Hopkins Hardware; Mantha'S Carpet & Draperies; Mantha'S Handyman Plumbing; Mantha'S Fence

1296 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Edgar Mantha and Kathleen Mantha, a Partnership, d/b/a Hopkins Hardware; Mantha's Carpet & Draperies; Mantha's Handyman Plumbing; Mantha's Fence; and Donald A. Spence and Pa- tricia A. Spence, Alleged Successor and United Food and Commercial Workers Union, Local 839. Case 32-CA-4225 31 July 1986 SUPPLEMENTAL DECISION AND ORDER REMANDING By CHAIRMAN DoisoN AND MEMBERS JOHANSEN AND BABSON On 9 December 19851 Administrative Law Judge Jerrold H. Shapiro issued the attached sup- plemental decision. The General Counsel filed ex- ceptions and a brief in support of its exceptions. 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 record in light of the exceptions and brief and has decided to affirm the judge's rulings, findings, and conclusions only to the extent consistent with this Supplemental Decision and Order. In his decision, the judge recommended the dis- missal of the instant backpay specification and notice of hearing issued against the Respondent, a partnership comprised of Edgar and Kathleen Mantha (Respondent Mantha).2 For reasons set forth below, we find, contrary to the judge, that the backpay specification and notice of hearing should not be dismissed based on failure of service. As set forth in detail in the judge's decision, on 12 July 1984 the Board issued its underlying Deci- sion and Order finding, inter alia, that the Re- spondent violated Section 8(a)(1) and (3) by unlaw- fully discharging employees Steven Bobeda, John Clarke, and Frederick Smith for engaging in pro- tected union activity, and ordered that the discri- minatees be offered reinstatement to their former positions and that they be made whole for any loss of earnings they suffered by reason of the Re- spondent's unfair labor practices .3 On 4 March 1985 the United States Court of Appeals for the i All dates are in calendar year 1985 unless otherwise specified. Y The judge also recommended the dismissal of the backpay specifica- tion issued against Donald A. Spence and Patricia A. Spence, a succes- sor-employer who took over the Respondent's business on 16 March 1982, finding that the General Counsel failed to establish at the hearing conducted in this matter on 28 October that when successor Spence became a successor-employer it knew about the Respondent's unfair labor practices. No party filed exceptions to the judge's dismissal of the back- pay specification, insofar as it relates to Spence. a 271 NLRB 175 (1984). Ninth Circuit entered its judgment enforcing the Board's Order.4 In March 1982 the Manthas, Canadian citizens, sold the business involved in this proceeding and shortly thereafter moved to Canada. On 26 July 1985 the Regional Director for Region 32 issued a backpay specification and notice of hearing. Copies of the specification and the notice were sent by registered mail to the Respondent's post office box in Ontario, Canada, and also by certified mail to their Watsonville, California attorney, Olsen, who represented the Respondent in the underlying unfair labor practice case." As evidenced by the postal return receipt, the backpay specification and notice of hearing were received by Olsen on 30 July. As of the time of the hearing on the backpay specification no postal return receipt had been re- turned for the copies sent to the Respondent at its Canadian address.6 By letter dated 27 August 1985, the Respond- ent's Canadian counsel, Painter, advised the Re- gional Director that he had recently been informed by the Respondent's "California attorneys" about the issuance of the specification and the notice of hearing and had reviewed the contents . He request- ed that the Regional Director postpone the hearing from 17 September 1985 until at least 17 January 1986, and he filed with the Regional Director a "Motion for Adjournment of Hearing Date," which argued, inter alia, that the Manthas were Canadian citizens residing in Canada, that the Re- spondent had "not been served with proper notice of hearing," and that it would be premature for the Board to conduct an administrative hearing in this proceeding until a court of competent jurisdiction ruled on these arguments.? On 4 September the Regional Director issued an order rescheduling the hearing from 17 September to 28 October. By letter dated 7 October the Respondent's Canadian counsel acknowledged receipt of the Order, but ad- vised the Regional Director that the Respondent would not be present at the hearing if it were held 4 NLRB Y Hopkins Hardware (Case No 84-7648, unpublished) ' The Respondent did not file exceptions to the judge 's Decision and Order in the underlying proceeding, nor did it contest the Board's en- forcement petition before the circuit court of appeals. a The judge noted that as there was no postal return receipt returned to the Regional Director indicating that the Respondent refused to accept delivery, it was just as