Croley Coal Corp. And South Harlan Coal Co., Inc.

CROLEY COAL CORP. 899 Croley Coal Corporation and , South Harlan Coal Co., Inc. and Southern Labor Union, Local 206 and Stanley Collins. Cases 9-CA-16942 and 9- CA-16998 24 June 1986 cers, agents, successors, and assigns, shall take the action set forth in the Order. David L. Ness, Esq., for the General Counsel. Otis Doans Jr., of Harlan, Kentucky, for the Respondent, South Harlan Coal Co., Inc. SECOND SUPPLEMENTAL DECISION AND ORDER BY MEMBERS DENNIS, JOHANSEN, AND STEPHENS On 11 April 1985 Administrative Law Judge Richard H. Beddow Jr. issued the attached deci- sion. Respondent South Harlan Coal Company, Inc.' filed exceptions and a supporting brief. I The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. 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, I and conclusions3 and to adopt the recommended Order.4 ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, South Harlan Coal Co., Inc., Harlan, Kentucky, its offi- i Respondent South Harlan has requested oral argument. The request is denied as the record, exceptions, and brief adequately present the issues and the positions of the parties. S In adopting the judge's decision to credit the preheanng affidavit to the Board of Ray Jackson, Respondent South Harlan 's president, where inconsistent with Jackson's testimony on the witness stand, we do not rely on Alvin J Bart & Go, 236 NLRB 242 (1978). Rather, we find that the statement in the 12 April 1983 affidavit that South Harlan retained the same employees and foremen at the mine as had been employed there by Croley Coal Corporation, to which we now find South Harlan to be a successor employer, is an admission by a party-opponent See Rubber Workers Local 878 (Goodyear Tire), 255 NLRB 251 fn 1 (1981), Boiler- makers Local 587 (Stone & Webster), 233 NLRB 612, 615 fn 5 (1977). Such an admission is not hearsay Fed R Evid 801(d)(2) 3 Although we adopt the judge's conclusion that Respondent South Harlan is liable as a successor with knowledge of unlawful conduct to remedy the unfair labor practices of its predecessor, Croley Coal Corpo- ration, we do not adopt the judge's formulation of the burden of proof in this case Contrary to the judge's statement, the burden is on the General Counsel to establish that there has been a substantial continuity in the em- ploying enterprise despite the transfer of the business to a new employer See Georgetown Stainless Mfg Corp., 198 NLRB 234 (1972). The General Counsel's burden is sustained here by the judge's finding, which we also adopt, that Respondent South Harlan continued to operate the mine for- merly owned by Croley in "basically an unchanged form" after South Harlan assumed control On the other hand, it is well settled that the al- leged successor has the burden of establishing that it was without knowl edge of its predecessor's unfair labor practices at the time it took over the business Cumberland Nursing & Convalescent Center, 263 NLRB 428 (1982) Also, we do not rely on the judge's discussion, based on Wrnco Petrole- um Co, 252 NLRB 1049 (1980), of South Harlan's status as sole stock- holder of Croley Coal Corporation 4 The citation in the judge's decision to Southeastern Envelope Co. is corrected to read Southeastern Envelope Co., 246 NLRB 423 (1979) SUPPLEMENTAL DECISION STATEMENT OF THE CASE RICHARD H. BEDDOW JR., Administrative Law Judge. This matter was heard in Lexington, Kentucky, on Sep- tember 20, 1984. Subsequently, briefs were filed by the General Counsel and Respondent South Harlan. The proceeding is based on the General Counsel's backpay specifications dated August 18, 1983, following United States court of appeals enforcement on March 31, 1983, of the Board Decision and Order of August' 3, 1982, which ordered Respondent Croley Coal Corpora- tion, its officers, agents, successors, and assigns, to make whole each listed discriminatee. On March 15, 1984, the Board issued a Supplemental Decision and Order in these cases (269 NLRB 182) in which it granted the General Counsel's Motion for Sum- mary Judgment against Respondent Croley Coal and or- dered that Respondent Croley Coal make payment to each of the discriminatees as set forth in the backpay specification. With respect to the liability of Respondent South Harlan Coal Co., Inc., the Board denied the Gen- eral Counsel's Motion for Summary Judgment and re- manded that portion of the case for a hearing before an administrative law judge to determine any potential li- ability on the part of Respondent South Harlan Coal. In this connection, the General Counsel alleges that South Harlan Coal is a successor and/or joint employer of Re- spondent Croley Coal and, as such, is jointly and several- ly liable with Respondent Croley Coal for the payment of the net backpay due each discriminatee as alleged in the backpay specification. Respondent South Harlan Coal does not dispute the computation of the backpay amounts due each discriminatee, but denies its liability as a successor or joint employer of Respondent Croley Coal. I. Jim Croley, president of Respondent Croley Coal, tes- tified that his company obtained a facility known as Mine #12 from Harlan Fuel