Ponn Distributing, Inc.

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Ponn Distributing, Inc. and Cott Corporation, as a Successor and Retail, Wholesale and Department Store Union, AFL-CIO. Case 1-CA-7971 September 23, 1977 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS PENELLO AND MURPHY On May 4, 1973, the National Labor Relations Board issued its Decision and Order' in this proceeding, finding that the Respondent, Ponn Distributing, Inc., herein called Ponn, engaged in and was engaging in unfair labor practices in violation of Section 8(a)(5), and (3), and (1) of the Act and ordering that it cease and desist therefrom; offer reinstatement to and make whole for loss of pay employees Donald Dinneen and Raoul Mathieu; and, upon request, bargain collectively with Retail, Wholesale and Department Store Union, AFL-CIO, herein called the Union, as the exclusive representa- tive of all employees in an appropriate unit. Enforce- ment of the Board's Order was granted on November 15, 1973, by the United States Court of Appeals for the First Circuit.2 On April 11, 1975, the Regional Director for Region I issued a Notice To Show Cause why Cott Corporation, herein called Cott, should not be found to be Ponn's successor and obligated to remedy the latter's unfair labor practices. On May 13, 1975, the Regional Director, having determined that issues raised by Cott's reply to the notice could best be resolved by a hearing, issued a notice of supplemen- tal hearing. On May 14, 1975, he issued an erratum to the notice of supplemental hearing. Cott and the Union were duly served with copies of all notices. On May 27, 1975, Cott filed a motion to quash the notices with respect to Cott Corporation (asserting that Cott was being improperly made a party in this proceeding) to which the General Counsel filed a reply and opposition on June 10. On June 16, 1975, Cott filed a response to the General Counsel's reply and opposition. On June 24, 1975, Administrative Law Judge Arthur Leff issued an Opinion and Order denying Cott's motion to quash. Cott did not request special permission to appeal that ruling to the Board I 203 NLRB 482. The court's decision was unpublished. :' A representative for Cott signed the stipulation and motion on November 29, 1976, and the amendment to the stipulation of facts on December 9, 1976, and representatives for the Union and the General Counsel signed all three documents on January 17 and 18. 1977. respectively. ' The attached documents consist of: Exh. A -('ott's December 13. 1974, letter, which accompanied checks for backpay to Dinneen and Mathieu, sent to Regional Director Fuchs; Exh. B May 6, 1974, letter from 232 NLRB No. 43 and, in the stipulation of facts, signed by a represen- tative of Cott on November 29, 1976, Cott waived "any procedural defects raised in its Motion." On various dates, the last being January 18, 1977, Cott, the Union, and the General Counsel entered into a stipulation of facts, a motion to transfer the proceeding to the Board, and an amendment to the stipulation of facts. 3 In the motion, the parties agreed that the motion, stipulation of facts, and exhibits attached thereto 4 constitute the entire record in this proceeding; that no oral testimony was necessary or desired by any of the parties; that the parties waived a hearing before an Administrative Law Judge, the making of findings of facts and conclusions of law by an Administrative Law Judge, and the issuance of an Administrative Law Judge's Decision; and that the parties desired to submit the case directly to the Board for decision. By order dated February 16, 1977, the Board approved the stipulation, transferred the proceeding to itself, and set a date for the filing of briefs. Thereafter, timely briefs were filed by the General Counsel and Cott. 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 entire record herein, as stipulated by the parties, as well as the briefs, and makes the following findings and conclusions. FACTS I. JURISDICTION Ponn, a Massachusetts corporation whose principal office and place of business was located at 2 Mill Street, Leominster, Massachusetts, was engaged in the distribution to various retail customers of beverages manufactured by Cott in western Massa- chusetts. On November 11, 1973, Cott canceled Ponn's distributorship and foreclosed on its security interest in Ponn's assets, and the next day Cott commenced to distribute its own beverages over the territory previously served by Ponn. As of the date it signed the stipulation of facts herein, Cott served substantially all the customers previously serviced by Ponn, plus a substantial number of additional customers. On the basis of our original Decision and Order in this proceeding, wherein we concluded that Cott's counsel to the Union, denying that Cott was the successor of Ponn; Exh. C--Regional Director Fuchs' Notice To Show Cause, dated April II, 1975; Exh. D-letter of April 25, 1975, from Cott's counsel to the Regional Director in response to the Notice To Show Cause: Exh. E-Regional Director's notice of supplemental hearing, dated May 13, 1975; Exh. F-- Regional Director's erratum to the notice of supplemental hearing, dated May 14, 1975; Exh. G--Cott's motion to quash the notices with respect to Cott Corporation, and Exh. H-General Counsel's reply and opposition to the motion to quash the notices with respect to Cott Corporation, dated June 6, 1975. 