possible that the specification and the notice were lost in the mail as it was that the Respondent refused to accept delivery. T Regarding the substantive allegations of the backpay specification, the Respondent's Canadian counsel stated that the Respondent intended to deny each of the allegations contained in the specification, but in order to litigate the issues he would need time to retain a California attorney and for an attorney to review the record in the underlying unfair labor practice proceeding and other facts pertinent to the case. 280 NLRB No. 146 HOPKINS HARDWARE on 28 October.8 The letter asserted that the Re- spondent would acknowledge that Board's jurisdic- tion only after a court rules that the Board was properly exercising its jurisdiction and had validly served the Respondent with the specification and notice of hearing. The letter concluded with a re- newal of the previous request for an adjournment of the hearing at least until 17 January 1986. Thereafter, the Respondent and Painter were in- formed that the hearing would be on 28 October as scheduled. The Respondent made no appearance at the hearing either through counsel or otherwise. Noting that the Board had jurisdiction over the Respondent's California business in the underlying unfair labor practice proceeding, the judge found that the Board was not deprived of jurisdiction be- cause the instant proceeding is a continuation of the underlying unfair labor practice proceeding in which jurisdiction was properly asserted. Regard- ing the issue of whether the backpay specification and notice of hearing must be dismissed because the Respondent was not validly served, the judge noted that the Federal Rules of Civil Procedure do not provide for service of process in a foreign country except when a statute expressly provides for such service. Since the Act does not provide for service of process in a foreign country, the Re- spondent resides in Canada and has not consented to be served, and the General Counsel failed to provide any legal citation to support the proposi- tion that the Board has the statutory authority to extend its service of process to parties residing out- side the United States, the judge dismissed the specification and notice of hearing pertaining to the Respondent Mantha without prejudice.9 In doing so, the judge also stated that there was no evidence that the California attorney who represented the Respondent in the underlying proceeding was des- ignated as the Respondent's agent for purposes of service of process. We find, contrary to the judge, that service of the backpay specification and notice of hearing on the Respondent was valid. Thus, in the underlying unfair labor practice proceeding, the Respondent • Postal return receipts establish that the Respondent received the 4 September Order Rescheduling Hearing at their Ontario, Canada post office box. • Although recognizing that the Respondent had actual notice of the backpaY specification and notice of hearing, was fully apprised of its con- tents, and suffered no prejudice from the General Counsel's failure to personally serve the Respondent, the judge nevertheless concluded that because the Board lacked statutory authority to extend its service of process outside the United States into a foreign country, his decision would be the same even if the record revealed that the service of process requirements of the Board's Rules and Regulations/or the Act had been met. Contrary to the judge, we do not find controlling here Fed.R.Civ.P. 4 which deals primarily with service of summons and of original process rather than the service of subsequent pleadings after original jurisdiction has been established. 1297 was represented by its California attorney, Olsen, who entered an appearance for the Respondent upon the record at the hearing. At no time has the Respondent's California attorney made a motion to withdraw as counsel for the Respondent. Nor did the Respondent or any attorney representing the Respondent notify the Board prior to the issuance of the backpay specification that the Respondent was no longer represented by Attorney Olsen. Rather, it was only after service of the backpay specification and notice of hearing had been made upon Olsen that the Respondent intimated, through its Motion for Adjournment of Hearing Date, that it was no longer represented by Olsen. In these cir- cumstances, service upon the Respondent's Califor- nia attorney by registered mail was a form of notice reasonably calculated to give the Respond- ent knowledge of the proceeding and an opportuni- ty to be heard. NLRB v. E. L. Clark, 468 F.2d 459 (5th Cir. 1972); NLRB v. O'Keefe & Merritt Mfg. Co., 178 F.2d 445 (9th Cir. 1949). Accordingly, we find that valid and sufficient service was made upon Respondent when a copy of the backpay specification and notice of hearing was served upon Olsen, at that time their attorney of record, in this proceding by registered mail dated 30 July 1985. Cera International Corp., 272 NLRB 