Southwest Distributing Co.

SOUTHWEST DISTRIBUTING CO. Southwest Distributing Co., Inc. and Brewery, Soft Drink, Industrial & Allied Workers Local Union 1111, a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of Ameri- ca. Cases 23-CA-6192 and 23-RC-4415 September 29, 1977 DECISION, ORDER, AND DIRECTION BY CHAIRMAN FANNING AND MEMBERS JENKINS AND MURPHY On March 3, 1977, Administrative Law Judge Herbert Silberman issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a brief, and the Charging Party filed a brief in support of the Administrative Law Judge's Decision. 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 briefs and has decided to affirm the rulings, find- ings,' and conclusions of the Administrative Law Judge only to the extent consistent herewith. The Administrative Law Judge found, and we agree, that Respondent violated Section 8(a)(1) of the Act by coercively soliciting union information and union support from Watt, and by coercively interro- gating Ammons in late August and again in September. We do not agree, however, with his findings that Respondent discriminatorily laid off employees Ammons, Kirkland, and Davila. We further disagree with his disposition of the challenged ballots cast in Case 23-RC-4415. The essential facts are as follows. On March 1, 1976, Anheuser-Busch breweries were subjected to a nationwide strike which continued until June 7, 1976. Respondent, a wholesale beer distributor of Anheu- ser-Busch products, immediately suffered a substan- tial reduction in the amount and types of beer available to it at its various facilities, including its Conroe, Texas, facility, the only facility involved here. This in turn resulted in a substantial loss of customers to its competitors. Approximately 6 weeks after the commencement of the strike, Coors intro- duced its beer products into Respondent's Conroe marketing area and almost immediately captured, and over the next 7 months retained, approximately i Respondent contends that, because the matter was not alleged in the complaint, it would be deprived of due process were we to adopt, as we do. the Administrative Law Judge's finding that Manager Smith unlawfully coerced Ammons in September 1976 and thereby violated Sec. 8(aX i) of the Act. We find no merit in this contention. While the complaint may not have 232 NLRB No. 116 19 percent of that market, 9.3 percent of which was at Respondent's expense. These overlapping events, plus a preexisting price differential which favored Respondent's competitors, including Coors, caused Respondent to suffer serious and continuous month- ly sales losses, which, by November 1, 1976, amounted to 34 percent compared to a similar period in 1975. In addition, several weeks after the conclu- sion of the strike, Respondent, at Anheuser-Busch's behest, began a 4-month test in its marketing areas to determine the effect of the strike on sales. However, because the test was designed to develop a true sales picture, Respondent was not allowed to conduct any price-off promotions during the test period. Despite its efforts, which included a series of managerial meetings beginning in May 1976 direct- ed, inter alia, toward considerations of expense curtailment and reductions in force, Respondent was unable to stem the adverse economic tide. By August 1, 1976, and despite a now unlimited supply of Anheuser-Busch products, its route salesmen were unable to sell "what [Respondent] was putting on the trucks . .. [and were] getting in at 1:00 or 1:30 [p.m.] and wanting to come in earlier." On August 3, 1976, Respondent's continued sales losses prompted its president, Gray, to instruct Conroe Manager Smith to submit recommendations "on how he could tailor his operation." On August 10, 1976, Smith presented a memorandum to Gray which proposed that on or before September 1, 1976,2 (1) one of Conroe's five package routes be eliminated, the route salesmen be laid off, and' the route stops be consolidated into the four remaining package routes; and (2) Conroe's two area supervisors be demoted to rank-and-file status and relegated to route work, where they would displace one package route salesman and the keg route salesman. On this same day, Gray approved the plan and instructed Smith to implement it "at the end of August" subject to the approval of Respondent's board chairman, Georges, who then was abroad. On August 18, 8 days later, Respondent received the Charging Party's letter requesting recognition as representative of Respondent's six route salesmen and its one warehouseman and thus learned, for the first time, of the existence of its employees' union activity. On August 19, the Board's Regional Office mailed to Respondent a notice of representation hearing pursuant to the Charging Party's petition for certification in Case 23-RC-4415, which it filed on August 16, and which listed September 7, 1976, as alleged the incident with the specificity desired by Respondent. its language is sufficiently broad to include the incident. Moreover, the matter was fully litigated. 2 All parties agree that the beginning of September signals the end of the beer season. 