Walter Pape, Inc.

WALTER PAPE Walter Pape, Inc. and Local 338, International Broth- erhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Case 29-CA-2705 August 27, 1973 DECISION AND ORDER By MEMBERS JENKINS, KENNEDY, AND PENELLO On January 2, 1972, Administrative Law Judge Al- vin Lieberman issued the attached Decision in this proceeding. Thereafter, the Respondent filed excep- tions and a supporting brief, the General Counsel filed a brief supporting the Decision, and the Charg- ing Party joined the position taken by the General Counsel. 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 Decision in light of the exceptions and briefs and has decided to affirm the rulings , findings, and conclusions of the Administrative Law Judge as mod- ified herein. The Administrative Law Judge found, and we agree, that Respondent violated Section 8(a)(5) and (1) of the National Labor Relations Act, as amended, by engaging in bad-faith bargaining with the Union, and by refusing to bargain with the Union concerning the effects of unit employees of its unilateral decision to dispose of its sales distribution routes.' As more fully set forth by the Administrative Law Judge, Walter Pape, Inc., in or about June 1960, be- gan the exclusive distribution of Crowley dairy prod- ucts in the New York City area. To do so, it leased a warehouse, hired employees , and acquired trucks which were driven by its employees over routes which were determined by Respondent. Sometime early in 1971, Respondent began to look for someone to take over its distribution routes. After unsuccessful negoti- ations with other companies toward this end, Respon- dent began negotiations with Metco Dairy Distributors , Inc., which was also engaged in the dis- tribution of dairy and other food products in the same geographic area. The Union was certified on November 2, 1971, as exclusive bargaining agent for Respondent's drivers ' In view of the finding of 8(a)(5) violations which we are adopting and the remedy we are utilizing, we do not adopt and need not pass on the Adminis- trative Law Judge's further finding that the transaction resulting in Respondent's disposal of its routes was a subcontract rather than a sale, and that Respondent violated Sec 8(a)(5) by not bargaining over the decision to nd itself of the routes 719 (route salesmen), warehousemen, and shipping, re- ceiving, and maintenance employees. Following the certification, and while Respondent was engaged in the aforementioned negotiations with Metco, Re- spondent agreed to meet with the Union on Novem- ber 30, 1971, for the purpose of negotiating a collective-bargaining agreement. Respondent did not, however, inform the Union of its decision to termi- nate its routes or of its negotiations with Metco for that purpose. Respondent and the Union met on November 30, 1971, and January 6, 1972, and discussed certain terms and conditions contained in the Union's pro- posal. Agreement was reached on a substantial num- ber of items, and others were left open. In some instances, Respondent made counterproposals. A third meeting was scheduled for January 19, 1972. On January 12, 1972, Respondent first informed the Union of its negotiations with Metco, when it presented to the Union a fait accompli. At this time Respondent notified the Union that it had reached an agreement with Metco by which Metco would take over Respondent's distribution routes on January 17 for a 5-year period and that all unit employees would be laid off. On the following day, when union repre- sentatives met with Respondent, Respondent gave them some details of the agreement. When asked by Union President Hart why the Union had not been informed of the decision, Respondent replied, in ef- fect, that there was nothing the Union could do. Re- spondent then stated that all employees would be laid off on January 14 but could apply to Metco for jobs, and that Metco had agreed to offer jobs to some of them. Respondent, however, has retained its corporate existence. As its exclusive distributorship agreement with Crowley is neither salable nor transferable, Re- spondent continued in its contractual relationship with Crowley and it orders and purchases goods di- rectly from Crowley. As it did previously, Respondent picks up the goods in trucks owned by Glendora Products (a trucking company owned by Respondent's president), but it now delivers them to Metco, billing Metco for the goods delivered, and adding thereto trucking costs and a 5-percent "bro- kerage" fee. Metco then distributes the goods in the area covered by Respondent's exclusive distributor- ship agreement. While it is not absolutely clear as to exactly what happened to all of Respondent's equip- ment after the transaction with Metco, the record shows that, when Respondent terminated its opera- tions, it leased its operable trucks, about seven, to Mendon Leasing Company on a weekly basis. Men- don in turn leased them to Metco. Although Mendon has returned the chassis of three of these trucks, it has 205 NLRB No. 84 720 DECISIONS OF NATIONAL LABOR RELATIONS BOARD continued to pay rent to Respondent for their bodies which have been put on new chassis by Mendon. At the time of the hearing two of the discarded chassis were stored on the premises of Glendora. The other was stored in Mendon's warehouse. The Administrative Law Judge found that by with- holding information from the Union during negotia- tions regarding its earlier formulated decision to transfer its routes or of its simultaneous negotiations to that end with Metco, which on January 6, 1972, were nearing fruition, Respondent bargained in bad faith. We agree. At the very least, Respondent should have advised the Union that the termination of the routes was under active consideration and was immi- nent.2 Respondent's failure to do so demonstrates that Respondent engaged in surface bargaining with an intention of keeping the Union "on a string" until its deal with Metco was consummated. Accordingly, we agree with the Administrative Law Judge that this constituted bad-faith bargaining.' It is also patent from the facts and we likewise agree with the Admin- istrative Law Judge's findings that Respondent failed to bargain with the Union over the effects of the trans- fer. THE REMEDY In his Decision, the Administrative Law Judge, in addition to finding 8(a)(5) and (1) violations predicat- ed upon Respondent's bad-faith bargaining and re- fusal to bargain over the effects of the plant closure, found a violation based on Respondent's refusal to bargain with the Union over the decision itself. To remedy those violations he recommended, inter aha, that Respondent be ordered to reinstate its distribu- tion routes. Inasmuch as the record evidence does not clearly show whether the transaction was a sale or a subcontract of the distribution routes, and inasmuch as resolution of this question would not, in any event, affect the remedy we deem appropriate here, we do not find it necessary to consider or adopt the Admin- istrative Law Judge's conclusions concerning the na- ture of the transaction itself. The record indicates that the Respondent's change 2 Our dissen ting colleague misinterprets our decision as holding inconsis- tently that Respondent was not obligated to bargain about the decision to nd itself of its sales routes, but was