1360 fn. 2 (1984); Star Grocery Co., 245 NLRB 196 (1979). We also note that the Respondent admitted having actual notice of the backpay specification when by letter dated 7 October its Canadian attor- ney stated that he was the Respondent's agent and had reviewed the contents of the backpay specifi- cation and notice of hearing. Further, on 4 Septem- ber in response to the Respondent's motion to ad- journ the hearing, the Regional Director issued an order rescheduling the hearing from 17 September to 28 October and the postal return receipts estab- lish that this order was received by Respondent Mantha at its Ontario, Canada address and by At- torney Olsen at his Watsonville, California address. Finally, by letter dated 7 October, the Respond- ent's California counsel acknowledged receipt of the 4 September order rescheduling the hearing. Significantly, the backpay specification at issue here is a supplemental step in this proceeding, in which the Respondent has been a party from the outset, and only part of our effort to effectuate our previous Decision and Order which has been en- forced. Indeed, the basic purpose of a hearing at this stage is to allow the Respondent to raise any affirmative defenses it may have to the backpay specification. Accordingly, and in light of all the circumstances set forth above, we conclude that the Respondent was properly served with the back- pay specification and notice of hearing. We there- 1298 DECISIONS OF NATIONAL LABOR RELATIONS BOARD fore remand this proceeding to the administrative law judge for further appropriate action. ORDER IT Is ORDERED that this proceeding is remanded to Administrative Law Judge Jerrold H. Shapiro for the purpose of conducting further hearing on the backpay specification, if deemed warranted in his discretion, and for the preparation of a second supplemental decision containing fmdings of fact, conclusions, and a recommended order concerning the amount of backpay due to employees Steven Bobeda, John Clarke, and Frederick Smith by reason of the unlawful discrimination practiced against them. Following service of the second sup- plemental decision on the parties, the provisions of Section 102.46 of the Board's Rules and Regula- tions shall apply. Will Vance, for the General Counsel. Fred R. Long, for Donald A. Spence and Patricia A. Spence. Perry Pearson, for the Charging Party. SUPPLEMENTAL DECISION JERROLD H. SHAPIRO, Administrative Law Judge. On July 12, 1984, the National Labor Relations Board (Board) issued its Decision and Order in the above-enti- tled proceeding' finding, inter alia, that Respondent, Edgar Mantha and Kathleen Mantha, a Partnership, d/b/a Hopkins Hardware; Mantha's Carpet & Draperies; Mantha's Handyman Plumbing; Martha's Fence, Wat- sonville, California, its officers, agents, successors, and assigns, had violated Section 8(axl) and (3) of the Na- tional Labor Relations Act (Act) by unlawfully discharg- ing employees Steven Bobeda, John Clarke, and Freder- ick Smith for engaging in protected union activity. The Board ordered that the discriminatees be offered rein- statement to their former jobs and that they be made whole for any loss of earnings they suffered by reason of the discrimination practiced against them. On March 4, 1985, the United States Court of Appeals for the Ninth Circuit entered its judgment2 enforcing the Board's Order. A controversy having arisen over the amount of back- pay due the discriminatees under the terms of the Board's Order, as enforced by the court, the Regional Director for Region 32, on July 26, 1985, issued a back- pay specification and notice of hearing alleging the amounts of backpay due under the Board's Order and that Donald A. Spence and Patricia A. Spence, who took over Respondent Mantha's business on March 16, 1982, were a successor employer and, as such, jointly and severably liable with Respondent Mantha for all backpay due the three discriminatees and obligated to 1271 NLRB 175. m NLRB v Hopkins Hardware (Case No. 84-7648, unpublished). offer the discriminatees reinstatement. The backpay spec- ification and notice of hearing further notified Respond- ent Mantha and Successor Spence that they should file timely answers complying with the Board 's Rules and Regulations and that a hearing would be conducted Sep- tember 17, 1985. Subsequently by order dated September 4, 1985, the Board's Regional Director rescheduled the hearing from September 17 to October 28, 1985. Succes- sor Spence filed an answer September 24, 1985, and an amended answer at the October 28, 1985 hearing. Re- spondent Mantha, as described in detail infra, did not file an answer and did not appear at the hearing which I conducted in this proceeding on October 28, 1985. The essential questions posed by the pleadings are as follows: (1) Whether the Board may exercise its jurisdic- tion over Respondent Mantha, Edgar and Kathleen Mantha, who reside in Canada; (2) whether the Board may extend its service of process into a foreign country so as to