Sullivan Motor Delivery

285 301 NLRB No. 37 SULLIVAN MOTOR DELIVERY 1 On November 1, 1987, the Teamsters International Union was readmitted to the AFL–CIO. The caption has been amended to reflect that change. 2 We deny the Respondent’s motion for an order incorporating briefs to the administrative law judge as part of the record. We find no good cause here to make an exception to the Rules. See Board’s Rules and Regulations, Sec. 102.45(b). We also deny the General Counsel’s motion to reject the Respondent’s ex- ceptions and supporting brief. 3 The Respondent has excepted to some of the judge’s credibility findings. The Board’s established policy is not to overrule an administrative law judge’s credibility resolutions unless the clear preponderance of all the relevant evi- dence convinces us that they are incorrect. Standard Dry Wall Products, 91 NLRB 554 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully ex- amined the record and find no basis for reversing the findings. In rejecting the Respondent’s reliance on First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), as justification for contracting out its oper- ations without offering to bargain over the decision, the judge found Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964), to be apposite. We need not, and do not, enter the debate over the applicability of these decisions to the facts of this case. Where, as here, the Respondent’s decision to subcontract its work and lay off its employees is motivated by antiunion reasons, the Re- spondent is not exempt from a bargaining obligation under First National Maintenance. Strawsine Mfg. Co., 280 NLRB 553 (1986). The judge’s citation of the following cases is corrected: Auto Fast Freight, 272 NLRB 561, 563 (1984), enfd. 793 F.2d 1126 (9th Cir. 1986), and Western Temporary Services v. NLRB, 821 F.2d 1258, 1266 (7th Cir. 1987). 4 In Member Oviatt’s view, there may be limited circumstances, not present here, in which an employer’s financial inability to pay may constitute a de- fense to an allegation that it unilaterally and unlawfully ceased contractually required payments to union benefit funds. To make this defense successfully, an employer must establish that it continued to recognize—and did not repu- diate—its contractual obligations. An employer must also prove that its non- payment was followed by its request to meet with the union to discuss and resolve the nonpayment problem. In Member Oviatt’s opinion, in so doing an employer demonstrates its adherence to the contract and the bargaining proc- ess. Sullivan Motor Delivery, Inc., and Sullivan Motor Delivery, Inc., Debtor-in-Possession and/or Springer Leasing, Inc., and/or ACF, Inc., Joint Employer and/or Successor and/or Single Em- ployer and/or Alter Ego and Teamsters ‘‘Gen- eral’’ Local 200, affiliated with International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America, AFL–CIO1 and Truck Drivers, Oil Drivers, Filling Station and Platform Workers Union, Local No. 705, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL–CIO. Cases 30–CA– 9154 and 30–CA–9343, formerly 13–CA–26106 January 24, 1991 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS DEVANEY AND OVIATT On November 8, 1988, Administrative Law Judge Burton S. Kolko issued the attached decision. The Re- spondent filed exceptions, a supporting brief, and a motion for an order incorporating briefs to the admin- istrative law judge into the record. The General Coun- sel filed a brief in support of the administrative law judge’s findings, an opposition to the Respondent’s motion, and a motion to reject the Respondent’s excep- tions and supporting brief. The Respondent also filed a memorandum in opposition to the General Counsel’s motion to reject its exceptions and supporting brief. The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the decision and the record in light of the exceptions, briefs, and motions,2 and has decided to affirm the judge’s rulings, find- ings,3 and conclusions except as modified. 1. The judge concluded that the Respondent failed to bargain in good faith and that by prematurely de- claring impasses in bargaining and by unilaterally im- plementing its last contract proposals to Local 200 and to Local 705 it violated Section 8(a)(1) and (5) of the Act. We agree with the judge that the Respondent failed to bargain in good faith and prematurely de- clared impasses in bargaining, but we do not adopt his finding that the Respondent unilaterally implemented its last contract proposals. The Respondent instead uni- laterally implemented new terms and condition of em- ployment by continuing its operations under a subcon- tracting arrangement with AFC, Inc. 2. In support of his finding that the Respondent failed to bargain in good faith and prematurely de- clared impasses in bargaining, the judge refers to testi- mony by Andrew Schumi, Local 705’s accountant. In his decision, the judge related Schumi’s opinion of the economic concessions that the Respondent needed in order to retain financial stability. To the extent, if any, that the judge relied on this testimony, we disavow that reliance. The judge also relied on testimony by Local 705’s attorney, Lisa Moss, regarding the January 16, 1986 bargaining session. The judge found that Moss’ testimony was corroborated by Robert DiFrances, the Respondent’s primary shareholder. The record does not support that finding. We find that these errors are harmless. 3. About September 23, 1985, and continuing there- after, the Respondent unilaterally discontinued pay- ments to Local 200’s and Local 705’s health and wel- fare and pension funds, and failed to remit to Local 200 dues already ‘‘checked off.’’ The evidence pre- sented to prove these unilateral actions was uncontested. The judge failed to rule on the complaint allegations that this violated Section 8(a)(5). The Gen- eral Counsel requests the Board to correct the judge’s omission. We agree that the violation has been proved and find that the Respondent by its unilateral actions has violated Section 8(a)(1) and (5) of the Act.4 THE REMEDY Having found that the Respondent has engaged in certain unfair labor practices, we shall order it to cease and desist and to take certain affirmative action de- signed to effectuate the policies of the Act. 286 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 5 Any additional amounts applicable to the delinquent payments shall be paid in accordance with the criteria set forth in Merryweather Optical Co., 240 NLRB 1213, 1216 fn. 7 (1979), and will be computed at the compliance stage of these proceedings. Having found that the Respondent violated Section 8(a)(1) and (3) of the Act by unlawfully laying off its employees, we shall order it to reinstate these employ- ees to their former jobs or, if those positions no longer exist, to substantially equivalent positions, without prejudice to their seniority or other rights and privi- leges previously enjoyed, discharging if necessary any replacements, and make the employees whole for any loss of earnings and other