International Harvester Co.

DECISIONS OF NATIONAL LABOR RELATIONS BOARD International Harvester Company and Sales Drivers & Helpers, Local 274, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehouse- men and Helpers of America. Case 28-CA-3718 June 5, 1978 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND PENELLO On December 7, 1976, the National Labor Rela- tions Board issued its Decision and Order in this pro- ceeding.' The Board found that Respondent violated Section 8(a)(5) and (1) of the Act by its failure to bargain with the Union about its decision to remove fleet account work and the job classification of fleet account executive from the bargaining unit at its Phoenix, Arizona, branch and by its failure to bar- gain about the effects thereof. Thereafter, the Board filed an application for en- forcement of its Order with the United States Court of Appeals for the Ninth Circuit. Respondent moved the court to remand the case to the Board for the purpose of receiving and considering additional evi- dence and, on July 11, 1977, the court entered an unpublished order remanding the case to the Board pursuant to Respondent's motion. On November 2, 1977, the Board issued an order reopening the record of this proceeding and ordering that a further hear- ing be held before an Administrative Law Judge for the purpose of taking evidence in accordance with the remand of the court. A hearing was held on December 1, 1977, in Phoe- nix, Arizona, before Administrative Law Judge Da- vid G. Heilbrun. On January 27, 1978, he issued the attached Supplemental Decision in this proceeding. Thereafter, the Employer filed exceptions and a sup- porting brief, and the General Counsel filed cross- exceptions and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its au- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Supplemental Decision in light of the excep- tions and briefs and has decided to affirm the rulings, findings, and conclusions of the Administrative Law Judge only to the extent consistent herewith. In November 1975, Respondent made a na- tionwide decision to remove fleet account work and personnel from its approximately 150 branches, and |227 NLRB 50 to establish separate centers for the sale of both new and used fleet trucks. Respondent's stated purpose for this reorganization of its marketing department was to separate the fleet and used-truck sales from the retail sales of the branches, and to place the branches on a strict profit and asset accountability, in order that it might determine the profitability of each branch. Respondent intended to change from a volume-oriented sales approach to one based entirely on profit. Benjamin Mercer, Respondent's principal witness at both hearings, testified that, after fleet sales were removed from the branches, the profitabil- ity and activities of each one were carefully analyzed and a decision was made whether to sell, close, or leave unchanged each particular operation. Mercer testified that, regarding the operations that were disposed of prior to November 1975, the deci- sion was based on the fact that they were small loca- tions, combination dealerships, or similar concerns. He further testified that, since 1975, the decision was based on the profitability of each branch with used- truck sales and fleet sales removed, enabling the Company to look at the profit from a strictly retail standpoint. Respondent contends that the branch closings are an integral part of a nationwide corporate reorgani- zation of the kind that is so much at the core of entrepreneurial control as to be exempt from the duty to bargain. It further contends that the changes involved a substantial shift in the Respondent's as- sets and that bargaining about the decision to with- draw its assets from its branches would be a signifi- cant abridgement of the Company's freedom to invest its capital and to manage its business. We do not agree. In our view of the evidence, in- cluding that of branch closings submitted at the sec- ond hearing, Respondent has at most reorganized the administrative and accounting arrangement of its marketing department. It must be emphasized that the issue is not whether Respondent was legally enti- tled to unilaterally decide to sell, close, or discon- tinue some of its branches throughout the United States but, rather, whether it was legally entitled to unilaterally remove most of the fleet account work as well as the job classification of fleet account execu- tive from the duly certified bargaining unit in Phoe- nix, Arizona. We are still of the opinion that Respondent's deci- sion to remove fleet account work from the unit em- ployees did not, as Respondent continues to claim, involve the termination, relocation, liquidation, clo- sure, or sale of any of Respondent's activities, nor did it involve the sale of assets, basic capital reorga- nization, or significant investment or withdrawal of capital by Respondent such as that in General Motors 