635 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the hearing date. On August 20, Smith conducted a meeting attended by all but one of the Conroe employees wherein he compared the terms of Respondent's collective-bargaining agreement cover- ing its Houston, Texas, facility employees with the benefits and conditions presently enjoyed by the employees at Conroe. Smith concluded his remarks by asking the employees "to be sure to think hard about it and to make sure you make the right decision." Five days later, Smith saw Ammons driving down the highway, followed him for several miles until Ammons stopped at an inn, and in Ammons' words "asked me if I had been thinking. And I said, yes, sir. I've heard the Union's side of the story and I've heard ... the Company's side of the story, and I'm still thinking. And we started talking about something else." Meanwhile, on August 24, Board Chairman Georges returned home and was informed of the petition and of the retrenchment program Gray had proposed, which he then approved. On September 1, 1976, Smith implemented the precise retrenchment plan that he had recommended and Gray had approved on August 10 and, on the basis of seniority, laid off Ammons, Kirkland, and Davila and demoted to route salesmen the two area supervisors3 who thereafter did not exercise any supervisory functions. Prior to this layoff, Respondent never had laid off employees at its Conroe facility at the conclusion of the beer season. Ammons' layoff, however, was of short duration for, as the most senior of the laid-off employees, he was recalled on September 20, 1976, to fill the position vacated by a route salesman who had quit. On October 20, 1976, pursuant to a Stipulation for Certification Upon Consent Election, an election was conducted in a unit composed of route salesmen and warehousemen which resulted in three votes for, and one against, the Charging Party, and four challenged ballots. The ballots cast by the two former area supervisors were challenged by the Charging Party on the ground that they were supervisors on the date of the election, and the Board agent conducting the election challenged the ballots cast by Kirkland and Davila because their names did not appear on the eligibility list. Smith readily admitted that, after learning of the forthcoming election, he "hoped" that the demoted area supervisors would vote against the Union, and that he thought Kirkland and Davila would vote for the Union and that Ammons' vote was "on the fence." I According to the testimony of these employees, when laid off, Kirkland was told that he "would be [recalled in] either Apnl or March"; Davila was told that he "probably" would be recalled "between Apnl and March of 1977"; Ammons was told that he was laid off "indefinitely":; Maze, one of The Administrative Law Judge concluded from the foregoing facts that Respondent was aware of its employees' organizational activity before it had reached an effective "termination decision" because Gray's August 10 decision to execute the recom- mended layoff plan was not "finalized" until it was approved by Georges on August 24, 6 days after Respondent had acquired knowledge of such activi- ty. Thus, the Administrative Law Judge rejected Respondent's economic defense; speculated that Respondent not only gerrymandered the unit by replacing employees who Smith "probably assumed" were union adherents with those he "hoped" were antiunion, but then also deliberately effectuated the layoff prior to September 7, the date set for the hearing in Case 23-RC-4415 at which time voting eligibility would be determined, in order to have a voting list to its liking; and concluded that the layoff was unlawful "even if Respondent merely accelerat- ed the date of an otherwise lawful reduction in its work force." We do not agree. The record amply supports Respondent's contention that as a result of the Anheuser-Busch strike and the almost simultaneous introduction of Coors' products into its distributing area it suffered substantial reductions in the sale of its products. These losses in sales continued after the Anheuser-Busch strike ended and after the reduction in the number of employees at the Conroe facility. Further, it is clear that, throughout the period prior to the layoff, Respondent was concerned about the impact of the Anheuser-Busch strike and the intro- duction of Coors' products in its area, and was discussing what personnel changes would be required to meet the sales decline which its Conroe facility was experiencing. Likewise, we do not agree with the Administrative Law Judge that the record supports the conclusion that the plan was put into effect for the purpose of gerrymandering the unit in which the election would be held. The record clearly shows the layoffs were implemented in strict conformity with the terms of a plan agreed upon by Smith and Gray prior to any knowledge by Respondent of any union activity, that the layoff followed strict seniority, and that Ammons was recalled in accordance with seniority. In addi- tion, the record is void of any probative evidence indicating that Respondent varied or accelerated its layoff plan as a result of having received notice that the representation petition had been filed. We cannot find, on this record, that the effective decisional date was advanced, as the Administrative Law Judge the two demoted supervisors, was told that he would be reinstated to a supervisory position "if business would pick up." The record is silent with regard to the other demoted supervisor, and Respondent avers that recall is dependent on its economic recovery. 636 SOUTHWEST DISTRIBUTING CO. found, to the time Respondent "finalized" its layoff plan, nor that it "finalized" its plan because of antiunion considerations, nor that the unlawful conduct in which it engaged when it was aware of such union activity either supplies the requisite factor of unlawful motivation for the layoff or invalidates Respondent's economic defense. We shall, therefore, dismiss the complaint to the extent that it alleges the layoff was discriminatory under Section 8(a)(3) of the Act. Accordingly, because the layoffs were not unlaw- fully motivated, and since on both the eligibility and election dates Kirkland and Davila did not have a reasonably foreseeable expectancy of recall, we shall sustain the challenges to their ballots. Similarly, since former Area Supervisors Maze and Fisher are properly included in the unit, and because the record shows that their demotions are permanent until such indefinite time as Respondent's business improves so as to warrant their return to supervisory status, we find that they have no reasonably foreseeable likelihood of returning to their supervisory positions, and we overrule the challenges to their ballots. Accordingly, we remand Case 23-RC-4415 to the Regional Director for Region 23 and direct him to open and count the ballots cast by Maze and Fisher and to issue a revised tally of ballots. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, Southwest Distributing Co., Inc., Conroe, Texas, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Unlawfully questioning employees about their union activities or the union activities of other employees. (b) In any like or related manner interfering with, restraining, or coercing its employees in the exercise of the rights guaranteed in Section 7 of the Act. 2. Take the following affirmative action which is deemed necessary to effectuate the policies of the Act: (a) Post at its place of business at Conroe, Texas, copies of the attached notice marked "Appendix." 4 Copies of said notice, on forms provided by the Regional Director for Region 23, after being duly signed by Respondent's representative, shall be posted by it immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereaf- ter, in conspicuous places, including all places where notices to employees are customarily posted. Reason- able steps shall be taken by Respondent to insure that said notices are not altered, defaced, or covered by any other material. (b) Notify the Regional Director for Region 23, in writing, within 20 days from the date of this Order, what steps the Respondent has taken to comply herewith. IT IS FURTHER ORDERED that the complaint herein be, and it hereby is, dismissed insofar as it alleges violations not found herein. DIRECTION It is hereby directed that within 10 days from the date of this Decision, Order, and Direction, the Regional Director for Region 23 shall open and count the ballots cast by Fred Maze and Ron Fisher and thereafter prepare and cause to be served on the parties a revised tally of ballots. 4 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 unlawfully question employees about their union activities or the union activities of other employees. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of their rights to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, or to refrain from any and all such activities. SOUTHWEST DISTRIBUTION CO., INC. DECISION AND REPORT AND RECOMMENDATIONS WITH RESPECT TO CHALLENGED BALLOTS STATEMENT OF THE CASE HERBERT SILBERMAN, Administrative Law Judge: These consolidated proceedings were heard in Conroe, Texas, on December 13 and 14, 1976. Following the close of the hearing, briefs were filed with the Administrative Law Judge on behalf of General Counsel, the Employer, and the Union. 637 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The Pleadings The complaint in Case 23-CA-6192, dated October 4, 1976, as amended at the hearing, alleges that Respondent, Southwest Distributing Co., Inc., herein called the Employ- er or the Company, has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a)(l) and (3) of the National Labor Relations Act, as amended. Based upon a charge filed on September 1, 1976, by Brewery, Soft Drink, Industrial & Allied Workers Local Union 11 I11, a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, herein referred to as the Union, the complaint, in substance, alleges that the Company unlawfully discharged its employees, James W. Ammons, Phillip Z. Davila, and Donald Lee Kirkland, on August 31, 1976,1 because of their membership in or activities on behalf of the Union; and, by reason thereof and other conduct set forth in the complaint, the Company has interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in Section 7 of the Act. The Respondent duly filed an answer generally denying that it has engaged in the alleged unfair labor practices. With respect to the representation proceeding, Case 23- RC-4415; a petition for Certification of Representative was filed by the Union on August 16, 1976, and on September 7, 1976, the parties entered into a Stipulation for Certification Upon Consent Election, which was approved by the Regional Director. Pursuant thereto an election was conducted on October 20,2 in a unit composed of all route salesmen and warehousemen employed by the Company at its facility located at 2615 Industrial Lane, Conroe, Texas, excluding all other employees: part-time employees, office clerical employees, outside salesmen, guards, watchmen, and supervisors as defined in the Act. The tally of ballots shows that of approximately six eligible voters, three votes were cast for Petitioner, one vote was cast against Petitioner, and four ballots were challenged. An investiga- tion of the challenged ballots was conducted by the Regional Director. His report, issued on November 4, shows that the ballots of Phillip Z. Davila and Donald L. Kirkland were challenged by the Board agent because their names did not appear on the eligibility list, that the complaint in Case 23-CA-6192 alleges that these two individuals had been unlawfully discharged, and that the ballots of Ronald Fisher and Fred Maze were challenged by the Union on the ground that they were supervisors on the date of the election. The Regional Director found that the challenges were sufficient in number to affect the results of the election, that substantial and material factual issues have been raised by the challenges which are directly related to issues involved in Case 23-CA-6192, and that a hearing should be conducted to resolve those issues. He therefore directed that a hearing with respect to the challenged ballots be held and be consolidated with