benefits suffered as a result of the discrimination against them, by payment to each employee the amount he normally would have earned from the date of his layoff until the date of the Re- spondent’s offer of reinstatement, less net earnings. Backpay shall be computed in the manner prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), plus interest to be computed in accordance with New Hori- zons for the Retarded, 283 NLRB 1173 (1987). Employees for whom no employment is immediately available shall be placed on a preferential hiring list for employment as positions become available. They will be hired before other persons are hired for the work. Priority of placement on the list is to be deter- mined by seniority or some other nondiscriminatory method. Having further found that the Respondent violated Section 8(a)(1) and (5) of the Act by failing and refus- ing to make contributions to fringe benefit funds, we shall order the Respondent to make whole its unit em- ployees by making all contributions that have not been paid and that would have been paid but for the Re- spondent’s unlawful discontinuance of the payments.5 In addition, the Respondent shall reimburse the unit employees for any expenses ensuing from the Re- spondent’s failure to make the required payments, as set forth in Kraft Plumbing & Heating, 252 NLRB 891 fn. 2 (1980), enfd. mem. 661 F.2d 940 (9th Cir. 1981), the amounts to be computed in the manner set forth in Ogle Protection Service, 183 NLRB 682 (1970), with interest as prescribed in New Horizons for the Re- tarded, supra. We shall also order the Respondent to remit to Local 200 dues already ‘‘checked off.’’ Interest on the dues owed is to be computed in the manner prescribed in New Horizons for the Retarded, supra. ORDER The National Labor Relations Board orders that the Respondent, Sullivan Motor Delivery, Inc., and Sul- livan Motor Delivery, Inc., Debtor-in-Possession and/or Springer Leasing, Inc., and/or ACF, Inc., Joint Em- ployer and/or Successor and/or Single Employer and/or Alter Ego, Milwaukee, Wisconsin, and Chicago and Skokie, Illinois, and their officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Bargaining in bad faith with Teamsters Locals 200 and 705. (b) Changing the terms and conditions of employ- ment of the unit employees without notification to and bargaining with the Locals about such terms and con- ditions. (c) Discriminatorily laying off its bargaining unit employees. (d) Unilaterally laying off unit employees without providing the Locals with notice and opportunity to bargain about the decision to lay off employees and the effects of the decision. (e) Failing to make contributions to Local 200’s and Local 705’s health and welfare and pension funds. (f) Failing to remit the checked-off dues to Local 200. (g) In any other manner interfering with, restraining, or coercing employees in the exercise of the rights that are guaranteed them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) On request, bargain with the Locals as the exclu- sive representatives of the employees in the units con- cerning terms and conditions of employment, including the laying off of unit employees and the effects and, if understandings are reached, embody the under- standings in signed agreements. (b) On request of the Locals, reinstate any term and condition of employment of the bargaining unit em- ployees that the Respondent unilaterally changed after unlawfully declaring impasses in negotiations, includ- ing any changes in the terms and conditions of em- ployment resulting from the layoffs and the subsequent failure to rehire employees, or the failure to rehire em- ployees at the level of the terms and conditions of em- ployment in effect at the time the impasses were de- clared. (c) Make the unit employees whole for any loss of benefits resulting from the unilateral changes in their terms and conditions of employment as set forth in the remedy. (d) Make the unit employees whole by paying all contractually required health and welfare and pension fund contributions, as provided in the collective-bar- gaining agreements, that have not been paid and that would have been paid in the absence of the Respond- ent’s unilateral discontinuation of payments about Sep- tember 23, 1985, and thereafter, with interest. (e) Remit to Local 200, with interest, the dues that it had already checked off but failed to remit. (f) Reinstate the laid-off employees to their former jobs or, if those positions no longer exist, to substan- tially equivalent positions, without prejudice to their 287 SULLIVAN MOTOR DELIVERY 6 If 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 Rela- tions Board’’ shall read ‘‘Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board.’’ seniority or other rights and privileges previously en- joyed, discharging, if necessary any replacements, and make the employees whole for any loss of earnings and other benefits suffered as a result of the discrimi- nation against them, with interest. Employees for whom no employment is immediately available shall be placed on a preferential hiring list for employment as positions become available, as set forth in the remedy. (g) Preserve and, on request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, time- cards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order. (h) Post at its Milwaukee, Wisconsin, and Chicago and Skokie, Illinois facilities copies of the attached no- tice marked ‘‘Appendix.’’6 Copies of the notice, on forms provided by the Regional Director for Region 30, after being signed by the Respondent’s authorized representative, shall be posted by the Respondent im- mediately upon receipt and maintained for 60 consecu- tive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or cov- ered by any other material. (i) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. For the purpose of de- termining or securing compliance with this Order, the Board, or any of its duly authorized representatives, may obtain discovery from the Respondent or its offi- cers, agents, successors, or assigns, or any person hav- ing knowledge concerning any compliance matter in the manner provided by the Federal Rules of Civil Pro- cedure. The discovery shall be conducted under the su- pervision of the United States court of appeals enforc- ing this Order and may be had upon any matter rea- sonably related to compliance with this Order, as en- forced by the court. APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has or- dered us to post and abide by this notice. Section 7 of the Act gives employees these rights. To organize To form, join, or assist any union To bargain collectively through representatives of their own choice To act together for other mutual aid or protec- tion To choose not to engage in any of these pro- tected concerted activities. WE WILL NOT refuse to recognize and bargain with the International Brotherhood of Teamsters, Chauf- feurs, Warehousemen and Helpers of America, Locals 200 and 705, AFL–CIO, as the collective-bargaining representatives in