Commercial Heating & Service Co.

COMMERCIAL HEATING & SERVICE CO. Commercial Gas Boiler & Heating Co. and Marjorie Koosed, Dennis Malkin, and Belinda Malkin, Co- Partners d/b/a Commercial Heating and Service Co. and Pipe Fitters Local Union 120, United Asso- ciation of Journeymen & Apprentices of the Plumb- ing and Pipe Fitting Industry of the United States and Canada, AFL-CIO. Case'8-CA-7667 June 27, 1974 DECISION AND ORDER By MEMBERS JENKINS, KENNEDY, AND PENELLO On March 29, 1974, Administrative Law Judge Thomas A. Ricci issued the attached Decision in this proceeding. Thereafter, the General Counsel and the Charging Party filed exceptions and supporting briefs, and the Respondent filed a brief in answer to the exceptions. 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 and to adopt his recommended Order.' ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Rela- tions Board adopts as its Order the recommended Order of the Administrative Law Judge and hereby orders that the complaint be, and it hereby is, dis- missed in its entirety. i In its exceptions, the Charging Party contends that the Administrative Law Judge erred by refusing its request for an extension of time in which to file its brief, and implies the brief was not considered by him. The record reveals the Administrative Law Judge received the brief 5 days before the Decision issued, which is ample time for him to have considered it In any event, the Board has considered the brief as part of the record in this case and finds the Charging Party was in no way prejudiced by the Administrative Law Judge's refusal to extend the time for receipt of briefs. Accordingly, we find this exception to be without merit DECISION STATEMENT OF THE CASE THOMAS A. Ricci, Administrative Law Judge: A hearing in this proceeding was held on February 21 and 22, 1974, at Cleveland, Ohio, on complaint of the General Counsel against Commercial Gas Boiler & Heating Co. and Marjorie 109 Koosed, Dennis Malkin, and Belinda Malkin, Co-Partners d/b/a Commercial Heating and Service Co., herein jointly called the Respondent. The complaint issued on January 24, 1974, upon a charge originally filed on May 4, 1973, and amended on January 24, 1974. The sole issue is whether the Respondent unlawfully refused to bargain with Pipe Fitters Local Union 120, United Association of Journeymen & Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, herein called the Union or Local 120, in violation of Section 8(a)(5) of the Act. Upon the entire record and from my observation of the witnesses, I make the following: FINDINGS OF FACT I THE BUSINESS OF THE RESPONDENT Commercial Gas Boiler & Heating Co., a corporation, is engaged in the sale and installation of heating equipment on commercial, industrial, and residential properties, with its principal place of business in Cleveland, Ohio. Annually it derives gross revenues in excess of $500,000, and annually it receives products valued in excess of $50,000 directly from out-of-state sources. Commercial Heating and Service Co. is a copartnership owned by Marjorie Koosed, Dennis Malkin, and Belinda Malkin, engaged in the sale and installation of beating equipment, also with its principal place of business in Cleve- land, Ohio. Annually this partnership derives gross revenues in excess of $500,000, and annually it receives products valued in excess of $50,000 directly from out-of-state sources. I find that both these companies are engaged in com- merce within the meaning of the Act. II THE UNION INVOLVED I find that Pipe Fitters Local Union 120, United Associa- tion of Journeymen & Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act. III THE ALLEGED UNFAIR LABOR PRACTICES A. A Picture of the Case Sanford Malkin is a heating engineer who for 20 years has been in the business of selling boiler and other heating equipment, installing it, and servicing it. He incorporated his operation in 1953, calling it Commercial Gas & Heating Co.; the corporation was still in existence at the time of the events giving rise to this proceeding. Malkin has, over the years, contracted to fulfill both union and nonunion jobs; at times some of his employees were members of Pipe Fit- ters Local 120, the Charging Party here. At times he had no union members working for him at all. Always a percentage, if not all, of his employees were nonunion. And, of course, when some employees were in the union, he paid them union scale-both hourly rate and fringe benefits; when 212 NLRB No. 15 110 DECISIONS OF NATIONAL LABOR RELATIONS BOARD they were not, as was most often the case, he paid them on whatever basis he could arrange with them individually. Late in 1970, he decided to separate the union as against nonunion parts of his business into a more clearly definable arrangement. On January 1, 1971, he put together a formal partnership called Commercial Heating and Service Co., and from then on did all his nonunion jobs-again selling, installing, and servicing heating and such equipment-as he simultaneously continued to do under the corporate name for his union jobs. He made his three children the partners and owners of the nonunion business; they were then stu- dents, a boy, age 19, and two girls, age 20 and 21. At the hearing Malkin candidly conceded he did this in part for IRS purposes and in part to provide for inheritance. The children, still students away from home now, simply have nothing to do with the business of either the corporation or the partnership For the past 10 years, the Union has been nibbling away at Malkin trying to get him to go union , but with little success. There came a time-in 1969-when Malkin joined a multiemployer association, the Mechanical Contractors Association of Cleveland (MCAC), in the name of the cor- poration; this, of course, was only with respect to his union jobs, or union employees. Things continued on in this fash- ion, with six or eight of Malkin's employees working on the union side of his