the unfair labor practice hearing in Case 23-CA-6192 and that, thereafter, Case 23-RC-4415 be transferred to and continued before the Board in Washington, D.C. I James W. Ammons was reinstated to his former position on September 28, 1976. Upon the entire record in the cases and from my observation of witnesses and their demeanor, I make the following: FINDINGS OF FACT 1. THE BUSINESS OF THE COMPANY The Company, a Texas corporation, is engaged in the sale and distribution of beer at wholesale. The facility involved in this proceeding is located at Conroe, Texas. In the course and conduct of its business the Company annually purchases and receives at its warehouse in the State of Texas goods valued in excess of $50,000 which are shipped to it through channels of interstate commerce directly from points outside the State of Texas. The Company admits, and I find, that it is an employer within the meaning of Section 2(2) engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The Union is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES A. Background The Company is a wholesale distributor of Anheuser- Busch beers under the brand names of Budweiser and Michelob. It began operations in May 1961 when it acquired a distributing facility located in Houston, Texas, from Anheuser-Busch. Subsequently, it opened much smaller distributing facilities in the Texas towns of Rosenberg and, in 1965, Conroe. Prior to September 1, the Company operated 28 routes from its Houston facility and employed approximately 69 driver-salesmen, helpers, and warehousemen. These employees are represented by the Union with whom the Employer has a collective-bargain- ing agreement. Albert John Foster, president of the Union, testified that the Union's relations with the Company at Houston have been "very pleasant." At Conroe, prior to September 1, the Company operated five package routes and one keg route and employed six driver-salesmen, one manager, two area supervisors, a warehousemen, and an office clerk. The area supervisors were Ronald Fisher and Fred Maze, who were supervisors within the definition of the Act. The supervisors were paid salaries plus allowances for certain expenses. The five package route driver-salesmen were paid a base salary of $58.50 per week plus a commission of 18 cents per case of beer that they delivered and the keg routeman was paid $170 per week plus 50 cents for each keg of beer that he delivered. B. The Organizational Drive In July Alvin Harrison, a package route salesman, contacted Union President Albert Foster and informed Foster that the Company's Conroe employees were 2 All dates refer to the year 1976 unless otherwise indicated. 638 SOUTHWEST DISTRIBUTING CO. interested in union representation. A meeting was held on August 13 which was attended by the keg routeman, Phillip Davila, and by four package route salesmen, Alvin Harrison, Donald Kirkland, James Ammons, and Danny Kelly. On or before that day union authorization cards were signed by Harrison, Davila, Kirkland, and Ammons. On August 16 the Union filed a Petition for Certification of Representative with the Board. The following were then working in the job classifications covered by the petition: Harrison, Davila, Kirkland, Ammons, Kelly, John Slott, and Walter Watt. On the same day the Union wrote a letter to the Company, which was received by the Company on August 18, requesting recognition as representative of the driver-salesmen, helpers, and warehousemen employed at its Conroe facility.3 Alvin Harrison was the principal contact between the Conroe employees and the Union. However, Harrison voluntarily quit his job about September 28 and thereafter the Union's principal contacts were with James Ammons and Donald Kirkland. On August 19, the Acting Regional Director of the Board mailed a notice of representation hearing to the Company and the Union, setting September 7, 1976, as the date for the hearing. On the hearing date a Stipulation for Certification Upon Consent Election was executed. On August 20 Manager Dan Smith held a meeting attended by all the Conroe employees except the office clerk. Smith stated that he had received a copy of the Union's representation petition. He then proceeded to compare the wages and benefits which were being paid to the Conroe employees with those provided for under the collective-bargaining contract covering the Company's Houston employees and also with those of local competi- tors. Among other things that Smith said was that, if the Union's organizational campaign should be successful, then (by comparison with the terms of the Houston collective-bargaining agreement) the employees would receive 3 weeks' vacation after 10 years instead of after 5 years; on the other hand, the employees would gain one holiday per year; the Houston route salesmen, in a case of a reduction of force, would be able to bump the Conroe route salesmen; the area supervisors would no longer be able to assist the route salesmen during promotional sales campaigns; the insurance package under the Houston union contract was not as good as the insurance package the employees at Conroe then had; and they would be required to attend monthly union meetings and to pay union dues and an initiation fee. Smith also said that the employees did not have to vote for the Union even if they had signed authorization cards. As there is no evidence that Smith in his talk to the employees on August 20 misrepresented the terms of the collective-bargaining agreement covering the Company's Houston employees, I find no violation of the Act by reason of the comparisons Smith made between the terms of that agreement and the benefits which the Conroe employees then had. 1 Jack Gray, the Company's president, testified that he first learned of the union activity at the Conroe