Milwaukee and Chicago respectively of: All drivers excluding office and clerical employ- ees, foremen and assistant foremen, engineers and draftsmen, timekeepers, guards, and watchmen. WE WILL NOT change wage rates or other terms and conditions of employment of employees in the above- described bargaining units without prior notification to and bargaining with the Locals as the representatives of those employees. WE WILL NOT unilaterally lay off employees without providing the Locals with notice and opportunity to bargain about the decision to lay off employees and the effects of that decision. WE WILL NOT fail to make contractually required payments to the Locals’ trust funds. WE WILL NOT fail to remit to Local 200 checked- off dues. WE WILL NOT in any other manner interfere with, restrain, or coerce you in the exercise of the rights guaranteed you by Section 7 of the Act. WE WILL recognize and, on request, bargain with the Locals as the exclusive bargaining representatives of the employees in the above-described units with re- spect to rates of pay, wages, hours, and other terms and conditions of employment and, if understandings are reached, we will embody the understandings in signed agreements. WE WILL, on request, bargain with the Locals con- cerning the decision to lay off employees on January 24, 1986, and the effects of that decision. WE WILL reinstate and make whole those employees laid off on January 24, 1986, for any loss of pay or other employment benefits suffered as a result of our unlawful conduct, plus interest. WE WILL make the unit employees whole by paying all arrearages to health and welfare, and pension funds, as provided in the collective-bargaining agreements, which would have been paid in the absence of our uni- lateral discontinuation of the payments. 288 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD WE WILL remit to Local 200 checked-off dues, with interest, which we deducted but failed to remit. SULLIVAN MOTOR DELIVERY, INC., AND SULLIVAN MOTOR DELIVERY, INC., DEBTOR-IN-POSSESSION AND ACF, INC., AND SPRINGER LEASING, A SINGLE EM- PLOYER DECISION AND ORDER BURTON S. KOLKO, Administrative Law Judge. The Re- spondent (stated in the collective singular for reasons later discussed) conducted a small package delivery service in Milwaukee and between Milwaukee and Chicago. The terms and conditions of employment were covered under collec- tive-bargaining agreements with the labor organizations noted in the case caption. Local 200 and Local 705 represented driver/employees in Milwaukee and Chicago, respectively; and Local 200 also represented mechanics in Milwaukee. The gravaman of the complaint is that after the collective- bargaining agreements expired, Respondent failed to bargain in good faith for their renewal, unilaterally imposed terms and conditions of employment, discriminatorily laid off its drivers, and restructured the corporate arrangements to oust the Unions and to avoid bargaining with the Unions. Re- spondent denies the material allegations in the complaint. I find that the Respondent did fail to bargain in good faith, unilaterally did implement terms and conditions of employ- ment, did discriminatorily lay off its drivers, and did restruc- ture its operations to oust the Unions and to avoid bargaining with the Unions, all in violation of Section 8(a)(1), (3), and (5) of the Labor Management Relations Act, 29 U.S.C. § 158. I. THE FAILURE TO BARGAIN Larry Springer was a mechanic with Sullivan’s Motor De- livery, Inc., and he represented the members of Local 200 as their union steward. In 1984 he became president of Sulli- van’s. The bargaining conduct that is the subject of or the background for the complaint began after Springer became president and, in fits and starts, occupied 1985 and 1986. Gerald Sprague represented Local 200, the Milwaukee union, in its dealings with Sullivan’s. Anticipating the expi- ration on March 31, 1985, of the bargaining agreements for drivers and mechanics employed by Sullivan’s, he sent out a standard contract reopener letter and a form notice to the Federal Mediation and Conciliation Service on January 18, 1985. (It happens that the reopening of the lead mechanic contract was moot since it had applied only to Springer when he was in the bargaining unit; when he became president of Sullivan’s there was no other mechanic to be covered by that contract.) Almost simultaneously, a reopener letter was sent out by Local 705, the Chicago drivers’ union, along with a form notice to the FMCS. In response, Springer sent re- opener letters to both locals on January 29, 1985. In response to Springer’s reopener letters he received a let- ter from the National Freight Industry Negotiating Com- mittee (Feb. 4, 1985), requesting individual negotiations, and on March 6, 1985, from Raymond Fularczyk, secretary/treasurer of Local 200 specifically seeking negotia- tions on March 13, 1985. On March 11 Springer wrote to Sprague that he was not available for negotiations on March 13. He stated that Sullivan’s was having financial trouble, and that he would contact Sprague ‘‘within the next week to submit our proposal.’’ A similar letter was sent to Local 705 in Chicago, according to Springer, but there is no evidence that it ever was sent. Springer did not get back to the locals until June 13. The contracts had expired on March 31, and Springer’s proposals to the Unions were sent with the observation that the Com- pany’s financial straits made it critical that the parties meet as soon as possible. No meeting took place, although Spring- er testified that he made some telephonic inquiries about the status of his proposals. But in August Sullivan’s received substantial insurance premium increases, causing it to borrow $10,000 from the principal stockholder, Joseph DiFrances, to make up a downpayment for financing the insurance pre- miums. That same day, August 22, 1985, Springer wrote to Sprague, and to Ed Coco for Local 705 in Chicago, that it was necessary to rescind the June 13 contract proposal and to substitute a new proposal. In the Unions’ views, the June proposal was a substantial regression from the terms of the expired contract, and the August proposal was even more re- gressive. Local 200 scheduled a meeting of its membership to con- sider both proposals. Sprague recommended rejection of both, and the vote was to reject. Sprague and the employees who testified stated that the Union was prepared to make some concessions but not to the extent that Sullivan’s was proposing, which in the case of the August proposal was a 50-percent reduction in economic benefits. Wages for the Milwaukee drivers, Local 200, were to be reduced by $5.08, and for Local 705 drivers in Chicago, by $5.50, from the re- spective levels of $10.58 and $11.10. A month after the Company’s revised contract proposal was sent to the Unions, Sullivan’s filed a petition for protec- tion from creditors under Chapter 11 of the Bankruptcy Code. On September 27 Sullivan’s bankruptcy counsel, Cunningham, wrote to each local to advise of the bankruptcy filing, enclosing financial data and attaching a set of pro- posals that would modify the bargaining agreements to pro- vide the necessary financial relief for Sullivan’s. Respondent had also filed an application with the court for rejection of the collective-bargaining agreements. Bankruptcy Judge James Shapiro issued his decision on November 4, 1985, de- nying the application because the bargaining agreements be- tween Sullivan’s and the Unions had expired and were not in force. The decision noted that ‘‘after the parties have bar- gained with each other to impasse, the debtor employer can make unilateral changes consistent with proposals made to and rejected by the Union.’’ It was from this point that Re- spondent acted to rid itself of its collective-bargaining agree- ments through conduct that violated the Act. Two weeks later, on November 19, Springer wrote to Sprague and Coco inviting each to bargaining sessions at dif- ferent times on December 3 at Sullivan’s offices. Included were contract proposals that drastically altered both the ex- pired bargaining agreement and the prior proposals from Re- spondent. 1. Bargaining with the Milwaukee local A bargaining session on the November 19 revised contract proposal from Sullivan’s occurred on December 6, 1985, 289 SULLIVAN MOTOR DELIVERY with Local 200. The December 6 bargaining session turned out to be the only one that was held by Sullivan’s with the Milwaukee Local. While Sullivan’s claims that there was a second, I can find no record support for the holding of an- other bargaining session, let alone evidence as to what tran- spired. Sprague could only remember the one on December 6; Springer’s testimony on this point was inconsistent, a minicosm of his opportunistic style of testimony throughout this protracted proceeding. When he was testifying initially as a Rule 611(c) witness under the General Counsel’s exam- ination, he could recall no sessions. Later, when examined by his principal counsel, Enich, Springer testified that there were two meetings with Local 200, one with the younger DiFrances present and an earlier one where all that occurred was Sprague saying ‘‘no’’ and mocking Respondent to get out of business if things were so bad. It turns out that Springer was mixing up the one bargaining session in Mil- waukee with one in Chicago, to which we shall turn soon. The single bargaining session held December 6 between Sullivan’s and Local 200 occurred at Sprague’s office with Springer representing Sullivan’s, whose other counsel, Charles Johnson, was introduced as there to take notes. At the hearing Johnson did not testify, so the account of the meeting devolves from Springer’s confused testimony and Sprague’s memory, which although demonstrably limited, impressed me as sincere and is to be credited over Spring- er’s. Because Springer’s proposal of November 19 departed so completely and fundamentally from every aspect of the expired collective-bargaining agreement, Sprague’s approach was to go down it line-by-line to determine exactly what Sul- livan’s was proposing and, of equal importance under the cir- cumstances, why. The topics discussed included a drastic wage reduction to $6 per hour; a 4-day workweek; reduction of holidays from eight to six; the elimination of the general conditions clause, which concerned Sprague because it would allow Sullivan’s to subcontract out at its sole discretion (a departure from the limited subcontracting that had been done at the Union’s sufference); the replacement of the Local 200 health and welfare plan with Sullivan’s own plan (the details of which were never shown to the Union); the elimination of Local 200’s pension plan and the substitution of a profit- sharing plan; the elimination of the grievance-arbitration plan and the funeral leave clause, which puzzled Sprague because the current contract had no funeral clause to amend. The meeting ended with Sprague asking Springer to send a de- tailed statement explaining why Sullivan’s needed the pro- posed changes and with Springer agreeing to do so. On Janu- ary 6, 1986, Springer sent a letter to Sprague in apparent ful- fillment of that undertaking. The letter explained that Sullivan’s was seeking the elimi- nation of clauses 2, 3, and 6 of article II of the Union’s secu- rity clause because they ‘‘would sanction non-negotiated changes.’’ This puzzled Sprague, puzzled the General Coun- sel, and puzzles me since clause 2 provides simply that in the event of any favorable changes in the law, the union could have a more favorable union-security clause; clause 3 merely permits the Union to act as a source of potential em- ployees; and clause 6 did not exist in the signed copy of the agreement. Regarding the proposed elimination of the general conditions clause, Springer repeated that those provisions would be inconsistent with its right to subcontract. With re- gard to the elimination of the Union’s health and welfare plan, Springer again stated that he wanted to replace the plan, without providing the specifics of the proposed new plan. Again, the proposal for replacing the pension plan with a profit-sharing plan was merely stated without providing any detail. No explanation was offered for the proposed elimination of the seniority clause and the grievance-arbitra- tion procedure. Nor was any explanation offered for the pro- posed elimination of such previously undisputed clauses as emergency reopening, governmental approval, protection of rights, and recognition and bargaining. Springer wrote to Sprague on January 10, announcing that the January 2 proposal (which was the explanation of the Nov. 19 proposal) was his final offer, and demanding a re- sponse from Local 200 by January 17. Sprague called Springer on January 16 to request until January 20 to re- spond because Fularczyk was not available for Sprague to consult. On January 20 Sprague called Springer, the sub- stance of which Sprague sent the next day by letter to Springer requesting negotiations because: You related to me that the Company may be shutting down their operation effective this week and all em- ployees may be laid off; however, you could not give me a final date or position, but said that you would contact me by the end of this week, that being January 24, 1986. Although Springer denied receiving that letter, General Counsel’s Exhibit 2(x) is the return receipt for the letter, ac- knowledged by Springer’s signature. On January 24 Sullivan’s notified all employees that they were being laid off as of that date because it could no longer afford the insurance premiums and the vehicles’ mainte- nance. If any employees were going to be rehired, it would be ‘‘according to modifications contained in our final con- tract offer.’’ A separate notice to unionized employees de- clared that the parties were at an impasse and that the com- pany was making unilateral changes effective Monday, Janu- ary 20, 1986. The changes described were those that were listed in Sullivan’s November 19 proposal to Local 200. Sul- livan’s reserved the right ‘‘to make further and conditional changes modifying existing contract provisions.’’ On January 27, Respondent, after notifying customers of the change in the structure but not the content of its oper- ations, resumed operating by subcontracting pickup and de- livery operations to ACF, Inc., a company Springer had ac- quired in late 1984 and to which Sullivan’s had been subcon- tracting on an occasional basis since 1981. On that occa- sional basis, and permanently after January 27, 1986, Sulli- van’s acted as a broker for customers with the actual haulage done by ACF, employing ‘‘independent contractors’’ who were paid solely on a percentage-of-revenue basis. 2. The bargaining with the Chicago local The Chicago local, Local 705, was so insulted by Sulli- van’s November 19, 1985 proposal that Counsel Lisa Moss, now involved because of Sullivan’s bankruptcy petition, wrote to Springer on December 5 that she considered the proposal to have been made in bad faith, but that she was willing to bargain when Sullivan’s was prepared to submit a good-faith proposal. Moss earlier had retained an accountant, Schumi, to evaluate the financial records that Sullivan’s had 290 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD been required to submit concerning its bankruptcy petitions, and Schumi had advised that the substantial wage reduction that had been proposed by Sullivan’s was excessive and that a 10-percent wage reduction for all employees was far more reasonable. It is no surprise, then, that when receiving the November 19 proposal, which was the same one that Local 200 had received and thus bore no logical relationship to the different contract with Local 705, Moss and Coco could not understand what Sullivan’s was up to. Moreover, as with the proposal to Local 200, the proposal to modify the expired contract substantially was without a rationale or explanation of the changes being sought, some of which were in areas that had never been a problem. Thus, when Sullivan’s attor- ney, Cunningham, sought a meeting with Local 705 for De- cember 3, a date on which Local 705 Counsel Moss was un- available, Moss wrote back on December 5 advising of her desire to bargain when good-faith proposals were on the table. A month passed, during which Springer and Coco sup- posedly talked on the phone but, since neither of them could remember, we will assume that what they talked about was inconsequential. On January 2, 1986, Springer sent a pro- posal to Local 705 analogous to that which Local 200 had received and, like the one to Local 200 the proposal went even farther than the November 19 proposal in undoing Local 705’s expired collective-bargaining agreement. On Jan- uary 10, a followup letter was sent by Springer to Local 705 stating, ‘‘Our proposal dated January 2, 1986, was and is our final offer.’’ Until this point no bargaining session had occurred with Local 705. On January 16 one was held. Present for Re- spondent were Springer and Robert DiFrances, representing his father’s interest. Present for Local 705 was Attorney Moss, and from the local, Coco, Navigado, Ligurotis, and Canneno. Moss testified that the sole discussion of the con- tract was as follows: Mr. Springer started the meeting by stating that they were looking for $6 per for drivers currently employed and $5 an hour for new hires. I stated at that time that—or I reminded him that during the bankruptcy proceedings, the testimony of Andy Schumi and that he had testified that the $5 and $6 proposal—that that was an excesssive proposal and that we were willing to ne- gotiate, however, we did not feel that the $5 and $6 proposal was a reasonable one. Mr. Ligoritious stated that the Union was willing to negotiate, but that the proposal was excessive. I also believe that Mr. Coco stated during that meeting that the Union was willing to bargain but the proposal was excessive. Mr. Springer said in response that he had to have the $5 of $6—$5 and $6 rate and I said there was nothing to talk about. I said we were willing to give conces- sions, however not of the nature that he was looking for and he and Mr. DeFrancis got up and walked out (Tr. 2372–2373). Moss’ account was corroborated by DiFrances, who testified straightforwardly and credibly, although he candidly was un- certain about the meaning of some of the notations he made during his note-taking at the meeting. DiFrances could not corroborate Springer’s oft-repeated assertion that the Local 705 officials told Springer to just close up shop and get out of Chicago. DiFrances’ notes indicated that the meeting was a short one, about 30 minutes, and after Springer insisted that he needed a $5 or $6 rate to be viable and it was clear that the Union would not agree to that rate and said there was noth- ing more to discuss, then he and Springer agreed that there was nothing more to do, and left. A week and a day later, January 24, Respondent handed to the drivers notices of lay- off, and sent one to Local 705 identical to that sent to Local 200. A week later, Sullivan’s began brokering to its cus- tomers, using ACF, Inc., for the delivery services. 3. The Respondent’s conduct The months during the summer were financially difficult for Sullivan’s. Continuing losses caused it to focus on the most acute areas of financial vulnerability, escalating insur- ance payments and high cost union contracts. Springer recog- nized the former was a fact of life that had to be lived with, but the latter, while equally galling, could be dealt with. The union contracts that had expired, but which were still de facto operative, called for a wage rate of just under $12 per hour, a weekly health and welfare plan payment of $63 per driver, and a weekly pension plan payment of $24 per driver. All Respondent could see was cash going out to the drivers or their unions and insufficient revenue coming in to stem the outflow. The contract proposals made to the Unions dur- ing the summer reflected Respondent’s principal concern that the union contracts be the source of the financial respite it needed. Wages were to be cut about in half, and health and pension contributions were to be under Respondent’s direc- tion. The Unions did not seem in any hurry to push for bar- gaining on these proposals, since the expired contracts under which they were operating were far more beneficial, and as far as the record shows Respondent did not really press the matter. Instead, Respondent put its hopes for contract ref- ormation into the legal system, namely, the imprimatur of the bankruptcy court to reject the collective-bargaining contracts with the Unions. This failed, but the effort had not been in vain; for the bankruptcy court outlined a plan that could work, although doubtless not in the spirit contemplated by the court. The court advised that once the Respondent had bargained to impasse with the Unions Respondent would be free to implement the terms of its last contract proposals. It is at this point that Respondent’s bargaining conduct lost the valid purpose of attempting, in good faith, to convince the