obligated to inform the Union of the status of its negotiations to "sell " Although an employer need not negotiate with a union over whether or not to sell its business, it must apprise the union of the fact that a decision to sell has been reached and that the employees' terms and conditions of employment are about to be changed , in order that the union may be able to bargain, if it wishes, over the effects of the trans- action on the employees ' fob The record in this case clearly shows that the Respondent went through the motions of negotiating a contract with the Union covering the terms and conditions of employment of the employees while it well knew that very shortly thejobs of these employees would in fact no longer exist 3 See, e g , Standard Handkerchief Co, Inc, 151 NLRB 15, 18 of operation was economically motivated and had long been anticipated. All or most of the employees went to work for Metco and are currently represented by a sister local of the Charging Party. Additionally, there is some evidence that those presently employed by Metco are paid higher wages than those they drew from Respondent. In view of all the circumstances, we shall not order the Respondent to reestablish its deliv- ery and sales routes, and we do not adopt the reestab- lishment portion of the Administrative Law Judge's remedy.4 We have, however, found that Respondent's con- cealment of its pending transaction with Metco dur- ing negotiations with the Union constituted bad-faith bargaining which prevented the Union from bargain- ing over the effects of the termination of the distribu- tion routes. Accordingly, we shall order that Respondent cease and desist therefrom and take cer- tain affirmative action designed to effectuate the poli- cies of the Act. The situation here is analogous to the facts in Inter- state Tool Co., Inc.,I and Transmarine Navigation Cor- poration 6 and the rationale of those cases is applicable in the instant case. As a result of Respondent's con- cealment of its intention to eliminate its distribution routes, the affected employees have been denied an opportunity to bargain about the effects of the route termination through their collective-bargaining repre- sentative at a time when Respondent was still in need of their services and a measure of balanced bargain- ing power existed. Although Respondent at a later date expressed a willingness to bargain over the ef- fects, this was after the collective strength of the em- ployees' bargaining unit had been dissipated, and any bargaining which would have ensued could not have been meaningful in a situation where any action taken by the Union would have been devoid of any econom- ic impact. Meaningful bargaining can be assured only if some economic strength is restored to the Union. A bargaining order alone, therefore, cannot serve as an adequate remedy for the unfair labor practices Re- spondent has committed. Therefore, we deem it necessary, in order to effectu- ate the purposes of the Act, to require that the Re- spondent bargain with the Union concerning the effects of the shutdown on its employees, and shall accompany our Order with a limited backpay order designed both to make whole the employees for losses suffered as a result of the violation and to recreate in some practicable manner a situation in which the par- ties' bargaining position is not entirely devoid of eco- nomic consequences for the Respondent. We shall do 4Cf Florida-Texas Freight, Inc, 203 NLRB No 74 5 177 NLRB 686 6 170 NLRB 389 WALTER PAPE so in this case by requiring the Respondent to pay backpay to its employees in a manner analogous to that required in Transmarine Navigation Corporation and Interstate Tool Company. Thus, the Respondent shall pay employees backpay, at the rate of their nor- mal wages when last in Respondent's employ, from January 14, 1972, the date of the employees' termina- tion by Respondent,' until the occurrence of the earli- est of the following conditions: (1) the date the Respondent bargains to agreement with the Union on those subjects pertaining to the effects of the plant shutdown on its employees; (2) a bona fide impasse in bargaining; (3) the failure of the Union to request bargaining within 5 days of this Decision, or to com- mence negotiations within 5 days of the Respondent's notice of its desire to bargain with the Union; or (4) the subsequent failure of the Union to bargain in good faith; but in no event shall the sum paid to any of these employees exceed the amount he would have earned as wages from the date on which the Respon- dent terminated its operations to the time he secured equivalent employment elsewhere, or the date on which the Respondent shall have offered to bargain, whichever occurs sooner; provided, however, that in no event shall this sum be less than these employees would have earned for a 2-week period at the rate of their normal wages when last in the Respondent's employ. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Rela- tions Board hereby orders that the Respondent, Wal- ter Pape, Inc., Corona, New York, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Failing or refusing to bargain with Local 338, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, or any other labor organization representing its employees in an appropriate unit, respecting the effects of any decision to transfer sales distribution routes to any other com- pany on employees in the following appropriate unit: All truckdrivers, warehousemen, shipping and receiving employees, and maintenance employ- ees, exclusive of office clerical employees, guards, watchmen, professional employees, and all supervisors, as defined in the National Labor Relations Act, as amended. 7 Cf. A P W Products Co, Inc, 137 NLRB 25 721 (b) Failing or refusing, upon request, to bargain in good faith with any labor organization representing its employees in an appropriate unit, respecting rates of pay, wages, hours, or other terms or conditions of employment. (c) In any like or related manner interfering with, restraining, or coercing employees in the exercise of their right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, or to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection as guar- anteed in Section 7 of the National Labor Relations Act, as amended, or to refrain from any or all such activities. 2. Take the following affirmative action which, it is found, will effectuate the policies of the National La- bor Relations Act, as amended: (a) Make the employees whose employment was terminated as a result of the transfer of its sales distri- bution routes to Metco Dairy Distributors, Inc., whole in the manner set forth in the section of this Decision entitled "The Remedy" for any loss of earn- ings they may have suffered by reason of the termina- tion of their employment. (b) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order. (c) Bargain in good faith with Local 338, Interna- tional Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America, or any other labor organization representing the employees in the afore- said appropriate unit, respecting the effects on the employees in the aforesaid appropriate unit of any decision to transfer sales distribution routes. (d) Mail to all employees who worked for it on January 14, 1972, copies of the attached notice marked "Appendix." 