Pentalic Corp.

500 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Triplex Oil Refining Division of Pentalic Corporation and Coal, Gasoline, Fuel Oil, Teamsters, Chauf- feurs, Helpers, Oil Burner Installation, Mainte- nance, Servicemen and Helpers of New York City and Vicinity, Nassau and Suffolk Counties, New York, N.Y., Local Union No. 553, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America. Case 29-CA-2181 the complaint be, and it hereby is, dismissed in its entirety. I As the General Counsel points out in his exceptions, the Trial Examiner's citation of Textile Workers Union of America v Darlington Manufacturing Company, 380 US 263, is inapplicable; and the Trial Examiner's alternative finding that the further processing of the case would not effectuate the policies of the Act is not acceptable as a basis for resolving this case. TRIAL EXAMINER'S DECISION December 10, 1971 DECISION AND ORDER BY CHAIRMAN MILLER AND MEMBERS JENKINS AND KENNEDY On September 3, 1971, Trial Examiner Thomas F. Maher issued the attached Decision in this proceed- ing. Thereafter, the General Counsel filed exceptions and a supporting 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 authority in this proceeding to a three-member panel. The Board has considered the record and the Trial Examiner's Decision in light of the exceptions and brief and has decided to affirm the Trial Examiner's rulings, findings, and conclusions as modified herein and to adopt his recommended Order. The Trial Examiner concluded that Respondent fulfilled its duty to bargain with the Union as to the effects upon the unit employees of its closing of the Triplex plant. We agree with the Trial Examiner's conclusion, but we rely only on his finding that Respondent held a meeting with the Union as to the effects of the plant closing, and thus satisfied its obligation to bargain. As the Trial Examiner found, Krauss, a representative of Respondent, asked an official of the Union to come down to the plant after the closing to make sure the terminated employees were satisfied with the benefits each received under the contract. The union official did so, and thus had an opportunity to seek negotiations on the effects of the closing. As the Respondent fulfilled its bargaining obligation by affording the Union this opportunity, it cannot be faulted for the Union's failure to present any demands. In view of this basis for our conclusion, we deem it unnecessary to consider the Trial Examin- er's alternate theories of the case.' 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 STATEMENT OF THE CASE THOMAS F. MAHER, Trial Examiner: Upon a charge filed on November 9, 1970, by Coal, Gasoline, Fuel Oil, Teamsters, Chauffeurs, Helpers, Oil Burner Installation, Maintenance, Servicemen and Helpers of New York City and Vicinity, Nassau and Suffolk Counties, New York, N.Y., Local Union No. 553, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, herein called the Union, against Triplex Oil Refining Division of Pentalic Corporation, Respondent herein, the Regional Director for Region 29 of the National Labor Relations Board, herein called the Board, issued a complaint on April 21, 1971, on behalf of the General Counsel of the Board alleging violations of Section 8(a)(1) and (5) of the National Labor Relations Act, as amended (29 U.S.C., Sec. 151 et seq.), herein called the Act. In its duly filed answer the Respondent, while admitting certain allegations of the complaint, denied the commission of any unfair labor practice. Pursuant to notice trial was held before me in Brooklyn, New York, where all parties were present, represented, and afforded a full opportunity to be heard,' present oral argument, and filed briefs. Briefs have been filed by General Counsel and Respondent. Upon consideration of the entire record, including the briefs filed with me, and upon my observation of witnesses appearing before me, I make the following: FINDINGS OF FACT AND CONCLUSIONS OF LAW I. THE NATURE OF RESPONDENT'S BUSINESS The stock of Triplex Oil Refining Company Incorporat- ed, a New York corporation, was purchased on January 2, 1970, by Pentalic Corporation, a New York corporation with offices and a place of business at 132 West 22nd Street, New York, where said Pentalic was engaged in the sale and distribution of artists' materials. After January 2, 1970, Triplex, its independent corporate entity dissolved by the total sale of its stock, continued the operation of its business as a division of Pentalic Corporation at its plant located at 37-80 Review Avenue, Long Island City, Queens, New York, where it was engaged in the rerefining of waste oil for its subsequent sale and distribution as lubricating oil. During the year ending October 30, 1970, Triplex, in the course and conduct of its business, purchased and caused 1 Counsel for the General Counsel has moved the correction of the transcript of the hearing in certain minor respects. Having noted the errors and in the absence of the objection to the motion it is granted and the transcript is corrected accordingly. 