Hagerman Trucking

296 N & G COAL CO N & G Coal Co., Inc., Robert Wick, Trustee in Bankruptcy; and its Successor, Blane Hager- man, a Sole Proprietor, d/b/a Hagerman Trucking and United Mine Workers of Amer- ica, District 29. Cases 9-CA-20479 and 9-CA- 20679 25 February 1985 DECISION AND ORDER By CHAIRMAN DOTSON AND MEMBERS HUNTER AND DENNIS On 27 September 1984 Administrative Law Judge Bernard Ries issued the attached decision. The General Counsel filed exceptions and a sup- porting brief. The Board has considered the decision and the record in light of the exceptions and brief and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order. ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed. DECISION BERNARD RIES, Administrative Law Judge This case was tried in Princeton , West Virginia, on July 11, 1984. The amended complaint essentially alleges that Respond- ent N & G Coal Co., Inc, which operated a mine at Mo- began, West Virginia, for a 9-month period in 1983, failed during that period to comply with various terms of its collective bargaining and other agreements with United Mine Workers of America, District 29, the Charging Party, thereby violating Section 8 (a)(5) and (1) of the Act, and that Respondent Hagerman Trucking, which has been operating the mine since the latter part of December 1983, is a "successor" to N & G (and pre- sumably, although neither the complaint nor the General Counsel's brief expressly so assert , is liable to make good on the defaults of N & G). It is useful to set out the procedural background of this proceeding The charge in Case 9-CA-20479 was filed on December 19, 1983, against N & G, and a com- plaint issued in that case on February 2, 1984 , alleging that N & G had failed to remit dues to the Union since September 1983, had failed to pay employees in accord- ance with the contract wage rates since August 1983, and had failed to comply with a grievance settlement since December 1983. The file does not show that N & G submitted an answer to the complaint within the re- quired 10 days after service or sought an extension to do SO. On February 24, the Union filed another charge, in Case 9-CA-20679, naming "N & G Coal Co., Inc And Its Successor, Hagerman Trucking Co," as the employ- er; the only material addition to the earlier charge was an assertion that Hagerman Trucking had, "on or about December 22," assumed the operations of N & G "with knowledge of the outstanding contractual obligations of and pending unfair labor practice charges against" N & G It was only after that charge was filed that, on March 12, N & G filed an answer to the first complaint, which, in a short paragraph, merely stated that "all allegations contained in the complaint and notice of a hearing are denied" and asserted that a Chapter 7 bankruptcy peti- tion filed by N & G on February 2 in the District Court for the Western District of Virginia "stays these pro- ceedings pursuant to law " On March 30, the Regional Office issued an amended order consolidating the two cases. The only changes from the original complaint were recitations of Hager- man's entry into the picture and of the appointment of a Chapter 7 trustee in bankruptcy for N & G on February 16, and the naming in the case caption of Hagerman as a successor and the N & G trustee in bankruptcy as a party. The record indicates that until May 4, N & G filed no answer; at that time, it briefly responded by as- serting that it had filed a Chapter 7 petition "which op- erates as a stay of these proceedings" and asking in effect that the Board proceeding be terminated. The trustee in bankruptcy filed no separate answer. Hagerman did not file an answer. On June 8, the Region filed a second consolidated amended complaint, the chief purposes of which were to modify the jurisdictional allegations of the previous com- plaints and to add another substantive allegation relating to the failure to keep in force and effect, since September 30, 1983, the health care insurance program. None of the named Respondents, or so the formal documents indi- cate, filed an answer to this last version of the complaint. Having considered the entire record and the brief filed by counsel for the Acting General Counsel, i I make the following findings of fact,2 conclusions of law, and rec- ommendation. I. THE EFFECT OF THE RESPONDENTS' FAILURE TO FILE APPROPRIATE ANSWERS Section 102.20 of the Board's Rules and Regulations provides: Sec. 102 20 Answer to complaint, time for filing; contents; allegations not denied deemed admitted.