serve Respondent Mantha with the backpay specification and notice of hearing herein; (3) whether Respondent Mantha's backpay liability to discriminatees Clarke and Smith was ended on or about March 12, 1982, by Respondent Mantha's offers of reinstatement made to them on that date; (4) whether Successor Spence took possession of Respondent Mantha's bussi- ness with knowledge of the unfair labor practice litiga- tion herein; (5) if Successor Spence is legally obligated to remedy the unfair labor practices herein, whether Spence has established that it eliminated discriminated Bobeda's position when it took possession of Mantha's business and would have laid off discriminatee Smith on or about November 22, 1983, for business reasons. On the entire record, from my observation of the de- meanor of the witnesses, and having considered the Gen- eral Counsel's posthearing brief and Successor Spence's oral argument, I make the following FINDINGS AND CONCLUSIONS 1. I shall first consider Respondent's Mantha's contention that the Board lacks jurisdiction because the Manthas are Canadian citizens who reside in Canada and that, in any event, this proceeding must be dismissed because there has not been valid service of process of the backpay specification and notice of hearing on the Manthas.3 An evaluation of the pertinent evidence follows. As indicated in Administrative Law Judge Myatt's de- cision in the underlying unfair labor practice proceeding, Respondent Mantha moved to Canada shortly after the Manthas sold their business involved in this proceeding. The Board's Regional Director sent by registered mail a copy of the July 25, 1985 backpay specification and notice of hearing to Respondent Mantha, addressed to the Manthas' post office box in Grimsby, Ontario, 0 I note that Respondent Mantha's request that the Board's Regional Director adjourn this proceeding until at least January 17, 1986, which was in effect denied by the Regional Director by his order rescheduling the hearing to only October 28, 1985, is not before me for consideration because it was not renewed before me. HOPKINS HARDWARE Canada,4 and also sent by certified mail a copy to Perry Olsen, the Watsonville, California lawyer who represent- ed Respondent Mantha before Judge Myatt in the under- lying unfair labor practice proceeding. The backpay specification and notice of hearing was received by At- torney Olsen, as is evidenced by a postal return receipt. There is no evidence that Respondent Mantha received it inasmuch as no postal return receipt was returned to the Regional Director. However there is no evidence that Respondent Mantha refused to accept delivery of the backpay specification and notice for hearing; it was not returned to the Regional Director with a notation indi- cating that Respondent Mantha refused to accept deliv- ery. Thus, it is just as possible that the backpay specifica- tion and notice of hearing mailed on July 25, 1985, to Respondent Mantha was lost in the mail as it is that the Manthas refused to accept delivery of this document. In any event, on August 27, 1985, Ernest W. Painter, a solicitor, whose office is located in Ontario, Canada, wrote the Board's Regional Director, on behalf of Re- spondent Mantha, that he recently learned from Re- spondent Mantha's "California Attorneys" about the Re- gional Director's issuance of the July 25, 1985 backpay specification and notice of hearing and had reviewed its contents. He requested that the Regional Director ad- journ the scheduled hearing from September 17, 1985, until at least January 17, 1986, and submitted to the Re- gional Director a "Motion for Adjournment of Hearing Date." In support of this motion Solicitor Painter argued to the Regional Director that the Board lacked jurisdic- tion over Respondent Mantha because the Manthas were Canadian citizens who resided in Canada and that, in any event, the backpay specification and notice of hearing had not been validly served on them and that it would be premature for the Board to conduct an administrative hearing in this proceeding until a court of competent ju- risdiction ruled on these arguments. With respect to the allegations contained in the backpay specification, Solici- tor Painter advised the Regional Director that if a court decided the Board had jurisdiction over Respondent Mantha and that the Manthas had been validly served, Respondent Mantha intended to deny each of the allega- tions contained in the specification, 5 but to litigate the 4 The record reveals that Respondent Mantha receives mail at this post office box inasmuch as postal return receipts establish that the Regional Director's September 4, 1985 order rescheduling hearing was received by the Manthas at that address. 