MPE, Inc.

MPE, INCORPORATED MPE, Incorporated and Teamsters Union Local No. 970 affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Help- ers of America. Cases 18-CA-4849-1 and -2 October 19, 1976 DECISION AND ORDER By MEMBERS JENKINS, PENELLO, AND WALTHER Upon a charge duly filed on January 19, 1976, by Teamsters Local-No. 970, affiliated with Internation- al Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America, hereinafter called the Union, the General Counsel of the National La- bor Relations Board, by the Regional Director for Region 18, issued a complaint and notice of hearing against MPE, Incorporated, hereinafter called Re- spondent. The complaint alleged that Respondent had engaged in and was engaging in unfair labor practices within the meaning of Section 8(a)(1) and (5) of the National Labor Relations Act, as amended, by refusing to bargain collectively and in good faith with the Union as the exclusive bargaining represen- tative of all employees. On May 26, 1976, Respon- dent filed an answer denying the commission of any unfair labor practices, and asserting that it was under no duty to execute a written collective-bargaining agreement which it had neither signed nor assumed. On June 11, 1976, the parties executed a stipula- tion of facts by which the parties waived hearing be- fore an Administrative Law Judge and the issuance of an Administrative Law Judge's Decision and rec- ommended Order, and agreed to submit the case to the Board for findings of fact, conclusions of law, and an order, based upon a record consisting of the stipulation of facts and exhibits, together with the charge, the certification of service thereof, the com- plaint and affidavit of service thereof, and the answer and affidavit of service thereof. On July 22, 1976, the Board approved the stipula- tion of the parties and ordered the case transferred to the Board granting permission for the filing of briefs. Thereafter, both Respondent and the General Coun- sel filed briefs in support of their respective positions. 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. Upon the basis of the stipulation, the briefs, and the entire record in this case, the Board makes the following: - FINDINGS OF FACT 1. JURISDICTION 519 MPE, Incorporated, is, and at all times material has been, a Minnesota corporation with its sole place of business in St. Paul, Minnesota, and is engaged in the manufacture of industrial, office, and restaurant equipment. During the past calendar year, a repre- sentative period, Respondent sold and shipped goods in excess of $50,000 from its facility in St. Paul, Min- nesota, directly to points outside the State of Minne- sota. Respondent admitted, and we find, that MPE, In- corporated, is, and at all times material herein has been, an employer engaged in commerce and in op- erations affecting commerce within the meaning of Section 2(2), (6), and (7) of the Act. II. LABOR- ORGANIZATION Respondent admitted, and we find, that Teamsters Local No. 970, affiliated with International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES Briefly stated, the stipulated facts indicate that the Union at all times material herein acted as the exclu- sive bargaining representative for the production and -maintenance employees of Respondent MPE, Incor- porated. Prior to the expiration of a collective-bar- gaining agreement on June 7, 1975, KOL, Inc., merged with and became Respondent MPE, Incor- porated. Respondent and the Union thereafter en- tered into an interim agreement extending the provi- sions of the expired contract for a period of 3 months. The parties subsequently entered into nego- tiations for a new contract, but:were unable to reach agreement prior to the expiration date of the interim agreement on September 7, 1975. With the ' aid of a Federal mediator, the parties continued their negoti- ations until October 14, 1975, when Respondent, rep- resented by its president, Zubik, and the Union, rep- resented by Business Agent Reiss, reached agreement and initialed a document containing the substantive terms of the settlement, subject to ratification by the union membership and formal execution by both parties. Pursuant to the provisions of the agreement, Respondent implemented the wage increases agreed upon on October 17, 1975, retroactive to September 7, 1975. 226 NLRB No, 79 520 DECISIONS OF NATIONAL LABOR RELATIONS BOARD At all times material herein, the assets of Respon- dent were used to secure a loan from the Small Busi- ness Administration (SBA) under which the SBA was a secured creditor and held the voting rights to 310, 000 shares of Respondent's 650,000 shares -of out- standing stock. On or about October 24, 1975, the SBA obtained the keys to Respondent's facility, os- tensibly to conduct an inventory. Instead, the SBA changed the locks on the premises, shut down Re- spondent's operation, and established a sale date for Respondent's assets due to'nonpayment of the SBA loan. The facility remained closed until on or about December 3, 1975. As a_ result of these events, Respondent contem- plated dissolution and receivership, but instead was contacted by four individuals desirous of acquiring ownership of the troubled enterprise. An assets pur- chase was considered and rejected by the parties, pri- marily because an assets purchase would result in the cancellation of Respondent's long-term lease (with a purchase option) with the St. Paul Port Authority, and the forfeiture of a substantial amount of equity toward the purchase price. The parties settled upon a sale of stock rather than a sale of assets in order to preserve the lease with the St. Paul Port Authority and to allow the sellers to realize a gain on the sale of their stock. At this point, it is important to note that Respondent was repre- sented in its negotiations with the Union by Zubik, a director and president. McPeak, Respondent's chair- man of the board, conducted the negotiations for the sale of stock to the new owners. Neither had been involved