Garden Fashions, Inc.

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Garden Fashions, Inc., and Timely Sportswear, Inc.; Kingston Sportswear, Inc; Crystal Sportswear, Inc.; Bing Fin Chang a/k/a Barry Chang and Ollie Brabham. Case 2-CA-13104 August 2, 1977 SUPPLEMENTAL DECISION AND ORDER' BY MEMBERS JENKINS, MURPHY, AND WALTHER On March 17, 1977, Administrative Law Judge Sidney J. Barban issued the attached Supplemental Decision in this proceeding. Thereafter, 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 and to adopt his recommended Order, as modified herein. The Administrative Law Judge failed to grant General Counsel's Motion for Summary Judgment against Respondent Crystal Sportswear, Inc., on the ground that General Counsel conceded on the record that Crystal Sportswear went out of business before the backpay specification in this case issued. After careful consideration of the record, we find merit in General Counsel's exception to this determination. The record shows that early in the proceeding General Counsel stated that Crystal Sportswear, Inc., was no longer in existence. It is not clear what General Counsel intended by this statement. How- ever, at a subsequent point in the hearing and in his brief he renewed his Motion for Summary Judgment against Respondent Crystal. In any event, General Counsel's factual assertion (not entered into as a matter of stipulation) was devoid of evidentiary value and did not prejudice Respondent Crystal (which made no appearance at the proceeding). According- ly, since we are in agreement with the Administrative Law Judge that Crystal Sportswear, Inc., was properly served by service upon its incorporator and designated agent, and since Respondent Crystal has failed to file an answer to the backpay specification, we shall grant General Counsel's summary judgment motion. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor 231 NLRB No. 9 Relations Board adopts as its Order the recommend- ed Order of the Administrative Law Judge, as modified below, and hereby orders that the Respon- dents, Garden Fashions, Inc. and Timely Sportswear, Inc.; Kingston Sportswear, Inc.; Crystal Sportswear, Inc.; and Bing Fin Chang a/k/a Barry Chang, New York, New York, their officers, agents, successors, and assigns, shall take the action set forth in the said recommended Order, as so modified: Insert "Crystal Sportswear, Inc." after "Kingston Sportswear, Inc." and before "Bing Fin Chang a/k/a Barry Chang" in the Administrative Law Judge's Supplemental Order. 1 The Board's original Decision and Order is reported at 214 NLRB 766 (1974). SUPPLEMENTAL DECISION STATEMENT OF THE CASE SIDNEY J. BARBAN, Administrative Law Judge: This matter was heard at New York, New York, on September 20 and October 13, 1976, upon a backpay specification dated August 18, 1976, as amended at the hearing, issued pursuant to an Order of the National Labor Relations Board against Garden Fashions, Inc. and Timely Sports- wear, Inc., and their officers, agents, successors, and assigns. (214 NLRB 766)1 In the backpay specification (par. VII), it is alleged that on or about May 10, 1974, Garden and Timely ceased to operate their plant at 307 Canal Street, New York City, and that since that time Crystal Sportswear, Inc., Kingston Sportswear, Inc., Barry Chang,2 and Morris Youshah at various times have operated said plant and engaged in substantially the same business operations, with substan- tially the same employees and supervisors, as Garden and Timely had been engaged in. Answers to the backpay specification were filed by Chang and Youshah only. During the hearing, General Counsel made Motions for Summary Judgment (a) as to Garden, Timely, Kingston, and Crystal on the ground that these parties did not file answers to the specification and did not make an appearance at the hearing, and (b) as to Chang and Youshah on the ground that their answers were insufficient under the Board's Rules and Regulations. For reasons discussed hereinafter, General Counsel's motions were granted as to all parties except Crystal and Youshah. As has been noted, General Counsel has since withdrawn his contention that Youshah is subject to the backpay specification. I The Board's Order was enforced by the Court of Appeals for the Second Circuit, which granted the Board's motion for summary entry of judgment which was filed on July 22, 1976, in Docket 76-4161. 2 The spelling of Chang's name has been corrected in accordance with his signature on documents in the record. The backpay specification also named Morris Youshah (name also corrected), but by motion dated November 11, 1976 (included in the record as ALJ Exh. I), General Counsel requested that the specification and notice of hearing in this matter as to Youshah be withdrawn. That motion is hereby granted. 72 GARDEN FASHIONS, INC. By motion received on January 10, 1977, General Counsel seeks to amend the backpay specification. This will be dealt with hereinafter. Upon the entire record in this case, and after due consideration of the briefs filed by General Counsel and by Phillip G. Klein, Esq., who, though he stated an appear- ance at the hearing only for Youshah and Chang, filed a brief on behalf of all the above-named Respondents and Youshah, I make the following: FINDINGS AND CONCLUSIONS A. The Problem of Service of Process From the outset of this case before the Board there has been a problem with service of process upon the Respon- dents involved. These Respondents are employers, or alleged employers, who operate in the Chinatown area of New York City as contractors in the garment industry, sewing articles of clothing for manufacturers who cut the garments and presumably thereafter finish them. The above-named Charging Party, Brabham, was employed as a sewing machine operator by Garden and Timely, which were found by the Board in the prior proceeding in this matter to "constitute a single integrated business enter- prise." 