Company and began oper- ation on May 29, 1981. Mine #12 is located near Smith, Kentucky, southwest of Cawood, Kentucky, off county road 987 near the Kentucky-Tennessee state line. It is also accessible over a road extending from state route 72 south of Harlan, Kentucky. Employees at this mine were represented by the Southern Labor Union, Local 206. The Union and an employee, Stanley Collins, filed unfair labor practice charges against Respondent Croley Coal on June 8 and 18, 1981. A consolidated complaint was issued against Croley Coal on April 9, 1982. Roy Dan Jackson, Respondent South Harlan Coal's president, re- ceived a copy of the complaint in the mail about April 22, 1982, but did not appear at the hearing which was 280 NLRB No. 104 900 DECISIONS OF NATIONAL LABOR RELATIONS BOARD held in Harlan, Kentucky, on May 11, 1982. A decision was issued on June 30, 1982, and affirmed by the Board on August 3, 1982, finding that Respondent Croley Coal violated the Act by refusing to recognize and bargain with the Union and by refusing to employ former em- ployees of Harlan Fuel at Mine # 12 because they refused to abandon their support of the Union and engaged in an unfair labor practice strike. Jackson owns and operates several companies engaged in coal mining activities in the Harlan County area. He also has been a leader of a Harlan County political party and was on the board of directors of the local coal oper- ations associations . It is noted that although some of Jackson's separate companies have bargaining agree- ments with the Union, he did not have a master agree- ment that otherwise was applicable to Mine #12. Jackson testified that he first spoke with Jim Croley about the possibility of buying Mine #12 when Croley approached him about buying some coal. Jackson then explored the whole mine with two of his company super- visors and visited the mine with Croley on six to nine occasions over a 2- or 3-week period. Jackson observed the mines productivity and equipment and then advised Croley on production problems. Jackson next met with Croley and several other persons' in Knoxville at the time of a "big ice storm" and, over a period of 2 or 3 days, discussed a proposal to purchase Mine #12. Jack- son asserts that no one at that time or on his visits to the mine made him aware of any pending labor complaint against Croley Coal or of Croley Coal's involvement in possible unfair labor practices. A purchase agreement dated January 19, 1982, was signed at the Knoxville meeting and shortly thereafter Jackson took over Mine #12. Jackson testified that he immediately brought in his own superintendent and a face boss from his other oper- ations. These two supervisors controlled the hiring or firing of employees. Jackson, however, personally was aware of at least four of Croley Coal's miners who had stayed on. Otherwise, however, he guessed that 85 per- cent of South Harlan Coal's employees at Mine #12 were transferred from his other mines, newly hired, or miners who previously had worked for one of Jackson's other companies. Jackson said that he had visited the mine prior to the sales agreement and recognized that a lot of Croley Coal's employees had worked for him before. Jackson also testified that within a week or 10 days of the purchase, he set up mining in a different sec- tion from that which Jim Croley had been mining and brought in much of his own equipment. To his knowl- edge, Croley's equipment was still sitting at the mine. South Harlan Coal issued Mine #12 employees its own paychecks and obtained a license permit for operating the mine under its own name on March 30, 1982. Under Jackson's ownership, the employees at Mine #12 were covered by an insurance company different than that uti- lized by the Union. i These others included Fred Langley, Langley's attorney, Keith McCord, and Roger Ayres, an employee of National Energy Resources, an operation which, as part of the agreement entered into, obtained quali- fied rights of first refusal on the purchase of coal from Mine #12 Subse- quently, Langley himself apparently obtained Mine #12. The agreement signed by Jim Croley and Jackson pro- vided, among other things, that (1) Jim Croley agreed to transfer, sell, and assign to Smith Harlan Coal Co., Inc., all the issued and outstanding shares of Croley Coal Cor- poration stock (10 shares) on the execution of this agree- ment and (2) South Harlan Coal Co., Inc., agreed to cause Croley Coal Corporation to pay the existing obli- gations of the corporation and all future obligations in- curred by it. Despite the above provision, Jackson testi- fied that he did not ask about possible pending legal suits, but only discussed financial notes on equipment and other mortgages. Although the agreement provided for the preparation and execution of a formal contract, this was not done prior to mid-October 1982, when Respondent South Harlan Coal transferred the stock of Croley Coal back to Jim Croley. II. Respondent South Harlan Coal's ownership of Mine #12 and the stock of Croley Coal Corporation occurred subsequent to the occurrence of the acts in 1981 which formed the basis for finding that Respondent Croley Coal Corporation