at any time in both sets of negotiations. During the negotiations for the sale of Respon- dent's stock, the prospective purchasers inquired on two occasions as to the labor situation at Respon- dent's facility, and on both occasions were informed that there was a union and that the old contract had expired, but a new one had not been executed. The agreement for the sale of stock, which resulted in a complete stock transfer, was finalized on November 25, 1975, and Respondent, under new management and ownership, resumed operations on December 3, 1975. The resumed operation employed substantially the same production process to produce the same goods at the same facility, and eventually employed 13 of the 22 former employees of Respondent. On -or about mjd-December 1975, the Union (Charging Party) learned that Respondent had re- sumed operations, and thereupon presented a final- ized copy of the October 14, 1975, agreement, which had been ratified by the membership, to Respon- dent's president, Halstensen, for signature. Halsten- sen responded that he was unaware of the agreement and would not sign it until it had been reviewed by his attorney. Respondent continues to refuse to exe- cute the October 14,, 1975, agreement. On December '31,' 1975, an employee of Respon- dent filed a decertification petition which was subse- quently dismissed because the list of names submit- ted in support of the petition was undated and untitled. A. Contentions of the Parties The General Counsel contends that the facts dem- onstrate the reason the transfer of ownership of the business took the form of a sale of stock rather than a sale of assets was the intention of both parties to the transaction that Respondent continue, as an on- going corporate entity. It is argued that, since the sale of stock had no effect on Respondent's contrac- tual obligations, and because Respondent's produc- tion format and location remained the same, the lan- guage of N.L.R.B. v. Burns International Security Services, Inc.,' referring to: the limited obligations of a successor employer, is inapposite here. It is therefore the position of the General Counsel that Respondent, as an ongoing corporate enterprise unaffected by the sale of its stock, is bound by the terms of the October 14, 1975, agreement initialed by Zubik and Reiss. Respondent, on the other hand, while acknowledg- ing a duty to recognize and bargain with the Union, denies it is under any obligation to sign or assume the agreement of October 14, 1975. In support of this position, Respondent contends that, under the prin- ciples enunciated in Burns, its responsibilities are that of a successor employer rather than an "alter ego" so closely associated with the former entity that it is deemed to have assumed the latter's labor obliga- tions. Employing this analysis, Respondent argues that, since the new ownership had no knowledge of the October 14, 1975, 'agreement, since there was a complete change in ownership and management, and because it undertook a stock rather than an assets purchase primarily as a matter of'business necessity, the instant case is more akin to a, sale of assets situa- tion, where only a duty to recognize and bargain has been found. B. Analysis and Conclusions The undisputed issue in this case involves a deter- mination as to whether a corporation which has un- dergone a complete change of ownership and man- agement, but which has retained essentially the same employees, production process, and location, is bound to assume a labor contract of which it was not apprised at the time of the transfer of ownership. ' 406 U S 272 (1972) MPE, INCORPORATED 521 The General Counsel, citing Western Boot and Shoe, Inc.,2 contends that the result in that case com- mands a conclusion that the sale of stock in the in- stant case had no effect upon Respondent as a legal entity and therefore it is obligated to sign or assume the agreement of October 14, 1975. An examination of Western Boot and Shoe, however, reveals substan- tial factual differences from the instant situation. Specifically, in Western Boot and Shoe, the Adminis- trative Law Judge determined as a matter of fact that the buyer of 100 percent of the stock of an ongoing business had knowledge of the labor contract be- tween the seller and the Union, and, more important- ly, was found to have explicitly assumed the obhga- tions of the contract that was then in effect. Here, it is stipulated that the purchasers of Re- spondent's stock, while aware of the existence of a union, were informed that the old contract had ex- pired and a new one had not yet been executed. Un- der these circumstances, it cannot be said that the stock purchasers and new managers had in any way explicitly assumed the obligations of a contract of which they were unaware. While it is clear that there may be situations in- 2205!NLRB 999 (1973). volving stock transfers in which the new ownership may be found as a matter of fact to have assumed the labor contract of the, prior owners,, the situation pre- sented here is not of that variety. This case certainly involves more than a cosmetic change in the struc- ture of the enterprise, and thus precludes a finding that the succeeding corporate entity is essentially but a mirror image of the predecessor. Instead, the fac- tors of a complete change in management and own- ership, the limited business options available to the parties to effectuate the transfer, and the absence of any evidence that the transfer was in any way illuso- ry or fraudulent militate against a finding that either assent or even knowledge of the October 14, 1975, agreement should be ascribed to the new ownership and management. Accordingly, we find that Respon- dent is under no duty to sign or assume the - agree- ment of October 14, 1975, and therefore the com- plaint herein is dismissed in its entirety. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board hereby orders that the complaint here- in be, and it hereby is, dismissed in its entirety.