operation, and six always on the nonunion portion The Union lived with this arrangement all the time. But in March 1973 it decided enough was enough, and demanded that Malkin discontinue all nonunion jobs, that he work only with union members and stop hiring people on any basis except full payment-direct and indirect as called for in the area contract between the Union and MCAC. Malkin took the position that he could not afford to do that, what with his nonunion jobs being in the "ghet- to," in the disadvantaged, or government, construction area of the business. The complaint here being considered now alleges Malkin's entire operation was always covered by his con- tract, not just his occasional union members but all of his employees. It says his membership in MCAC, which he accepted in 1969, affected his then nonunion members as well, that the partnership formality was a paper shell that never really divided his business so as to bring into being two separate companies, or employers. And in the end the General Counsel asks that all Malkin's employees-no mat- ter by what technical legal entity they seemed to be em- ployed-be declared covered by the MCAC multiemployer contract, today and retroactively to 1969. In terms of money remedy, he demands that Malkin now pay to all of his employees-back to 6 months before the filing of the charge (see Sec. 10(b) of the statute)-the difference between union and nonunion scale, about $3 for every hour worked since approximately October 1972. In defense, the Respondent contends the nonunion em- ployees were never covered by Malkin's contract with MCAC via his corporation, that they were never repre- sented by the Union in collective bargaining at all, and that therefore there can be no finding of illegal refusal to bargain as to them, to say nothing of any conclusion that they were always underpaid because the union contract called for higher wages than they received. B. The Pertinent Facts There are Board decisions which turn upon the question whether two companies, separate entities i n a legal sense, are nevertheless to be deemed a single employer for purpos- es of application of several sections of this statute. I find that Malkin's two companies-his corporation and the partnership-for purposes of this proceeding are a single employer. The principal test is unified day-to-day control and supervision of labor relations, that is, single-minded determination of those aspects of any business which affect the conditions of employment of the employees. The two businesses are exactly of the same kind, the skills practiced by the employees are the same, the office and shop of both are the same, the hiring all centers upon Malkin himself for final approval-albeit he has two subordinate managers who report to him, the funds are mingled, and Malkin func- tions literally as the boss-financial and otherwise-over both operations. But most significant of all, if Malkin is not the day-to-day boss of a truly unified business enterprise, it means that the partnership has no top management at all, for the children go to school and know nothing of what is going on-even assuming they care. This finding of single employer does not, however, dis- pose of the issue of the case Malkin Joined the MCAC in 1969, he was still a member in 1973, his entire operation is a single business-ergo, according to the General Counsel, the "Respondent" violated Section 8(a)(5) when in 1973 it refused to acknowledge Local 120 as bargaining agent of its nonunion employees and admit that the MCAC contract governed their conditions of employment. This one-sided view of the total picture of the case suggests a Picasso draw- ing-half a face, a very large eye, one ear, part of a mouth, and a candle shedding light but suspended in air. The reali- ties of human experience always show instead a more com- plete picture, a coherent story, a balanced and understandable portrayal of life. This is not the first time a union seeking to organize a nonunion employer was satis- fied, or had to be satisfied, with making progress a little step at a time. And in the jockeying for advantage between the disputants, the line of advance sometimes goes forward and sometimes recedes If at any given moment union and em- ployer are in agreement that only some of the employee complement will be union represented, and work under union conditions, and if their joint conduct shows imple- mentation in fact of such understanding, their agreement does not cease to be a fact of life merely because they simultaneously sign a 40-page contract that really has no application to a substantial segment of the working force. This is the Respondent's true defense. It contends that Malkin's nonunion employees, a number of whom he al- ways had, were always excluded from any contract the Company may have signed with Local 120, this regardless of whether or not the two entities be considered as one. The Union now asserts there never was such a collateral under- standing, and in support it offered the testimony of three of its business representatives, each of whom said at the hear- ing he never knew, before March 1973, that Malkin's busi- ness, or businesses, used a single nonunion employee. On this total record, I do not credit their denials. I credit instead the testimony of Malkin. Apart from the COMMERCIAL HEATING & SERVICE CO. question of the Union's knowledge of his nonunion opera- tions, most of what he related, and that is set out below, was not significantly denied by the opposing witnesses. The sto- ry started in 1963 when Malkin had eight regular pipefitter employees. He made an arrangement with Local 120 that two of the eight should be members of the Union and work under union conditions. The General Counsel proved that in his then corporate name Malkin signed a contract on March 7, 1963; it is in evidence and shows a multiemployer agreement between Local 120 and the MCAC. Malkin had no relationship either with the Association