236 NLRB No. 77 712 INTERNATIONAL HARVESTER COMPANY Corporation, GMC Truck & Coach Division.2 The is- sue before the Board in that case was whether the respondent's disposal of a dealership constituted a sale or a subcontracting situation. The majority con- cluded that it was a sale and reasoned therefore that it involved a significant investment or withdrawal of capital which lies at the core of entrepreneurial con- trol and is not the kind of subject which Congress intended to encompass within "rates of pay, wages, hours of employment or other conditions of employ- ment." In the instant case, Respondent's removal of certain work from the branches is not a sale of assets. Nor is it in our view a basic capital reorganization or the termination, relocation, liquidation, or closure of any of Respondent's activities. Respondent has not ceased either retail or fleet sales: it has merely changed its administrative and accounting structure within one department. With respect to the so-called reduction or shift in assets that occurred in November 1975, Mercer ex- plained that such change reflected the removal of the fleet business from its branches and the placement thereof into fleet groups. Mercer referred to "asset base" as the fundamental capitalization of each branch, excluding its real estate. Thus it includes the trucks and equipment assigned to it as well as its accounts receivable, capitalized equipment, and cash on hand. The nationwide reduction in branch assets from $345 million to $180 million which occurred on November 1, 1975, reflected the transfer of certain fleet accounts from the books of the branches to the books of the fleet groups. All the fleet accounts are presumably still carried by the marketing department under the overall supervision and control of the vice president for marketing operations but under the newly set up chain of command through regional sales managers. In our view the asset changes that took place after November 1, 1975, as a result of the sale or closure of retail branches had no necessary relation to Respon- dent's decision to remove fleet accounts from its branch operations because the fleet accounts had al- ready been removed from the branch asset base be- fore their disposition by Respondent. By Mercer's own admission the decision to close, sell, or continue a particular branch is based on the assessment of economic and other factors peculiar to each individ- ual branch and is made after fleet accounts are re- moved. It is interesting to note that, despite the al- leged vitally necessary profit and asset accountability achieved by Respondent's realignment of its invento- ry and thereby its accounting, Respondent's prac- tices thereafter have not been consistent. It has de- cided not to close certain branches which have con- tinued to lose money after November 1975 to the present time. In addition, Mercer testified that about 5 percent of the fleet accounts throughout the coun- try are still being handled by the branches. It is clear that Respondent has given a rather flexible applica- tion to its so-called nationwide decision. Respondent seems to assume that the Board's or- dering it to bargain about its unilateral decision to remove fleet accounts from the Phoenix bargaining unit is tantamount to ordering it to bargain over its decision to restructure its marketing department. On the contrary, nothing in the record supports the con- tention that the retention of fleet account work and the job classification of fleet account executive in the Phoenix bargaining unit would preclude the effective institution of Respondent's new marketing philoso- phy. In fact, as we previously found, unit employees in Phoenix continue to handle fleet accounts under the branch manager's control and presumably in the branch's asset base. Furthermore, the record reveals that William Toph, the fleet account executive, con- tinues to use the branch office where he uses the branch facilities, including filing space, a desk, the telephone, and answering service. Toph continues to use the services of the branch personnel who do his typing and accounting and secretarial work for a flat fee which is charged to the fleet group. In light of these facts, we wonder whether Respondent's desired segregation of fleet assets from the Phoenix branch's could not as easily have been accomplished through accounting procedures. However, we do not presume to suggest that Respondent should have accom- plished its goals in that manner. We do require that Respondent bargain in good faith about its decision with respect to the Phoenix branch. Accordingly. we affirm our original decision in this case that Respondent has violated Section 8(a)(5) and (I) of the Act by its refusal to bargain about its decision to remove fleet accounts from the Phoenix bargaining unit. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board adopts the recommendations of the Administrative Law Judge and hereby orders that the Respondent. International Harvester Company, Phoenix, Arizona. its officers, agents, successors, and assigns, shall take the actions set forth in the Board's Decision and Order of December 7, 1976, reported at 227 NLRB 85. 191 NI.RB 951 (1971) 713 DECISIONS OF NATIONAL LABOR RELATIONS BOARD SUPPLEMENTAL DECISION DAVID G. HEILBRUN, Administrative Law Judge: On De- cember 7, 1976, the National Labor Relations Board issued its Decision and Order in this proceeding,' finding that Respondent had violated Section 8(a)(5) and (1) of the Na- tional Labor Relations Act, as amended, by failure to bar- gain with the Union about its decision to remove fleet ac- count work from the bargaining unit and to remove the job classification of fleet account executive from the unit, and by failure to bargain regarding the effects on unit employ- ees of its decision to so remove the job classification and to so remove fleet account work which was previously per- formed by such employees at a branch in Phoenix, Arizo- na. Thereafter, the Board filed an application for enforce- ment of this Decision and Order with the United States Court of Appeals for the Ninth Circuit, and Respondent moved the Court to remand the case to the Board for the purpose of taking additional evidence. On July 11, 1977, the court entered an unpublished order remanding the case to the Board for the purpose of taking additional evidence as requested in Respondent's motion. The Board duly con- sidered the matter and, on November 2, 1977, issued an order reopening the record of this proceeding for further hearing before an Administrative Law Judge for the pur- pose of taking additional evidence in accordance with the court remand. Upon evidence adduced at the re-opened hearing held December I, 1977, in Phoenix, Arizona, including my ob- servation of witnesses appearing at that time, examination of the entire record, 2 and consideration of posthearing briefs filed with me by General counsel and Respondent, I conclude the Board should adhere to its earlier disposition. Prior to November 1975, Respondent had closed 2 (of some 150) branches based on fortuitous executive judg- ment relating to smallness of their location and undesira- bility of maintaining combination dealerships. During the period February 1, 1976-December 1, 1977, Respondent closed or sold 23 branches.3 As of re-opened hearing on December 1, 1977, six other branches were in process of sale for a further anticipated asset change of $7,292,000. In all instances of branch sales (except that for Charleston, effective on December 1, 1977) Respondent either sold, leased, or sublet the real estate involved (its Resp. Exh. 6 showing sublease of a facility at Kankakee, Illinois, in No- vember 1976 cannot be reconciled with the basic chronolo- '227 NL.RB 85 (1976), Member Walther dissenting in part. 2Errors in the transcript have been noted and corrected. 3 This total includes two parts and service stores. a type of facility referred to in the underlying Decision (AL.JD) by Administrative Law Judge Roger B. Holmes. Of the remaining 21 changes. I I were closings and 10 were sold with an aggregate asset change for both type transactions of $16.570,000. These facts are reasonably comparable to Administrative Law Judge Holmes' recitation of testimony in March 1976 by manager-dealer mar- keting (then manager of truck branch operations) Benjamin Mercer that two branches had "already closed" since November 1975 with three other branches "to be closed" during March 1976 (the month of trial) and "eigh- teen more to go." An asset change total of 117.338,579 appearing at page 14 of Respondent's brief erroneously includes duplicative $769,000 asset change projection as of Julv 29. 1977 for selling the Charleston. South C'aro- lina, branch. gy of branch changes because that location does not ap- pear as being sold). Additional real estate income generat- ed from the overall program of such branch sales (or in the case of Paterson, New Jersey, when it was simply closed) was $1,028,000 plus current annual rental income of $78,000 (both figures contradicting the tabulations in Re- spondent's brief). A second facet of the court's remand permitted evidence of "the written request of the majority of the retail sales persons at Respondent's Phoenix branch to terminate Teamsters, Local 274, as their bargaining representative and the granting thereof by the Director of Region 28 .... " As to this, the certified bargaining unit consisted of five retail sales representatives by October 1976. In that month, three of them signed a letter requesting termination of their bargaining representative and on October 19, 1976, signatory Kenneth Nelson filed a decertification petition. He requested its withdrawal on November 9, 1976, and the Regional Director promptly advised interested parties of his approval thereof without prejudice. The matters so presented hold no likelihood the Board will depart from its original