was liable for backpay payments to identified discriniinatees. The proceedings which estab- lished this liability, however, occurred during 1982, when Respondent South Harlan Coal owned the Croley Coal stock and operated the mine. Here, the liability of Respondent Croley Coal is not in question; however, Re- spondent South Harlan asserts that it should not be con- sidered a mere stockholder. It further contends that it is not a successor or joint employer with Croley Coal Cor- poration, arguing that it had no prior knowledge of the unfair labor practices and that the supervisors and em- ployees that had been used by Croley Coal were changed, South Harlan used its own equipment and Cro- ley's equipment was removed from the location, and it changed the section of the mine in which it was produc- ing coal and sold its product on the open market to open bidders, citing Golden States Bottling Co. v. NLRB, 414 U.S. 168 (1973), and Perma Vinyl Corp., 164 NLRB 968 (1967), also cited by the General Counsel. South Harlan Coal's president received a copy of the complaint in April 1982, but did not appear at the hear- ing in Harlan on May 11. Moreover, the Board's Deci- sion and Order in the matter was made on August 3, 1982, over 2 months prior to the time Respondent South Harlan Coal transferred the Croley Coal stock back to Jim Croley. It is noted that it is the usual practice of the Board to consider the issue of derivative liability at the compli- ance stage of proceeding, Southeastern Envelope Co., 426 NLRB 423 (1979) and, accordingly, Respondent South Harlan Coal was not required to attend or present its po- sition at the time of the initial hearing. By the same token, however, it cannot assert a lack of knowledge when it has specifically avoided the opportunity to accept information pertaining to the pending Board pro- cedure against the Company that it had purchased. As argued by the General Counsel, the Board has con- sistently held that a mere change of stock ownership CROLEY COAL CORP does not absolve a continuing corporation of responsibil- ity under the Act, Winco Petroleum Co., 252 NLRB 1049, 1054-1055 (1980). Here, it is clear that Respondent South Harlan Coal held a position as sole stockholder of Re- spondent Croley Coal at the time liability for the unfair labor practices of that company was litigated and decid- ed. Here, by virtue of its complete stock ownership, I find that Respondent South Harlan Coal was a successor. Moreover, as discussed below, the record shows that South Harlan otherwise is a successor under the criteria of Golden States, supra. At the hearing Jackson testified that after the purchase he immediately hired new employees and supervisors as a majority of the Mine # 12 work force, that he merely served in an "advisory" capacity to Croley Coal for 2 or 3 weeks before taking over operations, that he used his own machinery and did not know what happened to Croley's equipment, and that he used a different trucking service to transport the mine's production. Such testimo- ny, however, is significantly contradictory to the state- ments made by Jackson in his sworn affidavit to the Board dated April 12, 1983. In that affidavit, Jackson un- ambiguously states that Respondent South Harlan Coal purchased Respondent Croley's stock "on or about Janu- ary 15, 1982," that "the stock was transferred around February 1, 1982,"and that "I [Jackson] ran the coal mine for two (2) or (3) weeks before the stock transfer went through." Jackson also stated that "South Harlan Coal Company retained the same employees at the mine as Croley Coal Corportion had employed," that these em- ployees were not required to submit job applications, and that "South Harlan retained all of Croley Coal Corpora- tion's mine foremen." As argued by the General Counsel, Jackson's testimo- ny at the hearing must be considered in light of his guilty plea and conviction on July 26, 1984, to a felony charge of filing a false income tax return. I have also evaluated credibility in the light of his overall evasive demeanor, his consistent lack of recall, or lack of appar- ent interest in events of seeming importance to his busi- ness activities, and the inherent impossibility of his testi- mony regarding his lack of knowledge of Croley Coal's labor relations problems. Under these circumstances, I find that Jackson's affidavit of April 12, 1983, is the most reliable and probative indication of the truthfulness of the facts surrounding his takeover of Mine #12. Accord- ingly, and to the extent that Jackson's testimony at the hearing on September 20, 1984, is inconsistent with that set forth in his sworn affidavit of April 12, 1983, I credit the description of events set forth in the affidavit as set- ting forth the truth of the matter. See Alvin D. Bart & Co., 236 NLRB 242 (1978). Under these circumstances, I further conclude that, subsequent to the purchase, South Harlan Coal operated Croley Coal and its Mine #12 is basically an unchanged form. It is further noted that, in a case of this nature, the burden is on the Respondent to establish that it was not a successor employee (if it was not) and that when it took over it lacked knowledge of the unfair labor practices of its predecessor, Mansion House Center Management Corp., 208 NLRB 684 (1974). Here, I conclude that Re- spondent has failed its responsibility in both regards. 