312 PONN DISTRIBUTING, INC. Ponn was engaged in commerce within the meaning of the Act, we find that Ponn was engaged in commerce within the meaning of the Act until at least November 11, 1973. Although the parties to this proceeding failed to stipulate that Cott was engaged in commerce within the meaning of the Act, in view of the stipulation that Cott assumed Ponn's operation and the fact that we have previously asserted jurisdiction over Cott,5 we conclude that Cott is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The parties stipulated, and we find, that Retail, Wholesale and Department Store Union, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act. III. SUCCESSORSHIP AND BARGAINING ISSUES A. The Issues The issues presented are whether (I) Cott is the successor to Ponn, and, if so, (2) Cott should be ordered to recognize and bargain with the Union. B. The Stipulated Facts On May 4, 1973, the Board issued its aforemen- tioned decision finding that Ponn had refused to bargain with the Union in violation of Section 8(a)(5) and (1) of the Act,6 had discriminatorily discharged two employees in violation of Section 8(a)(3) and (1), and had coercively questioned and otherwise intimi- dated employees, threatened them, and promised them benefits in violation of Section 8(a)(1) of the Act. The Board ordered Ponn, its officers, agents, successors, and assigns, to bargain with the Union, offer reinstatement to the unlawfully discharged employees to the same or substantially equivalent employment, make said employees whole for any losses suffered by reason of their discharge, and to post appropriate notices to employees. On November 15, 1973, the Board's Order was affirmed and enforced against Ponn, its officers, agents, succes- I Cott Beverage Corporation, Case I RD 238, April I. 1957 (not reported in the bound volumes of Board Decisions). 6 The parties have stipulated that the appropriate collective-bargaining unit is as set forth in that Decision: All salesmen, drivers, and warehousemen of Ponn employed at the warehouse, exclusive of office clerincal employees, professional employ- ees, guards, and supervisors as defined in Section 2(11) of the Act. Throughout our Decision and Order herein, we refer to the unit in these terms although the employees in said unit are now employed by Colt and Cott alone is in a position to carry out the mandate of our Order. sors, and assigns, by the United States Court of Appeals for the First Circuit. Ponn's business ran into financial difficulties in 1973 and on November 11, 1973, Cott canceled Ponn's distributorship and foreclosed on its security interest in Ponn's assets.7 There was no sale of Ponn's business to Cott, and no consideration passed from Cott to Ponn. On November 12, 1973, Cott assumed the operation of Ponn's business over the territory previously served by Ponn. In April 1975, Cott reassigned a portion of this territory to Gilbert Distributors, and at the time of the signing of the stipulation of facts herein, Cott serviced all the customers previously served by Ponn, except those transferred to Gilbert, and a substantial number of additional customers. Cott's principal office and place of business is located one-eighth of a mile from Ponn's former facility. Cott did not occupy Ponn's leased facility, but retained and, as of the date of the stipulation, continued to use Ponn's telephone number. Cott's delivery equipment, as of that date, consisted of two leased van body trucks. Ponn also leased these same two trucks, in addition to a third van body truck and one pickup truck from the same lessor. At the time Cott took over Ponn's distributorship, Cott hired all eight unit employees previously employed by Ponn, who constituted Cott's entire complement of unit employees, and who performed substantially the same jobs for Cott as they had for Ponn. At the time of the stipulation herein, only one former Ponn employee was still employed by Cott.8 There is no allegation that any of the terminations or resigna- tions of the other former Ponn employees involved any violation of the Act. In November or December 1974, Cott offered reemployment to the unlawfully discharged Ponn employees, who declined the offers. On December 13, 1974, Cott sent checks totalling $4,017.81 to the Regional Director for Region I in full settlement of Ponn's backpay obligation, but, in an accompanying letter, stated: "You are reminded that Cott Corpora- tion has specifically rejected the contention that it is a successor to Ponn Distributing, Inc." Cott has never recognized a legal obligation to bargain with the Union. However, Cott, without 7 The stipulation is silent as to the nature of Cott's secunty interest in Ponn's assets. The Administrative Law Judge in his Decision in this proceeding (203 NLRB at 483), however. found that: By financial and other arrangements, and under conditions somewhat similar to obtaining a franchise from Cott, [Ponn I independently assumed, subject to some controls by Cott, the distnbution in the Worcester-Leominster-Fitchburg sector of products bearing the brand name of "Cott." N There are currently no former Ponn employees in Cott's employ. 