8 Copies of said notice, on forms provided by the Regional Director for Region 29, after being duly signed by its authorized representa- tive, shall be mailed immediately upon receipt thereof to such employees at their last known addresses. (e) Deliver to the Regional Director for Region 29 signed copies of said notice in sufficient number for posting by Local 338, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, it being willing, at all locations where notices to its members are customarily posted. 8 In the event that this 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 read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " 722 DECISIONS OF NATIONAL LABOR RELATIONS BOARD (f) Notify the Regional Director for Region 29, in writing, within 20 days from the date of this Order, what steps the Respondent has taken to comply here- with. MEMBER KENNEDY, dissenting: Respondent has an agreement with Crowley's Milk Company, Inc., giving it the exclusive right to distrib- ute Crowley products in a certain geographical area in and about New York City for a term of years to expire on June 15, 1978. Respondent employed route salesmen to distribute its products to grocery outlets in specific territories. It leased an office and ware- house in Queens and owned trucks used by the route- men in distributing the Crowley products. Early in 1971, for economic reasons, Respondent began to look for someone to take over its distribution routes. On January 14, 1972, it entered into a written agreement with Metco Dairy Distributors, Inc., like Respondent engaged in the business of distributing dairy and food products to grocers for the sale of its distribution routes to Metco. "Said sale to consist of every right, title and interest that the Seller may have thereto, for a period of five (5) years." In consider- ation of the sale, Metco agreed to purchase from Re- spondent all Crowley products needed to service the routes and to pay Respondent a brokerage fee of 5 percent. Although not provided for in the sales agree- ment, Metco also made a $15,000 interest free cash loan to Respondent. At the time of the hearing, held 6 months after the agreement of sale, Respondent had not repaid the loan and there was no written under- standing as to how, when, or if this $15,000 was to be repaid. After entering into the "sales" agreement, Respon- dent discontinued the operation of its sales routes, and terminated all its employees except an automo- bile mechanic who was kept on temporarily to put its trucks in shape for resale and a driver to service a Long Island route which Metco refused to accept. Respondent also negotiated a termination of its ware- house lease, vacated its warehouse and office, and disposed of its trucks by sale, lease, or scrapping. Respondent now operates its brokerage out of a resi- dence in upstate New York. On taking over the Respondent's routes Metco inte- grated Respondent's former operations with its own existing routes so that at the present time Metco's route salesmen sell Crowley products in addition to the products they previously sold. Metco has com- plete control of its operations, and sets its own price, sales, and industrial relations policies. Respondent purchases dairy products from Crow- ley and ships them to Metco at its own expense. It then bills Metco for the cost, plus trucking charges and the 5 percent brokerage fee. There is no contention that Metco was not a bona fide purchaser of Respondent's routes or that Respon- dent was motivated by antiunion reasons in disposing of those routes to Metco. The Administrative Law Judge determined that the transaction between Respondent and Metco was not a "sale" and therefore Respondent was required un- der the Supreme Court's Fibreboard decision 9 to bar- gain with the Union, the representative of Respondent's employees, concerning the creation of the new arrangement as well as the effects of such arrangement upon the bargaining unit employees. I disagree with the Administrative Law Judge's charac- terization of the Respondent-Metco transaction as not being a "sale." But more importantly, even if the transaction is not technically a "sale" I do not think that Fibreboard requires a finding that the decision to dispose of the routes therefore required bargaining with the Union.1° Although the agreement between Respondent and Metco is denominated a sales agreement and the "seller" conveyed all the right, title, and interest in the sales routes to the "buyer" for the remaining period of Respondent's exclusive sales agreement with Crow- ley, the Administrative Law Judge found that the "sales agreement" was not a sale because Metco "nei- ther paid, nor promised to pay, money" for the distri- bution routes. Apparently if Metco had promised to pay a flat sum of money, amount unstated, for the routes, the transaction would be a "sale" and Respon- dent would not be obligated to bargain about the decision to convey the routes to Metco, but because the compensation for the sale was to be in the form of commissions on future business, the transaction is not a "sale" and Respondent is guilty of violating e Fibreboard Paper Products Corp v N L R B, 379 U S 203 (1964) 10 The majority decision finds it unnecessary to consider whether , as found by the Administrative Law Judge, the transaction between Respondent and Metco was a subcontract rather than a sale, and therefore whether Respondent's failure to bargain over the decision to dispose of the routes violated Sec 8(a)(5) However , it then proceeds to find that, by withholding information from the Union during negotiations about its "formulated deci- sion" to transfer the routes to Metco , Respondent bargained in bad faith This is a nonsequitur If Respondent was not obligated to bargain about the decision itself, it can hardly be required to furnish the Union information about the progress of its negotiations to implement that decision The Board held as much in the General Motors case , infra The Board explained Such managerial decisions [to sell a business ] oft times require secrecy as well as the freedom to act quickly and decisively They also involve subject areas as to which the determinative financial and operational considerations are likely to be unfamiliar to the employees and their representatives Accordingly, in my opinion, if Respondent was not required to bargain about the decision to sell its routes to Metco, it cannot be found to have bargained in bad faith with the Union by not revealing to the Union the status of its sale negotiations with Metco There is no other basis for a bad-faith bargain- ing finding in this case WALTER PAPE Section 8(a)(5) in conducting its negotiations with Metco without first notifying and bargaining with the Union. I can see no reason why the method of pay- ment should dictate different results under Section 8(a)(5). There are few words of art in law. A word may have a narrow meaning when dealing with a question of property law, but have a broader meaning in other contexts. It is the context and purpose which gives meaning and determines legal consequences of words used to express legal relationships. Here, the instru- ment by which Respondent conveyed its interest in the distribution system is drawn in the form of a sales agreement, Respondent is the "seller" and Metco is the "buyer." The "seller" conveyed its entire interest in the distribution of Crowley products to the "buyer" for valuable consideration without recourse and with- out any right to interfere in the "buyer's" operation. Respondent completely withdrew from this part of its former business. If this transaction is not a "sale," then I do not know how to describe it. It appears to me to be every bit as much a "sale" as the transaction in the General Motors case 11 by which General Mo- tors conveyed a dealership to a franchisee for a 5-year period. In that case, the Board majority held that where there was an "arm's-length withdrawal of capi- tal" by the seller and a "corresponding investment" by the buyer, the transaction was a sale. This is the situation here. But there is a more fundamental error in the Ad- ministrative Law Judge's reasoning. Whether the transaction between Respondent and Metco is called a sale or something else, it involves the kind of mana- gerial decision which is not encompassed in the bar- gaining obligation envisaged by Fibreboard. He has given the kind of expansive reading to the Supreme Court's Fibreboard decision which has been uniformly rejected by the courts of appeals, most recently in the General Motors case.12 In Fibreboard the Supreme Court held that the "contracting out of plant mainte- nance work previously performed by employees in the bargaining unit, which the employees were capable of continuing to perform" was covered by the phrase "terms and conditions of employment" and was therefore a mandatory subject of bargaining. The Su- preme Court emphasized, however, that the decision was limited "to the facts of this case." These facts were that "the maintenance work did not alter the Company's basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely 11 General Motors Corporation, 191 NLRB 951 (Members Fanning and Brown dissenting), enfd sub nom Intl Union, United Automobile Workers, Loc 864 v N L R B, 470 F 2d 422 (C A D C, 1972) " Z Intl Union 's UAW v NLRB, 470 F 2d 422 (C A D C.) 723 replaced existing employees with those of an indepen- dent contractor to do the same work under similar conditions of employment. Therefore, to require the employer to bargain about the matter would not sig- nificantly abridge his freedom to manage the busi- ness." The majority opinion further emphasized that the decision was not intended to cover other forms of "contracting out" or "subcontracting." The concur- ring opinion stressed the narrowness of the Court's holding. All that was involved in Fibreboard, accord- ing to concurring Justices, was the "substitution of one group of workers for another to perform the same task in the same plant under the ultimate control of the same employer." 13 The concurring Justices stated that there are managerial decisions which may imperil job security or terminate employment entirely and yet are not bargainable: An enterprise may decide to invest in labor-sav- ing machinery. Another may resolve to liquidate its assets and go out of business. Nothing the Court holds today should be understood as imposing a duty to bar- gain collectively regarding such managerial deci- sions, which lie at the core of entrepreneurial control. Decisions concerning the commitment of investment capital and basic scope of the en- terprise are not in themselves primarily about conditions of employment, though the effect of the decision may be necessarily to terminate eemloyment.14 In keeping with this narrow interpretation of Fibre- board, the courts of appeals have held that a decision to convert a company-owned retail outlet into an in- dependently owned and operated franchise dealer- ship,15 a decision to close part of a business opera- tion,16 a decision to change a distribution method by using independent contractors rather than employ- ees,'7 were not bargainable matters since they are at the core of entrepreneurial control. The present case involves the same type of entreprenurial decision. Re- spondent decided to withdraw from part of its busi- ness by disposing of it to an independent entrepre- neur. Under my reading of the court decisions, as well as of the Board decision in the General Motors case, 13 379 U S at 224 14 Id at 223 15 Intl Union, UAW v N L.R B, supra 16 N L R B v. Drapery Mfg Co, 425 F 2d 1026 (C A 8, 1970) 17 N L R B v Adams Dairy, Inc, 350 F 2d 108 (C.A 8, 1965), cert. denied 382 U.S. 1011 (1966) 724 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Respondent was not obligated to bargain with the Union concerning this decision. Although Respondent was required to bargain with the Union about the effects on the employees of its decision to discontinue its distribution operations, it has never refused to do so. Two days before it signed the agreement with Metco, Respondent notified the Union of its decision to sell the distribution routes to Metco. At the same time it informed the Union that it was laying off its employees. Respondent met again with the Union on January 15. The latter asked if Respondent could secure jobs for the laid-off employ- ees and Respondent suggested that employees apply to Metco which would need additional employees. At no time did the Union demand that Respondent bar- gain about the effects on employees of the decision to sell the distribution routes. On March 22, and again on April 5, Respondent wrote the Union offering to negotiate about the impact on employees of its sales' decision. The Union did not respond to either letter. Under these circumstances, I do not think that a find- ing is warranted that Respondent has unlawfully re- fused to bargain about the effects of its decision to close out its distribution operations." As I would find that Respondent was not required to bargain with the Union about the decision to sell its distribution rights to Metco, and as I would further find that Respondent has not refused to bargain with the Union concerning the effects of that decision on the employees in the unit, I would dismiss the com- plaint in its entirety. Accordingly, I dissent from the majority decision to the contrary. 18 Cf Murphy Diesel Company, 179 NLRB 149, Saul Harberg d/b/a Ilfeld Hardware & Furniture Co, 157 NLRB 1401 APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government After a trial in which all sides had the opportunity to present their evidence, the National Labor Relations Board has found that we, Walter Pape, Inc., violated the law and has ordered us to mail this notice to all employees who worked for us, and we intend to carry out the Order of the Board and abide by the follow- ing: WE WILL NOT transfer distribution routes to any other company in the way we transferred distri- bution routes to Metco Dairy Distributors, Inc., without bargaining with Local 338, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America over the ef- fects of such a transfer on employees' jobs. WE WILL NOT refuse to bargain in good faith with any labor organization which represents our employees in an appropriate unit respecting rates of pay, wages, working hours, and other matters relating to your work. WE WILL NOT in any similar way interfere with any rights guaranteed to you by law. WE WILL pay you for any wages you lost be- cause we discharged you when we transferred our routes to Metco Dairy Distributors, Inc., for a period required by a Decision and Order of the National Labor Relation, Board. WALTER PAPE, INC (Employer) Dated By (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 compli- ance with its provisions may be directed to the Board's Office, Fourth Floor, 16 Court Street, Brook- lyn, New York 11241, Telephone 212-596-3535. DECISION STATEMENT OF THE CASE ALVIN LIEBERMAN, Administrative Law Judge: The trial in this proceeding, with all parties represented, was held before me in Brooklyn, New York, on May 31, and July 18 and 19, 1972, upon the General Counsel's complaint dated March 31, 1972, 1 and Respondent's answer. In general the issues litigated were whether Respondent violated Section 8(a)(5) and (1) of the National Labor Relations Act, as amended (the Act). Particularly, the principal questions for decision are as follows: 1. Did Respondent sell its distribution routes to Metco Dairy Distributors, Inc. (Metco), or did Respondent enter into an arrangement, akin to a subcontract, with Metco whereby Metco became the operator of Respondent's distri- 1 The complaint was issued pursuant to a charge filed on January 24, 1972, by Local 338, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America WALTER PAPE button routes? 2. Assuming the latter alternative set forth in the fore- going question to be the situation, did Respondent fail to bargain with Local 338, International Brotherhood of Teamsters (the Union),2 concerning its decision to enter into the arrangement involved and concerning the effects of its decision upon its employees and thereby violate Section 8(a)(5) and (1) of the Act? 3. Again assuming the latter alternative set forth in ques- tion 1, above, did Respondent, in negotiating with the Union for a collective agreement, bargain in bad faith in further violation of Section 8(a)(5) and (1) by not informing the Union that it had decided to enter into the arrangement involved and that it was simultaneously negotiating with Metco to implement its decision? Upon the entire record,' upon my observation of the witnesses and their demeanor while testifying, and upon careful consideration of the brief submitted by the General Counsel 4 and the arguments made during the trial,' I make the following: FINDINGS OF FACT 6 I JURISDICTION Until about January 14, 1972, Respondent, a New York corporation, was engaged in Corona, New York, in the distribution at wholesale of dairy products. During the year ending on March 30, 1972, Respondent purchased and re- ceived goods valued at more than $50,000 from suppliers located in the State of New York which were obtained by them from sources outside the State of New York. Accord- ingly, I find that Respondent is engaged in commerce within the meaning of the Act and that the assertion of jurisdiction over this matter by the National Labor Relations Board (the Board) is warranted. Sremons Mailing Service, 122 NLRB 81, 85. IV PRELIMINARY FINDINGS AND CONCLUSIONS 9 A. Respondent's Operations Respondent was incorporated in 1958. Until January 14, 1972, it distributed dairy and other food products to grocers located in and around New York City. Since about April 1971 Lew Wohl has been Respondent's president and sole stockholder, Wohl also operates a sepa- rate milk and diary products distribution business in Monti- cello, New York, and a trucking business, Glendora 5 Set forth below are the relevant provisions of the Act to which reference has been made in the text Sec 8. (a) It shall be an unfair labor practice for an employer- (I) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7• II THE LABOR ORGANIZATION INVOLVED The Union is a labor organization within the meaning of Section 2(5) of the Act. III INTRODUCTION This case is chiefly concerned with Respondent's disposal of its dairy products distribution routes. The General Coun- sel contends 7 that Respondent subcontracted the operation 2 See fn I, above , for the Union 's full designation 7 Issued simultaneously is a separate order correcting obvious inadvertent errors in the stenographic transcript of this proceeding Neither the Charging Party nor Respondent filed a brief 5 Although all arguments of the parties and the authorities cited by them while the trial was in progress and those appearing in the General Counsel's brief may not be discussed in this Decision, each has been carefully weighed and considered 6 Respondent's motion to dismiss the complaint made at the conclusion of the trial, upon which decision was reserved, is disposed of in accordance with the findings and conclusions set forth in this Decision 7 Inasmuch as the Union made no opening statement or closing argument and did not submit a brief , it is assumed that its position is the same as the General Counsel's (5) to refuse to bargain collectively with representatives of his em- ployees, subject to the provisions of section 9(a) Insofar as pertinent, Secs. 7 and 9(a) are as follows. Sec 7. Employees shall have the right to self-organization, to form, loin, or assist labor organizations, to bargain collectively through repre- sentatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities. Sec 9 (a) Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appro- priate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment. 9 The purpose of these findings is to furnish a frame of reference within which to consider the facts relating to Respondent's alleged unfair labor practices and the conclusions to which they may give rise To the extent that the contentions of the parties relate specifically to the findings made here they will be treated here, although they, as well as the findings, may again be considered in other contexts 725 of these routes to Metco without bargaining with the Union concerning its decision to do so and as the effects of its decision upon its employees. In this manner, the General Counsel asserts, Respondent violated Section 8(a)(5) and (1) of the Act. The General Counsel also contends that Respon- dent further violated Section 8(a)(5) and (1) by bargaining with the Union in bad faith in that Respondent did not inform the Union while negotiating with it for a collective agreement that it was, at the same time, negotiating with Metco respecting the transfer of the distribution routes to Metco.8 Respondent denies that it subcontracted its distribution routes. Respondent maintains that it sold them to Metco. Having done this, Respondent's argument continues, it was not obligated by Section 8(a)(5) of the Act either to notify the Union that it intended to sell its routes or to bargain with the Union over its decision to sell. Respondent further maintains that it offered to bargain with the Union concern- ing the effects of the sale upon its employees, but that the Union refused to do so. 726 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Products Corp. (Glendora), in Rock Hill, New York. On June 16, 1958, Henry Pape, Inc. (Pape), and Crowley's Milk Company, Inc. (Crowley), a processor of dairy prod- ucts located in Watertown, New York, entered into an agreement whereby Crowley appointed Pape as the "sole and exclusive distributor" of certain of its products in the city of New York and two outlying counties for a period of 20 years. The agreement further provides that Pape would buy from Crowley, and Crowley would "sell to Pape, all of Pape's reirements of said products in the territory de- scribed." 