed the cards to the local manager of Swift. After negotiations, agreement was reached and a collective- bargaining agreement was signed. This agreement was the same as the one the Union had with other members of the dairy industry with regard to wages, hours, and working conditions except that the contract with Swift did not have a union shop provision. The Union agreed to the omission of the union shop clause because Swift's national policy, as told to Wills by the Swift manager, was not to enter any collective-bargaining agreement which contained a union shop clause. However, the Union and Swift had an understanding outside the contract that all employees in the bargaining unit would be members of the Union and all employees did sign up.6 For a number of years, Swift and the Union entered into such written collective-bargaining contracts. Swift was never a member of the multiemployer bargaining unit (herein called the industry group) which negotiated an industrywide agreement known as the Fluid Milk and Ice Cream Contract (herein called the industry contract). On some undisclosed date, the industry contract was changed to provide that if the Union entered into a more favorable contract with anyone in the ice cream industry, the more favorable terms would apply to the entire industry.? The Union took the position that the lack of a union security provision in its contract with Swift might be considered more favorable than the union- security clause contained in the industry contract and therefore might jeopardize that clause. The Union and Swift therefore agreed that they would not sign another contract.8 In the years that followed, a working arrangement was followed whereby the Union kept Swift informed of what If, during the terms of this contract, a Local Union party hereto enters into a written contract with a firm engaged in the processing and distribution of fluid milk and ice cream products, which contains, in thejudgment of an Employer member of the Association , a condition more favorable than a comparable condition in the Association contract, the Association members shall have the right to elect to incorporate such condition into the contract to which he is a party. A similar election may be made if a condition having no counterpart in the Association contract is contained in a Local Union's written contract with an independent firm 8 These findings are based on the credible and uncontradicted testimony of Ted C Wills. THE DENHAM COMPANY was happening at the negotiating sessions with the industry group ; the final agreement with that group would be given to Swift , there would be various exchanges of letters between Swift and the Union; and Swift would increase wages and money benefits to conform to the amounts which were then being paid by the industry group. Wills testified that the Union bargained concurrently with the industry group and Swift, while Denham testified that Wills merely informed Swift of the Union's progress with the industry group . I do not believe that Wills' conclusion that his dealings with Swift prior to the Union's agreement with the industry group amounted to negotiations. There were no counterproposals, there was no give and take and, in effect, all the Union was doing was keeping Swift informed of what was happening at the industry group bargaining. However, that does not establish that the Union either had or did not have a binding agreement with Swift . The Union contends that it had a binding contract with Swift whereby Swift agreed to follow all the provisions of the industry contract except for the union -security clause . The Compa- ny, on the other hand, contends that Swift had no contract of any kind with the Union and that Swift followed the wage and benefit structure of the industry contract, not because of any obligation stemming from a contract, but solely because Swift desired to do it. Resolution of this contract question , however, must be made , not on the basis of the contentions of the party, but on the hard facts relating to the dealings between Swift and the Union and the documents that flowed from those dealings. The evidence with regard to the 1966 dealings between Swift and the Union as it related to the industry contract which ran from September 1, 1966, to September 1, 1968, is as follows . On June 29, 1966, Donald E. Forsythe, who at that time was manager of Swift , wrote to Ted Wills, secretary-treasurer of the Union, as follows- This will acknowledge your letter of June 20, with reference to Fresh Milk and Ice Cream Collective Bargaining Agreement. As you know, we have no contract with your union, but, as you suggested in your letter, we will get together and discuss our particular situation at any time it is convenient with you. I will appreciate it if you will let me know in advance so I can arrange my affairs to meet with you on whatever date you suggest. On December 30, 1966, Wills wrote to No Denham, who had replaced Forsythe as manager, saying: Enclosed are two Fluid Milk & Ice Cream Agreements that have been negotiated with the dairy industry. This is the same agreement I discussed with you and you took to your Chicago office. During our last conversa- tion you informed me you were going to put the enclosed wages and conditions into effect. You will note on Page 16, Article 24 Pensions there is an increase of 5 cents per hour effective September 1, 1967 Will you please inform if this is all the notice that is necessary or must I give you a special notice as we do have a signed agreement in regards to the pension rate. If I don't hear from you I assume the new pension rate will be put into effect September 1, 1967. On January 25, 1967, Denham acknowledged receipt of Wills' December 30 letter and stated: 437 .. . at a later date, prior to 9-1-67 we will be submitting to you, for your signatures, a revised agreement covering the companys contribution to the Union Pension Trust Fund. As in the past, we will continue to follow the wage and hours provisions of the industry agreement. On September 8, 1967, Denham for Swift and Wills for the Union signed a formal written agreement whereby Swift agreed to make certain payments to the Union's pension trust fund which they referred to as the Western Conference of Teamsters Pension Trust Fund. The documents relating to the 1968 dealings between Swift and the Union shed additional light on their relationship . The current industry contract is effective from September 1, 1968, to September 1, 1970. On December 4, 1968, Wills wrote Denham as follows: Enclosed is a copy of the latest proposed settlement for your record, of our Fluid Milk and Ice Cream Agreement. This proposal has been accepted by a majority vote of our members. I will be looking forward to seeing you in the near future... . The following document dated January 24, 1969, and signed by Denham and Wills, shows a conclusion to the dealings between Swift and the Union: Mr. Ted C. Wills Secretary-Treasurer Creamery Employees & Drivers Local No. 517 Del Webb Center - Suite 1107 Fresno, California 93721 Dear Mr . Wills. With respect to employees represented by the Creamery Employees & Drivers Local No. 517 at our Hanford, California Ice Cream Plant, it is agreed that the Fluid Milk and Ice Cream agreement between the Joint Council of Teamsters No. 38, Unions 87, 137, 150, 381, 386, 439, 517 and 684 and the Milk and Ice Cream Employers effective September 1, 1968 to September 1, 1970 will apply to the above employees in the same manner as in the past. It is understood that the wages and benefits provided for in such agreement represent all the wages and benefits which the Company is obligated to provide over the term of the agreement. Confirmed: /s/ Fred C. Wills Creamery Employees & Drivers Local No.517 Very truly yours, /s/ No Denham Manager On February 17, 1969, Wills wrote to Denham mention- ing that there had been changes in the welfare plan and pension plan required under the new agreement and asking whether his letter would be sufficient to cover them or whether an additional letter would be necessary . Denham replied on February 27, asking for copies of the modifica- tions in the welfare and pension plans, stating that because of the changes Swift would prefer to continue the benefits on a month-to-month basis until modifications were received and approved . The letter concluded "this will not effect our pay scale which will be based on the wage and 438 DECISIONS OF NATIONAL LABOR RELATIONS BOARD hours provisions of the industry agreement." Wills credibly and without contradiction testified that the costs of the increase in benefits had not been included in the industry contract because they had only negotiated benefits and the trustees had still to go out and buy those benefits. Swift paid on a month-to-month basis until the costs were determined and then paid the difference on a retroactive basis. Thereafter, on March 11, 1968, Swift and the Union signed an agreement which began as follows: AGREEMENT This agreement is made by and between Swift & Company Ice Cream Plant, Hanford, California, hereinafter called the "Company," and Creamery Employees and Drivers Union, Local 517, hereinafter called the "Union." The Union represents a bargaining unit of employees of the Company. This agreement witnesses that the Company has agreed to make certain payments for the benefits of its employees in said bargaining unit, upon the following terms and conditions: The agreement goes on to spell out dollar amounts to be paid by Swift into the Union's welfare fund, which they refer to as the Milk & Ice Cream Employees Welfare Fund. Though Swift did follow the wage and money