1. The prior proceeding As set forth in the Board's Decision in the prior proceeding in this matter, the original charge was served on Respondent Garden by registered mail at the address listed in its certificate of incorporation, but was returned marked "moved, left no address." A Board agent thereafter effected service by delivering a copy of the charge personally to Chang, apparently at the same address. Chang advised the agent of the name of the attorney for Garden and Timely (Phillip G. Klein). On the basis of the record before it, the Board found that Chang was "a responsible party in charge of a substantial phase of Respondents' operations sufficient to be a managing or general agent for service of process under sec. 4(dX3) of the Federal Rules of Civil Procedure [citations omitted ]." A copy of the original complaint was sent by registered mail to Garden and to the attorney. Neither the complaint nor the return receipt addressed to Garden was returned. The Board describes subsequent problems with service as follows (214 NLRB at 766): The first amended charge was filed January 4, 1974, naming Respondent Timely, in addition to Respondent Garden, as committing the unfair labor practices alleged above. The scenario set forth above was reenacted to effect service of this charge, including the marking of the return envelope "moved, left no address" and the eventual personal service on Respon- dents by the Board agent. With minor variations, it was repeated with each additional document, including the :I The articles of incorporation of both Garden and Kingston provide that "The Secretary of State is designated as agent of the corporation upon whom process against it may be served. The post office address to which the second amended charge, the amended complaint, and the instant Motion for Summary Judgment. Respondents' attorney thereafter had several contacts and communications with the Board in some of which he purportedly represented the Respondents and in some of which he stated that he had not yet been retained. No answer was filed by Respondents to the complaint. The Board, inter alia, ordered the Respondents Garden and Timely and their officers, agents, successors, and assigns, to reinstate the Charging Party, Brabham, to her former or substantially equivalent position, and to make her whole for losses suffered by reason of the discrimination against her. As noted above, the Board's Order has been enforced by a judgment of the Court of Appeals for the Second Circuit. 2. The present proceeding According to General Counsel's Exhibit 2A, which is entitled "Affidavit of Service of Backpay Specification and Notice of Hearing," those documents were served by postpaid registered mail on August 18, 1976, on Garden, Kingston, and Chang at 307-309 Canal Street, New York City,3 and on Phillip G. Klein, Esq., at his office in New York City. Klein is shown to have been the incorporator of both Garden and Kingston. Although this "affidavit of service" was duly signed by "Alfred Sussman," an apparent agent of the Regional Director of the Board, it is noted that the document is not verified, as required by the Board's Rules and Regulations. It also does not have attached the customary registered return receipts. General Counsel's Exhibit 2B is a second copy of the document received as General Counsel's Exhibit 2A, upon which is written that Gerald H. Moscola, secretary to the Regional Director, on September 1, 1976, mailed the backpay specification and notice of hearing by regular mail to Kingston, Garden, and Chang, "after they came back from being registered." This again is not verified, but was confirmed by an oral statement of General Counsel at the hearing. It is well established that "[o]fficial action by public officers, including judicial proceedings, are pre- sumed to have been regularly and legally performed." McCormick, Handbook of the Law of Evidence, p. 807 (2d ed., 1972). I therefore find that the Board agents performed their duties as stated. However, there is no dispute that Chang and attorney Klein received service of the Board's process, for Chang filed an answer to the specification (discussed hereinafter), which was prepared by Klein, who also appeared at the hearing on the specification on behalf of Chang. Further, the record shows and I find that Chang has been regularly engaged at the 307-309 Canal Street address, up until at least a week before October 13, 1976, in the same operations as has been described above, and that these operations have been continuously carried on at those Secretary of State shall mail a copy of any process against the corporation served upon him is 307 Canal Street . .. City and State of New York 10013." 73 DECISIONS OF NATIONAL LABOR RELATIONS BOARD premises, with substantially the same work force and with the same people in charge. 