1%, Some 2 years later, on June 2, 1960, while in the process of liquidation, Pape assigned to Respondent "all of the right and interest of [Pape] in, under and by virtue of the .. . agreement dated June 16, 1958, between [Pape] and [Crow- ley]." 11 Crowley consented to this assignment. From the time it became Pape's assignee until January 14, 1972, Respondent distributed Crowley's products in the area formerly served by Pape. To do this Respondent leased a warehouse in Corona, New York, hired employees, some of whom had worked for Pape, and acquired trucks which were driven by its employees over routes determined by Respondent. The products processed by Crowley and distributed by Respondent were bought by Respondent directly from Crowley, f.o.b., Crowley's plant in Watertown. The goods thus purchased were transported from Crowley's premises to Corona, a distance of some 325 miles, by Glendora, the trucking company, owned by Wohl, Respondent's president. Respondent's employees who drove its trucks were known as route salesmen. Each covered a specific territory pursuant to Respondent's direction. Respondent's route salesmen solicited orders for merchandise, principally Crowley's products, from grocers on their routes and imme- diately delivered the goods ordered. In this regard, Wohl testified that they "sold right off the truck." As will be discussed in detail below, on January 14, 1972, Respondent transferred its distribution routes to Metco. Upon doing so Respondent terminated the employment of its route salesmen, most of whom were later hired by Metco. Since February 1972, Respondent has been leasing its operable trucks, about seven in number, to Mendon Leasing (Mendon) on a weekly basis. Mendon, in turn, has leased them to Metco. Mendon has returned the chassis of three of these trucks, but has continued to pay rent to Respondent for their bodies which have been placed on new chassis purchased by Mendon. Two of the chassis discarded by Mendon are stored by Respondent on premises of Glendo- ra, Wohl's trucking company. The other was still in Mendon's garage at the time of the trial, although Mendon stopped paying rent for it. The lease on Respondent's warehouse was due to expire in December 1972. However, in March 1972, after the trans- fer of its distribution routes to Metco, Respondent negotiat- ed its cancellation. Notwithstanding the transfer of Respondent's distribu- tion routes to Metco, the termination of the employment of its route salesmen, and the cancellation of the lease on its warehouse, Respondent, as its president, Wohl, acknowl- edged, "is still a live corporation." As the assignee of Pape's contract with Crowley, Respondent's exclusive right to dis- tribute Crowley's products in the area described in that contract will not expire until June 15, 1978. Respondent continues to buy merchandise from Crowley for ultimate resale in that territory, which, as will be set forth below, it turns over to Metco at a profit. And Respondent still owns trucks, although some of them are under weekly lease to Mendon. B. Respondent's Transaction with Metco Early in 1971 Respondent began to look for someone to take over its distribution routes. To this end, after unsuc- cessfully negotiating with others, it began, in the fall of 1971, to negotiate with Metco, another company engaged, like Respondent, in the business of distributing dairy and other food products to grocers. Also like Respondent, Metco em- ploys route salesmen who perform the same tasks as Respondent's route salesmen performed under conditions of employment substantially similar to those under which Respondent's route salesmen worked. Respondent and Metco reached agreement on January 12, 1972. Two days later, on January 14, their agreement was memorialized in a written contract. 12 The salient provi- sions of this contract, in which Respondent is referred to as the "Seller" and Metco as the "Buyer," follow: WHEREAS, the Buyer desires to purchase from the Sell- er all rights and limitations with regard to the future conduct of the sale and distribution of Crowley prod- ucts through the Seller's routes and WHEREAS, the Seller desires to sell all rights and limita- tions with regard to the future conduct of the sale and distribution of Crowley products through their routes and WHEREAS, the Seller has exclusivity of the Crowley product line and desires to retain such exclusivity as a broker for the Crowley product line and no longer desires to be involved in the physical distribution of any said products. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. The buyer agrees to purchase, assume and acquire from the Seller, and the Seller agrees to sell, transfer and assign to the Buyer, the distribution sales routes conducted by the Seller from its principal location. Said sale to consist of every right, title and interest that the Seller may have thereto, for a penod of five (5) years. 2. In consideration for said sales routes, the Buyer agrees to purchase from the Seller all Crowley products needed to service said routes and others in that the Seller has an exclusivity contract with Crowley Dairy Farms and desires to retain such exclusivity for the purpose of conducting business as a broker. The bro- kerage fee shall be five per cent. * s s s 10 Resp Exh 3 11 Resp Exh 3 12 G C Exh 8 WALTER PAPE 7. It is understood and agreed that the Buyer shall take over control of the business on January 17, 1972. Metco did not pay, nor did it promise to pay, Respondent for the distribution routes transferred to it by Respondent. Metco, at the time of the transfer, did pay Respondent for some merchandise, including Crowley products, then stored in Respondent's warehouse. Metco also advanced $15,000 to Respondent to enable Respondent to pay its outstanding debts and to permit it to continue to buy goods from Crow- ley.13 As of the time of the trial, held 6 months after Respon- dent and Metco entered into their agreement , Respondent had not repaid this money to Metco and, as Wohl stated in this connection, "there is nothing in writing [concerning] how it is to be repaid or when it is to be repaid." As noted above, upon entering into its contract with Met- co Respondent discontinued the operation of its sales routes and terminated the employment of its route salesmen. How- ever, Respondent has continued to buy merchandise from Crowley for distribution to grocers, albeit by Metco, in the area in which it was Crowley's exclusive distributor 14 and has continued its practice of having these goods transported at its expense from Crowley's plant by Glendora, Wohl's trucking company. 