or the making of that contract. Asked what the signature page of the agree- ment was, Malkin answered: "It is a photocopy of my signa- ture at the back of a book which I signed back as of this date permitting me to have two of my employees in the union and the remaining six not . . . because the Union did not want the company, per se. They wanted two of my men in the Union." The contract bears the signatures, on behalf of the Union, of Donahue, Dingow, and Walsh, three profes- sional and long-time business representatives. These men took no issue with Malkin's clear testimony, yet on the witness stand they swore they knew nothing about Malkin's nonunion work until 1973. I do not know why the General Counsel placed that 1963 document in evidence; in the light of Malkin's absolutely credible testimony it was literally a meaningless scrape of paper so far as this case is concerned. The two union men of 1963 soon left and Malkin contin- ued a completely nonunion operation again until 1967..A fair reading of the testimony about what happened then and thereafter warrants an inference that Malkin was no less interested in having some of his employees be regular union members as was the Union later, in 1973, that they all be members. The difficulty throughout was that whereas the Union, logically, would have liked all of Malkin's people to be covered by union contract, Malkin felt that the nature of his business made it economically impossible. He said, and again no one contradicted him, that the kind of jobs he ,often bids for are low grade, only service, "ghetto" type contracts, without enough money to pay union scale and benefits. Be that as it may, there was another arrangement between Malkin and Local 120 in 1967. It is evidenced, in part, in the form of a letter between them detailing an oral under- standing (1) that Malkin could have three class A and five class B men, (2) that all these employees should become union members, (3) that Local 120 would produce agree- ments signed by each of the men individually guaranteeing they would stay with Malkin for 5 years and not seek or accept work elsewhere, and (4) that Malkin would keep them for 5 years "as long as it is economically feasible for us to do so." None of the individual commitments was ever produced, Malkin never signed any kind of contract with the Union, and he regularly continued to take both union and nonunion contract jobs. On the union jobs he paid union wages; on the nonunion ones he gave what was called class B wages-variously said at the hearing to be $2.50 or $3 less per hour than union scale. For all of his people he sent monthly payments to the Union for pension, insurance, etc., based on the payroll. In 1969 Malkin, in his corporate name, joined the MCAC. He concedes his corporation-which, as now revealed, is 111 that part of his single-employer enterprise which operates on union conditions-then became bound by the 1967-70 multiemployer contract Local 120 had with the Association, and continued to be bound by the successor 1970-73 con- tract. Malkin never resigned from MCAC and at the hear- ing he expressed the view his corporation, now operating only a single union job in a location 400 miles away from Cleveland, is today bound by the Association's 1973-76 contract with Local 120. Of special importance here is Malkin's explanation, again not really contradicted, of how the class A and class B businesses operated for 3 years, until the end of 1970, when he changed the system. To start with, the entire class B concept-a union member being paid $3 per hour less than scale-did complete violence to whatever contract Local 120 had with any employer. To say, therefore, that in 1969 Malkin became bound by the MCAC contract, even with respect to his nonunion employees, is a play on words. He did not. One wonders whether Mickey Donahue, 10 years an AFL Pipe Fitter business agent, would say to out-of- work members of his Union that pipefitters cutting the Union's scale by working for $3 an hour below contract terms are union members and covered by union contract. Malkin said his arrangement with the Union was that he would pay the class B men the lesser rate whenever he successfully bid on a nonunion job, and just so long as the project on which these men worked, large or small, was entirely nonunion. In the event it ever developed there were any union craftmen on that job-no matter what craft-the B men had to be paid full class A rates for their entire performance there, no matter how much Malkm's bid had been.' Towards the end of 1970 Malkin decided he could not continue to operate this way-not knowing in advance what his labor on a nonunion contract job would cost him. He therefore made a clean break between union and nonunion operations, taking union jobs in the corporate name and nonunion ones under the partnership. And he discontinued, at the start of 1971, sending welfare, pension, and vacation money to the Union for any of the nonunion employees. Asked at the hearing whether the Union was aware of the fact that he abolished the B rate, he answered: "They were, they make the payroll." Neither the Union nor the General ° From Malkin's testimony: The Union said that the A and B men did the same The union statement was that the B rate was to be paid whenever the B men were on jobs that no other union construction activity was involved. If there were other trades on the job, even though the man was a B man, he ultimately got the A rate which is what I was told If he [the B man] worked a job for 3 months and there was a plumber putting in the toilet, the whole thing would become A rate Whenever other trades were on their remodeling job where they were carrying cards, whether it be a bricklayer or a carpenter or a plumber, in order to keep peace in the family, that was an A rated Job and A rated men would be employed on that job 112 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Counsel took issue with this