benefit provisions of the industry contract, there was conflicting testimony as to whether the other aspects of the contract were followed. The Union acknowledged that the union- security provisions in the industry contract were not followed. As to the processing of grievances, John Kikkert, the union field representative, credibly testified that the only grievances he recalled processing since he started servicing the Swift bargaining unit in 1955 related to getting a girl holiday pay, seniority of some employees, and a question about a supervisor driving a truck. There is no testimony that the arbitration procedure set forth in the industry contract was ever utilized. There is no evidence that the Union demanded enforcement of article 2, section 3 of the contract by court action or use of the arbitration clause of the contract. That clause reads: SECTION 3. TRANSFER OF COMPANY TITLE OR INTEREST (a) This agreement shall be binding upon the parties hereto, their successors, administrators, executors, and assigns. In the event an entire operation or portion thereof is sold, leased, transferred or taken over by sale, transfer, lease, assignment or receivership or bankruptcy proceeding (unless otherwise provided by law), such operation shall continue to be subject to the conditions of this agreement for the remainder of its then existing term. (b) In the event the Employer fails to require the purchaser, the transferee or lessee to sign this contract or to otherwise assume the obligations of this contract, the Employer shall be liable to the Union and to the employees covered for all damages sustained as a result of such failure. When the purchaser, transferee or lessee signs this agreement or otherwise assumes its obliga- tions, the Employer shall be under no further liability to the Union or to the employees by reason of this Article. 9 As indicated above, on the basis of the past practice, I interpret the word "benefits" to mean money benefits 10 Wills testified that the employees signed after they worked for a time (c) The Employer shall give notice of the existence of this agreement to any purchaser, transferee, lessee or assignee of the operation covered by this Agreement, with a copy to the Union not later than the effective date of the sale, transfer, lease or assignment. Reading the documents together and fitting them into the actions of Swift and the Union, I find that they did not agree to apply all the terms of the industry contract except for the union-security clause. It was understood by both Swift and the Union that their agreement related only to wages and money benefits. This, of course, did cover a wide field by including such items as wages, holidays, vacations, pension, and welfare benefits. I find that Swift and the Union had a written contract dated January 24, 1969, which was signed by Wills for the Union and Denham for Swift. That contract is set forth in full above. The language of the agreement is not keyed to voluntary action by the Company but is that of a formal written agreement. In plain words it states that "It is agreed" that the industry contract "will apply" to the unit employees in the same manner as in the past. Though the last phrase is subject to interpretation, the next paragraph, as well as the independ- ent evidence of the past practice, makes it clear. That paragraph states that it is understood that the wages and benefits provided in the industry contract represent all the wages and benefits which the Company is obligated to provide over the term of the agreement. The fact that this document incorporates parts of the industry contract by reference makes it no less effective or binding. Swift sidestepped the ordinary type of negotiations by letting the industry group do the legwork, but after the industry group reached an agreement and the Union presented Swift with a package that Swift accepted, they had a binding collective- bargaining contract. In conclusion, I find that Swift and the Union were signatories to a collective-bargaining agreement whereby Swift agreed to pay the employees in the bargaining unit the wages and benefits9 that are set forth in the industry contract. I further find that this written contract between Swift and the Union was in full force and effect at the time that Swift sold the Hanford plant to the Company. 2. The union security and checkoff arrangement with Swift For at least 10 years before the sale, Swift and the Union had an understanding under which employees in the unit would sign applications for membership in the Union and authorizations for the checkoff of dues on the same day that employees started their employment with Swift.io When the employee reported for work, the union plant representative or field representative, Kikkert, would contact him and then give him the membership application and dues deduction authorization to sign. Though there is no evidence that any employee had ever refused to sign and therefore no test as to what would happen in such an event, there was a requirement that the employee sign. The signing was handled by union representatives and not by the However, his earlier testimony was that they filled out the applications and checkoffs when they came to work THE DENHAM COMPANY 439 Company, but from the point of view of the new employee, the signing was simply a part of the hiring process i i B The Events Surrounding the Sale I Prior to the union meeting On July 24, 1969, Denham called Wills on the telephone and requested that he be at the Hanford plant on July 28 because there were things concerning the Union that would be discussed In addition , the Company's plant superin- tendent, William 0 king,12 telephoned John Kikkert, the Union's field representative, and asked him to be present at the Hanford plant on the 28th Wills did not go to the plant on the 28th, but Kikkert did Denham and Kikkert had lunch together on that day The subject matter of the conversation at that meeting is in sharp dispute Only the two of them were present Denham testified that after talking about personal matters he told Kikkert that Swift was having difficulties with its profit structure in the ice cream business, that Swift had already sold other ice cream operations, that Swift was then making a decision about the Hanford operation, and that he (Denham) was contemplat- ing buying it He averred he told Kikkert if he were going to go ahead and buy it, he would propose to lower salaries to $150 a week for the packaging personnel, $20 a day for people on a call basis , and $165 a week for those running the machines, and that in addition, the premiums would be paid on the health and welfare for 30 days at which time he would like to sit down and negotiate changes According to Denham, Kikkert replied, "Golly, I wish Ted were here-well, okay," and that the "well, okay" remark was keyed to his proposals Kikkert acknowledged that he had lunch with Denham on the 28th and, while he testified that he didn't remember exactly what was said, he was certain that business was not discussed at all and he specifically denied that Denham said anything about buying the plant, lowering the wages, or ending the welfare payments Kikkert categorically denied ever telling Denham "I wish Ted were here - well, okay" or at any time authorizing lower wages I credit Kikkert After listening to both Wills and Kikkert testify and after observing them on the witness stand, it was quite apparent that Wills is very much the boss Wills was the one who had authority when it came to major dealings with Swift or the Company and Kikkert's responsibility was a very secondary one The authorization of a wage decrease for a substantial number of employees in the bargaining unit is certainly a very major matter and 11 Denham testified that the girls in the office would have the employees sign the checkoff authorization and that this was part of the initial hiring process However at another point in his testimony Denham averred that the Company referred the employees to the shop steward who gave them the membership application cards and the dues checkoff forms Wills testified that either the Union s plant representative or Kikkert went to the new employees and the cards were not given by managerial employees The testimony of the employees themselves showed a somewhat varied experience Employee Lane averred that he was the shop steward during the 1950 s or early 60 s that he told an employee she had to join the Union or quit work and that he had been told to do so by the plant manager Employee Rutter testified that when he went to work in 1948 or 1949 he was told by the shop steward and the plant superintendent that it was a union shop and they would like to see him join the Union Employee Leavens testified initially that he was told by the shop steward on the first day of his employment that he had to join but later in his testimony he acknowledged that he was asked by the shop steward if he wanted to join Denham's assertion that Kikkert took it upon himself to authorize a major change in the agreement signed by Wills and Denham is difficult to believe when faced with the flat denial by Kikkert 13 Kikkert met with Denham and C E Olson, who was a representative of Swift, in Denham's office immediately after lunch Olson told Kikkert that Swift was in the process of trying to sell the plant to Denham and that he was telling Kikkert because the contract stated that in case of sale the Union had to be notified Kikkert asked Denham if he was taking over the unexpired term of the contract and Denham said he could not answer because he was still negotiating to buy the Company 14 On July 28, at 4 30 p m ,15 Denham called all the employees at the plant to a meeting C E Olson, the Swift representative, was present and he informed the employees that Denham was taking over the plant At that time he distributed leaflets dated July 28, 1969, which read We want you to know first hand about a change of management at our plant, which has been operated by Swift & Company for many years Effective July 28, the business will be operated by The Denham Company We are sorry to see our operations come to an end and certainly regret that we must make this announcement As we explained in the meeting, this was not a hasty decision A great deal of time and effort was devoted to studying our situation One of the conditions of the sale was that The Denham Company will offer employment to all the present Swift employees for a mmunum period of 30 days Again, we are sorry to see our relationship come to an end and wish you the best of everything in the future Signed, C E Olson During the meeting the employees were notified that there was another meeting scheduled for 7 30 that evening The 7 30 meeting was attended by Plant Superintendent King, Donald E Forsythe (who had been plant manager until 1966 and who at that time was an independent insurance salesman), and a number of employees, some of whom were salaried and some of whom were in the bargaining unit Forsythe gave an insurance presentation to the employees and handed out cards that they could sign if they were interested Though Forsythe testified that the presentation was keyed to salaried employees, he acknowl- edged that at least seven bargaining unit employees were Forsythe who was the Swift manager from 1963 to 1966 testified that employees were required to join the Union when they started working but he acknowledged that he never told an employee that the employee had to join that he didn t know who had passed out the cards and that he knew of no employee who had refused to join 12 The Company s answer admits that King was plant superintendent and a supervisor within the meaning of Section 2(l 1) of the Act 13 In making this credibility resolution I have also considered the reliability of Denham s testimony on other material matters which are discussed infra 11 Olson did not testify at all and Denham s testimony made no mention of this after lunch meeting I find Kikkert s testimony upon which these findings are based to be credible 15 There was a conflict of testimony as to whether the date was the 28th or the 29th However at that time literature was distributed to the employees bearing the date July 28 so that date is used 440 DECISIONS OF NATIONAL LABOR RELATIONS BOARD present. Subsequently, 100 percent of the bargaining unit employees signed the insurance forms. There was a sharp conflict in testimony as to what else was said at this meeting. Fitting together the credible evidence, I believe the following events did take place at the "insurance" meeting.16 Forsythe told the employees that he was speaking for Denham and that the union health plan was no longer going to cover them. He described to them an alternate health plan in which the Company would pay premiums. He explained that the Company's plan did not include coverage of the employees' families, as had the Union's plan, and, if such coverage was desired, the employees would have to pay for it themselves.17 King also addressed the employees and gave them a "pep talk" in which he told them that the Company would expand its product line. He told them that there would be a number of changes, including pay adjustments which he would discuss individually with the employees, reduction in the length of vacations, and elimination of pensions, seniority, and overtime. King's statements were basically consistent with the events which occurred shortly after the meeting. On July 31, King 18 spoke individually with employee Lane and told him that they were all taking a wage cut, that Lane's wages would be changed to a weekly basis and he would be paid $150 rather than the $165 he had been making, that Lane would receive 2 weeks rather than 4 weeks vacation, that vacation time would start accruing from the date Denham purchased the plant, and that there would be no paid overtime.19 On August 5, King met with employee Garcia, told her that they had a cut in pay and that the women would get $20 a day or $100 a week. He asked her what she thought and she answered that she needed the job and the $20 was better than nothing. Prior to that she had been making $137 a week on an hourly rate. On July 31, King told employee Perntt that the pay adjustment would reduce Perritt's pay from $165 to $150. On July 31, King told employee Rutter that his pay was being reduced from $165 to $150 for a 40-hour week and that there would be no overtime. After signing the formal documents relating to the sale, Denham called Wills and told him that the purchase had been completed and that the Company was going to be operated as The Denham Company. Wills congratulated him and wished him good luck. On July 29 and 30, the union office received calls from 16 According to employee Joseph Rutter, Forsythe told them that he was there on behalf of Denham, whose daughter was sick , that Denham had taken out a policy of insurance with him because the union insurance would expire soon, and that the Company's insurance would only cover the individual and not the individual's family and so if they wanted to take out family insurance they would have to pay for it themselves Rutter also testified that at this meeting King told the employees that there would be no more vacation plan, that there would be no more seniority , that there would be adjustments in pay worked out with the employees in the near future, and that vacations would be reduced from 4 weeks to 2 weeks a year Employee Eugene Lane testified that Forsythe told them that he was speaking for Denham, who had to be out of town, that there would be no more Union, that they would have to pay insurance for their families, and that there would be no more seniority . Employee Leon Perritt 's version of this meeting was that Forsythe told them that he was speaking for Denham and that Denham couldn't afford the fringe benefits of the Union, that either Forsythe or King told them there would be reduction in vacation, and that King said there would be a pay adjustment that would be worked employees saying that the plant was going nonunion and that they would be losing the pension and health plans, seniority, and vacations. Kikkert went to the plant to see Denham and was told that he was not in. He returned on about August 1 and had a conversation with Denham with no one else present.20 Kikkert asked Denham about the rumors that he had heard that Denham was trying to operate without a union contract. Denham replied that it was up to the employees to decide whether they wanted to remain in the Union. Kikkert asked whether Denham would pay for the August premium into the health and welfare plan. Denham replied that he had already made arrangements with Forsythe for a different coverage of the employees. Denham also said that the summer was half over and unless profits came in he would have to close the plant down or package ice cream for other employers, in which case he would sell the property and operate from a different location. He mentioned that under his arrange- ment with Swift he had to offer 30 days employment to the employees. In addition, Denham talked about producing other products such as yogurt. Kikkert then requested and received permission to speak to the employees in the plant and the meeting ended. Kikkert spoke to the employees who asked him about such matters as the wage cut, loss of seniority, and loss of vacations. Kikkert told them that there would be a meeting set up. By a letter dated the same day, August 1, the employees were notified that a special union meeting of the Swift employees would be held August 7 at 7:30 p.m. in Armona, California. Sometime between August 1 and the union meeting of August 7, Wills met with Denham in Denham's office at the Hanford plant. Kikkert and Company Office Manager Keever were also present. Wills asked whether Denham would honor the agreement that the Union had with Swift and Denham answered that it was entirely the decision of the employees and that he would recognize the Union provided the employees wanted it. Wills asked whether Denham would sign the union shop agreement and Denham replied that he would not but he would agree to carry out the agreement exactly on the same basis as had been carried out by Swift. Wills then said that he would call a meeting of the employees to discuss the subject. These findings are based on the credited testimony of Wills as corroborated by Kikkert. Denham testified that he did not recall a meeting with Wills and Kikkert in which he told out later Forsythe testified that he gave an insurance presentation and nothing more. He acknowledged that King made a pep talk to the employees and spoke about different products that the Company could handle, but he denied that anything was said on such matters as wage reductions Employees Edgar Leavens and Angelo Nardini testified that Forsythe's version of the meeting was correct 17 Forsythe's presentation of a company plan would make sense to the employees only if they knew that they were no longer to be covered by the broader union health plan The Company never did make contributions to either the Union's health or pension plan. 18 King did not testify The following findings are based on the credited and unchallenged testimony of the employees named 19 Lane credibly testified that there had been some overtime work before but not very much 20 The findings with regard to this conversation are based on the credited testimony of Kikkert Denham did not testify concerning this conversation THE DENHAM COMPANY 441 Wills he would be willing to sign the union contract if a majority of the employees wanted the Union. Specifically, when asked whether he recalled Wills and Kikkert saying anything at any of the meetings concerning a contract, Denham answered, "No, because it has always been accepted that there was no contract." However, in a pretrial affidavit dated October 10, 1969, Denham swore that he had a meeting on August 4 with Wills and Kikkert and one of them asked him about the contract. This was a subject of great importance to both the Company and the Union and it is not the type of thing that is usually forgotten. The conflict between Denham's testimony on the stand and his affidavit sheds doubt either on Denham's veracity or on his ability to recall important matters. The Company contends that the testimony of Wills and Kikkert should be discredited because their allegation that the meeting took place between August 1 and August 7 is somehow inconsistent with the Union's August 1 notice to employees about the special meeting. The Company also points to the fact that its records show that Denham was out of town and away from the plant on August 4 and 5. However, Denham was back in the plant on August 6. Wills did mention the calling of a meeting to Denham after the notice for the meeting had been sent out, but that was explained by Kikkert's testimony concerning his meeting with Denham on August 1, which was the date of the notice. 2. The union meeting The union meeting took place on August 7. In addition to Wills, Kikkert, and Union Treasurer Johnny Vass, it was attended by 12 employees of the Company 21 The 12 employees, all of whom were union members, signed their names showing their attendance at the meeting. Wills and Kikkert gave a report of their meetings with Denham. Wills told them that Denham had made the statement that the decision as far as the Union contract continuing was up to the employees. Wills asked the employees if they wanted the Union to continue to represent them. A number of things were said at this meeting and various employees spoke up complaining of their loss of wages, vacation, seniority, pension plan, and better welfare plan. One of the employees asked whether withdrawal cards could be secured and Wills replied that the Union would not give out a withdrawal card as long as the employee continued to work in the industry. Another employee asked what would happen if Denham closed the plant. Wills replied that he did not think that Denham would have bought it if he could not make a go of it, but that if he did close the plant the employees could always draw unemployment. At some point in the meeting, a secret vote was suggested and Kikkert passed out blank pieces of paper to all the employees. The employees were told to write yes on the paper if they wanted the Union to continue to represent them and no if they did not. After the vote was taken, it was 21 These employees were Rutter, Walker, Perntt, Leavens, Nardmi, (whose status as an employee is discussed below) Garcia, Haley, Lane, Mueller, Howard, Filippi, and Hawkins In stipulating the names on the Swift payroll that were later carried on the Company's payroll, all of these employees appeared except for Nardmi The stipulation also included the name of Borba as an employee but left open the status of Bartima, Verheul, Marvin, and Nardmi 22 Earlier that morning, Leavens told Denham that the employees counted by employees Rutter and Walker who found that 12 ballots which constituted 100 percent of the voters were for the Union. The result was announced by Kikkert. Wills explained to the employees that he had to have something to take back to Denham, so a petition was prepared by Kikkert and circulated among the employees for their signatures. At the time, Wills told them they should sign it if they wanted to continue their membership in the Union and wanted the Union to represent them, that this decision was theirs and that if they didn't want to sign it, it was up to them. Wills was sitting about 20 or 25 feet away from the employees when they signed. The petition was circulated and signed by all 12 employees. It read: I hereby designate Local Union 517 of the I.B.T., Chauffeurs, Warehousemen and Helpers of America as my agent to bargain collectively for me on wages, hours, working conditions and for a union shop agreement. 3. The events of August 8 On August 8, which was the day after the union meeting, Denham had all the unit employees called into his office about 8 o'clock in the morning.22 King was also present. Denham testified that he told the employees there would be year-round employment and new products undertaken; that an employee asked him if they had to belong to the Union and he answered that it was up to them; that employee Garcia said that they were 100 percent behind them; that he asked for the same support that the employees had given to Swift; and that one of the employees suggested that employees leave the room and have a separate meeting. Employees Nardini and Leavens corroborated Denham's testimony and in addition Leavens added that at the meeting Garcia had said they didn't need the Union. Two other employees, Lane and Garcia, testified to strikingly different versions of this meeting. Lane averred that Denham said that he knew about the union meeting the night before and that he couldn't and wouldn't go union; that if he had to go union he would close the place down within 15 days; that the employees would all make progress by staying with him; and that he would try to see that there was a Christmas bonus in their pay envelopes for Christmas. Lane also testified that Denham said that if he closed the plant he would make a distribution outlet out of it and no more ice cream would be made. The only part of Denham's testimony that Lane corroborated was that Denham did request their cooperation, discussed new products, and that he hoped to work the plant year-round. Employee Garcia in large measure corroborated the testimony of Lane. She averred that Denham said that he had heard that they had a union meeting; that if the employees went Union he would close the plant in 15 days; that Denham asked her how she felt about working for them and that she replied that $20 was better than nothing. wanted to know how the plant was going to be operated Denham testified that he had a conversation with Leavens at a function unrelated to work in May 1969 and they discussed the possibility of his buying the plant Denham avers that Leavens told him that if he did buy it, there would be no need for a union Leavens, who testified on behalf of the Company, remembered the meeting but his testimony omitted any mention of a "no need for a union" remark I do not credit Denham 442 DECISIONS OF NATIONAL LABOR RELATIONS BOARD She acknowledged that Denham did tell the employees that the choice of joining the Union was up to them. However, she put this in the context of his further statement that if they went Union, he would shut the plant down in 15 days. The testimony of Denham, Leavens, and Nardini on one hand and Lane and Garcia on the other obviously cannot be reconciled. In deciding which of them is telling the truth, it is helpful to look at the events which occurred immediately after the meeting. It is uncontested that the employees met in the coffee room immediately after the meeting and discussed Denham's remarks and whether they wanted to stay in the Union. The meeting ended with a voice vote at which the employees unanimously voted for leaving the Union. Someone asked who was going to give the word to the office and Nardini' s name was suggested. Nardini then went into Denham's office and told him the result of the vote. Denham replied that it was too important a decision to take by voice vote and there should be a secret ballot. Nardini asked Denham if the girl in the office could fix up ballots and he said that it could be done. The ballots were brought to the coffee room by King who left after handing them to Nardini. The vote was taken and the ballots counted by Nardini, who told Denham the results and then sealed the ballots. The ballots were opened during the hearing. They showed that 100 percent of the employees voted against the Union. The ballots were signed by the employees. The following names appeared on the ballots- Borba, Garcia, Haley, Leavens, Mueller, Lane, Perntt, Rutter, Marvin, and Nardini.23 Twelve employees voted for the Union at the union meeting on August 7. Eight out of those twelve employees were also present at the meeting which occurred after Denham spoke to the employees on August 8 and all of them at that time voted against the Union. In the context of this case where there had been many years of amicable bargaining between the Union and Swift, where there was no evidence of employee discontent with the Union and where the employees knew that loss of union representation meant a direct and substantial cut in wages and fringe benefits, it is difficult to picture any motivation the employees would have had to change their vote other than that they thought they were faced with a choice between the plant's closing (which meant the loss of theirjobs) and their renunciation of the Union (which meant reduction in wages and benefits). The Company's contention that the employ- ees were coerced into voting for the Union at the union meeting of August 7 is frivolous. Wills' remark that withdrawal cards could be obtained only by employees