rationale.4 While additional gloss has clarified much of what occurred, 5 the essential character of Respondent's choice may still be termed a decision of national scope "to remove the job classification of fleet account executive from the bargaining unit and to remove the fleet account work, which was previously per- formed by employees in the unit." Approximately 5 per- cent of Respondent's total fleet business remains undiffer- entiatedly dispersed among its many existing branches. The crucial point is that asset changes relating to the fleet groups "had already been ... redeployed prior to" March 1976. It is in this sense that the Board's opinion must be comprehended as viewing such "wholly internal realign- ments of capital" as mere accounting exercises. The further negation of any showing that "termination, relocation, li- quidation, closure, or sale of any of Respondent's activi- 4The balance of this Supplemental Decision treats only evidence of branch sales and closings that postdate the first hearing. Contrary to the implication of Respondent's motion to the court, the Regional Director did not grant a majority request for termination of a labor organization's certi- fied bargaining rights. All that occurred was routine approval of a with- drawal request filed at a point in time requiring that decertification proceed- ings be withdrawn because of unremedied unfair labor practices arising under Sec. 8(aX5) of the Act. In such a circumstance, the petition was inappropriate and otherwise ripe for dismissal under doctrine allowing a full, unimpeded certification )ear, In achieving remand on this point. Re- spondent cited N.L RB. v. Coca-Cola Bottling Co of San Mateo, 472 F.2d 140 (C.A. 9. 1972). and Peerless of America, Inc. v N.L.R.B., 484 F.2d 1108. 1117 (C.A. 7. 1973) to the court. These cases are not germane to the Board's ultimate action here, and further note is made of the fact that Coca-Cola involved only the court's invitation, not its order, that the Board reconsider the "unique facts presented in this case." The great weight of firmly settled case law in this area provides no basis to disturb the Board's original hold- ing, or its Regional Director's action in permitting withdrawal of the decer- tification petition when he did. Cf. Mar-Jac Poultrr Company, Inc, 136 NLRB 785 (1962). Quaker Tool& Die, Inc., 162 NLRB 1307 {1967): Groen- dike Transport, Inc., 207 NLRB 381 (1973); John Hutton Corp., d/b/a KUML Radio AM/ FM, 213 NLRB 73 (1973); Bishop v. N L R.B., 502 F.2d 1024 (5th Cir. 1974) ' The understood difference between a dealership and a branch was found not to be, as to the former, an entity "independently owned and financed and has no ties with the Respondent other than its sales agree- ment." Contrarily. a Dealcor component of Respondent's corporate whole. in fact, finances most dealer start-outs and incubates their profitability to- ward the eventual buy-out of Respondent's stock interest. 714 INTERNATIONAL HARVESTIR COMPANY ties, nor the sale of assets, basic capital reorganization, or significant investment or withdrawal of capital by Respon- dent" was involved is implicitly addressed only to the fleet- leasing aspect of Respondent's overall enterprise. T he Board inexorably linked a profoundly new marketing phi- losophy to organizational hierarchy' and particular task re- sponsibility at a single branch where a presumptively con- tinuing certification applied to five sales employees. This linkage was seen as warranting application of the contract- ing out principles formulated in Fibreboard Paper Products Corp. v. N.L.R.B.. 379 U.S. 203 (1964), overlaid with "teaching" of Ozark Trailers, Incorporated, etc.. 161 NI RB 561 (1966), concerning the potential value of input from the labor organization involved. In this sense, the sale or closing of branches all occurring well after the major re- structuring of November 1975 does not affect an outlook whereunder removal of the single fleet account executive at the Phoenix branch (and random retention of particular fleet account business by at least one of the remaining re- tail sales representatives) is considered an integral part of the business decision to be assessed under principles of Fibreboard. My resultant opinion and recommendation that the Board reaffirm its original Decision and Order does not signify agreement with its controllingly stated reasoning. In the first instance, I would hold the essential events here are purely at the "core of entrepreneurial control" within the meaning of Fibreboard, supra at 223. The principal impetus to this entire matter arose out of Respondent's effort to- ward better assessing "accountability" of its retail branch managers. This was to be cast in terms of sales profitabilit) measured on a given asset base. The technique was purely managerial in character, and attempted no more than what is routinely described in the literature of business.6 In this doctrinal area, the chief focus must remain on employers as instrumentalities of commerce within constitutional and statutory purview. As such, each is a manifestation of basic free enterprise, an activity of which collective bargaining may be but one of several major components. This verity could not have been lost on the court in Fibrehoard. and must explain the main opinion's reference to "our complex economy" and the concurring opinion's rather pointed ne- gation of any labor relations duties when (expressly ana- lyzed as including "sales") decisions concern "commitment of investment capital and the basic scope of the enter- prise," even when "conditions of employment" (written about elsewhere as a phrase "no doubt susceptible of di- verse interpretations") might "necessarily" be affected. Fi- 6Thus a sales strateg, using "profit contrlbution rather than sale., sol ume . "was described in "Managing hb Profits," 'i$es a Iinik, m ,it June 24. 1974. pp 11 12. A less generalized article referring io a conmpain which, as with Respondent here, is among the "-oriune 500"I largest L S industrial corporations. illustrates use of a computer-generated bratich fi nancial contribution report (essentialls similar in thrust to Resp 1xh sI is the means of "providing insights into the relative performalnce of :ll the branches" as divisional executives "started to iet branch manalers thinkinr in terms of profit rather than solume." -Pitnes-Boses Promoiles Profll Awareness for Branch Managers," Sales ta<ino'tnclt, %ai! 19. 19 l, p 4t hrchoard. supra at 215. 221. 223. Early progeny of Fibre- hoard focused on whether "significant detriment" to em- ployees had flowed from a business decision and distin- guished it and related csl.cs from situations of an employer "seeking to gain an economic advantage at the expense of its employees or of the Union." Westinghouse Electric Corp., Bclti.s .4lotmic Power Laboratory , 153 NLRB 443 (1965): S4uc5t.sion ,Mario Vecrlcaldo E tliqo s d h a Central Ru- fina, 161 NLRB 696 (1966). By both these tests, an exempt decision was present: however, beyond this the underlying dynamics were not, in mrn view. of an essence commanding prior notification and bargaining. An entrepreneurial con- version from a volume-oriented to a profit-oriented basis of retail marketing with attendant change in administrative apparatus is fundamentalls as much an investment of capi- tal as the branch sale was in (General Motors Corporaurion, (;(' Truck & Coach Dniisio,,. 191 NLRB 951 (1971). To so change is to contemplate redirection of purchasing. product planning, manufacture, advertising, and sales in much the same fashion as General Motors would have plowed yield from the sale of its retail outlet at Houston. Texas. into total potential for re-deployment of capital. The fact that one fleet account executive had his form of employment reordered and a given retail sales representa- tive retained a particular fleet account for customer rela- tions purposes are but two instances of the point portended bh Ihbrehoard's concurring opinion as it noted how "core" decisions often unloose an "effect" on employment. Many business decisions, never claimed to be collaterally assaila- ble, have such an effect, particularly when the employee function lies in the rather intangible realm of seeking to make a sale. Judgment from above on matters of product emphasis. vigor of market penetration, and personality of chosen sales management officials are all matters that of- ten and directl affect the employment conditions of per- sons ultimately expected to close deals. What evolves is a showing that, fundamentalls Respondent's decision must be viewed in broader perspective. When so done, the phe- nomenon present is not, as termed, a decision "to remove [etc.]," but in fact is a decision to restructure general mar- keting policies from which the concern of this case is but "an efrect, " and as such completely merged into the subsid- iary result that bargaining omer such effect(s) was lacking. Notwithstanding these observations,. my closing fidelity must be to the Board's own law of the case. See A4on Con- Valcsccnt ('enter, 203 NLRB 937 (1974). Accordingly. I recommend reaffirmance of the Board's conclusion that Respondent's failure to bargain as to a de- cision to remove the job classification of fleet account ex- ecutive from the bargaining unit and to remove most fleet account work constituted a violation of Section 8(a)(5) and (I). and ihat its stated remeds from which the appropriate Order was fashioned be fulfilled. 7 In the cecntl no cxephtons to t his Supplemental Decision. filed as pro- ,ildd hb Sec 1(02 40 of the Rule, and Regulations of the National i.abor Relaintis Board. the fIidire,. on.Cluslions. and recommended Order herein sh.ll. a, pioirded mi Sset 102i 48 of he Rules and Regulations. he adopted bh tic Board aind bcnm e Its, findling,. cnicluslon,,. ad Order. ind .il oh lc.tIOn, theleto fhall hc dcccid *, scd for all purpo.es 715