Lexington Oil Corp.

AMERICAN STEEL WAREHOUSING American Steel Warehousing, Inc., a subsidiary of Lexington Oil Corporation i and United Steel- workers of America, AFL-CIO-CLC. Case 14- CA-18332 19 March 1987 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS JOHANSEN AND BABSON On 29 September 1986 Administrative Law Judge Burton S. Kolko issued the attached deci- sion. The General Counsel filed exceptions and a supporting brief. 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, fmdings,2 and conclusions and to adopt the recommended Order as modified, 3 ORDER The National Labor Relations Board adopts the recommended Order of, the administrative law judge as modified below and orders that the Re- spondent, American Steel Warehousing, Inc., a subsidiary of Lexington Oil Corporation, Granite City, Illinois, its officers, agents, successors, and as- signs, shall take the action set forth in the Order as modified. 1. Substitute the following for paragraph 2(b). "(b) Offer in writing immediate employment, without prejudice to any seniority or any other rights and privileges, to each of the former em- ployees of Steel Warehousing of Illinois who, had been laid off in November 1985 for whom the Re- spondent had vacancies after 27 January 1986 and whom it could have ' employed but declined to employ, if necessary replacing employees who had not been employed by Steel Warehousing of Illi- nois on 27 January 1986 but who were hired by the Respondent after that date, such employment to be offered for the classifications at the rates and under the conditions pertaining to the replaced employ- ees; and place on a preferential hiring list all re- maining, former employees of Steel Warehousing of I The Respondent's name appears as amended at the hearing. 2 No exceptions have been filed to the judge's finding that American Steel Warehousing is a successor employer. a The General Counsel excepted to the judge's recommended Order to the extent that it limits the remedy to require the Respondent to replace only those employees who had been hired by the Respondent "before I June 1986" We agree that the remedy should not be so limited and have modified the recommended Order and notice accordingly The General Counsel also excepted to the lack of a "make-whole" paragraph in the notice. We agree, and have so modified the notice 293 Illinois who would have been hired but for the lack of available jobs." 2. Substitute the attached notice for that of the administrative law judge. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice. WE WILL NOT refuse to bargain collectively with the United Steelworkers of America, AF]L-CIO- CLC as exclusive representative of the following unit: All production, maintenance, shipping and _ re- ceiving employees employed at our Granite City, Illinois facility, excluding office employ- ees, plant clerical employees, guards, watch- men, professional employees, foremen, assistant foremen and all other supervisors as defined in the Act. WE WILL NOT discourage membership in the Union or in any other labor organization by dis- criminating against any employee or job applicant regarding hire, tenure of employment, or condition of employment. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7 of the Act. WE WILL, on request, bargain with the Union with respect to rates of pay, wages, hours, and other terms and conditions of employment and, if an agreement is reached, embody such agreement in a signed contract. WE WILL offer employment to Steel Warehous- ing of Illinois employees who were laid off in No- vember 1985 for whom we had vacancies after 27 January 1986 and whom we could have employed but declined to employ, if necessary replacing em- ployees who had not been employed by Steel` War- ehousing on 27 January 1986, but who were hired by us after that date, such employment to be of- fered for the classifications at the rates and under the conditions pertaining to the replaced employ- ees; and place on a preferential hiring list all re- nnaining former employees of Steel Warehousing of Illinois who would have been hired but for the lack of available jobs. 283 NLRB No. 45 294 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD WE WILL make whole the employees of Steel Warehousing of Illinois to whom we will offer em- ployment as set forth above for any losses they may have suffered from our discrimination against them, plus interest. AMERICAN STEEL WAREHOUSING, INC. Keltner W. Locke, Esq., for the General Counsel. Rayford T. Blankership, Labor Consultant, of Green- wood, Illinois, for Respondent. DECISION STATEMENT OF THE CASE BURTON S. KoLKo, Administrative Law Judge. The Lexington Oil Corporation purchased certain assets from Steel Warehousing of Illinois, Limited, an Iowa corpora- tion (SWI), and it purchased the land and buildings used by SWI from the persons who owned SWI. Thereafter, the purchaser operated as American Steel Warehousing, Inc. (ASW), the nominal Respondent in this case.' From 1973 the Union that is the Charging Party in this case had a collective-bargaining agreement with SWI, and after American Steel Warehousing began operating the Union requested recognition by ASW. In effect that