313 DECISIONS OF NATIONAL LABOR RELATIONS BOARD prejudice to its contention that it was not legally obligated to do so, did discuss various subjects appropriate for collective bargaining with the Union between May and August 1974. Two or three bargaining sessions were held, but, upon learning of the filing of a decertification petition on August 30, 1974, Cott withdrew from bargaining and no further negotiating sessions have been held. C. Contentions of the Parties The General Counsel contends that Cott is the successor to Ponn and as such is liable for Ponn's unfair labor practices. In support of this contention, the General Counsel relies on the facts that Cott distributed its beverages over the same territory previously served by Ponn, operated from its plant which was close to Ponn's former location, used two trucks previously used by Ponn, and hired Ponn's entire complement of unit employees who continued to perform their same jobs. Additionally, General Counsel asserts that Cott took over Ponn's business with complete knowledge of the unfair labor prac- tices found against Ponn. Cott contends that for the Board to impose a bargaining obligation upon Cott under the circum- stances of this case would be unfair to Cott and to its present employees who did not work for Ponn. Cott asserts that: (1) no consideration passed from Cott to Ponn and thus Cott could not have protected itself against any potential liability by adjusting the purchase price; s (2) Cott has already satisfied a portion of Ponn's obligations by making backpay payments and offers of reinstatement to the two unlawfully discharged employees: (3) Cott did in fact bargain with the Union until the question concerning the continued majority status was raised; and (4) there has been a complete turnover of employees since Cott assumed operation of Ponn, and therefore no employee who may have been influenced by Ponn's unfair labor practices is still in Cott's employ. Cott contends, therefore, that its rights as well as those of its employees would be served best by allowing the employees to determine by an election if they desire to be represented by the Union. D. Discussion As noted above, the issues in this proceeding are (I) whether Cott is the successor to Ponn, and, if so, (2) whether Cott should be ordered to recognize and bargain with the Union. For the reasons set forth below, we answer both questions in the affirmative. " Thus, according to Cott, this case is distinguishable from Perma Vin'vl (Corporation. Dade Plastics Co. and United States Pipe and Foundrv Companhv. 164 NLRB 968 1967). enfd. 398 F.2d 544 (C .A.5. 1968). afd. sub nom. Golden State Bottling (o.. formerly Pepsi (iola Bottling Co. of Sacramento v. V. l R.B. 414 US. 168 (1973). The principles applicable to the successorship question herein are those enunciated in N.L.R.B. v. Burns International Security Services, Inc., 406 U.S. 272 (1972). In that case, the Court stated, with respect to whether or not an employer who takes over another's operations succeeds to the predeces- sor's bargaining obligations: [W]here the bargaining unit remains unchanged and a majority of the employees hired by the new employer are represented by a recently certified bargaining agent there is little basis for faulting the Board's implementation of the express man- dates of §8(a)(5) and §9(a) by ordering the employer to bargain with the incumbent union. [406 U.S. at 281.] We find similar considerations present in the case before us. Although the Union was not certified, the Board had ordered Ponn to bargain with the Union several months before Cott took over Ponn's opera- tions on November 12, 1973. Three days later the Board's Decision and Order finding Ponn to have violated the Act was enforced by the United States Court of Appeals for the First Circuit. There is no contention by Cott that it was unaware of the Board's Order or the pending court of appeals proceeding at the time of its foreclosure on its security interest in Ponn's assets. In support of its contention that under the circumstances of this case it should not be found to be a successor, Cott argues that the principles set forth in Perma Vinyl Corporation, supra, require a finding that it is not a successor to Ponn. In Perma Vinyl, the Board found that a successor is obligated to remedy the unfair labor practices of its predeces- sor. In that case, the business was continued in the same form and the successor was charged with notice of the unfair labor practice charges against the predecessor. The Board concluded that imposing this responsibility on the bona fide purchaser worked no unfair hardship upon the purchaser inasmuch as it became the beneficiary of the unremedied unfair labor practices and the purchase price could be adjusted to reflect any potential liability. Cott asserts that in this case there was no sale of Ponn's assets to Cott, and thus Cott had no opportunity to adjust the purchase price so as to compensate for any potential liability. We find no merit to this argument, for a sale and purchase is not a prerequisite for a finding of successorship.' 