Emsing'S Supermarket, Inc., Rocky'S Supermarket, Inc.,

302 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Emsing's Supermarket, Inc., Rocky's Supermarket, Inc., a single employer and United Food and Commercial Workers Union, Local 1460, AFL- CIO,CLC. Case 13-CA-24609 18 June 1987 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS JOHANSEN AND BABSON On 12 September 1985 Administrative Law Judge Richard J. Linton issued the attached deci- sion. Both the Respondents and the General Coun- sel filed exceptions and supporting briefs. 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 briefs and has decided to affirm the judge's rulings, 1 findings, and conclusions only to the extent consistent with this Decision and Order. The judge concluded that Respondent Emsing's Supermarket, Inc., violated Section 8(a)(1) and (5) of the Act by unilaterally discontinuing payments to contractual benefit funds, unilaterally discontinu- ing payments to employees for vacations, and by failing to give the Union adequate notice of its de- cision to close its operation, thereby precluding meaningful bargaining over the effects. We agree with these fmdings. The General Counsel excepts to the judge's fail- ure to find that Emsing's Supermarket, Inc. and Rocky's Supermarket, Inc. constitute a single em- ployer and his concomitant failure to provide for a remedy imposing joint and several liability. The General Counsel does not allege that Rocky's was a participant in the unfair labor practices described above or that Rocky's has inherited any of Ems- ing's bargaining obligation to the Union on a con- tinuing basis. Rather, the General Counsel argues that when an order is issued against an insolvent employer, derivative liability may be imposed on a nominally separate business entity which is none- theless shown to be so closely related to the guilty employer that a single-employer relationship can be established, thus preserving for remedial recourse an entity to which liability may attach.2 1 The Respondents have excepted to some of the judge's credibility findings The Board's established policy is not to overrule an administra- tive law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd 188 F 2d 362 (3d Or 1951) We have carefully examined the record and find no basis for re- versing the findings 2 See, e g, Coast Delivery Service, 198 NLRB 1026, 1027 (1972) For the reasons set forth below, we agree with the General Counsel that the two entities constitute a single employer and are therefore jointly and sev- erally liable. In deciding the single-employer issue, the judge relied on the four criteria the Board has traditional- ly applied when making such a determination. These factors are common control of labor rela- tions, common management, common ownership, and interrelation of operations. 3 None of these fac- tors, alone, is controlling, nor need all of them be present. Single-employer status ultimately depends on "all the circumstances of the case" and is char- acterized by the absence of the "arm's length rela- tionship found among unintegrated companies."4 Stated otherwise, the fundamental inquiry is wheth- er there exists overall control of critical matters at the policy leve1. 5 With these principles in mind, we now consider their application to the instant case. Common ownership is undisputed. Alan Emsing and his wife, Terri, purchased Emsing's from Alan's parents in 1980. With the exception of some treasury shares retained by the father, Joseph Emsing, to secure the purchase note, Alan and Terri Emsing have owned the balance of the common stock issued by Emsing's. Alan and Terri Emsing own all the outstanding stock of Rocky's. Financial control of these two corporations thus rests solidly in their hands. As found by the judge, all management decisions of any significance are made jointly by Alan and Terri Emsing for both stores. The record reflects, and the judge found, that Alan Emsing and his wife, Terri, also jointly established the labor rela- tions policies for both stores. As for interrelation of operations, the judge con- sidered the degree of employee interchange and fi- nancial integration. The stores were located 11 miles apart. The judge found that there was never any interchange of bargaining unit employees in the sense that employees are transferred intermit- tently or permanently. He did find that two assist- ant managers at Emsing's were transferred to Rocky's- and one employee of Rocky's trained for 1 or 2 days at Emsing's. With respect to the degree of financial integration between the two companies, the judge directed his attention to the time when both stores were open and operating. He found that on infrequent occasions there were sales of 3 Radio Technicians Local 1265 v Broadcast Service of Mobile, 380 U S 255, 256 (1965) (per curiam), Shellmaker, 265 NLRB 749, 754 (1982), American Stores Packing Co, 277 NLRB 1656 (1986) 4 Blumenfeld Theatres Circuit, 240 NLRB 206, 215 (1979), enfd 626 F 2d 865 (9th Or 1980) 5 Soule Glass Co, 652 F 2d 1055, 1075 (1st Or 1981), Sakrete of North- ern California v NLRB, 332 F 2d 902, 907 (9th Cm 1964), cert denied 379 U S 961 (1965), enfg 140 NLRB 765 (1963) 284 NLRB No. 41 EMSING'S SUPERMARKET 303 merchandise between Emsing's and Rocky's which were arm's-length transactions similar to transac- tions made between Emsing's and other stores before Rocky's opened. He also found that there were no direct transfers of cash, loans, or other fi- nancing as part of each Company's "normal" oper- ations. He did find, however, that Alan and Terri Emsing obtained personal loans from unidentified sources and, in turn, loaned the money to both stores. The judge also cited the following evidence: (1) both stores were covered under the same health in- surance policy in order to obtain a lower premium, and one store paid the premiums for both stores and was reimbursed by the other, and (2) near the time of Emsing's closing, Rocky's advanced $5000 to pay Emsing's final payroll. The judge found the latter to be an arm's-length transaction because it was duly recorded on the books of each corpora- tion and Rocky's took merchandise and equipment as security. In his final analysis, the judge concluded that the two stores were not functionally integrated and therefore were not a single employer. Although the judge discussed all the factors relevant to a deci- sion on the Respondents' single-employer status, it is clear that he considered the supposed lack of functional integration was dispositive. The extent of functional integration is certainly a relevant factor to be considered, but it is not a dispositive factor. In his analysis of the extent of financial integra- tion between the two stores, the judge stated that any focus on what happened in August 1984 during the time of Emsing's closing would be "misdirect[ed]." He therefore did not address cer- tain evidence bearing on events which occurred immediately after the physical closing of Emsing's. We disagree with his view of the relevance of the August closing transactions. In our view, Ems- ing's and Rocky's conduct in August—a time when Emsing's was engaging in unfair labor practices—is just as relevant, concerning the interrelation be- tween the two stores, as what took place when both stores were operating. In this regard, we note that: (1) Rocky's issued a check dated 22 August 1984 to a meat supplier in the amount of $3174.88 to cover an Emsing's check which had been re- turned due to insufficient funds. (2) Alan and Terri Emsing had personally purchased a 1983 Oldsmo- bile and put the title in the name of Emsing's Su- permarket. When Emsing's closed, ownership of the vehicle was transferred to Rocky's. (3) When Emsing's closed, inventory 'which suppliers would accept was returned, but $45,000 worth of its in- ventory which was nonreturnable was transferred to Rocky's without regard to whether Rocky's ac- tually needed it or not. There is no evidence that Emsing's retained a security interest in the trans- ferred merchandise. Rather than pay Emsing's $45,000 outright, Rocky's reduced its accounts pay- able to Emsing's by paying Emsing's vendors dir- ecty for supplies and merchandise that had been furnished to Emsing's when Emsing's was in oper- ation. (4) Before closing, Eming-'s had attempted on numerous occasions to sell its equipment but did not receive any offers due to a surplus of used equipment and a lack of interest in grocery retail- ing. At the time of closing, Emsing's transferred all its equipment to Rocky's Supermarket in order to prevent it from being locked up by the lessor be- cause Emsing's was in default on its rent. The equipment consisted of shelving, frozen food cases, and dairy cases. Rocky's had no practical use for the equipment and merely stored it in a backroom and in an adjacent building. We believe the judge i erred in concluding that Emsing's and Rocky's were not functionally inte- grated. He further erred in making this one factor dispositive in his resolution of the single-employer issue. 6 In our view, the judge underrated the sig- nificance of the August closing transactions and gave insufficient consideration to the actual impli- cations and ramifications of the various financial transactions. The judge's narrow reliance on the fact that the transfers of equipment and inventory were "duly recorded on the books" is misplaced. Form does not prevail over substance. As stated previously, the single-employer rela- tionship is characterized by the absence of the "arm's length relationship found among unintegrat- ed companies." 7 The transactions between the Re- spondents were not at full arm's length. Terri and Alan Emsing had a financial and personal interest in both stores. For all practical purposes, they used 6 The judge's reliance on Aspen Leasing Systems, 271 NLRB 1536 (1984), and Chippewa Motor Freight, 261 NLRB 455, 458-459 (1982), is misplaced These cases are distinguishable from the present case In both, aside from other dissimilarities, the companies alleged to be a single em- ployer were substantially more separate and unrelated than Emsing's and Rocky's Thus, in Aspen Leasing Systems, the judge found the fact that the two corporations did not have identical ownership and performed separate, distinct, and unrelated business operations to be particularly persuasive in finding the two employers did not constitute a single employer Here, we have identical ownership of two companies with an identical business purpose, i e., grocery retailing Likewise, in Chippewa Motor Freight, the two employers did not have identical ownership nor did they have identi- cal business operations and they were engaged in activities which were substantially unrelated Chippewa was a regular-route, general commodi- ty carrier transporting freight by truck from terminal to terminal throughout the Midwest, while Action Carrier provided nationwide long- haul, destination-to-destination, irregular-route service not offered by Chippewa 7 Operating Engineers Local 627 v. NLRB, 518 F.2d 1040, 1045-1046 (D C. Cir. 1975). 304 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Rocky's as a captive customer to purchase Ems- ing's leftover inventory and essentially worthless equipment which would have otherwise remained unliquidated and at risk of seizure. This transaction, involving the transfer of equipment with no market value, was not one made at arm's length. When Emsing's needed to dispose of its used equipment and nonreturnable merchandise, it turned to Rocky's, a captive customer in times of distress. This transaction, in turn, served as a convenient bookkeeping entry to account for payments made by Rocky's on Emsing's behalf. Even before the final events in August 1984, testimony by Alan Emsing evinced his willingness and tendency to "rob from Peter to pay Paul" from Rocky's incep- tion in January 1983. He testified under direct ex- amination that "We had to transfer money from the Rocky's Company to the Emsing's Company be- cause the Emsing Company was losing money . . . . On closing of the store to meet the fmal pay- roll, we had to transfer $5,000 to meet the payroll because there was no money left in the account." Further, the management employees of both stores were covered under a single health insurance policy in order to achieve a lower overall premium for both stores. Rocky's issued a check to cover an Emsing's check returned for insufficient funds. Ownership of an automobile was transferred from Emsing's to Rocky's rather than to Alan and Terri personally in order to avoid payment of $1000 in transfer taxes. And, as noted above, Rocky's trans- ferred $5000 to Emsing's to meet the latter's fmal payroll. These facts, taken as a whole, clearly reveal not only a financial interdependency between Rocky's and arising's, but also a propensity on the part of Alan and Terri Emsing to operate the two stores in such a manner that the exigencies of one would be met by the other. This method of operating shows less than an "arm's length relationship" between Emsing's and Rocky's. Accordingly, the General Counsel has estab- lished the presence of all four factors, including an interrelation of operations, and has thus met the burden of showing that the two corporations share sufficient identity to constitute a single employer. Further, as noted, not all four factors need be present for the Board to find a single-employer re- lationship. Rather, a single-employer finding rests on all the circumstances of an individual case. Here, the evidence relating to common control of labor relations, common management, and common ownership is overwhelming. Thus, even if the interrelation of the operations of Emsing's and Rocky's be deemed minimal, a finding of single em- ployer is nonetheless warranted. Because we have found Respondents Emsing's Supermarket, Inc. and Rocky's Supermarket, Inc. to be a single employer for remedial purposes, both these entities are jointly and severally liable for remedying the violations found.8 ORDER A. The Respondents, Emsing's Supermarket, Inc., Griffith, Indiana, and Rocky's Supermarket, Inc., Hammond, Indiana, their officers, agents, suc- cessors, and assigns, shall jointly and severally 1. Cease and desist from (a) Refusing to recognize and bargain with United Food and Commercial Workers Union, Local 1460, AFL-CIO, CLC, and its authorized successors, including United Food and Commercial Workers Union, Local 1550, AFL-CIO, CLC, as the exclusive collective-bargaining representative of the employees in the unit described below, by (1) unilaterally discontinuing payments to contrac- tual benefit funds, (2) unilaterally discontinuing payments to employees for vacations, or similar es- tablished terms and conditions of employment, and (3) failing to give the Union adequate notice of any decision to close Emsing's or any similar decision affecting important rights of employees, so that the Union may request the opportunity to meet and bargain at a time when meaningful bargaining over the effects of such closing can occur. The appro- priate bargaining unit is: All employees working in the retail stores of Emsing's Supermarket, Inc. who are actively engaged in handling or selling of merchandise, including all employees working in existing de- partments of the store which may hereafter be leased, but excluding employees in newly cre- ated leased departments, which departments were not formerly operated by the Employer, and wherein the employees are under the ex- clusive control and direction of the lessee and wherein the employees work exclusively in the leased department. Also excluded are those employees in the meat department, one (1) day manager, one (1) night manager, and one (1) 8 The Order that we provide below additionally conforms to the judge's conclusions of law and remedy and provides for payment to the benefit funds. In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 (1987), interest will be computed at the "short-term Federal rate" for the underpayment of taxes as set out in the 1986 amendment to 26 U S.0 § 6621. In accordance with the General Counsel's position that Rocky's has not inherited any of Emsing's bargaining obligation to the Union on a continuing basis, we shall limit to Emsmg's the affirmative portions of our Order requiring bargaining generally with the Union and its author- ized successor and the establishment of a preferential hiring list should Enising's reopen or resume operations elsewhere sit the Griffith, Indiana area. EMSING'S SUPERMARKET 305 co-manager (for stores over ten (10) employ- ees). Stores having less than ten (10) employ- ees shall have one (1) day manager and one (1) night manager only. (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. (a) On request of Local 1550, as the successor of Local 1460, bargain collectively with United Food and Commercial Workers Union, Local 1550, as the exclusive representative of the employees em- ployed in the previously existing unit described above in paragraph 1(a) concerning (1) payments due to contractual benefit funds, (2) payments due to employees for vacations, and (3) the effects of the 1 August 1984 decision to close Emsing's Su- permarket in Griffith, Indiana, on 11 August 1984. (b) Pay the employees terminated about 11 August 1984 their normal wages for the period set forth in the remedy section of the judge's decision. (c) Pay to all unit employees entitled to vaca- tions in 1984 the payments due them. (d) Pay all delinquent contributions from 1 July through 11 August 1984 to the pension trust fund and ,health and welfare trust fund established by the collective-bargaining agreement which expired 31 October 1983, and reimburse unit employees for any expenses ensuing from the failure to make such contributions. (e) Preserve and, on request, make available to the noard or its agents for examination and copy- ing, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order. (f) Post at its location in Hammond, Indiana, and mall a copy of the attached notice to employees marked "Appendix A," to United Food and Com- mercial Workers Union, Local 1550, as successor of Local 1460, and to all Emsing's unit employees who were on the payroll on 1 June 1984 and also to those on the payroll 1 August 1984. Copies of the notice, on forms provided by the Regional Di- rector for Region 13, after being signed by Ems- ing's Supermarket, Inc.'s authorized representative, and Rocky's Supermarket, Inc.'s authorized repre- 9 Lt.' 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." sentative, shall be posted and mailed immediately on receipt as directed. (g) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. B. The Respondent, Emsing's Supermarket, Inc., Griffith, Indiana, its officers, agents, successors, and assigns, shall I. Cease and desist from (a) Failing and refusing to recognize and bargain collectively with Local 1550 as the successor of Local 1460 as the exclusive bargaining representa- tive of its employees in the following appropriate unit: All employees working in the retail stores of Emsing's Supermarket, Inc. who are actively engaged in handling or selling of merchandise, including all employees working in existing de- partments of the store which may hereafter be leased, but excluding employees in newly cre- ated leased departments, which departments were not formerly operated by the Employer, and wherein the employees are under the ex- clusive control and direction of the lessee and wherein the employees work exclusively in the leased department. Also excluded are those employees in the meat department, one (1) day manager, one (1) night manager, and one (1) co-manager (for stores over ten (10) employ- ees). Stores having less than ten (10) employ- ees shall have one (1) day manager and one (1) night manager only. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. (a) Should Emsing's Supermarket, Inc., its suc- cessors or assigns, reopen Emsing's Supermarket or a successor store, recognize and bargain with the aforesaid Union in the unit described in paragraph 1(a) and, if an understanding is reached as to the terms and conditions of employment, embody same in a written agreement. (b) Establish a preferential hiring list of all unit employees terminated about 11 August 1984 fol- lowing the established seniority system, and offer to such employees full reinstatement to their former jobs or, if the former jobs do not exist, to substantially equivalent jobs, if Emsing's Supermar- ket, Inc. reopens or resumes operations elsewhere in the Griffith, Indiana area. (c) Mail a copy of the attached notice to employ- ees marked "Appendix B"" to United Food and Commercial Workers Union, Local 1550, as succes- sor of Local 1460, and to all Emsing's unit employ- '9 See fn. 9, above 306 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ees who were on the payroll on 1 June 1984, and also to those on the payroll 1 August 1984. Copies of the notice, on forms provided by the Regional Director for Region 13, after being signed by Ems- ing's Supermarket, Inc.'s authorized representative, shall be mailed immediately on receipt as directed. APPENDIX A 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. Section 7 of the Act gives employees these rights. To organize To form, join, or assist any union To bargain collectively through representa- tives of their own choice To act together for other mutual aid or pro- tection To choose not to engage in any of these protected concerted activities. WE WILL NOT refuse to recognize and bargain with United Food and Commercial Workers Union, Local 1550, as the successor of Local 1460, as the exclusive collective-bargaining representative of the employees in the unit described below by (1) unilaterally discontinuing payments to contractual benefit funds, (2) unilaterally discontinuing pay- ments to employees for vacations, or similar estab- lished terms and conditions of employment, and (3) failing to give the Union adequate notice of any de- cision to close our operation, or any similar deci- sion affecting important rights of employees, so that the Union may request the opportunity to meet and bargain at a time when meaningful bar- gaining can occur. The appropriate bargaining unit is: All employees working in the retail stores of Emsing's Supermarket, Inc. who are actively engaged in handling or selling of merchandise, including all employees working in existing de- partments of the store which may hereafter be leased, but excluding employees in newly cre- ated leased departments, which departments were not formerly operated by the Employer, and wherein the employees are under the ex- clusive control and direction of the lessee and wherein the employees work exclusively in the leased department. Also excluded are those employees in the meat department, one (1) day manager, one (1) night manager, and one (1) co-manager (for stores over ten (10) employ- ees). Stores having less than ten (10) employ- ees shall have one (1) day manager and one (1) night manager only. 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 of Local 1550 as the suc- cessor of Local 1460, bargain collectively with Local 1550 as the exclusive representative of the employees employed in the previously existing unit described above concerning (1) payments due to contractnal benefit funds, (2) payments due to em- ployees for vacations, and (3) the effects of the 1 August 1984 decision to close Emsing's Supermar- ket in Griffith, Indiana, on 11 August 1984. WE WILL pay the employees terminated about 11 August 1984 their normal wages, plus interest, for the period specified by a Decision and Order of the National Labor Relations Board. WE WILL pay vacation pay, with interest, to those of you who were entitled to be paid such in the summer of 1984, but who did not receive it. WE WILL pay, with interest, all delinquent con- tributions from 1 July 1984 through 11 August 1984 to the pension trust fund and health and wel- fare trust fund as established by the collective-bar- gaining agreement which expired 31 October 1983. EMSING'S SUPERMARKET, INC. AND ROCKY'S SUPERMARKET, INC., A SINGLE EMPLOYER APPENDIX B NOTICE To EMPLOYEES MAILED 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 abide by this notice. WE WILL NOT, should Emsing's Supermarket, Inc. reopen or resume operations elsewhere in the Griffith, Indiana area, refuse and fail to recognize and bargain collectively with Local 1550 as the successor of Local 1460 as the exclusive collective- bargaining representative of the employees in the unit described below: All employees working in the retail stores of Emsing's Supermarket, Inc. who are actively engaged in handling or selling of merchandise, including all employees working in existing