15 Further, Respondent has continued to pay Crowely for the merchandise it purchases. Respondent bills Metco for the goods delivered to it. Respondent adds to their cost the trucking charges and the 5-percent "brokerage fee" set forth in the agreement be- tween Respondent and Metco. A determination as to the nature of the transaction be- tween Respondent and Metco pursuant to which Respon- dent transferred its distribution routes to Metco is central to this case. Respondent argues that it was a sale , the Gener- al Counsel that it was a subcontract. If, indeed , it was a sale, as Respondent contends, then in accordance with the Board's recent holding in General Mo- tors Corporation, 191 NLRB 951, affd. 470 F.2d 422, (C.A.D. C., 1972), Respondent was under no duty to bargain with the Union over its decision to sell the routes. The same rule does not apply, however, if it was a subcontract, as the General Counsel strongly urges, or some other arrangement which, without altering Respondent's basic operation, re- sulted in the replacement of Respondent's route salesmen with those of Metco to do the same work under similar conditions of employment. Fibreboard Paper Products Corp. v. N. L. R. B., 379 U.S. 203, 209-214 (1964). "[S]ale is a word of precise legal import, both at law and in equity. It means at all times, a contract between parties, to give and to pass rights of property for money,-which the buyer pays or promises to pay to the seller for the thing 13 Wohl, Respondent's president, testified that at this time Crowley was doing business with Respondent "on a sight draft basis" 14 It will be remembered that Respondent's exclusivity contract with Crow- ley will not expire until June 15, 1978 15 The only change in this practice after January 14, 1972, related to the point of delivery Instead of delivering to Respondent 's warehouse in Coro- na, Glendora delivered to Metco's warehouse, located in Maspeth, New York, a short distance from Corona 16 This, the Court of Appeals for the Eighth Circuit stated , "is also the meaning of the word 'sale' to those not learned in the law " Curtis et al v O'Leary et al, 131 F 2d 240, 245 727 bought and sold." 16 Williamson, et al. v. Berry, 49 U.S. 505, 544. Although the foregoing definition of a sale was enunicat- ed by the Supreme Court in 1850, it has withstood the test of time. See, for example, MacDonald v. Commissioner of Internal Revenue, 76 F.2d 513, 514 (C.A. 2, 1935); Curtis, et al, v. O'Leary, et al., 131 F.2d 240, 245 (C.A. 8, 1942); Link, et al. v. Kallaos, et al., 56 F.Supp. 304, 305 (E.D. Mo., 1944); Guistina, et al. v. United States, 190 F.Supp. 303, 309 (D. Ore., 1960), modified in other respects 313 F.2d 708 (C.A. 9); and Wirtz v. Charleston Coca-Cola Bottling Company, Incorporated, et al., 237 F.Supp. 857, 866 (E.D.S. Car., 1965), reversed on other grounds 356 F.2d 428 (C.A. 4). As found above, Metco neither paid, nor promised to pay, money to Respondent for Respondent's distribution routes. Accordingly, it cannot be said that the transfer of the routes by Respondent to Metco constituted a sale.17 It was rather, an arrangement which, without changing Respondent's basic operation-the distribution of Crowley's products to grocers in the area in which it was Crowley's exclusive distributor-resulted in the perfor- mance by Metco's employees of work previously done by Respondent's employees under substantially similar condi- tions of employment. C. The Union's Certification On November 2, 1971, the Union was certified as the exclusive collective-bargaining representative of Respondent's employees in a unit consisting of all truckdri- vers, warehousemen, shipping and receiving employees, and maintenance employees.] V THE ALLEGED UNFAIR LABOR PRACTICES A. Facts Concerning Respondent's Alleged Violations of Section 8(a)(5) and (1) of the Act Respondent met, and bargained, with the Union on No- vember 30, 1971; and January 6, 1972.19 A third meeting was scheduled for January 19, but, as will be seen, it did not take place. While bargaining with the Union Respondent was also negotiating with Metco concerning the transfer to Metco of Respondent's distribution routes. These negotiations were nearing fruition at the time of Respondent's second meeting with the Union. Although Respondent had earlier decided to have some- one take over its distribution routes, at no time during its two meetings with the Union did it disclose this fact to the Union and it did not bargain with the Union respecting this decision or about its effects upon the employees whose jobs would be eliminated upon its consummation. Nor did Re- spondent advise the Union that it was simultaneously nego- 17 The fact that the contract between Respondent and Metco referred to the former as the "Seller" and the latter as the "Buyer" is not, of course, decisive as to the nature of the transaction under discussion International Union, Automobile Workers Local 864, v N L R B, 470 F 2d 422 (C A D C ) 18 Metco's employees are represented by another local of the International Brotherhood of Teamsters. 19 All dates hereinafter mentioned without stating a year fall within 1972 728 DECISIONS OF NATIONAL LABOR RELATIONS BOARD bating with Metco, as set forth above. On January 12, a week before their next scheduled bar- gaining meeting, Respondent informed the Union that Met- co would be taking over Respondent's distribution routes. The next day, at a hastily convened conference attended by Respondent and the Union, the Union was given some details of the agreement Respondent and Metco had reached. Respondent also told the Union that it would stop distributing Crowley's products on January 14; that it would then terminate the employment of its route salesmen; and that Metco had agreed to offer jobs to some of them.20 No further meetings were held between Respondent and the Union. One additional fact relating to Respondent's dealings with the Union requires mention. More than 2 months after its distribution routes had been turned over to Metco Re- spondent offered to negotiate with the Union concerning the effects of the transfer. B. Contentions and Concluding Findings Concerning Respondent's Alleged Violations of Section 8(a)(5) and (1) of the Act I have found that the transfer of Respondent's distribu- tion routes to Metco was not a sale, as Respondent con- tends, but an arrangement which, without changing Respondent's basic operation, resulted in the performance by Metco's employees of work previously done by Respondent's employees under substantially similar condi- tions of employment. This being the case, Respondent was obligated to bargain with the Union about its decision to make this arrangement,21 as well as about the effects of the arrangement upon the employees whose jobs it would elimi- nate? Respondent did not comply with its obligation in either respect. It did not bargain with the Union concerning the decision, nor its effects. Regarding the latter, Respondent's belated offer to engage in effects bargaining with the Union, made more than 2 months after its distribution routes were transferred to Metco, does not operate to excuse its failure to do so before the transfer. Thompson Transport Company, Inc., 184 NLRB 38. Accordingly, I conclude that by failing to bargain with the Union concerning its decision to transfer its distribution routes to Metco and concerning the effects of this decision upon the employees affected by it Respondent violated Sec- tion 8(a)(5) and (1) of the Act. The General Counsel argues that Respondent violated Section 8(a)(5) of the Act in a related, but separate, manner. He contends, and I agree, that by withholding information from the Union regarding its decision to turn over its distri- bution routes to another company and of its concurrent negotiations with Metco to implement its decision Respon- dent bargained with the Union in bad faith. 