194 NLRB No. 86 TRIPLEX OIL REFINING DIVISION 501 to be transported and delivered to its plant, waste oil and other goods and materials valued in excess of $50,000, of which goods and materials valued in excess of $50,000 were purchased from firms inside the State of New York which originated outside the State of New York. During the same period Triplex sold and distributed from its plant products valued in excess of $50,000, of which products valued in excess of $50,000 were shipped in interstate commerce to States of the United States other than the State of New York. It appears from documents introduced into the record and deemed to be credible that on September 30, 1970, all of the property, real and personal, of Triplex Division was conveyed to the parent corporation and that on or about October 30, 1970, the aforesaid property, being the plant, its equipment, fixtures, machinery, and vehicles, was leased by Pentalic to Newtown Refining Corporation, not a party to these proceedings, and on that same date Triplex Division discontinued all production, terminated all of its employ- ees, and ceased to exist as a division of Pentalic Corporation. Upon the foregoing it cannot be established for lack of probative evidence that Pentahc Corporation is or ever has been an employer. I do conclude and find, however, that Triplex Oil Refining Company, Inc., being otherwise identified in the pleadings and herein as Triplex Oil Refining Division of Pentalic Corporation, at least until its dissolution on October 30, 1970, as described above and in further detail herein, was an employer engaged in commerce within the meaning of the Act and over which the Board would assert its jurisdiction. II. THE LABOR ORGANIZATION INVOLVED It is admitted and I accordingly conclude and find that Coal, Gasoline, Fuel Oil, Teamsters, Chauffeurs, Helpers, Oil Burner Installation, Maintenance, Servicemen and Helpers of New York City and vicinity, Nassau and Suffolk Counties, New York, N.Y., Local Union No. 553, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, is a labor organization within the meaning of the Act. III. THE UNFAIR LABOR PRACTICES ALLEGED A. Sequence of Events When Pentalic purchased the stock of Triplex Refining on January 2, 1970, from William Krauss, Thomas Masterson, George Blake, and Arthur Winn, it retained these individuals in the management of the operation, Krauss continuing as president. On the same date Pentalic also purchased the stock of City Oil Service Corporation from the same four stockholders. City Oil was a trucking establishment engaged in the collecting of waste oil from local service stations and delivering it to the Triplex plant for processing. Triplex, as previously noted, was engaged in the processing of waste oil delivered to it by City Oil and by independent suppliers to produce a low grade lubricating oil which it sold in bulk. This process involved a distillation of the waste oil utilizing four stills and employing approximately 26 employees plus supervision. When Pentalic acquired the stock of City Oil and Triplex each organization had contractual relations of longstanding with the Union, the current contract being scheduled to expire on or about April30, 1970. Prior to the expiration of City Oil's contract Pentalic sold its trucks to the drivers over the Union's objection, and the drivers were treated thereafter as independent contractors by all parties.2 Henceforth the drivers continued to operate their trucks, collecting waste oil which they sold to Triplex. This sale, according to the credible testimony of Pentalic's president, Louis Strick, resulted from a determination that the oil needed for the refining operation could more economically be collected through drivers working as independent contractors rather than as City Oil employees. Upon the dissolution of City Oil and the expiration of its contract with the Union it ceased to be a factor in Pentalic's oil refining operations. These were thereafter confined to Triplex, and nothing further transpired between the Union and either City Oil or Pentalic with respect to these former employees. No representations have been made in the instant proceeding that any phase of this transaction is in violation of the Act. By the time the Union's Triplex contract had expired negotiations for a new one had already begun. From the outset the Company, represented by William Krauss, resisted the Union's demand for substantial wage increases, seeking instead a 1-year extension of the existing contract based on a claim of continuing poor financial condition. Following the entry of a Federal mediator into the negotiations and a week long strike by the employees a new 3-year contract containing terms satisfactory to the Union was executed and made retroactively effective to May 1, 1970. By the terms of this agreement the