facility when he received a copy of the representation petition filed by the Union. About August 25 Manager Smith followed James Ammons to a place known as Bill's Drive Inn. When Ammons got out of his truck Smith motioned for Ammons to come to where he was sitting in his car. Ammons testified without contradiction that Smith "asked me if I had been thinking. And I said, yes, sir. I've heard the Union's side of the story and I've heard ... the Company's side of the story, and I'm still thinking. And we started talking about something else." Ammons further testified that on August 31 he was laid off. Thereafter, towards the end of September, he was asked to visit Smith. According to Ammons, when he met with Smith the latter informed him that "Harrison had quit and left them in a real bind, and that he needed me up there. But Houston had informed him that they thought they could make it without, and he [Smith] knew better. And he said that he would have to get in touch with Mr. Gray and find out if I would be O.K. to come back, and he would get in touch with me Monday. And he went on to say, I sure hope you been thinking about this union thing coming up. And he said, I have been employed with this Company a long time, and I feel like that if you don't come to our side, that my job is in real jeopardy. And I told him I had been off a month and had a lot of time to think about it, and that I was kind of leaning toward the company's way." The complaint alleges that the above-described encoun- ters between Dan Smith and James Ammons constitute unlawful interrogation. I agree. In each instance the purpose of Smith's initial remark to Ammons was to elicit from Ammons an expression as to whether or not Ammons intended to support the Union. At the first encounter Ammons avoided a direct reply by stating that he was "still thinking." At the second encounter, however, Smith pressed Ammons harder for a declaration of intention first by informing Ammons that Smith had to obtain approval of Company President Gray before Smith could recall Ammons to work and then by informing Ammons that "if you don't come to our side, that my job is in real jeopardy." This time Ammons' response was less uncertain and he advised Smith that he was "kind of leaning toward the company's way." The Act is intended to guarantee employees the right to engage in organizational activities free of fears of reprisals. For a supervisor to press an employee to declare whether or not he was going to support a union, particularly where the wrong answer might jeopardize the possibility that the employee would be recalled to work from layoff, constitutes an unlawful instrusion upon employees' organizational rights. 4 Walter Watt testified that about August 30, while he was working in the warehouse, Smith engaged him in a conversation and asked if Watt thought "anyone could be persuaded to our side. .... I told him that I didn't think so, because he had a bunch of young fellows and they wanted to better themselves. He said, 'Oh, s-,' and he walked off." In agreement with General Counsel I find that for Manager Smith to question warehouseman Watt as to whether other employees could be persuaded to support 4 National Business Forms, 176 NLRB 859, 863 (1969), affd. 425 F.2d 1082 (C.A. 6. 1970). 639 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the Company's position was to infringe unlawfully upon the privacy which the statute seeks to accord employees in deciding whether or not to support a union and implicitly solicited a declaration from Watt as to his attitude toward the Union. I find such conduct constituted a violation of Section 8(a)(1).5 C. The Layoffs On August 31 as James Ammons, Donald Kirkland, and Phillip Davila returned from their routes each was informed that he was being laid off for an indeterminate period of time because the Company's sales were bad. These three had the least seniority with the Company. In order to accomplish the layoff the Company eliminated one package route, distributing the stops on that route among the other four routes, and demoted Area Supervi- sors Fred Maze and Ron Fisher to fill the jobs made vacant by the layoffs. Maze, who had been working for the Company for approximately 10 years, was continued at his same salary, but Fisher was taken off salary and paid on the same basis and at the same rate as the other routemen. The evidence establishes that since their demotion Maze and Fisher have not exercised supervisory authority. James Ammons was recalled to work on September 28 after Alvin Harrison voluntarily quit his employ. General Counsel's theory is that a motivating consider- ation for the layoffs was to remove three suspected union supporters from the bargaining unit and substitute for them two supervisors who the Company believed would not aid the organizational campaign and would not vote for the Union in an election. The Company's position is that the personnel charges were dictated solely by reasons of economic necessity. Jack Gray, the Company's president, testified that in 1976 two overlapping events occurred which had a drastic adverse impact upon the Company's business. From March I to June 7 there was a strike at the Anheuser-Busch breweries which seriously reduced the products available for distribution and, to aggravate the sales decline, during the strike period Coors Beer was introducted into the Company's market areas. Distribution of Coors Beer began in the Conroe area on April 15 and in the Houston area in May. Company sales have not yet recovered from these twin blows and, according to Jack Gray, there is no expectancy that the Company's Conroe work force will expand in the near future. Statistics prepared by the Company show that for its Conroe operation the percentage comparison of sales for the first 10 