- The respondent shall, within 10 days from the serv- ice of the complaint, file an answer thereto. The re- spondent shall specifically admit, deny, or explain each of the facts alleged in the complaint , unless the respondent is without knowledge , in which case the respondent shall so state, such statement operating as a denial. All allegations in the complaint, if no answer is filed, or any allegation in the complaint not specifically denied or explained in an answer I Neither N & G nor Hagerman Trucking was represented at the hear- ing by counsel Hubert Stevenson, president and co-owner of N & G, en- tered an appearance for N & G (and, I infer, for N & G's trustee), Blanc Hagerman entered an appearance and actively participated on behalf of his firm Neither man is an attorney None of the Respondents has filed a brief 2 Certain errors in the transcript were noted and corrected 274 NLRB No. 45 N & G COAL CO 297 filed, unless the respondent shall state in the answer that he is without knowledge, shall be deemed to be admitted to be true and shall be so found by, the Board, unless good cause to the contrary is shown. As set out above, N & G apparently filed only two tardy replies to the three editions of the complaint. Clearly, the two responses did not comport with the quoted Board regulation E.g, SDS Distributing Corp., 245 NLRB 322, 323 (1979); Pipeline Construction Workers Local 692 (Fulhgum Construction), 248 NLRB 1315, 1316 (1980). As also discussed above, Hagerman Trucking filed no answer at all to either of the two versions of the complaint to which it was a party. In such circumstances, the regulation set out above would appear to require that the complaint allegations must be considered as true ("shall be deemed to he ad- mitted to be true and shall be so found by the Board"), unless "good cause" for withholding such action is "shown." The record before me suggests no particular "good cause" for the failures of compliance. The General Counsel has, however, made no effort, by motion for summary judgment or otherwise, to take ad- vantage of the inadequate and nonexistent answers. In- stead, at the hearing, the General Counsel attempted to present a fully developed case, including the calling of a witness from out of town to supply commerce informa- tion for the purpose of demonstrating that the Respond- ents satisfy the Board's jurisdictional standards. The question presented, as I see it, is whether the Gen- eral Counsel has the right to so proceed under the Board's regulation. The words "shall be deemed" seem to plainly constitute a mandate; the exception, for "good cause" being "shown," appears to mean a showing of such cause approved by the Board. I shall, however, proceed on the basis deliberately chosen by the General Counsel. In the interest of good order, it would seem appropriate that the sanctions of Section 102.20 not be invoked unless the General Coun- sel has so requested. There may have been known to the General Counsel what he deemed to be "good cause" for all the inadequacies in the answers or failures thereof, and which he determined would be accepted by the Board if motions for summary judgment had been made In such circumstances, it would seem to be within the General Counsel's allowable discretion to avoid what he thought might turn out to be wasted time and effort; to consider that appropriate denials had been filed, and to proceed directly to trial Accordingly, I shall turn to the first issue presented. whether the Board should assert ju- risdiction over the Respondents H. JURISDICTION As amended, the complaint alleges that N & G (and thereafter Hagerman), in the 12 months preceding the amended complaint, "sold and caused to be shipped from their Mohegan, West Virginia, facility products, goods and materials valued in excess of $50,000 directly to points outside the State of West Virginia." Although the evidence as to the critical legal relationships here is not very well developed, it can safely be said that only in an indirect sense does the evidence show that either of the Respondents "caused to be shipped [more than $50,000 worth of goods] directly to points outside the State of West Virginia." Aside from the Respondents, two other businesses are involved in the sale of coal from the mine here involved. The record shows that the mine property was owned by one W. B. Swope and that he leased the property, and the right to mine coal there, to N & G (apparently Swope used the name of "Bankers Pocahontas Coal Part- nership," see G C Exh 2). The lease agreement is not in evidence. After mining the coal, N & G (and, similarly, Hagerman) transferred the coal to Swope The character of this transaction, while most important to this issue, is less than certain . At the hearing, in answer to the ques- tion, "Who was your contract with for the sale of the