20 As I have noted, Metco ultimately hired most of Respondent's route salesmen whose employment with Respondent came to a close on January 14 21 F,breboard Paper Products Corp v N L R B, supra at 209-214 22 Interstate Tool Co Inc, 177 NLRB 686, 687 As set forth above, Respondent and the Union met on November 30, 1971, and January 6, 1972, for the purpose of bargaining out a collective agreement. At the same time Respondent was negotiating with Metco. However, at nei- ther of its meetings with the Union did Respondent inform the Union of its decision, earlier formulated, to transfer its distribution routes or of its simultaneous negotiations to that end with Metco, which, on January 6, were nearing fruition. By not doing so Respondent bargained with the Union in bad faith. In Vac-Art, Inc., 124 NLRB 989, 997, it was held, in this regard, that an employer's failure "to notify [a union] of his planned action [to close one of his plants], while going through the motions of negotiating for a contract, is a most glaring example of bad-faith bargain- ing." 23 Accordingly, I conclude that Respondent further violated Section 8(a)(5) and (1) of the Act by failing to bargain in good faith with the Union. VI THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE Respondent's unfair labor practices occurring in connec- tion with its operations set forth in section I, above, have a close, intimate, and substantial relationship to trade, traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. VII THE REMEDY Having found that Respondent engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act, my recommended Order will require Respondent to cease and desist therefrom and to take such affirmative action as will effectuate the purposes of the Act. Concerning the latter, as urged by the General Counsel and for the reasons set forth by the Board in Town & Coun- try Manufacturing Company, Inc., 136 NLRB, 1022, 1030 -31, enfd. 316 F.2d 846 (C.A. 5, 1963), my order will require Respondent to reestablish the distribution routes it transfer- red to Metco and operate them as it did before January 14, 1972, and not to discontinue them in the same manner again without first bargaining with the Union concerning their discontinuance and the effect of their discontinuance upon the employees whose jobs would be affected by such action. My order will also require Respondent to offer reinstate- ment to its employees whose jobs were terminated when Respondent transferred its distribution routes to Metco and to make them whole for any wage loss they may have incur- red. Any backpay found to be due to them shall be comput- ed in accordance with the formula set forth in F. W. Woolworth Company, 90 NLRB 289, and shall include inter- est in the amount and manner provided for in Isis Plumbing & Heating Co., 138 NLRB 716. Finally, my order will direct Respondent to bargain in good faith with the Union. 23 Analytically, insofar as the issue here under consideration is concerned, there appears to be no difference between closing a plant, as was the case in Vac-Art, and discontinuing a substantial portion of an employer's opera- tion, as is the case here The result of both is the loss of jobs WALTER PAPE While Respondent may be inconvenienced by being re- quired to reestablish and operate its distribution routes, to allow it to do less would be to permit it to profit by its own wrongful failure to bargain with the Union over their trans- fer to Metco. In prescribing a similar remedy for a similar violation of the Act the Board stated in Town & Country: We have further found that Respondent violated Section 8(a)(5) by unilaterally subcontracting its truck- ing operations without bargaining with the Union over its decision to do so. We shall therefore order that Respondent cease and desist from making unilateral changes in their terms and conditions of employment without consulting their designated bargaining repre- sentative. It would be an exercise in futility to attempt to remedy this type of violation if an employer's deci- sion to subcontract were to stand. No genuine bargain- ing over a decision to terminate a phase of operations can be conducted where that decision has already been made and implemented . Here, too, the remedy must be "adapted to the situation which calls for redress ," [N.L. R.B. v. Mackay Radio & Telegraph Co., 304 U.S. 333, 3481 and here, too, we would require an employer to restore the status quo ante by abrogating its subcontract and fulfilling its statutory obligation to bargain. Of course, where that obligation has been satisfied after the resumption of bargaining, an employer may lawful- ly subcontract unit work. In our opinion, it would be equally futile to direct an employer to bargain with the exclusive bargaining rep- resentative of his employees over the termination of jobs which they no longer hold . Since the loss of em- ployement stemmed directly from their employer's un- lawful action in bypassing their bargaining agent, we believe that a meaningful bargaining order can be fash- ioned only by directing the employer to restore his employees to the positions which they held prior to this unlawful action. In sum, even were we to find that Respondent termi- nated its trucking operations for nondiscriminatory reasons, we would, in the circumstances of this case, order Respondent to abrogate its subcontract and bar- gain with the Union over any future decision to sub- contract those operations . In addition, we would direct 729 reinstatement of its drivers with an appropriate back- pay remedy. Upon the basis of the foregoing findings of fact, and upon the entire record in this case, I make the following: CONCLUSIONS OF LAW 1. Respondent is an employer within the meaning of Sec- tion 2(2) of the Act and is engaged in 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 transaction between Respondent and Metco pur- suant to which Respondent transferred its distribution routes to Metco did not constitute a sale of those routes to Metco. 4. All truckdrivers, warehousemen, shipping and receiv- ing employees, and maintenance employees, employed by Respondent as of January 14, 1972, exclusive of office cleri- cal employees, guards, watchmen, professional employees, and all supervisors as defined in Section 2(11) of the Act, constitute a unit appropriate for the purposes of collective bargaining. 5. At all material times the Union has been the exclusive collective-bargaining representative of the employees in the unit set forth in Conclusion of Law 4, above. 6. By failing to bargain with the Union concerning its decision to transfer its sales distnbution routes to Metco and concerning the effects of this decision upon the employ- ees in the unit set forth in Conclusion of Law 4, above, Respondent has engaged, and is engaging, in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 7. By failing to bargain in good faith with the Union as the exclusive collective-bargaining representative of the em- ployees in the unit set forth in Conclusion of Law 4, above, Respondent has engaged, and is engaging, in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 8. The unfair labor practices engaged in by Respondent, as set forth in Conclusions of Law 6 and 7 , above, affect commerce within the meaning of Section 2 (6) and (7) of the Act. [Recommended Order omitted from publication.]