months in 1976 with the same months in 1975 is as follows: Month Budweiser Michelob Keg Beer Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. +15.8 +22.3 -27.9 +21.4 6/ -57.2 -47.0 -23.8 -29 .2 -29.4 -39.7 Total: -25.9 +107.5 + 89.9 + 38.1 -35.6 -51.9 -29.3 -39 .3 -45.8 -32.1 -50.8 + 7.9 +10.4 +11.2 - 5.5 -23.5 - 3.2 -21.6 -12.0 - 5.0 -28.5 -19.5 - 9.4 President Gray testified that in May he held a meeting with the managers of the Company's three operations at which there was discussion of the effect of the strike upon the Company's business and the managers were advised that they should begin thinking about ways of cutting expenses, including reductions of personnel. Gray further testified that about 3 weeks after the end of the brewery strike, in late June or early July, the Anheuser- Busch management informed the Company that the Company had been selected to conduct a test in its market area to determine the effect of the strike upon sales, and in support of this test Anheuser-Busch would supply the Company with all the beer it required. According to Gray, "as a result of that decision on the part of the brewery and us becoming this test market, we said, well, we're going to give it all we got, you know. We're going to see if we can turn this thing around. So we then approached it in that light, to give it all we had and see." Gray explained that, because the market test was intended to develop a true picture of sales, price-off promotions were forbidden. It was not until after the sales results for the months of August through October had been accumulated that Anheuser-Busch again permitted the Company to stimu- late sales with a price-off promotion. This was done in November.7 On August 3 Gray held a meeting with his managers. Although as of that date the Company had devoted only I month to its market test, Gray instructed Dan Smith, the Conroe manager, to submit in writing his recommenda- tions "on how he could tailor his operation." Gray suggested that Smith would have to eliminate the two area supervisors because the Company cannot afford their overhead. He instructed Smith to "think about relegating them back to routes, and then see what you can do in the elimination of a route and still give the best service we possibly can under the circumstances." 8 Gray did not I Fairview Hospital, 174 NLRB 924, 926 (1969), enfd. 75 LRRM 2839, 64 LC 1 11,298 (C.A. 7, 1970); Clark Printing Company, Inc., 146 NLRB 121, 122 (1964). R The improvement for Budweiser beer in the month of April is accounted for by the fact that inventory which had been accumulated in anticipation of the stnke was distnbuted in that month. I In March and June 1975 there had been sales promotions. These promotions, in part, account for the drop in 1976 sales as compared to 1975 sales for the 2 months. The Company did not submit any figures to show the effect of the November sales promotion or the companson of sales for November 1976 with November 1975. 8 Smith's version of what occurred differs as to detail from Gray's version. According to Smith, "Mr. Gray called me in his office on August 640 SOUTHWEST DISTRIBUTING CO. testify that similar instructions had been given to the managers of the Houston and the Rosenberg operations. The next week Smith delivered the following handwritten memorandum to Gray: Interoffice memo AUG. 10-1976 Jack Gray As we discussed in our meeting in your office 8-3- 76, in order for me to reduce my operating expenses and to organize my operation to be in line with my reduced volume, I recommend the following changes to be made effective on or before 9-1-76. I. Elimination of package route #5 (my last route added) and consolidate this area with my remaining four package routes. 2. Reduction of my keg route as a four day per week route to a two day route to be pulled by supervisor Fred Maze-thus eliminating another em- ployee. 3. In view of my reduced sales volume I do not need two sales supervisors plus myself. Therefore I recommend assigning supervisor Fisher (my junior supervisor) back to a package route from which he was promoted. This would eliminate another employee. In my opinion we can still offer adequate service to my area and certainly cut back on operating expenses by these moves. DAN C. SMITH Although the memorandum contains no projections (1) as to how much money would be saved by the recommen- dations (and Jack Gray testified that since it was imple- mented on September I no computation as to the savings, if any, have been made), (2) as to the reduction in labor costs as a percentage of sales, (3) as to the reduction in labor costs as a percentage of overhead, (4) as to the total savings as a percentage of sales and as a percentage of overhead, (5) how the plan would affect the Company's potential for increasing its sales,9 or (6) how the Company will "still give the best service we possibly can" despite the elimination of a route, and although Respondent intended to give the Anheuser-Busch test, which still had 2 more months to run, "all we've got," Gray authorized Smith to implement his proposed plan as of the end of August. Gray testified that the end of August was selected for implement- ing the personnel reduction at Conroe because a seasonal drop in business occurs at that time and it was not until August 24 that he was able to obtain the approval of the plan from Basil Georges, the Company's chairman of the board. Gray testified that in implementing the plan seniority was followed because that is the fairest method for the 3rd and after the meeting. .. he told me to come up within seven days to have my recommendation as to what we should do. And then I wrote it out and gave it to him." 9 The evidence is that the two area supervisors whose jobs were eliminated spent approximately three-fourths of their time promoting the sale of the Company's products. 