901 First, the agreement between the two Respondents clearly provides that South Harlan will cause Croley Coal "to pay the existing obligations of the corporation and all future obligations incurred by it" and no indemni- fication clause or other qualifying clause of any nature was included in the agreement. Although it appears that neither Croley nor Jackson may have mentioned the pending unfair labor practice charge when the purchase was consummated, it otherwise appears that Jackson was already aware of Respondent Croley's unfair labor prac- tices. As indicated by the General Counsel, the record in this case supports the inference that Jackson possessed knowledge that Respondent Croley's Coal was involved in a labor conflict over its refusal to hire former employ- ees that did not abandon their support of the Union. Jackson was an active member of the Harlan community, serving in 1981 on the board of directors of the Harlan County Coal Operators Association and as the chairman of a Harlan County political party. During the first week of June 1981, three articles appeared on the front page of the major local newspaper describing the picketing in protest of Respondent Croley's unfair labor practices and, in one article, appeared the information that unfair labor practice charges had been filed. Although Jackson asserted he "never" reads newspapers, he has a paper re- ceptacle in front of his (and his grandfather's) home and admits that he occassionally would read about mining disasters or other special occurrances. He also admitted that he heard "street talk" about the strike. During 1981, at the time of the picketing, Jackson op- erated various coal mines in the Harlan County area, in- cluding two mines in close proximity to Mine #12 which makes it unlikely that Jackson was unaware of Croley Coal's labor problems. Significantly, the two mines were contract-mined by Jackson for one of James Croley's other companies, Golden Glow. Pennellee Coal Compa- ny, of which Jackson was part owner and vice president, was contract-mining for Golden Glow at Mine Nos. 8 and 9, whose entrances were 2 to 3 miles beyond the en- trance to Mine #12. According to undisputed testimony, the Union's picketing at the Mine #12 entrance lasted for approximately 2 weeks after May 29, 1981, with an aver- age of six to eight picketers. Up to 25 or 30 picketers also appeared at a fork in the road on Highway 72, with one direction leading to Respondent Croley Coal's main office at Liggett, Kentucky, and the other to a town called Yancy. The only two routes for driving to Mine #12 would have taken Jackson by the two locations where the Union picketed. Thus, driving from Jackson's office at Cranks toward Mine Nos. 8 and 9 would have taken him by the picketing at the Mine #12 entrance, and driving from Harlan to those mines, Jackson would have passed the picketing on Highway 72 and also come within 1 or 2 miles from the Mine #12 picketing. Under these circumstances, I find Jackson' s assertion that he lacked prior knowledge of the picketing and Re- spondent Croley Coal's labor problems lack credulity, and I conclude that Respondent South Harlan Coal has not met its burden of proof with regard to either its successorship status or its knowledge of Croley Coal's unfair labor practices. I therefore find and conclude that 902 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Respondent South Harlan Coal is a successor of Re- spondent Croley Coal with knowledge of its predeces- sor's unfair labor practices and has the consequent re- sponsibility to rectify the unfair labor practices of its predecessor. Because the backpay due the discriminatees is the sole item to be remedied, I conclude and find that Respondent South Harlan Coal stands with and in the place of Respondent Croley Coal and is jointly and sev- erally liable and solely liable in those areas when its predecessor is liable, and must fulfill the backpay obliga- tions set forth in this decision when its predecessor is unable to do so. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed2 ORDER On the basis of the findings and conclusion set forth above, it is ordered that the Respondent Croley Coal Corporation and South Harlan Coal Company, Inc., 2 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. Harlan, Kentucky, its officers, agents, successors, and as- signs, shall make whole each of the discriminatees named below by payment to each of them the amount set forth next to his name, plus interest computed according to Florida Steel Corp., 231 NLRB 651 (1977), less any lawful tax witholdings.3 Hirman Daniel Jr. $ 3,393.57 Clifford Lee 11,514.48 Larry Collins 16,729.48 James Miller 12,091.77 Stanley Collins 3,070.88 Stephen Alan Vaughn 10,222.11 Charles Howard 8,324.88 Joe Watkins 3,699.20 David Caldwell 29,077.84 Phillip Daniel 6,878.84 Steve Farmer 2,124.00 Jimmy Crawford 2,851.49 Robert Nix 846.56 Donnie Green 1,932.00 Roger Colinger 3,539.00 7 See generally Isis Plumbing Co, 138 NLRB 716 (1962)