coal?" N & G's president Stevenson answered, "Mr Swope." Stevenson further testified that all of his pay- ments came directly from Swope, that Swope "let Can- nelton Coal Company have" the coal, and, when asked whether Swope was a "coal broker," answered, "I guess, I don't know." The most likely interpretation of this tes- timony, in my view, is that after Stevenson, and later Hagerman , mined the coal, they sold it to Swope. The record shows that the amounts of coal sold to Swope by Stevenson (and Hagerman) exceeded $50,000 per year. William C. Miller, the secretary of Cannelton Indus- tries, Incorporated, testified that the parent of Cannelton, Algoma Steel Corporation, Ltd., a Canadian corporation, buys coal from Swope and has it delivered to Cannel- ton's preparation plant in Superior , West Virginia. The amount of coal bought by Algoma from Swope is con- siderable : in a one-half-month period in 1983, Algoma purchased from Swope over $314,000 worth, and that was "not an unusual figure" for the year The coal pur- chased from Swope is commingled at Cannelton's Supe- rior plant both with coal purchased elsewhere and with coal mined by Cannelton itself, and after preparation, a "majority" of the coal is shipped to Algoma for use in Canada. At the beginning of his testimony, Miller referred to Swope as "the agent for-broker for N & G Coal " But when he was later asked whether Swope "actually owns the coal that is being sent to Algoma through Cannelton Industries," Miller replied, "The arrangement between Algoma is strictly purchased from Mr. Swope. [sic] His relationship or legal relationship with his suppliers is un- known to me." Thus, while the record is less than definitive as to the legal status of Swope in these transactions, and could have been much better documented, on the evidence as presented I feel obliged to conclude that Swope was a purchaser of the coal from N & G (and, later, Hager- man).3 On the basis of that conclusion, it also seems to a I recognize that Hagerman testified that he "sold" the coal to Can- nelton Industries, but then when asked if the coal was "actually sold" to Algoma, he said, "The only thing I do is put the coal on the truck and send it to Superior" and that he gets paid by Swope The General Counsel's witness Miller testified that Algoma 's dealings with Hagerman were "through Mr Swope " in the same manner that it had business dealings with N & G Coal Company " 298 DECISIONS OF NATIONAL LABOR RELATIONS BOARD me that I am further obliged to conclude that the Board would not assert jurisdiction in this matter under its present standards. While the Board's jurisdiction over American com- merce is virtually unlimited, see Polish National Alliance V. NLRB, 322 U.S. 643, 647-648 (1944), NLRB v. Fainb- latt, 306 U.S. 601, 607 (1939), the Board has chosen to establish jurisdictional standards of general application for determining whether, in various situations, it will exert authority over a labor dispute. Those standards are designed to relieve the Board of the burden of making case-by-case adjudications and to provide guidance to the Board staff and the public to avoid "confusion and uncertainty as to exactly where the dividing line will be drawn in particular cases.. . " Siemons Mailing Service, 122 NLRB 81, 83 (1959). In Sremons, at 85 the Board set out the standard which it would apply to "nonretail en- terprises," a category which plainly encompasses coal- mining. [T]he Board has concluded that it will best effectu- ate the policies of the Act if jurisdiction is asserted over all nonretail enterprises which have an outflow or inflow across State lines of at least $50,000, whether such outflow or inflow be regarded as direct or indi- rect For the purposes of applying this standard, direct outflow refers to goods shipped or services furnished by the employer outside the State Indirect outflow refers to sales of goods or services to users meeting any of the Board's jurisdictional standards except the indirect outflow or indirect inflow stand- ard. Direct inflow refers to goods or services fur- nished directly to the employer from outside the State in which the employer is located. Indirect inflow refers to the purchase of goods or services which originated outside the employer's State but which he purchased from a seller within the State who received such goods or services from outside the State. In applying this standard , the Board will adhere to its past practice of adding direct and indi- rect outflow , or direct and indirect inflow It will not add outflow and inflow. The facts described above make clear that neither N & G nor Hagerman could be said to have had any "direct outflow," i.e., "goods