Leland Detroit Mfg. Co.

596 DECISIONS OF NATIONAL .LABOR RELATIONS BOARD Leland Detroit Mfg. Co. and Local -157, Internation al Union, United Automobile,-. Aerospace -and Agricultural , Implement Workers . of America,. and UAW Paul Kornylo. Cases 7-CA-18341. and 7-CA-18668 31 May 1985- DECISION AND ORDER BY CHAIRMAN DOTSON AND - MEMBERS - HUNTER AND DENNIS - On 16 November 1982 the National Labor Rela- tions 'Board issued an Order in - this proceeding adopting, in the absence of exceptions, the decision of the administrative law judge and directing the Respondent to, inter alia, make whole discriminatee Paul Kornylo for any loss of earnings suffered from the Respondent's unfair, labor practices (not reported in,Board volumes). A controversy having arisen over the amount of backpay due under the Board's Order, the Regional Director for Region 7, on 2 March 1983, issued and duly ,served .on the Respondent a backpay specification and notice of hearing alleging the amount of backpay due and notifying . the Respondent, that- it should file.. a timely answer in compliance. with Section 102.54 of the Board's Rules and Regulations. The specifica- Ation alleges in- part thatthe Respondent is liable for wages and benefits from. 26 November, 1980,_ the ..date of Kornylo's unlawful -discharge, thropgh; 25 ,May 1982, the date the -Respondent ceased oper- ations .and, closed its facility. The specification also states. that the Respondent filed- for : bankruptcy under,Chapter 11 on 26.October.198;1,. The bank- ruptcy proceeding was-converted to Chapter 7 on 30 September 1982 (Case 81-0636-8): The Respondent failed -to answer ;the backpay specification. On 20.April 1983 the Regional,attor- ney for Region 7. notified the Respondent's attor- ney that unless an answer was filed, by 2 May 1983 a- motion for default judgment- would be filed. On =26 April 1983,the Regional Office received_aIletter from the Respondent's attorney explaining, that he had, not.. filed' an. answer because-he had not -been authorized, to- represent the. Respondent. in the• pro- ceeding.' -On : 2'1 April : 14983 the ,, Regional, Director .',sent ,a:.letter t9 - the, Trustee in, Bankruptcy and.the Trustee's. attorney= advising,them, inter alia, ; of ,'the issuance of -the backpay specif cation, and ,the;.fact ,that-no answer had, been•.f&a., The, letter also.noted that the .attorney who had previously represented they Respondent had advised the.. Regional., Office that - -he no 'longer' did so: The letter, enclosed a copy of the backpay specification and extended the time -for filing an,answer. On 7 June 1983 the Re- gional attorney again notified the Respondent that no-answer -had been filed and that if none were re- ceived by 14 June 1983 a motion for default judg- ment.would-be filed with the Board. The Respond- ent did not file an answer. -On 2-2 June= :1983'-the General Counsel filed a motion to transfer the cases -to -the Board and, for default summary judgment. On 29 June 1983 the Board issued an order transferring, the proceeding- to the Board and a Notice to Show Cause why the General Counsel's motion should not be granted. The Respondent filed no response. The allegations in the motion are therefore undisputed. - Ruling on Motion for Default Summary Judgment Section 102.54 of the, Board's Rules and Regula- tions provides,,in pertinent part, as follows: (a) . : . The respondent shall, within 15 days from the service of the specification, if any, file an answer thereto . . . (c) '. If the, respondent fails to file any answer to the specification within the time prescribed by this section, the Board may, either with or 'without taking evidence, in sup- port, of 1 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. The backpay specification issued and, served on the Respondent on 2 March 1983 -specifically states that the Respondent. shall,, within 15 days from the service 'of the, specification,' file an answer with the Regional Director for Region 7. The specification further states that, if the answer-fails-to deny the allegations''of tthe specification in 'the manner re- quired under-.the Board's Rules and Regulations and the failure-to do so is not adequately explained, such allegations shall be deemed admitted to be true; and. the Respondent shall be precluded from -'introdu'cing any evidence controverting them. - In addition to. the backpay specification and notice of hearing, the.Regional Office notified the Respondent, ,its attorney, and the- Trustee in Bank- ruptcy-that no answer had. been received. The Re- giorial ` Office also extended the 'time. for filing an answer. -, , As •of `22-June 1983, , the date' of the Motion for Default , Summary Judgment,; the Respondent had notfiled, an. answer . to- the backpay specification. -: `The' °Respondent also failed' to file a response to the 'Notice to Show Cause. 