Northgate Cinema, Inc.

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Northgate Cinema, Inc. and Wyandotte Theater, Inc. and International Alliance of Theatrical Stage Employees and Motion Picture Machine Opera- tors of the United States & Canada, AFL-CIO, Special Departments-Detroit Branch, and its Local 199. Case 7-CA-13557 November 17, 1977 DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND PENELLO On June 28, 1977, Administrative Law Judge Almira A. Stevenson issued the attached Decision in this proceeding. 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 attached Decision in light of the exceptions and brief and has decided to affirm the rulings, findings, and conclusions of the Administrative Law Judge only to the extent consistent herewith. The Administrative Law Judge recommended dismissal of the complaint because Respondents' projected gross revenues for the calendar year following the takeover of their predecessors' opera- tions I did not meet the Board's discretionary monetary standard for assertion of jurisdiction over motion picture theaters. That projection was based on Respondents' gross income for the approximately 5-month period preceding the hearing in which they operated the theaters involved. It is, on the other hand, uncontroverted that the operations of both Respondents are materially indistinguishable, in terms of location, services, equipment, etc.,2 from those of their predecessors, whose combined income for the 3 calendar years3 preceding the takeover uniformly surpassed our discretionary jurisdictional standard for such enter- prises. Thus, the issue presented is whether the actual income of the predecessors in the calendar years prior to the takeover is a less reliable barometer for resolution of the discretionary jurisdictional question I The Administrative Law Judge concluded, and we agree for the reasons set forth in her Decision, that Respondents Northgate and Wyandotte are joint employers. 2 It also appears that the employee complement before and after the takeover was, in the case of Respondent Northgate. virtually identical, and in the case of Respondent Wyandotte substantially so. At the former. 10 of the I I employees and, at the latter. approximately 4 of 14 employees worked before and after the takeover. The instant complaint alleges. inter alia, I 1 233 NLRB No. 88 than is the income of Respondents projected from the abbreviated period they have been in business. The Administrative Law Judge concluded that reliance on a predecessor's annual gross volume for purposes of establishing Board discretionary jurisdic- tion is precluded in all cases where partial-year commerce data is available for the successor employ- er. In support of the proposition, the Administrative Law Judge relied on Martin J. Baker, an individual proprietor, d/b/a Galaxy Theater, et al., 210 NLRB 695 (1974). The issue in Galaxy Theater, however, was not framed in terms of whether or not partial-year commerce date existed for the successor employer, but, rather, involved the applicability of two inde- pendent jurisdictional tests: [T]he Board has treated a successor-employer as if it had commenced operations of a new business and has determined whether it meets the jurisdictional standard by making a forward projection based on its actual experience. The Board has also used the 12-month experience of a predecessor to project what the revenues of the successor will total during its first 12 months of control where evidence indicates that the business will continue in essentially the same manner as before the change of ownership. The latter test was not restated to the exclusion of the former and to have done so would plainly conflict with important policy considerations which both underlie our discretionary standards and were addressed in Galaxy itself. That much is evident from the Board's rejection in Galaxy of the Administrative Law Judge's reliance on Perma Vinyl Corporation..4 Whereas Perma Vinyl seeks to protect the victims of unfair labor practices who, but for a change in ownership, would clearly be entitled to a Board- ordered remedy, the Administrative Law Judge would assert jurisdiction here [in Galaxy ] although he would not have asserted jurisdiction over any operation separately before the change in ownership. Therefore, the Administrative Law Judge's rationale that a sale of a business should not result in a lapse of coverage is totally inapplicable here, where the income is combined to achieve coverage rather than continue it. The latter point is crucial to an understanding of what was involved in Galaxy, for it was a case in discriminatory discharges of whom I worked at Northgate and 10 at Wyandotte. The discharges, thus, substantially correspond to the changes in the complement. :' In the last of the three, 1976, the jurisdictional amount is based on a projection from the approximately I l-month period the predecessors were in operation. 4 Permna Vinyl Corporation. Dade Plastics Co. and United Slates Pipe and Foundry Company, 164 NLRB 968 (1967). See Gala.ry, supra, fn. 8. 