employees were given an immediate 11-percent increase, with 7-percent increases on each of the two subsequent contract anniver- saries. A series of circumstances thereafter conspired to cause serious losses to Triplex in the period following the execution of the new contract. As a consequence of the strike during the May negotiations the Company, already in shaky financial condition, lost two of its largest customers; and a month thereafter Penn Central Company, one of its most important customers, went into bankruptcy owing Triplex $18,000, canceling further orders .3 In July 1970 one of the four stills used for the production of lubricating oil broke down, causing a curtailment of production. In August 1970 the plant closed down for a week because a shortage of operating capital made it temporarily impossi- ble for Triplex to meet its payroll. A week's production was thereby loss. Finally, in September a second still broke down. 2 Bernard Pellegrino, the Union's business agent, testified that no unfair labor practice charges were ever contemplated with respect to this transaction 3 The findings herein are based, unless otherwise noted, on the testimony of employee Joseph Stricko, the union steward at the plant, called as a witness by General Counsel I find that in substantial measure he is corroborated by Louis Stuck, the president of Pentalic. 502 DECISIONS OF NATIONAL LABOR RELATIONS BOARD When it was learned that it would cost $40,000 to repair or replace two damaged stills4 an assessment of Triplex's facilities was made and it was determined that because the Company could not afford to repair or replace the stills it could not continue the rerefining of waste oil into lubricating oil. Accordingly, in late September it was decided to abandon the rerefining process. Instead, it was decided to produce fuel oil from the waste oil it received. This did not require the use of the stills, as did the rerefining process for lubricating oil. All that was required were boilers wherein a dehydration process was carried out to provide a low grade fuel oil for industrial use. In consequence of the change of product and the substitution of the dehydration process for the more complicated distillation process considerably fewer em- ployees were required. This, indeed, was assigned as one of the economic reasons for abandoning the initial product. Accordingly, in September when the processing changes were accomplished Triplex laid off approximately 22 of its 28 employees in the bargaining unit represented by the Union. It posted signs at the plant stating that this layoff was temporary. When the decision to effect the layoff was made Krauss notified Union Steward Stricko, who in turn notified the Union's business agent, Pellegrino. The Union did not protest this layoff, according to Business Agent Pellegrino, because it understood it to be a temporary one which, if past practice were followed, would result in a recall within a short time. When the recall did not recur Steward Stricko, one of the employees not laid off, began to press Krauss on the matter. Krauss' repeated reply was that he did not know what would be happening. Meanwhile, during the pendency of what was still believed to be a temporary layoff, Triplex Oil Refining Company, Inc., by indenture dated September 30, 1970, conveyed to its parent corporation and its sole stockholder, Pentalic, all its real and personal property, including machinery, equipment, and buildings. At this time, it is stipulated, Triplex Oil Refining Company, Inc., was dissolved into its parent, Pentalic Corporation as a Division of Pentalic Corporation. It is to be noted that on this date and for a period of time thereafter this division continued as an operating entity producing fuel oil with its own employees. On October 13, 1970, Triplex Division announced its intention to make permanent the layoff of the 22 employees in the following letter: After giving the matter serious consideration, we have decided to discontinue making lubricating oil. We have reached this decision because of the prohibitive cost necessary to repair our equipment. We are considering processing our oil on a simplified basis which would require fewer employees. Because of this change we regretfully informed our employees who were layed [sic] off that we would be unable to keep them on our payroll so that they may be in a position to seek employment elsewhere. This letter followed a conversation between Steward Stricko and Pentalic's Stnck in which Stricko, at Krauss' suggestion, sought information in behalf of the Union as to 4 The testimony of President Louis Stnck 5 It is to be noted that this phase of the overall transactions, including the termination of employees, has not been made the subject of the instant what disposition would be made of the laid-off employees. Strick, according to Stricko, said that "he was only there a short time, that as far as he was concerned, they could go get