shipped . by the employer out- side the State " As I have found, they sold to Swope, and he sold to Algoma, which then shipped most of the coal outside of West Virginia.4 Nor is there any evi- dence that Swope was himself a "user . . . meeting any of the Board's jurisdictional standards" other than indi- rect outflow. While he did meet the latter standard, by virtue of his sales to Algoma, that cannot qualify Re- spondents for the assertion of jurisdiction under the "in- direct outflow" test. 4 Southern Dolomite, 129 NLRB 1342 (1961), holds that there need be no showing that, in applying the indirect outflow test , the purchasing company which is directly engaged in the interstate business actually "used " the intrastate-purchased goods across state lines There is effect enough on commerce, says Southern Dolomite, if the purchasing firm is engaged in interstate commerce as defined by the Board's standards Thus, the only possible basis for application of the "in- direct outflow" standard here would be a contention that the two Respondents each annually sold more than $50,000 worth of coal to Algoma, a "user . . . meeting any of the Board's jurisdictional standards" (except the indirect outflow or inflow standards), which Algoma clearly is. This contention, however, would be valid only if the evidence showed that Swope was acting as an agent of N & G/Hagerman or in some other allied role which would allow Swope/N & G/Hagerman to be re- garded as a single entity. In that event , it could appropri- ately be said that Swope/N & G/Hagerman sold the req- uisite amount of coal to Algoma, a commerce situation over which the Board would plainly exercise jurisdic- tion, and hence "indirect outflow" existed On my find- ings on this particular record, however, the evidence does not weigh in favor of finding that any such relation- ship existed between N & G or Hagerman and Swope.5 I thus conclude that, under the Board 's announced standards , it would be improper to assert jurisdiction over the Respondents . It is not a conclusion in which I find particular satisfaction, since a good argument can be made that the Board should exercise jurisdiction in a case such as this one, where there is evidently a consist- ent and substantial flow of coal from the Mohegan mine across state boundaries. The Board could very well choose to ignore or modify its own nonretail standards in this case if it believed that a reason presented itself for doing so, see NLRB v. Erlich's 814, 577 F.2d 68 (8th Cir 1979). It appears to me, however, that I have no such option. Iowa Beef Packers, 144 NLRB 615, 616 (1963), and many other cases have firmly established that it is my duty to "apply established Board precedent." Siemons Mailing Service is such a precedent, and it makes no provision for me to deviate from the prescribed standards in a case like this one 6 One other possibility for asserting jurisdiction suggests itself. The Board has held that where the employer in- volved in the proceeding is a member of a mu ltiemploy- er bargaining unit, the commerce data of the other em- ployers in the unit may be considered in assessing direct or indirect outflow or inflow. Sremons, supra at 84. But the Board will only permit such aggregation where the evidence establishes that the employer in question has participated in or demonstrated an intent to be bound by 5 I have found no case which construes the word "user," quoted above in Sremons, to be confined to an entity which actually makes some pro- ductive use of the goods in question , an argument which might allow middlemen such as Swope to be disregarded and businesses such as Algoma to be considered the real "user " Taking the Board 's language at face value , it would be difficult to construe "sales of goods to users" as comprehending such an indirect relationship as that between N & G and Algoma, so far as the record shows, no "sale" was transacted be- tween those firms The word "user" was employed by the Board in Sre- mons to permit consideration , for purposes of assessing "indirect out- flow," of entities which are not "employers" covered by the Act, but which otherwise engage in a volume of activity substantially affecting commerce Sremons, supra at 85 fn 12 6 I note that at times the Board has been very strict in applying its standards In Love's Barbecue Restaurant, 209 NLRB 220 (1974), it dis- missed a petition where the standard for retail enterprises was $500,000 in annual revenue and the employer 's projected gross was $497,250 N&GCOAL CO multiemployer bargaining R. J. Causey Construction Co, 238 NLRB 52 (1978), Marty Levitt, 171 NLRB 739 (1968) There is not, in the present case, any indication that