5 More specifically Solicitor Painter informed the Regional Director that Respondent Mantha would establish, among other things, that the three discriminatees were terminated in 1981 for legitimate business rea- sons; that discrimmatee Bobeda was not employed by Respondent Mantha for a 44-hour workweek as alleged in the specification, that Re- spondent Mantha reinstated the three discriminatees in February 1982 pursuant to the Board's request; that any backpay liability or obligation to reinstate the discriminatees was tolled as of the date Successor Spence took possession of the business; and that "[t]he claim for net backpay owing to the discriminatees does not properly account for unemployment insurance benefits received by the discrminuatees since the alleged unfair labor practice, nor have the discriminatees properly disclosed all of their income from other sources since the termination of employment , as each and everyone of the discrimmatees has been receiving gainful employ- ment compensation as freelance plumbers and handyman workers and further in the case of discrimmatee Bobeda the claim for backpay has failed to take into account the discriminatee's period of incarceration." 1299 matter it would need time to retain a California attorney and for the attorney to review the record in the underly- ing unfair labor practice proceeding and other facts per- tinent to the case. As I have found supra, on September 4, 1985, the Re- gional Director issued an order rescheduling the hearing from September 17, 1985, to October 28, 1985. In re- sponse, Respondent Mantha's solicitor Painter wrote the Regional Director on October 7, 1985, acknowledging receipt of the Order, but advised the Regional Director that Respondent Mantha would not attend or be repre- sented at the hearing if it was held October 28, 1985. He explained that Respondent Mantha would acknowledge the Board's jurisdiction only after a court ruled that the Board was properly exercising its jurisdiction and had validly served Respondent Mantha with the backpay specification and notice of hearing. The letter concluded with Painter renewing his previous request for an ad- journment of the hearing until at least January 17, 1986. Subsequently Painter was advised by counsel for the General Counsel, who was representing the Regional Di- rector in this proceeding, that the hearing would be held October 28, 1985, as scheduled. Respondent Mantha did not attend the hearing and was not represented there. There is no question that when Respondent Mantha owned and operated its Watsonville, California business, the business involved in this proceeding, that it was en- gaged in commercial activity within a State within the definition of commerce in the Act. The fact that the Manthas may have been Canadian citizens who resided in Canada is immaterial to the Board's assertion of juris- diction over the business which they owned and operat- ed in the State of California. See S. K Products Corp., 230 NLRB 1211, 1214 (1977), and Delta Match Corp., 102 NLRB 1400 fn. 2 (1953). As a matter of fact Respondent Mantha, which was represented by counsel in the under- lying unfair labor practice proceeding, admitted in that proceeding that the Board had jurisdiction over the Manthas' Watsonville, California business operations. The instant backpay proceeding is merely a continuation of the earlier proceeding. 6 Because the Board properly exercised its jurisdiction over the Manthas' Wastsonville, California business in the underlying unfair labor practice proceeding, the fact that the Manthas are Canadian citi- zens who reside in Canada does not deprive the Board of jurisdiction in this backpay proceeding inasmuch as it is merely a continuation of the underlying unfair labor practice proceeding.7 Respondent Mantha argues that even if the Board may properly exercise its jurisdiction here, the backpay speci- fication and notice of hearing must be dismissed because there has not been valid service of processa inasmuch as e See Sec. 102.52 of the Board's Rules and Regulations and Sec. 102.16 of the Board's Statements of Procedure. 7 See 4 Wright A Miller, Civil Sec. 1064, at 209 fn. 43 ("It has uniform. ly been held that jurisdiction acquired at the beginning of litigation will persist to its end regardless of whether the court maintains continuing physical power over defendants [cases cited]"). 8 Sec. 102.52 of the Board's Rules and Regulations requires that the backpay specification and notice of hearing issued herein be served on the "parties" to the proceeding. 1300 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the Manthas reside in Canada and the Board lacks the authority to serve the backpay specification and notice of hearing on the Manthas in Canada , absent their consent. The General Counsel, ignoring the undisputed fact that the service of process in this case is being made in a for- eign country, treats the service of process issue just as if the Manthas resided in the United States. In this respect the General Counsel in his posthearing brief contends, "Since all the evidence tends to show that Respondent Mantha actually received copies of the Backpay Specifi- cation and Notice of Hearing, following a good faith at- tempt and the use of all reasonable efforts to effect serv- ice of the documents on him, it must be found that Re- spondent Mantha was afforded adequate notice and an opportunity to be heard." This argument ignores the fact that the service of process involved took place in a for- eign country without the Manthas' consent. The Federal Rules of Civil Procedure do not provide for service of process in a foreign country, other than when a statute expressly provides for such service.9 The Act does not provide for service of process in a foreign country. 