0 Additionally, inasmuch as Ponn was essentially a franchise of Cott, which maintained some control over Ponn's manner of operation, it "' See A I State ibactors, Secured Party in Possession of North Park Mfeat Company, 205 NLRB 1122(1973), and cases cited therein. 314 PONN DISTRIBUTING, INC. appears that Cott assumed operation of Ponn's business in order to protect its own investment in Ponn. In these circumstances, we conclude that Cott was not a totally disinterested party at the time it foreclosed on its security interest in Ponn's assets. Indeed, in our view, Cott's security interest is analogous to the "purchase" relied upon by the Board in Perma Vinyl. Accordingly, we conclude that Cott became a successor to Ponn on and after November 12, 1973, when Cott hired all of Ponn's former employees to continue in their former jobs and essentially contin- ued Ponn's former operation. We further conclude that as Ponn's successor Cott is obligated, in accordance with the basic holding in Perma Vinyl, supra, to remedy Ponn's unfair labor practices. Cott contends that there are special circumstances in this case which militate against ordering it to bargain with the Union even if it is found to be the successor to Ponn. Thus, Cott asserts, correctly, that it engaged in bargaining until a question concerning the continued majority status of the Union was raised by the decertification petition. We note, however, that even while bargaining Cott stated that it had no obligation to do so. We therefore conclude that Cott's few bargaining sessions with the Union do not constitute a basis for finding that Cott remedied Ponn's unlawful refusal to bargain. We further find that in these circumstances Cott could not validly rely on the decertification petition as a reason to terminate bargaining. 1 Cott also argues that, inasmuch as none of Ponn's former employees are still employed by Cott, its present employees should not be forced to be represented by a union which they have not had an opportunity to select. Cott thus seeks to benefit from having successfully avoided bargaining from Novem- ber 12, 1973, until such time as a complete turnover of unit personnel was effectuated. However, "[p]rior unremedied unfair labor practices preclude an employer from questioning the majority status of the union." 12 Additionally, "it is a well-settled principle that new employees are presumed to support the union in the same ratio as those whom they have replaced." 13 Accordingly, we conclude that the turnover in the employee complement does not warrant excusing Cott from its obligation to bargain. "I See Olson Bodies, Inc., 206 NLRB 779, 780 (1973), in which the Board held: Serious unremedied unfair labor practices ... tend to produce disaffections from a union and thus remove as a lawful basis for an employer's withdrawal of recognition the existence of a decertification petition or any evidence of loss of union support which, in other circumstances, might be considered as providing objective consider- ations, demonstrating a free and voluntary choice on the part of employees to withdraw their support of a labor organization. Finally, we find no merit to Cott's contention that, because it has already satisfied a portion of Ponn's obligations by offering backpay and reinstatement to the two employees found by the Board to have been unlawfully discharged by Ponn, the further remedy of a bargaining order is unwarranted. Cott offers neither precedent nor rationale in support of this proposition, nor are we aware of any. Cott further offers no compelling reasons warranting a conclusion that it should be relieved of the obligation of satisfying the entire Board Order. To the contrary, it is obvious that the remedying of 8(a)(3) discharges cannot serve to remedy 8(a)(5) refusals to bargain since separate and different statutory rights, obliga- tions, and considerations are involved. Consequently, if this contention of Cott were to prevail, the refusal- to-bargain violation would go unremedied and the Board's Order against Ponn and its successor, Cott, substantially would be to no avail. On the basis of the foregoing, having found that Cott is the successor to Ponn and that the circum- stances of this case do not warrant a conclusion that Cott should be excused from remedying its predeces- sor's unfair labor practices, we shall order Cott to bargain with the Union. N.L.R.B. v. Burns Interna- tional Security Services, Inc., supra. IV. THE EFFECTS OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Cott set forth above have a close, intimate, and substantial relationship to trade, traffic, and commerce among the several States, and tend to lead to industrial strife burdening and obstructing commerce. v. REMEDY Having found that Cott has failed to remedy all of Ponn's violations of the Act by refusing to recognize and bargain with the Union since November 12, 1973, we shall order Cott to cease and desist therefrom and, affirmatively, to bargain with the Union upon request.' 