another job." When Stricko suggested that President Strick hold a meeting with the men the latter refused and that ended the subject. The October 13 letter then followed .5 At this time the plant was producing fuel oil with the six remaining employees, plus supervisors. The Union, having learned of the final fate of the laid-off employees, took no further action in their behalf. Shortly after Stricko had spoken to Strick in behalf of the laid-off men Strick called Steward Stricko and suggested that he get the employees together, referring to those six still employed, to discuss the problems created by the May strike and the high cost of the contract with a view to rolling back wages. Stricko, after considering the offer, told Stricko later in the day if he wanted to call the six together he should do it himself. Strick's answer was "It's of no importance now, forget about it." On Friday morning, October 30, the employees noted strangers dressed in street clothing walking about the plant and premises. Shortly thereafter and still before noon Krauss called the union steward, Stricko, into his office and in the presence of Supervisors Bohen and Blake told him that as of midnight of that date there would no longer be a Triplex Oil Refining and that they all were to go out and look for other jobs. Stricko testified that he learned later in the day that Krauss had suggested to the two supervisors, that they return later in the day to meet with the people who had leased the plant and discuss employment possibilities with them. All this was reported to Union Business Agent Pellegrino who then telephoned President Strick. Pellegrino protested the closing down of the plant and the plan, as he understood it, to have the new leasee keep the two supervisors. Strick replied that Triplex was dissolved, saying "there is nothing to discuss. There is no more Triplex." After thus fruitlessly urging a discussion Pellegri- no then prepared and sent to Triplex a telegram dated October 30, 1970, reading as follows: WE HAVE BEEN ADVISED THAT YOU INTEND TO LEASE YOUR PLANT AND EQUIPMENT AND LAY OFF ALL EMPLOYEES. SUCH ACTION IS IN VIOLATION OF OUR CONTRACT AND WE WILL TAKE ALL LAWFUL ACTION TO PREVENT YOUR AVOIDENCE OF YOUR OBLIGATIONS TO THE EMPLOYEES AND THIS UNION. WE DEMAND IMMEDIATE MEETING TO DISCUSS ALL ASPECT OF YOUR ACTIONS. CONTACT UNDERSIGNED IMMEDIATELY. COPIES OF THIS TELEGRAM SENT TO LOU STRICK, WILL KRAUSS AND TOM MASTERSON. On the same date Triplex, over Krauss' signature, sent the following letter to the Union: Effective today October 30th, 1970 Triplex Oil Refining Co. Inc. is no longer in business. We are paying all vacations and, sick pay due our employees under the terms of the Union Contract. case. I am not advised of any other outstanding unfair labor practice charges TRIPLEX OIL REFINING DIVISION 503 B. The Disposal of the Plant In October 1970, as Triplex's production problems were mounting, discussions began between Pentalic's Strick and Mr. Russ Mahler of Northeast Oil Co. As a result of these discussions Pentalic agreed to lease the premises, plant, and trucks of Triplex to a new corporation to be set up by Mahler-Newton Refining Corporation. This lease was executed on November 2, 1970, to become effective immediately. From that date Newtown engaged in the production of fuel oil, as had Triplex. It appears from a description of the Newtown operation by Business Agent Bernard Pellegrino that it hired the two supervisors previously employed by Triplex and two of the six Triplex employees. These two constitute the total bargaining unit at Newtown. They are, as they were at Triplex, represented by the Union. On November 30, 1970, Business Agent Pellegrino in behalf of these employees, executed a collective agreement with Newtown and that agreement is presently in force. C. Conclusions This case presents two basic issues which, when stated, could well suggest their own solutions without further discussion. First it is questionable in the present state of the law whether an employer may not completely go out of business, and at that point be relieved of further bargaining with respect to the effect of such a closing upon the unit employees. Second, assuming an employer must bargain with the representative of its employees relative to the effects of its going out of business, it is questionable whether the purposes of the Act would be properly served by processing a complaint which alleges a violation of Section 8(a)(5) under the foregoing circumstances when the Union presently represents and enjoys contractual relations with the employer who has leased the plant and property of its defunct predecessor, and where the represented bargaining unit consists of two of the six employees of the defunct employer, and no others. _ 1. The obligation to bargain Here we are presented with the question of the Respondent's obligation to bargain with the Union concerning the unilateral closing of the plant, the