586 NORTHGATE CINEMA, INC. which the application of either test would not have resulted in coverage. Neither the predecessor em- ployer's volume of business nor the successor's partial-year business projected forward met applica- ble discretionary standards.5 And to apply in a mutually exclusive fashion the tests restated in Galaxy could readily portend harsh consequences. Statutory remedies for serious unfair labor practices committed on the date of acquisition might well be unavailable to the victims of such conduct solely because of an offending successor's measured effort, in the beginning weeks of operation, to defeat Board jurisdiction. While we express, of course, no opinion on the merits of the General Counsel's case, the allegations of the instant com- plaint present a not too dissimilar picture in which the Respondents allegedly took over operation of the theaters involved for the avowed purpose of "getting rid of" the labor organization which represented employees at both. We conclude, therefore, that the enterprises in- volved herein meet, on the basis of their gross volume of business in each of the three most recent calendar years, our monetary standard for the assertion of jurisdiction over such enterprises and shall, accord- ingly, remand the proceeding to the Administrative Law Judge for purposes of issuing a decision on the merits and recommended Order. ORDER It is hereby ordered that this proceeding be, and it hereby is, remanded to Administrative Law Judge Almira Abbot Stevenson for such further action as is required in light of our Decision herein to assert jurisdiction. I In Galaxy the respondent operated a theater and two bookstores whose gross volume in calendar year 1972 fell far short of the jurisdictional standard. In March 1973, it purchased two additional theaters and in June 1973 a third-all of whose income, combined, similarly did not meet the standard. The income from all six entities for the year preceding the hearing (utilizing a projection for the newly acquired operations) likewise was insufficient. Finally, income for calendar year 1972 of the two theaters acquired in March. combined with a projected income for the theater acquired in June and the 1972 income of the previously owned theaters, still fell short. At no point, therefore, did the case present a question of whether one or the other traditional test was met but involved. as the Board stated in Galaxy, a case lying "somewhere between the situations in which [those tests are applied." DECISION STATEMENT OF THE CASE ALMIRA ABBOT STEVENSON, Administrative Law Judge: This case was heard in Detroit, Michigan, April 27 and 29, 1977. The original charge was filed November 30, and served on the Respondent corporations December 2, 1976; the first amended charge was filed January 11, and served January 12, 1977. Upon the entire record,l including the demeanor of the witnesses, and after due consideration of the memorandum brief filed by the General Counsel, I make the following: FINDINGS OF FACT AND CONCLUSIONS OF LAW I. Jurisdiction Northgate Cinema, Inc., a Michigan corporation, since November 1, 1976, has been engaged solely in operating the Northgate theater in Hazel Park, Michigan. Its total receipts from ticket and concession sales for the 5 months it was in business prior to the hearing were $77,204. Projected over a period of 12 months, these receipts would total $185,292. Wyandotte Theater, Inc., a separate Michigan corpora- tion, has, since November 24, 1976, been engaged solely in operating the Wyandotte theater in Wyandotte, Michigan. Its total receipts from ticket and concession sales for approximately its first 4 months of operations amounted to $83,450, which projected over a 12-month period totals $250,344. It is clear that the Respondent corporations individually do not meet the Board's jurisdictional standard for motion picture theaters of $500,000 annual gross income. 2 The General Counsel contends, however, that the gross incomes of the Respondent corporations should be combined with each other because they are a single employer. The record establishes that a single individual, Ronald Sloan, wholly owns and controls both corporations; that he is actively engaged, with his Northgate general manager, Ronald Undieme, in the operation and booking of movies for both theaters; and that Sloan exercises centralized control over labor relations by retaining and exercising final authority over general wage increases and all decisions relating to the operation of the two theaters. I find therefore that Northgate Cinema, Inc., and Wyandotte Theater, Inc., constitute a single employer for jurisdictional purposes. 3 Even so, however, the combined projected gross income of the two corporations, Northgate $185,292 plus Wyandotte $250,344, falls short of the Board's $500,000 standard.4 General Counsel argues further that the first 5 months of the Respondent's operation of the two theaters are not truly reflective of the theaters' potential revenue because I General Counsel's exhibits erroneously marked have been noted and corrected. 2 Cedar Hills Theatres, Inc., et al, 168 NLRB 871 (1967); Chicago Theatrical Protective Union Local No. 2, I.A.T.S.E. (Midwest Neas Reel Theatres, Inc.), 151 NLRB 857 (1965). 3 Chicago Theatrical Protective Union Local No. 2, . TS. E. (Midvest News Reel Theatres, Inc.), supra. 4 As Northgate Cinema, Inc.. pays S1,875 a month (which projects to $22,500 annually) to Zyoquip Company in Cincinnati Ohio, as rent for all the equipment in its theater, and Wyandotte Theatre, Inc., pays National Screen Service, New York. approximately S80 a week (which projects to $4.160 annually) for trailers and previews of coming attractions, I find that the Board has statutory jurisdiction over the Respondent. 587 DECISIONS OF NATIONAL LABOR RELATIONS BOARD they went through a winding down operation by their former owners, startup operations were hampered by extensive theater repairs, and both theaters were struck by revenue-damaging picketing for extensive periods of time. Therefore, the argument continues, a more appropriate basis for projecting the theaters' revenues would be the year 1976 when the theaters were not encumbered by the above factors. Thus, the General Counsel would, for the Northgate, add the $212,183 gross income which the predecessor company earned until the end of October to the $29,074 earnings of the Respondent in November and December, for a total 1976 gross of $241,257. For the Wyandotte, the General Counsel would add that theater's gross income of $253,772, which the predecessor earned through November 19, to the $24,271 which the Respon- dent made from that date until the end of 1976, for a yearly total of $278,043. Combining the gross income figures would result in a total of $519,299, which, if