1' Gray testified that with respect to its Houston operation the number of effecting layoffs. Thus the three junior employees were laid off and the two area supervisors, who had greater seniority, were demoted. Subsequently, when one of the retained employees, Alvin Harrison, quit his employment Ammons was recalled.°0 D. Conclusions The essential facts are not in conflict. Respondent offers a superficially reasonable explanation for the August 31 layoffs, namely, that they were effected in order to offset a sharp decline in business volume. Purportedly the action taken would result in savings by the elimination of one truck route and by a reduction in payroll and related expenses. On the other hand, uncontradicted evidence adduced by General Counsel points to other reasons for the layoffs. Although in Houston the Company has had amicable relations with the Union, nevertheless, it was opposed to the organization of its Conroe employees. Conroe Manager Dan Smith understood company opposi- tion to be very strong as is reflected by his comment to James Ammons that "I have been employed with this company a long time, and I feel like that if you don't come to our side, that my job is in real jeopardy." Smith testified that he "wanted to win the election." He did not stand idly by to let his wish develop by itself but took forthright action directed towards achieving his goal. On August 20 he held a meeting with his employees in which he sought to dissuade them from supporting the Union. Thereafter, on August 25 he spoke to Ammons privately about the subject. On August 30 he questioned warehouseman Watt as to the union attitudes of the employees and expressed his bitter disappointment when he learned from Watt that the drivers favored the Union." As of prior to September I there were seven employees in the bargaining unit requested by the Union, namely, the six drivers and the warehouseman. Based upon his conversa- tion with Watt, Smith probably assumed that of the seven only Watt might vote for the Company. However, this unfavorable situation could be reversed by terminating three drivers and demoting Maze and Fisher, whose votes Smith believed would be against the Union, so that the count would then be three to three. The timing of the layoffs tends to support such speculation. The Company received the Union's demand for recognition on August 18; it probably received the representation petition about the same time; and only I or 2 days later it received the Board's notice setting the representation hearing for September 7. If a plan to reverse what was thought to be an unfavorable position was conceived it was imperative to put it into effect quickly before the payroll period for voting eligibility should be fixed. (The Stipulation for Certification Upon Consent Election fixed eligibility as the payroll period ending routes was reduced from 28 to 25 and there was a reduction of 4 helpers from the 69 employees in the unit. I Manager Dan Smith testified that he was of the opinion that Maze and Fisher would vote against the Union, that the Company "didn't have Kirkland's and Davila's vote," and only after he spoke with Ammons towards the end of September about the latter returning to work did he form an opinion that Ammons' vote was on the fence. 641 DECISIONS OF NATIONAL LABOR RELATIONS BOARD September 5, 1976. Thus, the layoffs and demotions were effected in the nick of time.) The Company's explanation for taking the action it did when it did is weak. (The alleged violation of Sec. 8(a)(3) is established even if Respondent merely accelerated the date of an otherwise lawful reduction in its work force.) First, although Gray testified that August 31 was selected because there is a seasonal drop in sales after Labor Day, his testimony does not indicate how deep such fall in business normally is. In the 15 years that the Company has been in the beer distributing business it had not previously laid off employees at Labor Day. Thus, it would seem that in the year 1976, August 31 was a no better time to effect a layoff than some weeks later. Had the Company waited a few weeks it would have had an opportunity to assess whether there would be a sales decline following Labor Day. Second, from about July I through October the Company was engaged in a market test to ascertain the effect of the brewery strike and was striving to improve sales without "price-off' promotions. It is not logical that, in the midst of this test period when it was seeking to do its utmost to improve sales, it would cut personnel which necessarily meant a reduction in customer service and also the elimination of its area supervisors who normally spent about three-fourths of their time in sales activities. Third, prior to the personnel changes no projection was made as to what savings would accrue therefrom and between September 1 and the date of the hearing the Company had not calculated the savings. Four, Maze testified that, about a week before his demotion on August 31, Manager Dan Smith assured him that he would be reinstated as area supervisor "if business would pick up," and in the meantime he was continued in the job of keg routeman at the same salary he had been receiving as area supervisor. This suggests that the Company did not plan to keep Maze on a route indefinitely.12 Upon consideration of all the evidence I find that Ammons, Kirkland, and Davila were laid off on August 31 not for the reason asserted by Respondent, but in order to prevent the Union from gaining the support of a majority of the Company's bargaining unit employees at its Conroe facility, and by such layoffs Respondent has violated Section 8(a)(l) and (3) of the Act. IV. THE REPRESENTATION PROCEEDING I have found that Respondent on August 