inert Unions of the Company’s need for concessions. Respondent’s proposals of November 19, 1985, and Janu- ary 2, 1986, were made following the bankruptcy court’s No- vember 4 observation about the result of an impasse in bar- gaining. As described above, and like earlier proposals, they called for slashing wage rates almost in half, and for health and welfare and pension plan contributions that were of an undefined amount and under Respondent’s control. More om- inous were the remaining proposals which, as described above, seemed to suggest contract reformation as an end in itself but which bore no apparent or substantial relationship to the economic relief that Respondent has claimed was its underlying motivation. Instead, the nitpicking or empty na- ture of the noneconomic proposals reflects the games-playing mentality that has permeated Respondent’s conduct toward 291 SULLIVAN MOTOR DELIVERY the Unions and its defense of the General Counsel’s com- plaint. I sense the guiding hand of counsel in both. Using as an excuse the Unions’ reopener letters of January 1985, pro- posing ‘‘to negotiate changes [in the expiring contracts] . . . making reference to all language, wages, and fringe benefits modification,’’ the Respondent proposed on November 19 a complete reformation of the contract; from top to bottom; subsequently bargained for 30 minutes on each contract; de- clared an impasse in bargaining; and on the basis of that dec- laration implemented contract proposals. This course of con- duct implies very clearly that after November 4 Respondent had the single-minded purpose of pretending to bargain with the Unions so that it could effect, in fact, the relief that, in form, had been denied to it by the bankruptcy court; namely, the abrogation of its contracts with the Unions. Respondent’s bargaining was superficial, as opposed to the kind of hard bargaining that is firm but genuine, Browning Ferris Indus- tries, 275 NLRB 71 (1985); there was no impasse in negotia- tions because there had been no real attempt toward the give- and-take of negotiations that is necessary to precede an im- passe, Powell Electrical Mfg. Co., 287 NLRB 969 (1987); and the unilateral imposition of the contract proposals was made without a lawful impasse having occurred. By failing to bargain in good faith and by unilaterally implementing its contract proposals, NLRB v. Katz, 369 U.S. 736 (1962), Re- spondent has violated Section 8(a)(1) and (5) of the Act. Respondent challenges these conclusions by shifting the blame to the Unions, who in Respondent’s scenerio sat around while Respondent slowly expired, and who encour- aged, both in Chicago and Milwaukee, that Respondent call it quits. But this will not wash. To be sure, from the time of the reopener letters in January until the first bargaining sessions, a year almost (Local 200) or in fact (Local 705) had elapsed. But while Respondent beats its breast about the Unions’ indifference to its economic plight, Respondent’s as- sertions that it needed economic relief can hardly be ex- pected to make a union negotiator swoon in this day and age. It was not until Attorney Moss and Accountant Schumi for Local 705 got a look at Respondent’s bankruptcy filing data that some picture began to emerge for them, and even then it was Schumi’s view that a 10-percent wage concession was the most that was called for. Respondent found that proposal laughable, but never bargained on it. All of its efforts were toward, at most, a $6-wage rate and undefined health and pension contributions. On these, it never wavered from keep- ing the Unions in the dark; to this day the economics of these proposals are uncertain. Perhaps the Unions fiddled while Respondent withered (to alter the famous metaphor), but in the face of totally unsupported assertions that a 50- percent wage cut was needed, it was not their duty to counterpropose. Thus, their inertia throughout the prebankruptcy months of 1985, and even Moss’ indignant re- tort to Respondent in December to come back with a good- faith proposal, are justified by Respondent’s revolutionary and unsupported proposals. M&M Building, 262 NLRB 1472 (1982). Once bargaining was requested, the Unions responded quickly. This is particularly evident when looking at late 1985. November 19 was the first time that Respondent pro- posed a date for bargaining. Local 200 responded by meeting with Respondent 2 weeks later. Because the November 19 proposal was inapplicable to Local 705, that Union did not have one to review until January 2, after which it met with Respondent 2 weeks later. Within a further 2 weeks, Re- spondent had gone out of business only to rise, unlike Laz- arus, in a new guise. To that we now turn. II. THE FAILURE TO BARGAIN OVER THE DRIVERS’ LAYOFF AND THE SUBSEQUENT CONTRACTING OUT OF RESPONDENT’S DRIVING FUNCTIONS The General Counsel asserts that Respondent acted unilat- erally in two different fashions, each violative of Section 8(a)(5). The first, discussed above, was the unilateral imple- mentation on January 24, 1986, effective January 20, 1986, of the contract proposals it made to Local 200 on November 19 and to Local 705 on January 2. The second action also taken on January 24, 1986, but effective the next day, was the layoff of the drivers and mechanics and the resumption of delivery business on January 27 in the guise of employing independent contractors who worked for the Springer-owned entity ACF, Inc. In the General Counsel’s view, whatever the legal rubric–alter ego, successor, single employer, or joint employer—the effect is the same: Sullivan’s continued to pick up and deliver small packages in the Milwaukee-Chi- cago regions having unilaterally abrogated its collective-bar- gaining agreements. I agree. ‘‘It seems apparent that Respondent had to do something to stop its downhill slide. However, Respondent owed a con- tinuing duty . . . to work with the representative of the em- ployees in proposing and making changes that affected the employment of those employees, whatever those changes may have been.’’ Auto Fast Freight, 272 NLRB 561, 563 (1984), enfd. 793 F.2d 1196 (9th Cir. 1986). Instead of doing that, the following ensued as related by Sullivan’s bank- ruptcy counsel, Cunningham (G.C. Exh. 17(e)): Sullivan’s was, prior to filing the petition and for a short time thereafter, in the business of delivering small packages. In order to deliver its packages, Sullivan’s had up to 18 drivers, all members of the Teamsters Union, and those drivers caused a severe financial strain on Sullivans’ overhead. In fact, there was no way that Sullivan’s could stay in business with such high labor costs and therefore it went into the Chapter 11. As part of the program to come out of the 11 Sullivan’s considered subcontracting its work to others and letting them deal with the headaches and costs in employing drivers, etc. After investigating the possibilities of hir- ing drivers on a percentage basis management decided to subcontract all the driving. ACF, Inc., a corporation that already existed and was already being operated by Springer well before the filing of the petition, agreed to serve the needs of Sullivan’s at a very favorable rate. Management and its shareholders decided to pursue that option. The upshot of this is that Respondent never really went out of business. Instead, it made the business decision to alter its payroll by laying off its drivers and contracting out its driving functions to another company. It so happens that Sullivan’s and the other company, ACF, while nominally ‘‘separate entities are actually part of a single integrated en- terprise so that for all practical purposes [they are] in fact only a ‘single employer,’’’ Western Temporary Services v. 292 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD NLRB, 821 F.2d 1253, 1266 (7th Cir. 1987). We will come to this shortly. But even assuming arm’s length between them, it was a violation of Section 8(a)(5) and (1) of the Act for Sullivan’s to subcontract out its entire means of pro- viding service to customers and to lay off drivers without bargaining with the employees’ representatives over that de- cision and its effects, NLRB v. Advertisers Mfg. Co., 823 F.2d 1086 (7th Cir. 1987), Lapeer Foundry & Machine, 289 NLRB 952 (1988), for it is crystal clear that the sole reason for deciding to subcontract was the desire to reduce labor costs and, thus, was a mandatory subject of bargaining, Otis Elevator Co., 269 NLRB 891 (1984). Sullivan’s claims that it was forced out of business when its Chicago office was trashed by a small number of angry, out-of-control drivers on the day that layoff notices were re- ceived. But there is not a scintilla of evidence that this was the Union’s doing. Nor does it explain why the nature of Sullivan’s Milwaukee operations was changed as well. In short, that disgusting display by some drivers is immaterial. It simply played into Sullivan’s hands, as such stupid acts usually do, by giving Sullivan’s a pretext for what it wanted to do anyway, get rid of the troublesome and expensive union drivers en masse. By so doing, Sullivan’s discriminatorily laid off the employees, thereby violating Section 8(a)(3) of the Act. Finally, Respondent relies on First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), as justification of man- agement’s decision to contract out its operations. But this case falls more appropriately under Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964). Sullivan’s was contracting out all, not part, of its business. There was no redeployment of capital, no venturing into new business frontiers. The motiva- tion was strictly economic, to reduce the largest and, by this action, most easily controlled cause of expenditures, wages. The effect on employees of losing their jobs was clearly an adverse one. And the Unions were given no opportunity to bargain over a decision which so fundamentally and momen- tously affected the employees they represented. The applica- bility of Fibreboard is so clear that reliance on First Na- tional Maintenance borders on the frivolous. The General Counsel argues further that in fact ACF and Sullivan’s are, inter alia, a single employer and that, as such, should both be found in violation of the Act for changing the terms and conditions of the drivers’ employment without bar- gaining with their unions. The Board treats two or more re- lated enterprises as a single employer for the purposes of holding the enterprise jointly to a single bargaining obliga- tion or for the purpose of considering liability for unfair labor practices. ‘‘Single employer status, for the purposes of the Act, depends on all of the circumstances of the case and is characterized as an absence of an ‘arms length’ relation- ship found among unintegrated enterprises.’’ JMC Transport, 283 NLRB 554 (1987). In short, single employer status ‘‘ex- ists where two nominally separate entities are actually part of a single integrated enterprise so that for all practical pur- poses there is in fact only a ‘single employer.’’’ NLRB v. Browning-Ferris Industries, 691 F.2d 1117, 1122 (3d Cir. 1982). Springer described the operational duties of each entity (G.C. Exh. 17(g)): ACF is controlled by Larry Springer, president of Sulli- vans. ACF is the company that actually does the pick up and delivery of parcels, bears the financial burden of the task, as well as the financial uncertainty of col- lection, and pays to Sullivans 35% of the total charge for each package delivered. Sullivans, on the other hand, is primarily a dispatching and order taking entity. As Sullivan’s bankruptcy attorney put it, were ACF ‘‘unwill- ing to continue this current arrangement it is certainly true that Sullivan’s could not negotiate as favorable an arrange- ment.’’ Springer himself recruited some Sullivan drivers for ACF driving. The hiring of ACF drivers occurred at Sullivan’s lo- cation in Milwaukee, and from that location the drivers were dispatched as ACF ‘‘contractors.’’ ACF utilized the same Sullivan’s facility without paying any rent, nor was any ef- fort made to apportion costs between them. At a different lo- cation in Milwaukee, drivers arrived to pick up their orders, allocated by either Springer or Ruth Buttke, the Sullivan dis- patcher. All direction to the ACF contractor-drivers came from Springer, the Sullivan dispatchers, or Rose Pozorski, Sullivan’s vice president and ACF’s president and former owner. In Chicago, after the destruction of Sullivan’s office, Sulli- van’s utilized ACF’s. During the several months until it found a new office, Sullivan’s paid no rent to ACF. In any event, ACF had no responsible official in the Chicago office. The operation there was run by Marshall Steinfeld, a Sul- livan employee who had dispatched Sullivan’s drivers from the previous Sullivan’s office. At Sullivan’s new office in Chicago, actually in Skokie, ACF drivers reported there and dealt with Steinfeld, still a Sullivan’s employee. All facilities in Chicago or Skokie, when called by telephone, were answered ‘‘Sullivan’s Motor Delivery.’’ All direction to the ACF drivers came from Sulli- van’s employees. ACF drivers in both Milwaukee and Chi- cago made pickups and deliveries exclusively for Sullivan’s. Dispatch, billing, and clerical support for ACF were per- formed by Sullivan’s and its employees, in fact the same em- ployees who had performed the service for Sullivan’s in Mil- waukee. All billing and driver and customer contact were so performed, although Springer was careful to see that only ACF letterhead bills were sent out. However, ACF and Sulli- van’s pickup tickets were used interchangeably. In light of this operational mish mash I must agree with the General Counsel’s lament that ‘‘one cannot tell which en- tity is which, or who was performing services for who[m].’’ So intertwined were the operations of ACF and Sullivan’s that there can be no question but that they constituted a sin- gle integrated operational enterprise. That integration extended also to the management of these ostensibly separate entities. While Respondent attempted to place ACF control in the hands of Springer’s wife, June Mershon, it is clear that Springer managed both. At Sulli- van’s he handled finances, contracts, daily management, and the decisions on bankruptcy and driver layoff. His was total operational and management control, with owner DiFrances essentially absent except when extreme financial intervention was requested of him by Springer. As for ACF, in other forums, Springer signed statements referring to ‘‘a company called ACF which is controlled by 293 SULLIVAN MOTOR DELIVERY 1While the General Counsel’s reply brief refers to ‘‘literally’’ having to pull Springer’s teeth, doubtless the allusion was figurative since in fact Springer’s teeth, if not his credibility, remained intact. Larry Springer, who is also president of Sullivan’s.’’ He con- ceded that he was operating ACF before Sullivan’s bank- ruptcy. In this forum, June Mershon became the controlling force as ostensible president. But she was a figurehead. She had no prior experience in the small package or delivery business. She was employed at the Singer Control Company; in fact, a timecard for her that was introduced by the General Counsel shows her there ‘‘at the very time she was purport- edly meeting with potential drivers at the Sullivan facility on January 27, 1986.’’ (G.C. Br. at 86.) And after supposedly hiring the contractor-drivers for ACF, only once did she sign an agreement with the contractor. Either presigned applica- tions, signed by Rose Pozorski, or ones signed for her by Larry Springer were used. Agreements were modified by Springer or by Marshall Steinfeld. All ACF-Sullivan’s ar- rangements were arranged by Springer. Leases were signed by Springer. Interstate Commerce Commission paperwork was signed by Springer. All significant labor relations—bar- gaining, grievances, establishment of terms and conditions, and hiring (Mershon’s assertions to the contrary and Spring- er’s contradictions, evasions, half truths, and denials being completely incredible),1 were effected by Springer or under his supervision and direction. In short, all operational man- agement of ACF was in Springer’s hands. Arrangements be- tween ACF and Sullivan were made as though they were separate offices of the same company—there was a total ab- sence of arm’s length, the most outstanding example being ACF’s cost-free acquisition of Sullivan’s business, for which a competitor had been willing to pay $48,000 (essentially for goodwill and the customer list). In short, ‘‘the only distinc- tion in the ACF/Sullivan operation was that it was nonunion, that drivers were paid on a different basis, and some of Sulli- van’s drivers were terminated.’’ (G.C. Br. at 86.) A clearer case of a single employer is hard to find. Cf. Neighborhood Roofing, 276 NLRB 861, 867 (1985). A further component of this single integrated enterprise is Springer Leasing, owned by Larry Springer. Incorporated in January 1987, it utilized contractor-drivers who drove vehi- cles owned by Larry Springer that were used on behalf of ACF for Sullivan’s. If the reader has trouble following this arrangement, it is because drivers were interchanged between Springer Leasing and ACF as determined by Sullivan’s dis- patcher, creating so much confusion that one driver, Jarvis, testified that he did not know he worked for Springer Leas- ing even though that was the entity paying him. Financial transactions between Springer, Springer Leasing, and ACF were as unencumbered as those between family members of the same household; that indeed is an apt comparison, as at all times Larry Springer, owner of ACF and Springer Leas- ing and in operational control of them and of Sullivan’s, was essentially transacting with himself and with his spouse, June Mershon, acting as his employee or agent. What all this shows is the sad, sorry spectacle of the law being used by literal minded nit-pickers thinking that they could craft a legitimate scheme to throw out their employees’ unions. Instead of engaging in genuine bargaining to real im- passe and then implementing the last genuine offer; or once having made the decision to lay off employees for economic reasons, bargaining over that decision and its effects, Re- spondent engaged in surface bargaining and the charade of farming out its operations to itself in the guise of separate entities. It is the kind of cleverness that is too cute, more in the nature of what ‘‘jailhouse lawyers’’ concoct in prison li- braries. True union bashers would be embarrassed, for the at- tempt was so obvious and so inartful as to be laughable, were there no harm. But harm there was, to the jobs of those Sullivan’s drivers who did not get rehired by ACF, to the level of economic benefits received by those who did, and to the concept of respect between employees and employer. Because this course of conduct was so intentionally discrimi- natory and its crafting evidences a tendency to read the letter of the law with extreme literalness, the Board’s standard remedy to cease and desist ‘‘like or related’’ conduct must be here broadened to include ‘‘any other conduct’’ that vio- lates Section 7 rights. For similar reasons, the General Coun- sel’s request for visitatorial rights in supervising compliance with the Board’s remedy is granted. CONCLUSIONS OF LAW 1. Respondent is an employer engaged in commerce within the meaning of Sections 2(2), (6), and (7) of the Act. 2. The Unions are labor organizations within the meaning of Section 2(5) of the Act. 3. The appropriate units for collective bargaining within the meaning of Section 9(b) of the Act are: (a) All mechanics employed by Respondent at its Milwaukee, Wisconsin facility, excluding guards and supervisors as defined in the Act. (b) All drivers employed by Respondent at its Mil- waukee, Wisconsin facility, excluding guards and su- pervisors as defined in the Act. (c) All drivers employed by Respondent at its Chi- cago, Illinois facility, excluding guards and supervisors as defined in the Act. 4. The Unions have been and are the exclusive representa- tives of all the employees in the units for collective bar- gaining within the meaning of Sections 9(a) and 8(a)(5) of the Act. 5. By engaging in surface bargaining with the Unions and then declaring prematurely that an impasse in bargaining ex- isted, Respondent failed to bargain in good faith with the Unions in violation of Section 8(a)(1) and (5) of the Act. 6. By unilaterally implementing new terms and conditions of employment without agreement having been reached with the Unions, Respondent violated Section 8(a)(1) and (5) of the Act. 7. By discriminatorily laying off its employees who were represented by the Unions, Respondent violated Section 8(a)(1) and (3) of the Act. 8. Respondent is a single integrated enterprise within the meaning of the Act, comprised of Sullivan’s Motor Delivery, Inc. and Sullivan’s Motor Delivery, Inc., Debtor-in-Posses- sion; ACF, Inc.; and Springer Leasing, Inc. 9. The Respondent’s unfair labor practices affect com- merce within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.]