used as the Respondent's probable gross for 1977, would meet the Board's standard.5 Briefly, the relevant facts with regard to the Respon- dent's relation to the former owners and operators of the theaters are as follows: Before November 1, 1976, the Northgate theater was operated by Show, Inc., which leased the building from Borman's, Inc., and leased the equipment from Zyoquip Company. On or about Novem- ber 1, the Borman's, Inc., lease to Show, Inc., was assigned to Northgate Cinema, Inc., which assumed Show, Inc.'s monthly payments to Zyoquip for the equipment. Before November 24, the Wyandotte theater building was owned by First Elm Corporation and operated by Suburban Detroit Theatres, Inc. Ronald Sloan purchased the building and equipment from First Elm Corporation, and then leased them to Wyandotte Theatre, Inc., which became the new operator in place of Suburban Detroit Theatres, Inc. There are no substantial interrelationships between Borman's, Inc., Show, Inc., First Elm Corporation, or Suburban Detroit Theatres, Inc., or between any of them and either of the Respondent corporations. 6 In Martin J. Baker, an Individual d/b/a Galaxy Theatre, et al., 210 NLRB 695 (1974), the Board stated: Where a successorship is involved, the Board has treated a successor-employer as if it had commenced operations of a new business and has determined whether it meets the jurisdictional standard by making a forward projection based on its actual experience. 5 The General Counsel also points out that the combined gross incomes of the two theaters under their former owners exceeded $500.000 dunng 1974 and 1975. 6 Ronald Sloan owns an 8.4-percent interest in First Elm Corporation, and Ronald Undieme, whose present title is general manager of Northgate Cinema, Inc., was a stockholder and president of Show. Inc. 7 The record shows that a new box office was built for the Wyandotte theater, and repairs costing $1.622 were made to a fan in the building. Toilets had to be unplugged in the Northgate theater. It appears that the Wyandotte may have been closed for 2 days: there was no interruption in business at the time of the Northgate takeover. I Projectionist Richard Hallmon testified that the Union picketed the Northgate theater from November 4, 1976, until some time in January i977: General Manager Ronald Undieme said the picketing lasted until about Christmas. Projectionist Paul Flowers testified the Union picketed the The Board went on to say it has also used the 12-month experience of a predecessor to project what the revenues of the successor will total during its first 12 months of control where evidence indicates that the business will continue in essentially the same manner as before the change of ownership. In support of this latter approach, the Board cited Will Coach Lines, Inc., 175 NLRB 518 (1968), and Car City, Inc., 116 NLRB 1571 (1956), cases in which no relevant commerce date was available for the successor companies. In Galaxy Theatre, the respondent had operated one theater and two book stores throughout 1972 and pur- chased two more theaters in 1973. The combined gross incomes of all five operations projected from the first month of the respondent's operation in 1973 did not amount to $500,000. In these circumstances, the Board declined jurisdiction because the $500,000 standard could be achieved only by a projection based on "imputing to Respondent, in addition to his own income for 1972 (prior to the takeover) the 1972 income from enterprises then totally unrelated to that of the Respondent; . . . thus [securing] a gross for the calendar year 1972 which the evidence shows has not been and will not be achieved after the takeover." This appears to be what the General Counsel would have the Board do in the instant case. Thus, this is not a case where no data is available from which the Respondent's own experience can be projected. On the contrary, data representing 4 to 5 months of the Respondent's experience is available, and it indicates that the Respondent will not achieve the required volume of business during its first year of operations. Moreover, the record does not support the General Counsel's contention that there was any winding down of operations by the former owners. Nor is there evidence that the Respondent's operations were hampered by any extensive theater repairs, 7 or by the picketing.8 In these circumstances, I find, in accord with Galaxy Theatre, supra, that, without imputing to the Respondent in addition to its own income during 1976 prior to its takeover the income from enterprises then totally unrelated to that of the Respondent in order to secure a projection which the evidence shows the Respondent has not and will not achieve after its takeover, the Respondent does not meet the jurisdictional standard for its industry. I conclude that the complaint must be dismissed.9 [Recommended Order for dismissal omitted from publi- cation.] Wyandotte theater for 2 or 3 weeks beginning on or about December 1, 1976. Except for the projectionists, all employees continued working, and there is no evidence as to what extent, if any, the picketing affected the Respondent's business, and the Board has refused to speculate on such matters. Motion Picture Machine Operatrors Local Union 330. AFL-CIO (Western Hills Theatres, Inc.), 204 NLRB 1057 (1973). Adams Iron Works, Inc., 221 NLRB 71 (1975), relied on by the General Counsel, is distinguishable on its facts. There, the respondent, which was engaged in the fabrication and installation of ornamental iron work. had been in business for the past 3 consecutive years and had exceeded the jurisdictional standard in all 3 years, after which its employees engaged in an unfair labor practice strike, and, the Board found, its business "experienced a precipitous decline ... largely due to the picketing." 9 Cf. Retail Clerks Union Local 1557, el al. (Giant Food, of Chattanooga, Inc.l), 217 NLRB 4 (1975). 588