re- quest was denied, and the Union's charge followed.2 As a result of that charge the General Counsel complains that ASW as a successor to SWI violated Section 8(a)(5) of the Act, 29 U.S.C. § 158(a)(5), by failing to recognize and bargain with the Union. Also, the complaint alleges that ASW discriminated against former SWI employees by hiring others in their stead who did not belong to the Union, thus violating Section 8(a)(3)., The Respondent denies the allegations. FINDINGS OF FACT The Lexington Oil Corporation negotiated with SWI to_ purchase SWI on 8 January 1986. Before the closing the sellers discovered that the transaction would cause them a tax liability that was unacceptable. The transac- tion was postponed and restructured. SWI's land and buildings were sold by Mr. and Mrs. Blumenthal, their owners. The remainder of the sale consisted of SWI's in- ventories of raw materials and supplies, work in progress, finished materials, machinery, equipment, furni- ture, cash, accounts receivable, customer lists, telephone listings, trade secrets, etc., which were conveyed on 27 January 1986. 1 The buyer chose to effect the purchase through a wholly owned sub- sidiary, Steel Warehousing of Illinois, Inc, an Illinois corporation, which bore no relationship to the seller, SWI, Steel Warehousing of Illinois, Limited, an Iowa corporation Having mentioned the name of the actual purchasing entity, we shall forget about it as that entity has no further use in this discussion 2 The charge was filed on 26 February 1986, was amended on 8 April 1986, and was followed by the complaint on 16 April 1986 The heanng was held on 19 May 1986 in St Louis Briefs were received on 23 June 1986 The purchaser immediately began operating as ASW, like SWI distributing steel products. It immediately sent this letter to the customer list that was stored on the computer that SWI had used. American Steel Warehousing, Inc. has purchased the steel inventory of Steel Warehousing of Illinois, Ltd. located in Granite City, Illinois. It has also ac- quired the land and buildings on Route 11 where the operation is located. The new organization is headed by John P. Stahl- man formerly of Dallas, Texas. Mr. Stahlman is the President and CEO while Pam DeShasier, a long- time employee of Steel Warehousing, will serve as corporate Secretary. Pam will also be in charge of inside sales. This company has had a long history in the steel in- dustry, having begun in 1950 as American Sheet & Strip Steel Corp. Mr. Stahlman has been in the steel industry for fifteen (15) years. He has served as a salesman as well as a service center owner. The company is greatly expanding its bar stock and sheet inventory and it will still continue to provide shearing services. You are invited to visit Pam and John via telephone or in person. Please put American Steel Warehous- ing, Inc. on your list to call for all your steel needs. American Steel Warehousing, Inc. P.O. Box 460 Granite City, IL 62040 On the day after the sale the Union's subdistrict direc- tor, Morgan, heard of it and called ASW. The next morning Morgan met with Carman and Stahlman, ASW coowners. Morgan told them about the collective-bar- gaining agreement between the Union and SWI, that in his view the contract remained in effect because neither party to the contract had sent the required advance ter- mination notice, and that he was interested in continuing to represent the employees at the facility.3, Carman and Stahlman replied that they did not know about the continued viability of the collective-bargaining agreement, that they would have to consult counsel, and that they would get back to Morgan. They never did. After unsuccessful attempts to make contact Morgan fi- nally reached Stahlman, who told him that "my General Counsel 'told me not to talk to you anymore." So that was the end of it. Subsequently ASW hired two additional employees, Daniel Van Scoyk on 24 March 1986 and Mark Knight on 6 May 1986. Neither of these employees was among the 17 bargaining unit employees that had been laid off by SWI the previous fall. One of the unit employees, indeed the Union's shop steward, was Thomas Cottrell. He had regularly been'talking with Plant Manager Ogle S Coincidently, the date of the sale also was the last day of the collec- tive-bargaining agreement that had been made between SWI and the Union on 28 January 1983. By its terms it remained in effect for one more year, until 28 January 1987, since the required 60-day notice for ter- mination or change had not been given by either party to the other AMERICAN STEEL WAREHOUSING even while laid off, as part of his steward responsibilities. On the day after the sale Cottrell went to the plant and talked with Ogle. Cottrell asked if the place had been sold, and Ogle said yes. Then Ogle was asked by Cottrell ... if he was going to call any of us back now that it had been sold . . . thinking that they would have mbre business . And he said no. He said that they were going to be non-union plant from then on. For me to start looking for a job. They wasn't going to bring any of us back. As Supervisor Ogle was not called to testify, Cottrell's credible testimony stands without