10 Respondent Mantha resides in Canada , this is where the General Counsel has attempted to serve the Manthas in this proceeding, and it is plain that the Manthas have not consented to be served. Nor is there evidence that Attorney Olsen, the California lawyer who represented Respondent Mantha before the administra- tive law judge in the underlying unfair labor practice proceeding, was designated as Respondent Martha's agent for purposes of service of process . II In view of these circumstances, and in the absence of any legal cita- tion by the General Counsel standing for the proposition that the Board has the statutory authority to extend its service of process outside of the United States to parties who reside in a foreign country, I shall recommend, albeit reluctantly, the dismissal of the backpay specifica- tion and notice of hearing, without prejudice, insofar as its allegations pertain to Respondent Mantha.12 II. Successor Spence contends it is not obligated to rein- state the three discriminatees or pay them backpay be- See Rule 4 of the Fed. R. of Civil Procedure. to See Sec. 11(4) of the Act. Also am Sec. 11(1) of the Act. " The sole record evidence pertinent to Attorney Olsen's relationship with Respondent Mantha follows. He represented the Manthas only during that part of the underlying unfair labor practice proceeding which was conducted before the administrative law judge . Respondent Mantha did not file exceptions to the judge's decision and order and did not file any answer to or otherwise contest the Board's enforcement petition before the circuit court of appeals, and there is no showing that Attorney Olsen otherwise represented the Manthas in those supplemental proceed- ings. Lastly, on receiving the backpay specification and notice of hearing mailed to him by the Regional Director, Attorney Olsen apparently transmitted it to Respondent Mantha 's Canadian counsel 12 I recognize that Respondent Mantha had actual notice of the back- pay specification and notice of hearing and was fully appraised of its con- tents and suffered no prejudice from the General Counsel 's failure to per- sonally serve Respondent Mantha with a copy by registered mail. These circumstances, however, are beside the point when, as here, the Board lacks the statutory authority to extend its service of process outside of the United States and its territories into a foreign country. In other words, even if the record showed that the service-of-process require- ments of the Board's Rules and Regulations or the Act had been com- plied with herein, my decision would be the same. cause when it took over Respondent Mantha's business on March 16, 1982, as a successor-employer, it did not know about the unfair labor practice litigation before the Board involving the three discriminatees. The General Counsel contends Successor Spence learned of this litiga- tion on March 15, 1982, by Western Union mailgram from a representative of the Charging Party. An evalua- tion of the relevant evidence follows. On March 5, 1982, the complaint issued in the underly- ing unfair labor practice proceeding . Previously, in De- cember 1981 Respondent Mantha and Successor Spence began serious negotiations concerning the sale of the Manthas' Watsonville, California business. In February 1982, these negotiations culminated in a verbal agree- ment. On March 16, 1982, this agreement was reduced to writing and signed. Pursuant to the terms of the March 16, 1982 contract of sale, Spence agreed to purchase Re- spondent Mantha's business and to take possession of it on March 16, 1982, at 5:30 p.m., the close of the business day. 13 As a matter of fact Successor Spence purchased the assets of Respondent Mantha's business including the premises, inventory, and goodwill. Spence took posses- sion of the business on March 16, 1982, at 5:30 p.m. and continued to carry on Mantha's business without signifi- cant interruption or substantial change in the method of operation or employee complement. During the afternoon of March 15, 1982, Perry Pear- son, a representative of the Charging Party, sent two identical Western Union mailgrams to Donald Spence. The mailgrams, addressed to Spence in care of Hopkins Hardware and the Star Motel, read as follow: THIS IS TO NOTIFY YOU THAT UNFAIR LABOR PRAC- TICE CHARGES HAVE BEEN FILED AGAINST HOPKINS STORE WITH THE NATIONAL LABOR RELATIONS BOARD AND A COMPLAINT HAS BEEN ISSUED BY SAME. BASED UPON YOU PURCHASING HOPKINS HARDWARE FROM ED MANATHA YOU ARE LIABLE FOR ALL BACK WAGES AND BENEFITS ORDERED BY THE NATIONAL LABOR RELATIONS BOARD. IF YOU HAVE ANY QUESTIONS REGARDING THIS LIABILITY PLEASE FEEL FREE TO CALL ME AT [phone number). Hopkins Hardware was part of the business owned and operated by Respondent Mantha which Successor Spence on March 16, 1982, purchased and took posses- sion of at the end of the business day.14 The Star Motel 38 The contract of sale contains a provision which provides that Spence does not assume any of Mantha's liabilities and that Mantha agrees to indemnify Spence for any claims or liabilities which arose prior to Spence's takeover of the business. 