either of the Respondents have ever evinced an intention to be bound by multiemployer bargaining At the hear- ing, Stevenson testified that when N & G went into busi- ness in March 1983, it "signed the National Bituminous Coal Wage Agreement of 1981." The agreement referred to is in evidence. It is executed by the UMWA and the Bituminous Coal Operators' Association, Inc., a collec- tion of employer associations and independent operators. The contract could be read to constitute the signatories into a single multiemployer unit, but the language is un- clear. The document signed by Stevenson in 1983 is not in evidence, and thus there is no showing that Stevenson (and the same is true of Hagerman) expressed an inten- tion to be bound by multiemployer bargaining. In the ab- sence of any such expression or other showing of inten- tion, the possibility of aggregating the commerce data of the other employer parties to the contract as a predicate for asserting jurisdiction must fail. R. J. Causey Construc- tion Co, supra 7 I conclude, therefore, that the complaint must be dis- missed for want of proof of compliance with the Board's jurisdictional standards 8 Technically speaking, there is no evidence in the record that the other members of the BCOA collectively met the Board's standards, but that speculation would seem supportable if that point were reached 8 1 need not, therefore, reach the other issues presented I might, how- ever, gratuitously make the following observations It is clear that N & G failed to abide by the bargaining agreement in various respects, and also failed to honor certain grievance settlements made with the Union Existing Board law would very likely brand these breaches of contract as violations of Sec 8(a)(5) (which may also be rem- edied by civil action under Sec 301) The fact that N & G is now under- going bankruptcy proceedings makes that company a very unpromising source of recovery, however, and the only viable possibility of recovery is from Hagerman (to whom, however, the bankruptcy court is also available) But the wellspring of Hagerman's potential liability under the Act for N & G's defaults is Perma Vinyl Corp, 164 NLRB 968, 969 (1967), hold- ing that a successor employer (which, under the law, Hagerman clearly would be) may be held liable for remedying his predecessor's unlawful 299 CONCLUSIONS OF LAW 1 Under existing Board standards, it is inappropriate to exercise jurisdiction over Respondents N & G Coal Co., Inc., Robert Wick, Trustee in Bankruptcy for N & G Coal Co, Inc., and Blane Hagerman, d/b/a Hagerman Trucking. 2. The consolidated complaints should, accordingly, be dismissed. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed" ORDER The consolidated complaints in Cases 9-CA-20479 and 9-CA-20679 are dismissed in their entirety. conduct where he acquires the business "under circumstances which charge him with notice of unfair labor practice charges against his prede- cessor " In Golden State Bottling Co v NLRB, 414 U S 168, 181 (1973), which approved the Perma Vinyl principle, the Supreme Court referred to the opportunity which had been given the successor in Golden State to litigate the issue of "its knowledge of the pendency of the unfair labor practice litigation at the time of purchase " In the present case, Hagerman signed the purchase agreement with N & G on December 19, the first charge was also filed on December 19 Unobjected-to, and therefore probative, hearsay testimony is that at some time prior to the signing, Hagerman was made aware of all of the "debts" owed by N & G The extent to which Hagerman was put on notice of all the alleged unfair labor practices, including N & G's failure to comply with the contract wage rates, and the effect of the fact that the original charge was not filed until the same day that the sale was consummated, are nowhere discussed in the General Counsel's brief, which terminates its discussion of the issue after arguing that Hagerman was a successor, but does not go on to argue that the successorship was one which should entail remedial liability for the defaults of the predecessor Indeed, in view of the truncation of the briefs legal discussion, it may be that the General Counsel does not seek to so hold Hagerman, although the inart- fully drawn complaint (it is inaccurate to allege that Hagerman, as one of the "Respondents," failed to pay employees properly since August 1983, failed to remit union dues since September 1983, etc , since Hagerman was not even in the picture at those times, and, at best, can be held only to remedy any such violations) would seem to be attempting to do so 9 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses