El San Juan Hotel

EL SAN JUAN HOTEL San Juan Hotel Corporation d/b/a El San Juan Hotel and Union de Trabajadores de la Indus- tria Gastronomica de Puerto Rico , Local 610, Hotel and Restaurant Employees and Bartend- ers International Union, AFL-CIO. Case 24- CA-4712-2 13 February 1985 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS HUNTER AND DENNIS Upon a charge filed by the Union on 29 Septem- ber 1982, the General Counsel of the National Labor Relations Board issued a complaint on 12 November 1982 against the Company, the Re- spondent, alleging that it has violated Section 8(a)(5) and (1), Section 8(d), and Section 2(6) and (7) of the National Labor Relations Act. The complaint also alleges that the most recent collective-bargaining agreement between the Union and the Respondent was effective by its terms from 25 May 1979 to 24 May 1982 and that, by written stipulations executed by the parties, it was extended through 15 October 1982. The complaint further alleges that since 29 March 1982 the Respondent has failed to continue in full force and effect all the terms and conditions of the collective-bargaining agreement by discontinuing the monthly contribu- tions to the employees' pension fund as required by article XXII of the collective-bargaining agree- ment. On 24 November 1982 the Respondent filed its answer, admitting in part and denying in part the allegations of the complaint, submitting affirma- tive defenses, and requesting that the complaint be dismissed in its entirety. On 29 March 1983 the General Counsel filed a Motion for Summary Judgment. On 5 April 1983 the Board issued an order transferring the proceed- ing to the Board and a Notice to Show Cause why the motion should not be granted. The Company filed a response. On the entire record, the Board makes the fol- lowing Ruling on the Motion for Summary Judgment In its answer and its motion in opposition to the Motion for Summary Judgment, the Respondent admits that since about 29 March 1982 it has failed to make its payments to the employees' pension fund as required by its collective-bargaining agree- ment with the Union, but contends that its failure to do so has been the result of its bankrupt status. The Respondent also contends that its noncompli- ance with this provision of the collective-bargain- ing agreement did not constitute an unfair labor 13 practice and, therefore, that the Motion for Sum- mary Judgment should be denied and the com- plaint dismissed in its entirety. As explicated below, we find merit in the Re- spondent's contention that its discontinuance of payments to the employees' pension fund does not warrant our finding of an unfair labor practice. We shall therefore deny the General Counsel's Motion for Summary Judgment and dismiss the complaint in its entirety. In NLRB v. Bildisco & Bildisco, 104 S.Ct. 1188 (1984), the United States Supreme Court held that a collective-bargaining agreement is unenforceable within the meaning of Section 8(d) of the Act from the date of the filing of the employer's petition in bankruptcy until formal acceptance of the parties' collective-bargaining agreement. Furthermore, the Court noted that, in the case of a conversion from a Chapter 11 reorganization to a Chapter 7 liquida- tion proceeding, the Bankruptcy Code requires that the trustee must decide whether to accept or reject the collective-bargaining agreement within 60 days from the date of an order for relief. i If the collec- tive-bargaining agreement is not accepted within this 60-day period, the Bankruptcy Code provides that it is automatically rejected 60 days after the conversion. 2 In the instant case, the Respondent's petition in bankruptcy was filed under Chapter 11 of the Bankruptcy Code on 20 May 1980, more than 1- 1/2 years before it commenced the discontinuance of payments to the employees' pension fund on 29 March 1982, and over 2 years prior to the Union's filing of the unfair labor practice charge in this case. Thereafter, on 31 March 1983 the Respondent closed its operations and, pursuant to the approval of the U.S. Bankruptcy Court for the District of Puerto Rico, this case was converted from a Chap- ter 11 reorganization to a Chapter 7 liquidation proceeding, and the Respondent's assets were sold to a third party via a public auction.3 Accordingly, we find that the collective-bargain- ing agreement between the Respondent and the Union was unenforceable during the relevant period of time herein, and that, consistent with Bil- disco, the Respondent did not commit an unfair labor practice when it discontinued its payments to the employees' pension fund following the filing of its petition in bankruptcy under Chapter 11. ' Bildisco, supra at 1198, 11 U S C § 365 (d)(2) 2 The conversion of a Chapter l1 proceeding to a Chapter 7 proceed- ing in itself constitutes an order for relief G Pettigrew, Federal Bank- ruptcy Code Theory Into Practice, at 140, 201 (1982) 9 Thus, by operation of law, the collective-bargaining agreement was automatically rejected 60 days after the conversion 274 NLRB No. 3 14 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On the basis of the entire record, the Board makes the following FINDINGS OF FACT 1. THE BUSINESS OF THE RESPONDENT The Respondent is an employer engaged in com- merce within the meaning of Section 2 (2), (6), and (7) of the Act. IT. THE LABOR ORGANIZATION INVOLVED Union de Trabajadores de la Industria Gastrono- mica de Puerto Rico, Local 610, Hotel and Restau- rant Employees and Bartenders International Union, AFL-CIO is a labor organization within the meaning of Section 2(5) of the Act. CONCLUSIONS OF LAW Respondent did not violate Section 8(a)(5) and (1) or Section 8(d) of the Act by discontinuing its payment to the employees' pension fund, as re- quired by the collective-bargaining agreement be- tween the Respondent and the Union, after filing its petition in bankruptcy with the U.S. Bankruptcy Court for the District of Puerto Rico. ORDER The Motion for Summary Judgment is denied and the complaint is dismissed in its entirety. MEMBER DENNIS, dissenting. Contrary to my collegues, I would remand the case to the Regional Director for further investiga- tion and consideration in light of Bildisco . See Earle Equipment, 270 NLRB 827 (1984). The Respondent admitted in its answer that the collective-bargain- ing agreement was extended while the Respondent was under Chapter 11 reorganization and that the contract was still in effect . This admission raises genuine issues concerning a possible violation during the Chapter 11 period, before the conver- sion to a Chapter 7 liquidation proceeding.