statement at the hearing. I take it to mean the Union, in one way or another, looked over his shoulder to ascertain the correctness of the monthly report he sent to the Union accompanying his contribution check. Malkin also testified that from time to time during 1971 and 1972 some of his union employees complained to Local 120 about nonunion employees of Malkin's working too close to their projects-it irritated them. According to Mal- kin he received telephone calls from all three of the Union's representatives-Donahue, Dingow, and Walsh-about this. He said he explained to them why he had had to separate the groups, because he could not afford A rates on the nonunion jobs, and was told by the agents "I should keep them separate," meaning union as against nonunion employees, and "I was told to keep the nonunion men off the job at the time that the union men are there even if they were doing a different function." The union agents denied any such conversations Their denials must be appraised together with the position of the Union taken later, in the spring of 1973, when, according to its witnesses, it for the first time learned Malkin was doing any nonunion jobs at all. The Union complained to the MCAC about ajob Malkin was doing in March, contending he was violating the MCAC contract, and arguing the Union had a right to file a grievance under the contract. The issue was considered at several monthly meetings of the point conference committee under the MCAC contract, em- ployer representatives sitting opposite Local 120 officers. Malkin personally appeared at the first, on April 4, 1973 He explained the history of his business vis-a-vis the Union, as he did at the hearing here-how the Union always knew and approved of his two-sided operations. The position of the MCAC, as reflected in the minutes of some of the meet- ings of the joint conference, was "the Malkin case is not subject to consideration by the Joint Conference Commit- tee," "they do not believe that the Malkin case is arbitra- ble," "MCA did not view the matter as a violation of the Agreement," "Malkin's operation of a nonunion shop was a matter between Local 120 and Sanford Malkin," "MCA has no right to dictate method of business operations to any of its members." More important, however, is the position of the Union expressed at the very first meeting, on April 4. After all of the talk about union and nonunion work done by Malkin, "The Union stated that Mr. Malkin must make a choice between operating completely on a union shop basis or a nonunion shop basis." The above quotations are from the regularly kept minutes of the joint conference committee meetings The minutes of prior meetings are normally read and approved at the next; it is conceded the Union never raised any question, to the committee itself, about the accuracy of the minutes as re- ceived in evidence here; the member of MCAC who regu- larly is in attendance and prepares them from his notes testified for the Respondent and vouched for their correct- ness and regularity Local 120's business agents tried to create a doubt as to their reliability at this hearing, but their suggested alternate story of what was really said at the meetings is ambiguous , vague, and cannot serve to offset the persuasiveness of the documents under the circumstances. Moreover, for the Union to tell Malkin in 1973 he had to choose one or the other-union or nonunion-is entirely consistent with the total story of the past. The truth of the matter is the Union always knew Malkin did part of his business with a cadre of employees never represented by the Union. It is highly unlikely, for the least, that an AFL construction union in the city of Cleveland would not notice sudden, complete, and permanent elimina- tion of five or six employees from a single contractor's monthly reporting statement, reflecting substantial reduc- tion in money contributions to Union-controlled funds. The rational explanation for the Union's silence on that score all through 1971 and 1972 is that offered by Malkin-that it did no more than reflect continued understanding between him and Local 120 that Malkin used some employees repre- sented by the Union and others who stood entirely apart from any collective bargaining at all I credit Malkin and find the union agents told him a number of times during those 2 years to keep his nonunion jobs under cover, so to speak, and not embarrass the Union too much I find that the MCAC contract never covered Malkin's nonunion employees, first working under his corporate name and since 1971 working under the partnership name. I find the Union never represented this identified group of workmen. I find the Respondent was never under legal obligation to bargain with Local 120 for these employees and that therefore it did not violate Section 8(a)(5) of the Act as alleged in the complaint. When Malkin picked up the gauntlet thrown by the Union at the MCAC conference and went 100 percent nonunion in Local 120's jurisdiction, his union employees left him. The Union refused to send him any more. It filed 8(a)(3) charges against Malkin, but they were dismissed. A few months later some of these craftsmen could find no other work and came to Malkin, now willing to accept nonunion wages; some were taken on. Under- standably the Union wants to represent these people. The way to do it is by organizing, by producing authorization cards, by filing a petition with the Board. Representation cannot be achieved by bludgeoning the employer via an existing contract that never had anything to do with the employees involved. ORDER' I hereby recommend that the complaint be, and it hereby is, dismissed. 2 In the event no exceptions are filed as provided by Sec 102 46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Ordef herein shall, as provided in Sec 102 48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions , and Order, and all objections thereto shall be deemed waived for all purposes