'Therefore,-'the allegations of the backpay specification and the Motion for Default Summary Judgment stand uncontroverted. In accordance with the. rules set forth above, the 275 NLRB No. 83 LELAND DETROIT.MFG. CO , allegations in the backpay specification are deemed to be admitted as true, and the Board so-finds.- Accordingly, the Board grants the Motion for Default Summary Judgment and concludes that the net backpay due Paul Kornylo and the relevant. pension and medical insurance premium payments are as stated in the computations of the specifica- tion. The Board orders that payment, thereof be made-by the Respondent as set-forth below.' - ' Member Dennis, in granting the General Counsel's Motion for De- fault Summary Judgment, believes this case is distinguishable from others involving bankruptcy petitions that have been remanded despite failure to answer the complaint or the backpay specification The sole issue here involves backpay and medical and pension benefits that the backpay spec- ification alleges are owed to Paul Kornylo, who the Board found was unlawfully discharged The most recent collective-bargaining agreement between the Respondent and the Union expired on i November 1980 Kornylo was terminated 26 November 1980 A Chapter 11 bankruptcy petition was filed 26 October 1981, and the plant was closed 25 May 1982 Accordingly, the specification seeks compensation for the period 26 November 1980 to 25 May 1982 The Respondent did not answer the specification Sec 102 54(c) of the Board's Rules and Regulations permits the Board to find the allegations of the specification true when no answer has been filed When the Respondent filed its bankruptcy petition 26 October 1981, it could have unilaterally reduced wages and other benefits contained in the expired contract Yet it did not do so automatically by filing the petition, nor was it required to do so, nor is there auy evidence that it did Indeed, previously, on 30 October 1980, the Respondent had posted a notice stat- ing that it would abide by the terms and conditions of employment con- tained in the contract until a bill of sale for the plant had been executed Under the Board's Rules and Regulations , the Respondent was required to assert in an answer that it lawfully reduced wages and benefits which would affect Kornylo's entitlement to backpay It did not do so In Member Dennis' view, Maraldo Asphalt Paving, 274 NLRB ' 98 (1985), which the dissent relies on. is distinguishable It is true that the respondent there also failed to answer a backpay specification The un- derlying unfair labor practice, however, was the respondent's violation of Sec 8(a)(5) and (1) by unilaterally ceasing to make contractually required fringe benefit trust fund payments The specification sought fund contri- butions for the third and fourth quarters of 1982 and the third quarter of 1983 The Board noted, however, that a Chapter 11 petition had been filed 3 August 1983, during the third quarter of the year , and therefore remanded the case for further investigation into the circumstances sur- rounding the filing of the petition In Maraldo, there was no question the respondent abrogated its, labor contract before and after the filing of the petition, raising ' the issue whether the respondent acted unlawfully at all after 3 August 1983 Here, however, the underlying violation is an 8(a)(3) discharge, and the only question is whether the Respondent has a defense to part of its liability on the ground that it lawfully reduced existing wages and benefits after the bankruptcy petition was filed Such a defense, however, must be af- firmatively raised by the Respondent in an answer to the backpay specifi- cation Member Hunter concurs in the granting of the General Counsel's Motion for Default Summary Judgment - As he stated in his dissent in Edward Cooper Painting, 273 NLRB 1870 (1985), he would not cut off the Board's traditional remedies as of the date of the filing of a bankruptcy petition in cases where the unfair labor practices found against the re- spondent preceded the filing of the petition In;Maraldo Asphalt Paving, supra, a supplemental backpay proceeding involving issues similar to those in the instant case, Member Hunter disssented from the majority's remand to the Regional Director for further