resulting termination of employees, and the leasing of the premises to a new employer who is not claimed to be a successor. While the Supreme Court's decision in Textile Workers Union' of America v. Darlington Manufacturing Co., 380 U.S. 263, does not treat of a refusal to bargain concerning the closing of a plant or a portion of it as a violation of Section 8(a)(5), but rather of discriminatory nature of terminations which result from such a closure, as violations of Section 8(a)(3), there is, nevertheless, an implicit principle to be drawn from that case which has application to all plant closures. It is this: "When an employer closes his entire business, even if the liquidation is motivated by vindictive- ness towards the union, such action is not an unfair labor practice." 6 I am aware, of course, that in the assessment of violations of Section 8(a)(3) distinction is made between partial closing and a complete closing, as in the instant case. And it would appear to be settled law that to close part of a plant or a department or branch does not partake of the immunity provided by Darlington. Turning now to violations of Section 8(a)(5) wherein an employer has failed or refused to bargain concerning the closing of a plant or a part of it, parallels to the cases dealing with the discriminatory aspects are not as evident as might seem logical. Fibreboard Paper Products v. N.L.R.B., 379 U.S. 203, describes the scope of mandatory collective bargaining as including "contracting out" work which results in the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment. But the court's decision "need not and does not encompass other forms of `contracting out' or `subcontracting' which arise daily in our complex economy." 7 The instant circumstances do not comport with those in Fibreboard There has been no subcontracting whatever, but as in the terminology of the Supreme Court in Darlington, this is a situation where "an employer closes his entire business"-a "liquidation." Nor is it significant that Newtown Refining, the third party, has leased rather than has purchased the premises, plant, and machinery. The fact is that it has leased from Pentalic, the parent of Triplex, which had already purchased the premises, plant, and machinery from Triplex, as part of the latter's liquidation. Thus it cannot be said, as was claimed without avail in General Motors Corporation, G.M.C. Truck & Coach Division, 191 NLRB No. 149, that this was something less than a sale. Whatever legalistic form the transaction has taken it is clear from the facts herein that, as in General Motors, there has been a significant withdrawal of capital which "lies at the very core of entrepreneurial control." We must ultimately take one of two views of the management decision here which produced the issue of Triplex's moribundity on October 30. It is either a closing down of an entire company (Darlington) or a closing down of a facility (General Motors) Under Darlington, as previously quoted, there is no unfair labor practice. And under the Board's decision in General Motors, there is no obligation to bargain with respect to the decision to close even when less than the entire closing is involved. Thus by either view Respondent's decision herein to close its plant is proper and lawful. There still remains for consideration the issue of obligation to bargain as to the effects of the decision to close upon the unit employees-the six individuals terminated on October 30. The Board, in General Motors, restates the proposition that such bargaining is obligatory and cites specific authority for its holding. Because the nature of the closing here differs from that in General Motors in that this was a total closing and the closing in that case was that of a facility, and because two of the three cases relied on by the Board do not relate to a total closing I am inclined to the 6 380 U.S. at 273. 7 379 U.S at215. 504 DECISIONS OF NATIONAL LABOR RELATIONS BOARD belief that the "complete going out of business" here brings into focus the basic nature of the problem. Although General Motors, in contrast to Darlington's complete close, presents what amounts to a partial closing, as do two of the cases relied on,8 the Board has nevertheless not limited the bargaining obligations to complete plant closure. Thus in Interstate Tool Co. Inc., 177 NLRB No. 107, failure to bargain about the effect of a plant closure on unit employees was found to be unlawful where total closing had occurred, unlike the other cases considered in General Motors. Relying on Transmarine Navigation Corporation, 170 NLRB 389, and New York Mirror, Division of Hearst Corporation, 151 NLRB 834, the Board held that such an employer "was under a continuing duty to bargain about the effects of its decision to close and that it violated Section 8(a)(5) of the Act by refusing to do so, upon the Union's request." Implicit in this conclusion, I presume, is the Board's determination