31 unlawfully discharged employees Phillip Z. Davila and Donald L. Kirkland in violation of Section 8(a)(l) and (3) of the Act. But for their unlawful discharges they would have been employed by Respondent during the payroll period ending September 5, 1976, the payroll period for eligibility as set forth in the Stipulation for Certification Upon Consent Election, and would have been eligible to vote in the 12 In its brief Respondent argues: "The union activities of the terminated employees could not be a factor in Respondent's decision because their organizational attempts did not start until after the termination decision was made." This assertion is contrary to the evidence. Company President Gray testified that the proposal to terminate the three employees was "finalized" when it was approved by the chairman of the board on August 24, which was after the Company had received the Union's request for recognition. The August 10 memorandum from Conroe Manager Smith recommended a layoff as of September I or earlier. However, the memorandum gave no election. Accordingly, I recommend that the challenges to the ballots of Davila and Kirkland be overruled. I further find that Ronald Fisher and Fred Maze, who were supervisors within the meaning of the Act on August 31, were demoted to the nonsupervisory positions left vacant by reason of the unlawful discharges of employees Davila, Kirkland, and James Ammons. As the eligibility of Maze and Fisher to vote in the election depended upon their transfer to jobs which would not have been vacant but for the Employer's unlawful discharge of the incumbents, I recommend that the challenges to the ballots of Maze and Fisher be sustained. Accordingly, I recommend that the ballots of Phillip Z. Davila and Donald L. Kirkland be opened and that such further proceedings be taken in the matter as shall be appropriate and required under the rules and regulations of the National Labor Relations Board. V. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Company set forth in section III, above, occurring in connection with its operations de- scribed in section 1, 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. VI. THE REMEDY Having found that Respondent has engaged in unfair labor practices, I shall recommend that it cease and desist therefrom and that it take certain affirmative action designed to effectuate the policies of the Act. Having found that Respondent unlawfully terminated James Ammons, Phillip Davila, and Donald Kirkland on August 31, 1976, I shall recommend that Respondent offer Davila and Kirkland (Ammons was reinstated on Septem- ber 28, 1976) immediate and full reinstatement to their former jobs or, if those jobs no longer exist, to substantially equivalent positions, without prejudice to their seniority and other rights and privileges, and make Ammons, Davila, and Kirkland whole for any loss of earnings each may have suffered by reason of the discrimination against him by payment to him of a sum of money equal to that which he normally would have earned from August 31, the aforesaid date of his termination, to the date of Respon- dent's offer of reinstatement, less the employee's net earnings during such period. The backpay provided for herein shall be computed on the basis of calendar quarters, in accordance with the method prescribed in F. W. Woolworth Company, 90 NLRB 289 (1950). Interest at the rate of 6 percent per annum shall be added to such reason for the selection of that date and before implementation it required approval which was not forthcoming until after August 24. Respondent argues further: "In fact, the most likely inference that can be drawn from this record is that the employees turned to the Union after it became apparent that a reduction in force would occur." This may be true. But it is irrelevant. The issue is whether a motivating reason for the layoff on August 31 was to cripple the Union's organizational drive and not whether the Company, absent any unlawful purpose, would have effected a reduction of its work force on some later date. 642 SOUTHWEST DISTRIBUTING CO. backpay and shall be computed in the manner set forth in Isis Plumbing & Heating Co., 138 NLRB 716 (1962). Respondent's unlawful activities, including the discrimi- natory terminations of employees Ammons, Davila, and Kirkland, go to the very heart of the Act and indicate a purpose to defeat self-organization of its employees. The unfair labor practices committed by Respondent are potentially related to other unfair labor practices proscrib- ed by the Act, and the danger of their commission in the future is to be anticipated from Respondent's conduct in the past. The preventive purposes of the Act will be thwarted unless the recommended Order herein is coexten- sive with the threat. Accordingly, in order to make effective the interdependent guarantees of Section 7 and thus effectuate the policies of the Act, an Order requiring Respondent to cease and desist from in any manner infringing upon the rights of employees guaranteed in the Act is deemed necessary. N.LR.B. v. Express Publishing Company, 312 U.S. 426 (1941); N.LR.B. v. Entwistle Manufacturing Company, 120 F.2d 532 (C.A. 4, 1941). Upon the basis of the foregoing findings of fact and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW 1. By discriminatorily terminating the employment of James Ammons, Phillip Davila, and Donald L. Kirkland on August 31, 1976, thereby discouraging membership in the Union, Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a)(3) of the Act. 2. By interfering with, restraining, and coercing its employees in the exercise of the rights guaranteed in Section 7 of the Act, Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(aX 1) of the Act. 3. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.] 643