14 John Clarke, one of the diacriminatees, testified that at the end of the workdays on March 15 and 16, Donald Spence personally handed him paychecks for those days of work and that the checks had been signed by Spence Donald Spence testified he did not engage in this con- duct. He admitted, however, that on March 16, when he took over the buiness at the end of the workday, he personally handed out the employ- ees' paychecks which had been signed by Ed Mantha and introduced himself to the employees as the new owner. I have credited Spence's and rejected Clarke's testimony because Spence's testimonial demeanor was better than Clarke's. HOPKINS HARDWARE 1301 was a commercial motel owned by Successor Spence. The Spences did not reside at the motel , nor did they personally operate it . They were absentee landlords who employed managers to operate the business on their behalf. Neither one of the Spences functioned in any ca- pacity at the motel. Donald Spence testified he first learned about the above-described March 15, 1982 mailgrams when his lawyer verbally informed him about them shortly before the hearing in this proceeding and when he was shown copies of the mailgrams during the hearing . Spence also testified that he did not learn about the unfair labor prac- tice charges involved in this proceeding until at least 1 week after he signed the March 16, 1982 contract of sale and had taken possesion of predecessor employer Mantha's business. Spence testified that the only thing Ed Mantha said to him about the Union was said during a luncheon meeting early in March 1982 when Ed Mantha mentioned that there was a union problem in the store, but assured Spence that it was nothing for Spence to be concerned about and that Mantha would take care of it. Successor Spence, which is admittedly a successor-em- ployer of Respondent Mantha, may be ordered, as a suc- cessor-employer, to reinstate the three unlawfully dis- charged employees herein and to pay them backpay, pro- vided that when Successor Spence took over Respondent Mantha's business it had knowledge of the unfair labor practice litigation before the Board involving the three discriminatees. Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973), and Perms Vinyl Corp., 164 NLRB 968 (1967), enfd. sub nom. U.S. Pipe Co. v. NLRB, 398 F.2d 544 (5th Cir. 1968). 1 am persuaded that the General Counsel has failed to establish that when Successor Spence became a successor-employer of Respondent Mantha that it knew there was unfair labor practice liti- gation before the Board involving the three discrimina- tees. There is no contention or evidence that Patricia Spence had such knowledge and the evidence fails to persuade me that, as contended by the General Counsel, Donald Spence had such knowledge . Donald Spence, as described in detail supra, testified that he did not learn about the unfair labor practice litigation until at least I week after signing the contract of sale. He impressed me as a sincere and conscientious witness . His testimonial demeanor was good and, when viewed in the light of the whole record, his testimony is not incredible.'r Based on the foregoing, I find that the General Coun- sel has failed to establish that when Successor Spence became a successor-employer of Respondent Mantha that it knew about Mantha's unfair labor practices. I therefore shall recommend that the allegations contained in the backpay specification which pertain to Successor Spence be dismissed in their entirety. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed1e ORDER The backpay specification is dismissed in its entirety. 15 I do not find it incredible that Donald Spence was not informed about the March 15, 1982 Western Union mailgrams sent to him by the Charging Party. One of the mailgrams was sent to Hopkins Hardware which at the time was still owned and operated by Respondent Mantha It is not unreasonable to believe that Respondent Mantha concluded that it was not in its best interest to advise Spence about this mailgram. The second mailgram was sent to a motel where the Spences did not reside and, although they owned the motel, they were absentee landlords who employed managers to operate it. Under the circumstances, Spence's tes- timony that he did not learn of this mailgram is not incredible. 16 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