who left the industry was a statement of union policy and in no way coercive. Withdrawal cards generally give certain status within the Union even though a member isn't active. Such status is within the control of the Union and the Union's refusal to issue such withdrawal cards to persons who stay within the industry does not coerce those persons to stay in the Union. Likewise, Wills' statement that the 23 It is noted that all of these names except for Borba and Marvin appeared on the petition in favor of the Union signed by the employees at the union meeting the day before The General Counsel contended that Nardini was a supervisor However, the evidence in the most favorable light for the General Counsel established that Nardini sometimes made out work schedules, sometimes changed work assignments when King was not present pursuant to King's outstanding instructions, and every once in a employees could collect unemployment insurance if the Company closed was not improper and in no sense forced the employees to accept the Union. The employees at their meeting on August 8 were convinced that their jobs depended on remaining out of the Union. The testimony of Lane and Garcia which relate to Denham's statements to the employees just before the employee meeting fully explains the origin of that conviction. The testimony of Denham, Leavens, and Nardini as to Denham's remarks makes the subsequent action of the employees completely inexplicable. I believe that Lane and Garcia were telling the truth and that the testimony of Denham, Leavens, and Nardini was not worthy of credit. Denham and Nardini's credibility is further undermined by a major discrepancy between their testimony and affidavits that they swore to prior to trial. Nardini testified with regard to Denham's August 8 meeting with employees that Denham did not say anything about the employees reconsidering the vote they had taken the night before. However, in his affidavit, Nardini swore that "The employees voted to have the Union. Denham had heard about it. The next day he called us together and asked us to reconsider. He asked if we'd have a meeting about it." In a similar vein, Denham testified that at the time he called the December 8 meeting he did not know that the Union had held a meeting the night before. Yet, in his affidavit, Denham averred, "I knew the Union did have a meeting. I guess, I heard about the meeting from the employees. The next day, Leavens said the employees wanted to see me. I called them all in to my office." In sum I find that at his August 8 meeting with the employees, Denham told them that he knew of the union meeting the night before, he would close the plant if they chose the Union, that he would stop making ice cream and become a distributing plant in such an event, that he would try to give them a Christmas bonus if they stayed out of the Union and that in connection therewith he asked employee Garcia how she felt about it. 4. The events on August 11 Denham's meeting with employees was on Friday, August 8. The following Monday, August 11, Denham, together with King and Office Manager Keever, met with Wills and Kikkert. Wills told them that at the August 7 union meeting the employees had voted to stay with the Union and have the Union represent them. Denham replied that he understood that it happened, and that Wills had done an excellent job at the meeting but that since the meeting the employees had come to him and told him that they had now changed their minds and they no longer wanted to be part of the Union. Denham said that Nardmi was now a spokesman for the employees and asked whether Nardini should be called in. Wills answered in the negative. Because Denham had said that the employees had changed while filled in for King In addition, King had been a supervisor sometime before the incidents in this case However, it is uncontroverted that King's regular function was that of rank-and-file employee and that any other functions were performed on an irregular and spasmodic basis He was during this time a member of the Union in good standing I find that he was an employee within the meaning of the Act THE DENHAM COMPANY 443 their minds, Wills did not give Denham the petition that the employees had signed at the union meeting. At this meeting, Wills asked whether the employees' reports that wages had been cut were true and Denham replied that not all the employees had been cut. Wills mentioned that Swift had not paid the proper prorated vacatiori pay and Keever answered that he thought Swift had overpaid.24 Wills mentioned the loss in benefits that the employees would incur if the plant went nonunion and particularly the loss of the pension plan. He pointed out that Denham's father was drawing benefits under the union pension plan. Denham mentioned the possibility that he could become a distributor and operate with three or four people. On August 11 about 4:30 p.m., which was after his meeting with Wills, Denham met with a number of employees. Denham told them that he met with Wills and Wills had left a defeated man. Beyond that statement, the employees who testified concerning the meeting were not consistent in their testimony. Employee Lane testified that Denham said that he would get withdrawal cards for the employees. Employee Garcia testified that the subject of withdrawal cards came up in the context of her telling Denham that if they didn't go union she would like to have withdrawal cards so that she could freeze her pension Employee Rutter testified that someone brought up the subject of withdrawal cards and Denham replied that he would get a lawyer to see if he could get them for the employees. Denham flatly denied that he promised employees assistance in obtaining withdrawal cards. In view of the conflicting testimony between the witnesses for the General Counsel on the subject of the withdrawal card, and particularly that of Garcia who testified that she was the one who discussed withdrawal cards rather than Denham, I find that General Counsel has not established by a preponderance of the evidence that Denham promised employees assistance in obtaining withdrawal cards as alleged in the complaint. However, at this meeting Denham said that he had new contracts to bid on and asked each employee present where that employee stood.25 In the context of Denham's earlier remarks and particularly those on August 8 in which he threatened to close the plant if the employees chose the Union, I believe that Denham's questions concerning how the employees stood referred to whether they had chosen the Union and the employees so understood it. C. Analysis and Conclusions 1 The successor issue a. The legal framework In John Wiley and Sons, Inc. v Livingston, 376 U.S. 543 (1964), the United States Supreme Court held that a successor-employer could be required to arbitrate with a union under a collective-bargaining agreement even though the predecessor company had disappeared through a 24 Subsequently, Wills wrote to Swift and additional vacation pay was paid to a number of employees 25 Perritt credibly testified that Denham asked each employee how he stood Rutter credibly testified "Well, Mr Denham said he had some new contracts he was about to sign but he wanted to know how the employees felt about working with him and cooperating with him So he asked each merger. A merger situation was equated with one where a business entity remained the same despite the replacement of one owner by another. Under this continuing business entity theory, the Board has consistently required succes- sor-employers to honor bargaining obligations of their predecessors .26 The Board's policy was well summed up by Trial Examiner George J. Bott in Will Coach Lines, Inc., 175 NLRB No. 87. In that case, the Board adopted the Trial Examiner's Decision which held in part: The Union represented and bargained collectively for E & OV's drivers for many years before that company was sold to Respondents . Respondents refused to bargain with the Union when it took over E & OV's operations, and itjustifies its refusal on various considerations connected with the transfer and change of ownership. It has long been established, however, that a change in ownership in an enterprise does not automatically extinguish the rights of employees or their representatives and absolve the new owner from any duty to recognize the union which represented his predecessor's employees or to comply with any of the terms of a labor contract which covered those employees. Since it is the "employing industry" which the Act seeks to regulate ,10 the predecessor's obligations may devolve on the successor in certain circumstances. Critical questions in determining the extent of the new employer's obligations are whether there has been a "substantial continuity of identity in the business enterprise" or "the enterprise remains essentially the same," after the change in ownership .ll The basic question had also been described as "whether respon- dent continued essentially the same operation, with substantially the same employee unit..." 12 In at- tempting to answer these critical questions and determine whether a new employer is a "successor employer" obligated to bargain with the Union which represented his predecessor's employees, the Board and the courts consider many factors. What combination of factors is controlling is not always easy to determine, but prime considerations are the continuation of the business without substantial interruption, in such a form as to make the bargaining unit readily discernible, with some or all of the former employees employed at their old jobs.13 10 N L R B v Cotten, d/b/a