that the exclusionary language of Darlington, as quoted above,9 does not apply. I have no alternative but to conclude, therefore, that in a complete closing, just as in the partial closing considered in General Motors, an employer is obligated to bargain with respect to the effect of the complete closing upon the unit employees. Such bargaining subject matter it is pointed out, consists of "severance pay, vacation pay, seniority and pensions, among others, which are necessarily of importance and relevance to the employees." This criteria is quoted from the Board's decision in Interstate Tool Co. Inc., supra, where, as here, the entire operation was closed, all unit jobs abolished, and assets sold.10 Under the same circumstances present here, based on this specific holding of the Board, I am constrained to find that Triplex was required to bargain with the Union as to the effects of the total plant closing. There is evidence, however, that something akin to bargaining of this sort actually occurred. Granted, as the cases generally concede,"' there is little of substance to discuss at such a late date and in such an atmosphere of finality. Here Union Steward Stricko testified that Krauss, the former president of Triplex, asked him to come down to the plant after the closing "to make sure that everything was straightened out. [He ] wanted to make sure all of the people were taken care of that worked there." And when asked to explain what he meant by "taken care of," Stricko explained, "everybody satisfied with the pay according to contract etc., etc. with vacation pay, sick days that had to be paid off and stuff like that." If, as I view the Board's requirement, there still must be bargaining as to the effect of that closing upon the employees in the unit even upon a complete closing, then I 8 Thompson Transport Co. Inc., 184 NLRB No. 5 (one terminal); Drapery Manufacturing Co, 170 NLRB 1706 (one of two integrated enterprises found to constitute both a single employer). 9 "When an employer closes his entire business ... such action is not an unfair labor practice," supra fn. 6. 10 In the Interstate case the Board relied on an earlier decision in Transmanne Navigation Corporation, 170 NLRB 389, as authority for the am satisfied that the meetings between Triplex's Krauss and the Union's steward, Stricko, satisfied this requirement. I would accordingly conclude and find that there was in fact bargaining as to the effects of the closing upon the six unit employees. I would therefore recommend that so much of the complaint as alleges a violation of Section 8(a)(5) be dismissed in this respect. 2. Alternative conclusion relating to the effectuation of the policies of the Act by further processing of the complaint In the course of his testimony as a witness for the General Counsel Union Business Agent Pellegrino testified that the Union had negotiated a contract with Newtown Refining which became effective as soon as it began operation at the leased Triplex site. He also testified that the bargaining unit represented by the unit was identical to the previous one at Triplex, but that it consisted of but two employees, both of whom were among the six displaced by the Triplex closing. Essentially, therefore, this case devolves about the four Triplex employees who did not obtain employment with the new company because of its reduced employment opportu- nities. While I am fully aware that this outcome of the closing of the Triplex plant and the continued recognition of the Union by the new employer has no legal effect on Triplex's obligations, we cannot avoid the fact that bargaining has resumed on the same premises, for the same type of work, in behalf of the same employees performing the same duties, albeit these employees are fewer in number. Clearly under Darlington the four displaced employees would have no recourse, even had the closing, contrary to the fact, been discriminatory. Furthermore, it is doubtful that bargaining in their behalf on some more formal basis than Stricko's meetings with Krauss (supra), would have been more fruitful. It is respectfully suggested, therefore, that the further processing of this matter would not effectuate the policies of the Act, and for this further alternative reason it is recommended that the complaint be dismissed. Upon the basis of the foregoing findings of fact, conclusion of law, and .the entire record, I hereby issue the following: RECOMMENDATION It is recommended that the complaint in this matter be dismissed in its entirety. proposition that such bargaining was required-"where an employer sold its entire business " With all due deference for the Board's reliance on this particular case it is respectfully noted that in the Transmanne Navigation case only the Los Angeles terminal of the employer was closed down. 11 Cf. Thompson Transport Company, Inc., 184 NLRB No. 5; Royal Plating and Polishing Co., 160 NLRB 990; Transmarine Navigation Corp., 170 NLRB 389.