contradiction. Discussion The "successor employer" issue has been summarized by the United States Court of Appeals for the Ninth Cir- cuit in Premium Foods v. NLRB, 709 F.2d 623, 627 (1983): A new employer who conducts essentially the same business as the former employer, and who hires former employees of his predecessor as a ma- jority of his work force is considered a successor employer.... Where a union has been recognized ... as the representative of the employees of the predecessor, and his successor hires a majority of his workers from those employees, a presumption arises that the successor's employees also support the union. . . . The basic rationale is that a mere change in ownership, without an essential change in working conditions, would not be likely to change employee attitudes toward representation. See NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 278-279, 92 S.Ct. 1571, 1577, 32 L.lid. 2d 61 (1972). A similar approach has been taken by the Court of Ap- peals for the Seventh Circuit, see Zim's Foodliner v. NLRB, 495 F.2d 1131 (7th Cir. 1974); by the Court of Appeals for the Sixth Circuit, see Service Employees Local 47 v. Cleveland Tower, 606 F.2d 684 (1979); by the Court of Appeals for the First Circuit, see NLRB v. Fall River Dyeing, '775 F.2d 425 (1985); and by the Board, see Bay Breeze Industries, 280 NLRB 1216 (1986).4 What we must do to deal with the issue of successorship raised by ASW's denial is to ascertain whether (1) ASW is a new employer, (2) it conducts essentially the same business as SWI at Granite City, Illinois, (3) it has hired former SWI employees as a majority of its work force, and (4) the Union had been recognized as the representative of SWI's employees. Questions (1) and (4) having already answered, we turn to the heart of the successorship issue. The record is thin but sufficient to make the following findings. SWI had been in the business of distributing steel and steel products. That is the business that ASW was pur- chasing and undertaking. Evidence of this is its initial letter to SWI's customers, dated 27 January 1986, in 4 See also cases cited in fn 7, infra. 295 which it apprised'SWJ's customers of the purchase and its intention to expand "its bar stock and sheet inventory and it will still continue to provide shearing services." The expansion envisioned by ASW was in contrast to the contraction of operations by SWI in its final months. In November 1985, SWI's reduced sales caused it to lay off most of its unit employees, leaving only the two, Gass and Miller, that ASW started up with.5 As ASW expanded its sales it added employee Van Scoyk 2 months later, in March, and employee Knight 2 months after that. But, while expanding its customer base, ASW was still relying on the former SWI customers as the mainstay of its sales. Its initial revenues were totally from SWI's cus- tomers, as it purchased SWI's accounts receivable for sales that transpired after 1 January 1986, 4 weeks before ASW began its own operation. Thereafter, ASW added new customers so that by the end of February 1986 the 49 customers inherited from SWI were expanded to 103. But as the General Counsel's brief shows, relying on the sales figures in General Counsel's Exhibits ,9 and 12, out of ASW's revenues of $180,858 for its first month of op- erations, $101,801 came , from SWI's former customers, 56 percent. This is almost all the data that we have, but it is enough for our purposes, as the Union's demand for rec- ognition was immediate. ASW does not argue that its first month of operations is unrepresentative, nor does it challenge the fact that in the first month, when the Union made its demand, the employees of ASW were working at the same plant and were using the same equipment as they had, at the predecessor SWI. ASW claims that it is a different operation from SWI. Its evidence to support this consists solely of the testimo- ny of its president, Stahlman: Q. Can you tell the Court in what respect-since you were-you have testified that you were present at the facility for a couple of weeks before the change in ownership,'Can you tell the Court please in what respects the services provided changed since the change in ownership? A. Well, in many respects. The inventory at the facility was way down because of the economic conditions that Mr. O'Brien spoke about and we have added-well we have doubled the inventory. So we have many more services just due to the fact that we have the inventory in stock. So we can supply the customers. I don't know if it is the right time to say the dollar figures, but my understanding is that the people that were there before the De- cember of 1985, that their gross sales were approxi- mately $60,000 and in April of this year our's were approximately $300,000. So the major difference is in the,-is in the amount of inventory there and we now carry more products. We carry stainless prod- 5 Also kept on the payroll were salarwd employees De Shashier, SWI's sole salesperson, and Ogle, SWI's warehouse manager. In fact, I cannot find from the record that ASW failed to take on any working ISWI em- ployees 296 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ucts, aluminum