4 12 King Radio Corporation, 208 NLRB 578. 583 (1974), enfd. 510 F.2d 1154 (C.A. 10, 1975). 11 James W Whirfield d/b/a Currtten Supermarket, 220 NLRB 507, 509 (1975). 14 As the successor to Ponn, Cott was also responsible for remedying Ponn's violations of Sec. 8(aX3) and (1) of the Act. However, inasmuch as the General Counsel concedes that Cott has already complied with the affirmative portions of the Order directed to Ponn and "its ... successors" regarding these violations, we shall not include provisions relating to reinstatement and backpay in our Order therein. 315 DECISIONS OF NATIONAL LABOR RELATIONS BOARD CONCLUSIONS OF LAW I. Cott Corporation is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The following unit was found by the Board in its Decision and Order reported at 203 NLRB 482, stipulated by the parties herein, and continues to be appropriate for purposes of collective bargaining: All salesmen, drivers and warehousemen of Ponn employed at the warehouse, exclusive of office clerical employees, professional employees, guards and supervisors as defined in Section 2(11) of the Act. 3. Since May 4, 1973, the Union has been the exclusive representative of the employees in the unit found appropriate above. 4. On and after November 12, 1973, Cott Corpo- ration became responsible for remedying the unfair labor practices found by the Board to have been committed by Ponn Distributing, Inc. 5. As the successor to Ponn Distributing, Inc., Cott Corporation succeeded to its predecessor's bargaining obligations under the aforesaid Board Order, and has since that date refused to recognize and bargain with the Union as the exclusive representative of its employees in the appropriate unit. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, Cott Corporation, Leominster, Massachusetts, its officers, agents, successors, and assigns, shall: I. Cease and desist from: (a) Refusing to bargain collectively with Retail, Wholesale and Department Store Union, AFL-CIO, as the exclusive bargaining representative of the employees in the following appropriate unit: All salesmen, drivers and warehousemen of Ponn employed at the warehouse, exclusive of office clerical employees, professional employees, guards and supervisors as defined in Section 2(11) of the Act. (b) In any like or related manner, interfering with, restraining, or coercing its employees in the exercise of their right to self-organization, to form, join, or assist the above-named Union, or any other labor organization, to bargain collectively through repre- sentatives of their own choosing, and to engage in other concerted activities guaranteed by Section 7 of the Act, for the purpose of collective bargaining or other mutual aid or protection, or to refrain from any or all such activities. 2. Take the following affirmative action, which is deemed necessary to effectuate the policies of the Act: (a) Upon request, bargain with the above-named Union as the exclusive representative of the employ- ees in the unit described above with respect to wages, hours, and other terms and conditions of employ- ment and, if an agreement is reached, embody said agreement in a signed contract. (b) Post at its Leominster, Massachusetts, plant copies of the attached notice marked "Appendix." ' 5 Copies of said notice, on forms provided by the Regional Director for Region 1, after being duly signed by Cott's representatives, shall be posted by Cott immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reason- able steps shall be taken by Cott to insure that said notices are not altered, defaced, or covered by any other material. (c) Notify the Regional Director for Region 1, in writing, within 20 days from the date of this Order, what steps Cott has taken to comply herewith. 15 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." APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT refuse to bargain collectively with Retail, Wholesale and Department Store Union, AFL-CIO, as the exclusive representative of the employees in the bargaining unit described below. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of their right to self-organization, to form, join, or assist the above-named Union, or any other labor organization, to bargain collec- tively through representatives of their own choos- ing, and to engage in any other concerted activities for the purposes of collective bargaining or other mutual aid or protection, or to refrain from any or all such activities. WE WILL, upon request, bargain collectively with the said Union as the exclusive representa- tive of all our employees in the appropriate unit with respect to wages, hours, and other terms and 316 PONN DISTRIBUTING, INC. conditions of employment, and, if an understand- ing is reached, embody such understanding in a signed agreement. The bargaining unit is: All salesmen, drivers and warehousemen of Ponn employed at the warehouse, exclusive of office clerical employees, professional employees, guards and supervisors as de- fined in Section 2(11) of the Act. CoTr CORPORATION 317