4 Attorney Klein confirmed that, at the time of their incorporation, both Garden and Kingston were located at 307-309 Canal Street in New York City. He first declined on the basis of attorney-client relationship to state whether Garden had moved from that location, and then stated that he knew that both Garden and Kingston had moved, but declined to adduce evidence in support of that assertion. With respect to Crystal, its articles of incorporation provide that service may be made on the secretary of state of New York who shall serve Phillip G. Klein at his New York office, Klein being designated to accept such service for the corporation. However, General Counsel conceded on the record that Crystal went out of existence before the specification in this case was issued. 3. Conclusions From the above, and upon the record as a whole, I find that the proper place for service upon Garden, Timely, and Kingston during the times material here was 307-309 Canal Street, New York City, and that proper service on Crystal, if it had continued in existence, would have been made upon Klein. I reject Klein's argument that proper service could have been made only on the secretary of state who would then mail process to the persons and places to which the Board mailed process in the first place. Both Section 11(4) of the Act and Section 102.112 of the Board's Rules and Regulations provide, inter alia, for service by registered mail. It is also clear that service of process may not be avoided by willful refusal to accept registered mail. The Board, in Pasco Packing Company, 115 NLRB 437, 438 (1956) held that in authorizing service by registered mail what Congress intended was "that the Post Office Department tender the registered process to the addressee," stating further: Manifestly if Respondent, by its wilful refusal to accept registered mail, clearly labeled as originating in the Board's Regional Office, can thwart service of process, and require the Regional Director to effectuate service of process by one of the more cumbersome alternative methods listed in Section 11(4) of the Act, then the provision authorizing service by registered mail, be- comes a dead letter with respect to this Respondent and all other parties who may act accordingly. To the same effect, see Local Union 49, Sheet Metal Workers International Association, AFL-CIO, and its Agent, E.D. Brooks (Driver-Miller Plumbing and Heating Corp.), 124 NLRB 888, 890 (1959). There being no probative evidence that Garden or Kingston has changed its address for effectuation of service, I find that service upon Garden and Kingston was effectuated by mailing process to them by registered mail at the address designated by them for service of process. Inasmuch as it has been found that Garden and Timely constitute a single integrated business enterprise, service on Garden constitutes service on Timely. In any event, in view of the Board's finding that 4 The record shows that Chang has leased the premises at 307-311 Canal St., New York City, in his own name, until December 31, 1977. Chang constitutes a proper agent for service on Garden and Timely, service on Chang was sufficient service upon Garden and Timely in this instance. I find no service on Crystal because General Counsel concedes that it went out of existence before the backpay specification issued. B. The Motions for Summary Judgment General Counsel has moved for summary judgment against Garden, Timely, Kingston, and Crystal on the basis that they filed no answers to the specification, thus admitting the allegations, and against Chang on the basis that his answer does not meet the requirements of the Board's Rules and Regulations and thus should be stricken. The Board's Rules and Regulations, Section 102.54 (b) and (c), provide: (b) Contents of the answer to specification.-The answer to the specification shall be in writing, the original being signed and sworn to by the respondent or by a duly authorized agent with appropriate power of attorney affixed, and shall contain the post office address of the respondent. The respondent shall specifically admit, deny, or explain each and every allegation of the specification, unless the respondent is without knowledge, in which case the respondent shall so state, such statement operating as a denial. Denials shall fairly meet the substance of the allegations of the specification denied. When a respondent intends to deny only a part of an allegation, the respondent shall specify so much of it as is true and shall deny only the remainder. As to all matters within the knowledge of the respondent, including but not limited to the various factors entering into the computation of gross backpay, a general denial shall not suffice. As to such matters, if the respondent disputes either the accuracy of the figures in the specification or the premises on which they are based, he shall specifically state the basis for his disagreement, setting forth in detail his position as to the applicable premises and furnishing the appropri- ate supporting figures. (c) Effect of failure to answer or to plead specifically and in detail to the specification.-If the respondent fails to file any answer to the specification within the time prescribed by this section [15 days from service of specification] the Board may, either with or without taking evidence in support of the allegations of the specification and without notice to the respondent, find the specification to be true and enter such order as may be appropriate. If the respondent files an answer to the specification but fails to deny any allegation of the specification in the manner required by subsection (b) of this section, and the failure so to deny is not adequately explained, such allegation shall be deemed to be admitted to be true, and may be so found by the Board without the taking of evidence supporting such allegation, and the respondent shall be precluded from introducing any evidence controverting said allegation. 