products. I believe Steel Warehous- ing is limited to carbon products only. Q. So in other words there are more types of metal that are sheared and distributed? A. Well we do other things. We do other proc- essing work also. Q. When did you add the new processing? A. When I got there. Q. Before or after the change in ownership? A. After. Q. And how long after? A. Immediately. Q. What does the new processing consist of? A. We do a great deal of slitting of coil and then we also do leveling, but I believe they did that before. So the major differences are that ASW has-a larger in- ventory of products from SWI and does slitting of coil. These do not change the employees' working conditions sufficiently to infer that their "attitudes toward represen- tation" would be changed. Premium Foods, supra, 709 F.2d. at 627. What would indicate such a change in employee atti- tudes toward representation would be a change in the structure of the bargaining unit, and this is the argument that ASW presses the hardest. What ASW argues, in effect, is that having started out in January with a work force of two employees, both of whom were former SWI unit members , by May it had added three who were not former SWI unit members, thereby destroying the basis for presuming the majority status of the Union.6 The legal question thus posed is when did ASW have a representative complement of employees-when it started rebuilding from SWI's deteriorated base in Janu- ary or when it had reached its full complement of em- ployees in May. The court in Fall River Dyeing, supra, 775 F.2d at 431, summarized this test in these words: In determining whether a representative comple- ment existed at a given date, the Board first looks to see whether the job classifications for the operation were "filled or substantially filled" and whether the operation was in "normal or substantially normal production." The Board also considers the size of the complement on that date, the time expected to elapse before a substantially larger complement would be hired, and the relative certainty of the ex- pected expansion. I find that ASW's bargaining obligation arose on 29 January 1986, Which is (1) the date that the Union through Morgan made its demand on ASW, (2) the day after ASW began its operations, and (3) 2 days after the transfer. See Fall River Dyeing, supra, and NLRB v. Hudson River Aggregates, 639 F.2d 865, 870 (2d Cir. 6 There were two new hires, Van Scoyk and Knight, and the elinuna- tion of the truckdriving classification freed up former SWI employee North, who as a truckdriver for SWI was not in the bargaining unit, to do production work for ASW. 1981). On that date ASW employed three of the five production employees it would be using by the time of the hearing, and two of those three were from the SWI unit represented by the Union-a clear majority. While sales would continue to rise, presumably the reason for the two later hires, the two former SWI employees, Miller and Gass, represented the two classifications of employees in the bargaining unit (Miller was a shear operator/laborer, and Gass was a laborer or "shear helper"). The third employee, North, had been a truck- driver for SWI, and outside the unit. At ASW, North Miller, and Gass-performed all duties, but I do not find that the change in job classifications materially bears on this case since the tasks performed did not change. The essential structure of ASW's operations was set with the initial hire of these three workers. Finally, we come to Stahlman's testimony that 2 weeks after the sale Gass told him that he did not want the Union. I am not persuaded that this helps ASW's case. First, Gass' statement and any doubt it caused ASW that the Union no longer represented a majority of its former SWI employees came after ASW's bargaining obligation arose, too late for ASW to rely on. Fall River Dyeing, supra, 775 F.2d at 433-434. Secondly, as I have no reason to doubt Stahlman's credibility, that hearsay alone is not "substantial evidence sufficient to support a finding for the company." TRW-United Greenfield Division v. NLRB, 716 F.2d 1391 (11th Cir. 1983). I reject any claim of good-faith doubt about ASW's bargaining obligation. In fact, not only was there no doubt, there was no good faith. Plant Manager Ogle told Union Steward Cot- trell on the day after the sale that "they were going to be [a] non-union plant from then on." Clearly an antiun- ion modus operandi had been established long before Stahlman heard from Gass, and explains why when the two new employees were later hired they were not from the pool of laid-off SWI unit members. The lame excuse that Cottrell was not hired because he -was a workers- compensation risk has no support, and does not explain why none of the other 17 laid-off bargaining unit mem- bers was hired. Ogle's admission does explain it, and es- tablishes a violation of Section ' 8(a)(3).' Peng Teng, 278 NLRB 350 (1986). In sum, there is no good-faith doubt advanced by ASW why the Union no longer represents these employ- ees, and there is insufficient difference between SWI and ASW7 to overcome the ,presumption that "the employ- ees' desires concerning unionization" are unchanged.8 I conclude that the Union, which has represented employ- ees at this facility since 1973, is to be recognized as the ongoing -representative. 