investigation into the cir- cumstances of the filing of the respondent's bankruptcy petition In Mar- aldo, the respondent was found to have violated Sec 8(a)(5) and (1) by unilaterally ceasing to make contractually- required payments to, the union's fringe benefit funds. The Respondent's bankruptcy petition was filed 3 years after the unilateral action Accordingly,. here, as in Maraldo, because it is undisputed that the violations found against the Respondent occurred prior to the filing of the petition in bankruptcy on 26 October 1981, Member Hunter grants the General Counsel' s motion and finds the Respondent liable for the full amount set forth in the backpay specifica- tion Member Hunter finds no basis for remanding the proceeding to'fur- ORDER . - -597, The National Labor Relations Board -orders that the Respondent, Leland Detroit Mfg: Co., Detroit, Michigan, its officers, ' agents, . successors, and' as- signs, -shall - " 1. Make whole Paul Kornylo by payment ,to him of $20,850.88 in net backpay.iand $1,462.91 in medi- cal insurance , premiums, plus -interest thereon as computed in the manner prescribed in Florida Steel Corp., 231 NLRB 651 (1977),2 minus tax. withhold- ings required by Federal 'and state laws. 2. Make whole Paul Kornylo by payment to his pension fund account,with Auto Workers Local 157 of $684.64, plus interest accrued to the date of payment as provided in the backpay specification. CHAIRMAN DOTSON, dissenting. In NLRB v. Bildisco & Bildisco, 104 S.Ct. 1188 (1984), the Supreme Court held that "from the filing of a petition in bankruptcy' until formal ac- ceptance, a collective-bargaining agreement is not an enforceable contract within the -meaning of NLRA § 8(d)." The Board applied Bildisco in a no- answer summary judgment' proceeding concerning a backpay specification in Maraldo Asphalt Paving, 274 NLRB 98 (1985).' In that case the record did not reveal whether the respondent formally accept- ed the 'collective-bargaining agreement following the filing of a bankruptcy petition or whether the Bankruptcy Court permitted the respondent's rejec- tion of the contract. As a result, 'the respondent's liability for fringe benefit payments' during part 3 of -the backpay period could not be determined. 'The Board therefore remanded the case for further' in- vestigation into the circumstances surrounding the filing of the bankruptcy petition. 2 ' ! - ' , The present case is similar. Here the backpay specification seeks backpay and contractual benefits for the period' from Kornylo's unlawful discharge on 26, November 1980'until the closure of the plant on 25• May 1982. The decision of the judge reveals that the collective-bargaining agreement between the Respondent' and the Union expired on 1 No- vember 1980.''On 30 October 1980 the Respondent posted a notice informing the employees, inter alia, that the Respondent would abide 'by the terms and conditions of the contract' until a' bill of sale' for'the plant had been executed: However,''the' Respondent "filed a bankruptcy -petition on 26 'October 1981. -The record' does not show nor does the"General 'ther investigate the'terhis and conditions of employment' of the Res'pond- ent's employees subsequent to the filing of the bankruptcy petition- : i 2 See generally Isis Plumbing Co, 138 NLRB 716 (1962) i Member Hunter dissenting 2 See also Edward Cooper Painting; 273 NLRB- 1870 (1985) (Member Hunter dissenting) ` - ' . . , ,; 598 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Counsel specifically allege that the terms and con- ditions of employment ,for the Respondent's em- ployees remained unchanged after the filing of the petition. I find this omission to be crucial in light of the Supreme Court's statement in Bildisco_ that a collective-bargaining agreement is not an enforcea- ble contract from the ' filing of a bankruptcy "peti- tion until formal acceptance . Where the record in- dicates that a bankruptcy petition has been. filed during the relevant time frame, it is the General Counsel's burden to establish the continued effec- tiveness of the bargaining agreement on which the requested remedy is to be based. The General Counsel has not done so with respect to the 'con- tractual benefits sought by the backpay -specifica- tion"here. I therefore find that under Bildisco- fur- ther investigation into the postbankruptcy terms and conditions of employment of the Respondent's employees is required. I would deny the General Counsel's Motion for Default 'Summary Judgment and remand the case to the Regional Director for further appropriate action.