Kiddie Kover Mfg, Co, 105 F 2d 179, 183 (C A 6) 11 John Wiley & Sons, Inc v Livingston, 376 U S 12 Maintenance Incorporated, 148 NLRB 1299, 1301; 13 Overnice Transportation Company v N L R B, 372 F 2d 765 (C A 4), Randolph Rubber Company, Inc, 152 NLRB 496, Firchau Logging Company, Inc, 126 NLRB 1215, 1221 In The William J. Burns International Detective Agency, Inc, 182 NLRB No. 50, the Board clarified this area of law by holding that absent unusual circumstances, the Act "requires the successor-employer to take over and honor a collective-bargaining agreement negotiated on behalf of the employing enterprise by the predecessor." Not only is the individual how they felt and which way they would go, if they would stand behind him " 26 See Wackenhut v International Union , United Plant Guards, 332 F 2d 954 (C A 9), Overnice Transportation Co v N LR B, 372 F 2d 765 (C A 4) and cases cited therein for judicial approval of this doctrine 444 DECISIONS OF NATIONAL LABOR RELATIONS BOARD successor-company bound to the contract as if he were a signatory thereto, but its failure to maintain the contract is a violation of Section 8(d) and 8(a)(5) of the Act. The Board also held that "the obligation to bargain imposed on a successor-employer includes a negative injunction to refrain from unilaterally changing wages and other benefits established by a prior collective-bargaining agreement even though that agreement has expired." In the instant case, the Company continued Swift's business without interruption at the old location with the same employees, machinery, and equipment. As a result of the sale, the manager for Swift became the owner-manager of the Company. The Company clearly meets all the criteria set up by the Board to determine whether a purchasing employer is a successor-employer of a continuing business entity. I find that the Company is such a successor- employer. However, where unusual circumstances prove that the normal obligations flowing from a successorship status, including the duty to honor the contract, would not be appropriate, those normal obligations will not be imposed. The Company has raised a number of defenses in order to show such "unusual circumstances." b. The Company's defenses The threshold contention of the Company is that it did not refuse to bargain with the Union because the Union approved of the changes implemented by the Company. The only evidence of such approval is the testimony of Denham with regard to his conversation with Kikkert on July 28 in which Kikkert allegedly authorized the changes. As set forth in detail above, I do not credit Denham's assertion and I do credit Kikkert's denial. I found above that the Company unilaterally and without bargaining with the Union reduced the wages of most of the employees, canceled the pension plan, reduced the scope of the welfare plan, and abolished seniority and overtime shortly after it purchased the Hanford plant from Swift. In Denham's August 1 conversation with Kikkert, and his conversations a few days later with Kikkert and Wills, he equivocated on whether or not he would recognize the Union by saying it was up to the employees. Thereafter on August 11, he flatly told Kikkert and Wills that the Union did not represent the employees. The Company points out that the Union never made any effort to bargain with it after August 11, and didn't send bills for the welfare and trust funds until much later. However, the Company's refusal even to acknowledge that the Union represented the employees made any further efforts of the Union to deal with the Company an exercise in futility and no such useless gestures were required of the Union. The Company did not bargain with the Union. The more serious question posed by the Company is whether it had any obligation to bargain with the Union. The Company contends that even if it were a successor, it had no duty to bargain with the Union because Swift merely followed the industry practice with regard to wages and benefits and did not bargain or have a contract, either oral or in writing, with the Union As a subsidiary argument, the Company urges a finding that the Burns case has no application to the instant situation because neither Swift nor the Company had a written contract with the Union . However, these contentions are not supported by the facts. As set forth in detail above , Swift did have a collective-bargaining relationship with the Union which reached fruition in a signed contract dated January 24, 1969. Another contention of the Company is that Swift illegally assisted the Union in obtaining its membership , thereby making any bargaining relationship between the Company and the Union improper and unlawful and any collective- bargaining agreement void and unenforceable . Though the complaint did not allege any unlawful union -security practices by Swift or the Union , this matter was litigated at the hearing in order to allow the Company to develop it as a possible line of defense. As indicated above , I have found that the agreement and understanding between Swift and the Union was that employees were required to join the Union in less than 30 days and that the employees were given application cards and dues authorization checkoff forms on the first day of employment as part of the hiring process. As to the original recognition of the Union by Swift, there is no evidence in the record to contradict Wills' credible testimony that in the early 1940's he organized the Swift employees and secured bargaining authorization cards from them before recognition . It is also noted that the written contract between Swift and the Union did not contain any unlawful union-security provision either on its face or in the parts of the industry contract which were incorporated by reference. A company and union violate the Act where they maintain and enforce an agreement under which employees are required to join the Union in less than 30 days27 and they also violate the Act where they engage in conduct which leads employees to believe thatjoining the Union or signing checkoff authorizations is part of the hiring process. Zidell Explorations, Inc., 175 NLRB No. 137 ; Paranite Wire & Cable Div., Essex Wire Corporation, 164 NLRB 319; Western Building Maintenance Company, 162 NLRB 778. Where an employer unlawfully assists the union in obtaining its majority status and then recognizes the union on the basis of that status, the Board will normally order the employer to withdraw and withhold recognition from the assisted union unless and until that union is certified by the Board. Department Store Food Corp. of Penna, 172 NLRB No. 129 enfd . 415 F.2d 74 (C.A. 3). The effect of such an order is to set aside any contract that has been based on such unlawful recognition . In Zidell Explorations, Inc., supra, the Board found that an employer violated the Act by requiring new employees at the time of their hire to execute dues and initiation checkoff authorizations as well as applications for membership , and deducted the dues and fees during the initial 30 days of their employment. The Board did not, however, find the initial recognition of the Union to be unlawful and refused to set aside the contract, saying "it has long been established by Board and court cases that employer acts of unlawful assistance occurring after the execution of a lawful contract, and during the contract term , do not justify a remedial order suspending 27 Except for certain situations in the construction industry not applicable here THE DENHAM COMPANY 445 recognition of the assisted union during the contract term or directing that the contract be set aside." In the instant case, the Union's initial recognition was lawful. The contract between Swift and the Union was lawful on its face. Even though the practices relating to union security and checkoff described above may have been unlawful, they were not of such a nature as to taint the basic underlying relationship between Swift and the Union. The Company as a successor cannot, of course, be required to succeed to any unlawful practices that its predecessor engaged in . However, the existence of such practices, which were outside of the contract, did not relieve the Company of any duty it may otherwise have had to honor the lawful bargaining obligation and contract that Swift had with the Union.28 The Company's next contention is that it should not be required to bargain with the Union because a majority of the employees in the bargaining unit renounced the Union shortly after the purchase. As found above, a substantial majority of the employees reaffirmed their support of the Union on August 7 at the union meeting; on the following day, Denham told the employees that he knew of the union meeting, that he would close the plant if they chose the Union, that he would stop making ice cream and become a distributing plant in such an event, and that he would try to give them a Christmas bonus if they stayed out of the Union; and shortly thereafter, a majority of the employees voted to stay out of the Union. As is more fully set forth below, Denham's conduct at the August 8 meeting was violative of the Act and I find that the employees' vote against the Union on August 8 flowed directly from and was coerced by Denham's unlawful conduct. That vote therefore was not a true indication of the employees' desires.29 The Company's final argument is that the Union's attitude with regard to the most favored employer clause in the industry contract precluded good-faith collective bargaining and has discharged the Company of its duty to bargain with the Union. A most favored employer clause, such as the one contained in the industry contract, can arguably have the practical effect of hamstringing a union in its bargaining with other employers. However, in the instant case, Swift's refusal to sign any contract that contained a union-security clause and the Union's refusal because of the most favored employer clause to sign a contract without one resulted in exchanges of letters and other working agreements as set forth above. An amicable bargaining relationship evolved and it is not contended that either refused to bargain. In Dolly Madison Industries, 182 NLRB No. 147, the Board found th,.t a company's insistence to the point of impasse on a most favored employer clause was not a violation of Section 8(a)(5) of the Act because such a clause was a mandatory subject of bargaining. In that case, the clause was similar to the one herein in that it provided that if the union entered into a more favorable agreement with a competitor of the employer, the employer's collective-bargaining agreement would be automatically amended so as to give the employer the full benefit thereof. The Board has held that such a clause is not only lawful but a mandatory subject of bargaining. It would be inconsistent to find that such a clause automatically prevents a union from bargaining in good faith with other employers. The Company, rather than attempting to test the Union's desire to bargain in good faith, prevented the issue from arising by refusing to recognize that the Union represented a majority of its employees. The Company cannot justify its refusal to bargain on the speculation that the Union, if it were allowed the opportunity, might not have bargained in good faith. It is also noted that under the Burns case the Union was not required to reopen the contract for negotiations but could insist on the Company's adherence to the contract that it had with Swift. Cf. Kota Division of Dura Corporation, a subsidiary of Walter Kiddy & Company, Inc., 182 NLRB No 51. c. Conclusions as to successorship For the reasons set forth above, I find that the Company is a successor-employer of a continuing business entity, that there are no unusual circumstances present that would exempt the Company from the obligations of a successor- employer as set out in the Burns case, and that the Company therefore had the duty to honor Swift's bargaining obligations and contract with the Union and to refrain from making unilateral changes in the wages, hours, and working conditions of the employees. I further find that by making unilateral changes with respect to wages, vacations, pensions, health insurance, seniority, and overtime, by refusing to acknowledge the Union as a collective-bargaining representative of the employees, and by refusing to adopt, honor, and enforce the contract between Swift and the Union, the Company violated Section 8(a)(5) and (1) of the Act. Section XI(b) of the complaint alleges that the Company refused to bargain by bargaining directly with employees through King and Forsythe at the "insurance" meeting. I do not believe that what occurred at that meeting can properly be called individual bargaining. The Company had made a change and it was being announced at that time to the employees. The fact that the employees were given the option of obtaining additional insurance from Forsythe on their own does not indicate that the Company was bargaining individually with them. I therefore recommend that the "direct bargaining" allegation in the complaint be dismissed. 28 It is noted that Swift would have been in a poor position to raise an attack on its own bargaining obligation because of unlawful conduct in which it took part Denham stands in the place of Swift not only as a successor but as an individual who, as Swift's chief representative at the Hanford plant, participated in such conduct Though in some cases the rights of the employees might be the prime concern no matter who raised the issue, in this case Denham is pointing to misconduct in which he participated as a justification for reducing the pay and benefits of those employees 29 The Company's contention that a lack of majority is shown by evidence that employee Leavens told Denham some time before that the employees would not need the Union, and that a majority of the unit employees at the insurance meeting of July 28 filled out company insurance forms, has little substance I found that Leavens did not make such a remark The signing of the insurance application forms was merely an acceptance by the employees of what the Company had done rather than an indication that they no longer desired to be represented by the Union 446 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 2. The alleged independent violations of Section 8(a)(1) of the Act a. Impression of surveillance Section XII(b) of the complaint alleges that the Company gave the employees the impression that it was engaging in surveillance of their union activities. The only evidence in the record in support of this allegation is that relating to the statement of Denham to the employees on August 8 that he knew of the union meeting the night before. It is noted that before the meeting both Wills and Kikkert told him that a meeting was planned . Employees may well have volun- teered to him information about the meeting. Standing alone, I do not believe that Denham's remark was either calculated to interfere , or would have the likely effect of interfering, with rights of the employees by giving them the impression that he was spying on their union activities. I therefore recommend that that section of the complaint be dismissed. b. Threats and promises Section XII(c) and (d) of the complaint allege that the Company unlawfully threatened to close the plant and promised wage increases to discourage union activity. I have found that at the August 8 meeting Denham did tell the employees that he would close the plant if they chose the Union, that he would stop making ice cream and become a distributing plant in such an event and that he would try to give them a Christmas bonus if they stayed out of the Union. Such a threat to close is not protected as free speech . As the United States Supreme Court said in N. L. R. B. v. Gissel Packing Co., 395 U.S. 575 (1969): We therefore agree with the court below that "conveyance of the employer's belief, even though sincere, that unionization will or may result in the closing of the plant is not a statement of fact unless, which is most improbable , the eventuality of closing is capable of proof." 397 F.2d, at 160.... As stated elsewhere, an employer is free only to tell "what he reasonably believes will be the likely economic consequences of unionization that are outside his control," and not "threats of economic reprisal to be taken solely on his own volition ." N.L.R.B. v. River Togs, Inc., 382 F.2d 198,202,. . . (C.A. 2d Cir. 1967). Equally valid was the finding by the court and the Board that petitioner's statements and communications were not cast as a prediction of "demonstrable economic consequences," 397 F.2d at 160, . . . but rather as a threat of retaliatory action.. . . In Paranite Wire & Cable Division, Essex Wire Corporation, 164 NLRB 319, the Board evaluated the free speech argument and concluded that an employer violated Section 8(a)(1) of the Act by threatening to close the plant if the employees did not ratify a contract. I find that Denham's threat to close the plant and to cease manufacturing ice cream if the employees chose the Union was an unlawful threat of retaliatory action and interfered, with, restrained, and coerced employees in the rights guaranteed to them by Section 7 of the Act in violation of Section 8(a)(1) of the Act. Denham's statement that he would try to give the employees a Christmas bonus if they stayed out of the Union was a clear promise of benefit to discourage union activity. Though the promise was only that an effort would be made to give the Christmas bonus rather than that the bonus would be given , the statement was nonetheless an unlawful interference with Section 7 rights and therefore a violation of Section 8(a)(1) of the Act. c. Interrogation Section XII(e) of the complaint alleges that the Company unlawfully interrogated employees . With regard to the employees' meeting after Denham's speech on August 8, the General Counsel has not established by a preponder- ance of the evidence that the Company sponsored or took part in the vote taken at that meeting . It was not established that Nardini, who was present at the meeting, was either an agent or supervisor of the Company . No finding can therefore be made that the Company interrogated its employees through the voting at that meeting . However, I have found that at Denham's August 8 meeting with the employees he asked employee Garcia how she felt about "it" in the context of threats and promises which were keyed to undermining the Union. In addition, on August 11, Denham asked a number of employees at a meeting how the employees stood and that his question was in reference to whether they had chosen the Union . I find that Denham's questioning of Garcia on August 8 and of other employees on August 11 was unlawful interrogation which probed into their union sentiments and interfered with their rights under Section 7 of the Act in violation of Section 8(a)(1) of the Act. d. Conclusions as to the independent 8(a)(1) violations In sum, I find that on August 8 the Company threatened to close the plant and become a distributing plant if its employees chose the Union , promised them benefits if they stayed out of the Union, and on August 8 and 11 interrogated its employees concerning their union senti- ments, all in violation of Section 8(a)(1) of the Act. IV. THE EFFECTS OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Company set forth in section III, occurring in connection with the Company's operations described in section I, above , have a close, intimate, and substantial relation to trade, traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that the Company has engaged in unfair labor practices violative of Section 8(a)(1) and (5) of the Act, I shall recommend that it cease and desist therefrom THE DENHAM COMPANY and take certain affirmative action designed to effectuate the policies of the Act. Having found that the Company is a successor to Swift and as such is bound by the contract that Swift had with the Union, I shall recommend that the Company: cease and desist from refusing to bargain with the Union and upon request bargain collectively with the Union as the exclusive representative of all the employees in the unit set forth below ; cease and desist from making unilateral changes in the wages, hours, and conditions of employment of said employees in derogation of the rights of the Union and the employees under the Act; and honor, adopt, and enforce the contract between the Union and the Company's predecessor, Swift. I shall also recommend that the Company cancel the unilateral changes, give retroactive effect to the contract and make whole, with 6 percent interest, employees for all losses suffered by reason of the Company's unilateral changes and refusal to adopt, honor, and enforce the contract. As found above, that contract covers wages and other money benefits to the employees. This "make whole" recommendation shall therefore apply to loss of wages, vacation benefits, and premiums for pension and health and welfare benefits. With regard to the premiums on the pension plan, retroactive payments can be made to the pension trust. With regard to the health and welfare plan, the Company did supply some employer-paid coverage. The employees will be made most nearly whole with regard to the health and welfare benefits if the Company pays to the employees that amount which the employees contributed to the premiums to obtain family coverage. In the event that any employee suffered a loss that would have been covered under the health and welfare plan prior to the successorship but was not covered thereafter, the employee can only be made whole by the payment of that amount to him by the Company. I recommend that such payments be ordered. CONCLUSIONS OF LAW Upon the foregoing findings of fact and the entire record in the case, I make the following conclusions of law: 1. The Company is an employer engaged in commerce and in operations affecting commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the meaning of Section 2(5) of the Act. 3. The following employees constitute a unit appropri- ate for the purpose of collective bargaining within the meaning of Section 9(a) of the Act: All production and maintenance employees and truckdrivers employed by the Company at its Hanford plant , excluding office clerical employees, guards, and supervisors as defined in the Act. 4. By failing and refusing on or about July 28, 1969, and thereafter, to bargain with the Union as the exclusive bargaining representative of the Company's employees in the above-described appropriate unit, by unilaterally changing wages, hours , and conditions of employment in derogation of the rights of the Union and the employees under the Act, and by failing to honor, adopt, and enforce 447 its contract with the Union as successor to Swift, the Company has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(a)(5) and 8(a)(1) of the Act. By the foregoing conduct, by telling employees that the plant would close if they chose the Union, that the Company would stop making ice cream and become a distributing plant in such an event , and that an attempt would be made to give the employees a Christmas bonus if they stayed out of the Union, and by interrogating employees concerning their union sympathies, the Compa- ny has interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed to them by Section 7 of the Act and therby has violated Section 8(a)(1) of the Act. 5. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2(6) and (7) of the Act. RECOMMENDED ORDER Upon the foregoing findings of fact and conclusions of law, and upon the entire record in this case, I recommend that the Company, No H. Denham and Geraldine Denham, d/b/a The Denham Company, its agents, successors, and assigns, shall: 1. Cease and desist from: (a) Refusing to bargain collectively, upon request, with the Union as the exclusive bargaining representative of its employees in the above-described unit. (b) Unilaterally changing wages, hours, or conditions of employment in derogation of the rights of the Union and its employees under the Act. (c) Refusing to adopt, honor, and enforce its contract with the Union, as successor to Swift. (d) Threatening its employees to close the plant and to become a distributing plant if they chose the Union. (e) Promising its employees benefits if they stay out of the Union. (f) Interrogating its employees about their union sympathies. (g) In any manner interfering with, restraining, or coercing its employees in the exercise of rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action which is necessary to effectuate the policies of the Act: (a) Bargain collectively, upon request, with the Union. (b) Cancel the unilateral changes and honor, adopt, and enforce its contract with the Union , as successor to Swift, and give retroactive effect to the contract. (c) Make its employees whole for any losses they may have suffered by reason of its unilateral changes and failure to honor, adopt, and enforce the contract in the manner set forth in the section of this Decision entitled "The Remedy." (d) Preserve and, upon request , make available to the Board or its agents, for examination and copying, all payroll records and reports and other records necessary to ascertain the amount due employees. 448 DECISIONS OF NATIONAL LABOR RELATIONS BOARD (e) Post at its Hanford, California, place of business copies of the attached notice marked "Appendix A.1130 Copies of said notice, on forms provided by the Regional Director for Region 20, after being duly signed by the Company's authorized representative, shall be posted by the Company immediately upon receipt thereof and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Company to insure that said notice is not altered, defaced, or covered by any other material. (f) Notify said Regional Director, in writing, within 20 days from the receipt of this decision, what steps have been taken to comply therewith.31 Dated: 30 In the event no exceptions are filed as provided by Section 102 46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, recommendations, and Recommended Order herein shall, as provided in Section 102 48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and order, and all objections thereto shall be deemed waived for all purposes In the event that the Board's Order is enforced by a judgment of a United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall be changed to read "Posted pursuant to a Judgment of the United States Court of Appeals enforcing an Order of the National Labor Relations Board " 31 In the event that this Recommended Order is adopted by the Board, this provision shall be modified to read "Notify said Regional Director, in writing, within 10 days from the date of this Order, what steps the Company has taken to comply therewith " APPENDIX A NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government We hereby notify our employees that: WE WILL NOT refuse to bargain collectively, upon request, with Creamery Condensery Employees & Drivers Union, Local 517, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, as the exclusive bargaining representative of our employees in the following appropriate unit: All our production and maintenance employees and truckdrivers employed at our Hanford plant, excluding office clerical employees, guards and supervisors as defined in the Act. WE WILL NOT unilaterally change wages, hours, or conditions of employment in derogation of the rights of the Union and our employees under the Act. WE WILL NOT refuse to adopt, honor, and enforce our contract with the Union, as successor to Swift & Co. WE WILL NOT threaten to close our plant and to become a distributing plant if our employees choose the Union. WE WILL NOT promise our employees benefits if they stay out of the Union. WE WILL NOT interrogate our employees about their union sympathies. WE WILL NOT in any manner interfere with , restrain, or coerce our employees in the exercise of their rights to join or assist the Union or otherwise engage in activities protected by the Act. WE WILL bargain collectively , upon request, with the Union. WE WILL cancel the unilateral changes and honor, adopt, and enforce our contract with the Union as successor to Swift & Co ., and give retroactive effect to the contract. WE WILL make our employees whole for any losses they may have suffered by reason of our unilateral changes and failure to honor, adopt, and enforce that contract with interest at 6 percent. Dated By No H. DENHAM AND GERALDINE A. DENHAM, D/B/A THE DENHAM COMPANY (Employer) (Representative ) (Title) This is an official notice and must not be defaced by anyone. 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. Any questions concerning this notice or compliance with its provisions may be directed to the Board's Office, 13050 Federal Building, 450 Golden Gate Avenue, Box 36047, San Francisco, California 94102, Telephone 556-0335.