7 In other words, the plant's "operations, as they impinge on union members, remain essentially the same after the transfer of ownership " Electrical Workers IUE v NLRB, 604 F 2d 689, 694 (D.C Cir. 1979). See NLRB v. Hudson River Aggregates, 639 F.2d 865, 869 (2d Cu. 1981) 8 Ranch-Way, Inc., 183 NLRB 1168, 1169 (1970) AMERICAN STEEL WAREHOUSING 297 CONCLUSIONS OF LAW 1. The Respondent, American Steel Warehousing, Inc,, is an employer within meaning of Section 2(6) and (7) of the Act.9 2. The Union, United Steelworkers of America, AFL- CIO-CLC, constitutes a labor organization within the meaning of Section 2(5) of the Act. 3. The following employees constitute a unit that is ap- propriate for collective bargaining within the meaning of Section 9(b) of the Act: All production, maintenance, shipping and receiving employees employed by Respondent at its Granite City, Illinois facility excluding office employees, plant clerical employees, guards, watchmen, profes- sional employees, foremen, assistant foremen and all other supervisors as defined in the Act. 4, United Steelworkers of America, AFL-CIO-CLC has been and is the exclusive representative of all em- ployees in the above-described appropriate, unit for pur- poses of collective bargaining within the meaning of Sec- tion 9(a) of the Act. 5. By failing and refusing to recognize and bargain col- lectively with the Union as the exclusive representative of all of Respondent's employees in the appropriate unit, Respondent has engaged in and is engaging in unfair labor practices within the meaning of Sections 8(a)(5) and 8(a)(1) of the Act. 6. By discriminatorily refusing to hire laid-off members of the Union Respondent has engaged in unfair labor practices within the meaning of Sections 8(a)(3) and 8(a)(1) of the Act. 7. Respondent's unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed'° ORDER The Respondent, American Steel Warehousing, Inc., Granite City, Illinois, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain collectively with the United Steelworkers of America, AFL-CIO-CLC as exclusive representative of the following unit: All production, maintenance, shipping and receiving employees employed by Respondent at its Granite 9 During the calendar year ending December 31, 1985, Respondent sold and shipped products valued in excess of $50,000 from its Granite City, Illinois facility directly to places that are outside the State of Illi- nois. 1° 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. City, Illinois, facility excluding office employees, plant clerical employees, guards, watchmen, profes- sional employees, foremen, assistant foremen and all other supervisors as defined in the Act. (b) Refusing to hire employees because they had or were believed to have joined, supported, or assisted the Union. (c) In any like or related manner interfering with, re- straining, or coercing its employees in the exercise of their rights under Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) On request, bargain with the Union with respect to rates of pay, wages, hours, and other terms and condi- tions of employment, and if an agreement is reached, embody it in a signed contract. (b) Offer in writing immediate employment to each of the employees of SWI who had been laid off in Novem- ber 1985 for whom Respondent had vacancies between 27 January through' 31 May 1986 and whom it could have employed but declined to employ for discriminato- ry reasons, if necessary replacing employees who had not been employed by SWI on 27 January 1986 but who were hired by Respondent after that date and before 1 June 1986, such employment to be offered for the classi- fications, at the rates, and under the conditions pertaining to the replaced employees. (c) Make whole the employees offered employment under subparagraph (b), above, for any loss they may have suffered from the discrimination against them by paying to each money that he would have been paid in Respondent's employ from the putative date of hire to the actual date of hire, less their respective net earnings elsewhere during this period, computed as in F. W. Woolworth Co., 90 NLRB 289 (1950), with interest as stated in Isis Plumbing Co., 138 NLRB 716 (1962). (d) Mail to the SWI employees laid off in November 1985, and post at its Granite City, Illinois plant copies' of the attached notice marked "Appendix.""" Copies of the notice, on forms provided by the Regional Director for Region 14, after being signed by the Respondent's au- thorized representative, shall be posted by the Respond- ent immediately upon receipt and maintained for 60 con- secutive days in conspicuous places including all places where notices to employees ,are customarily posted. Rea- sonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or,covered by any other material. (e) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. 11 If this Order is enforced by a judgment of a United States court of appeals, the words in the notice reading "Posted by Order of the Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board."