74 GARDEN FASHIONS, INC. I. Garden, Timely, Kingston, Crystal Having found no proper service on Crystal, the Motion for Summary Judgment against Crystal is denied. How- ever, having found that Garden, Timely, and Kingston were properly served and that they did not file answers to the backpay specification as required by the Board's Rules and Regulations, it is found that each of these Respondents has thereby admitted the allegations of the specifications, including the allegations in paragraph VII of the specifica- tion that Kingston, together with Chang, as a successor to Garden and Timely, has operated the plant formerly operated by Garden and Timely at 307 Canal Street, New York City, engaged in the same business operations as Garden and Timely, employing substantially the same supervisors and employees. It is therefore found that Kingston at times material to this proceeding has been an agent, successor, and assign within the meaning of the Board's Order in this case, operating the business, through the agency of Chang, with knowledge of the unremedied unfair labor practices of Garden and Timely. 2. Chang Chang's answer to the backpay specification was a general objection to the assertion of jurisdiction over him in this matter and a simple, general, and undetailed denial of all the allegations of the backpay specification. The answer was not sworn to nor did it contain the address of the Respondent as required by the Rules and Regulations. Chang's attorney, Klein, was advised that this general denial did not constitute a sufficient answer under the Rules and Regulations. Upon his assertion that he needed more time to secure the necessary records from his client (which records had also been requested by General Counsel under the terms of the Board's Order), in order to prepare a proper answer, an adjournment of 22 days was granted. However, no amended or supplemental answer was ever filed for Chang, counsel stating that his client had not supplied him (or General Counsel) with the necessary records. I find that the answer filed by Chang is not a sufficient answer under the Rules and Regulations of the Board, and it is therefore stricken, and the allegations of the specification, other than paragraph VII, are found to have been admitted by Chang. I hold that the allegations of paragraph VII are of a character that may be sufficiently controverted by a general denial, putting General Counsel to his proof. However, as previously noted, the record establishes that Chang has been engaged at 307-309 Canal Street for Garden and Timely, and continuously thereafter at the same location in the same business operations with substantially the same employees and supervisors. Upon the entire record in this case it is found that Chang at times material to this matter has been an agent, successor, and I In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall, as provided in Sec. assign within the meaning of the Board's order in this proceeding with knowledge of the unremedied unfair labor practices of Garden and Timely. C. Motion To Reopen the Record To Amend the Backpay Specification The backpay specification issued on August 18, 1976, alleges that the backpay period "is from July 18, 1973, the date of [Brabham's] discharge, to the present time (and in futuro, until such time as Respondents make a valid and proper offer of reinstatement to her)." The specification, as amended at the hearing, alleged that, from the third quarter of 1973 through the second quarter of 1976, net backpay due Brabham under the Board's Order was $23,010. On January 10, 1977, a motion was received from General Counsel to accept into the record an exhibit setting forth amended computations of backpay due Brabham for the period from the third quarter 1973 through the second quarter 1976, the same period covered by the original specification. There is indication that this motion has been served on Kingston, Garden, Chang, Klein, and Brabham. No response to the motion has been received so far as I am aware. The effect of the motion is to reduce the net backpay due Brabham until July 1, 1976, from $23,010 to $14,231. In the circumstances there is obviously no prejudice to the Respondents herein and the motion is therefore granted. The motion to amend is hereby marked Administrative Law Judge Exhibit 2, and is included with the formal papers in this matter. D. Remedial Order On the basis of the foregoing findings of fact, conclusions of law, and the entire record in this proceeding, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: ORDER5 Respondents Garden Fashions, Inc., Timely Sportswear, Inc., Kingston Sportswear, Inc., and Bing Fin Chang a/k/a Barry Chang, and their officers, agents, successors, and assigns, shall jointly and severally pay to Ollie Brabham for backpay due until July 1, 1976, under the Board's Order in this matter, Case 2-CA-13104, the amount of $14,231, with interest thereon at the rate of 6 percent per annum computed in accordance with Isis Plumbing & Heating Co., 138 NLRB 716 (1962), and without prejudice to further proceedings hereafter to determine backpay due under said Order from July 1, 1976, until such time as Respondents make a valid and proper offer of reinstatement to Brabham in accordance with the Board's Order. 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes. 75