de- EMSING'S SUPERMARKET 307 partments of the store which may hereafter be leased, but excluding employees in newly cre- ated leased departments, which departments were not formerly operated by the Employer, and wherein the employees are under the ex- clusive control and direction of the lessee and wherein the employees work exclusively in the leased department. Also excluded are those employees in the meat department, one (1) day manager, one (1) night manager, and one (1) co-manager (for stores over ten (10) employ- ees). Stores having less than ten (10) empltiy- ees shall have one (1) day manager and one (1) night manager only. WE WILL, on request of Local 1550 as the suc- cessor of Local 1460, bargain collectively with Local 1550 in the unit described herein and, if an understanding is reached as to the terms and condi- tions of employment, embody same in a written agreement. WE WILL, if Emsing's Supermarket, inc. reopens or resumes operations elsewhere in the Griffith, In- diana area, establish a preferential hiring list of all unit employees terminated on or about 11 August 1984 following the established seniority system. WE WILL first offer the employees named on this list full reinstatement to their former jobs or substan- tially equivalent positions. EMSING'S SUPERMARKET, INC Alan Hellman, Esq., for the General Counsel. J. Charles Sheerin, Esq. (Hoeppner, Wagner & Evans), of Valparaiso, Indiana, for the Respondent. Jairus M Gilden, Esq. (Karmel & Rosenfeld), of Chicago, Illinois, for the Charging Party. DECISION STATEMENT OF THE CASE RICHARD J. LINTON, Administrative Law Judge. In this refusal-to-bargain case I find that Emsing's Super- market, Inc. (ES!) violated Section 8(a)(1) and (5) of the Act. ESI is now insolvent. For a remedy to be currently effective, a finding would have to be made that ES! and Rocky's Supermarket, Inc. (RSI), a firm apparently sol- vent, were operated during the relevant time as a single employer by their owners, Alan Emsing and his wife, Tern Emsing. Instead, I find that ES! and RSI were not operated as a single employer. This means, unfortunately, that the violations found may never be remedied, either effectively or even significantly. This case was tried before me in Chicago, Illinois, on 27-29 March and 29-30 April 1985, pursuant to the 18 December 1985 complaint issued by the General Counsel of the National Labor Relations Board through the Re- gional Director for Region 13 of the Board. The com- plaint is based on a charge filed 5 November 1984, as thereafter amended, by the United Food and Commercial Workers Union, Local 1460, AFL-CIO, CLC (the Union, the Charging Party, or Local 1460) against Ems- ing's Supermarket, Inc. and Rocky's Supermarket, Inc., a single employer (Respondent).' In the complaint the General Counsel alleges that the Respondent violated Section 8(a)(1) and (5) of the Act by unilaterally ceasing to make certain contractual pay- ments on and after 1 June; by unilaterally closing its store in Griffith, Indiana, on 9 August, and thereafter by refusing to bargain with the Union concerning the effects of such closing on unit employees. By its answer Respondent admits certain factual mat- ters, but denies violating the Act. On the entire record, including my observation of the demeanor of the witnesses, and after due consideration of the briefs filed by the General Counsel 2 and the Re- spondent, I make the following FINDINGS OF FACT I. JURISDICTION For several years before its closing in August 1984, Respondent Emsing's owned and operated a retail gro- cery supermarket in Griffith, Indiana. Joseph Emsing and his wife, Lee, founded ESI and the Griffith store in 1967. The Emsings have a Son, Alan. 3 In 1980 Alan and his wife, Terri, purchased ESI from Alan's parents. We shall examine this subject in more detail when we discuss the single-employer issue.4 In its answer to the complaint, ESI admitted facts es- tablishing the Board's legal jurisdiction, but it denied the allegation of discretionary jurisdictional facts. 5 That is, ESI admitted that during the past calendar year it had purchased and received at Griffith, Indiana, goods and materials valued in excess of $50,000 directly from points outside the State of Indiana. At the hearing the parties stipulated, and I find, that during the 12 months ending with the closing of the Griffith store in mid-August 1984, ESI had gross reve- nues (sales) exceeding $500,000, and that during the same period the firm was an employer within the meaning of Section 2(2), (6), and (7) of the Act (1:9-12). 1 All dates are for 1984 unless otherwise indicated 2 As I requested (5 1050), counsel for the General Counsel attached a proposed order and notice to his brief (Citations in the five-volume tran- script of testimony are by volume and page.) He thereafter submitted and unopposed motion, dated 8 August 1985, to correct his brief by supplying the first half of a sentence that had been omitted from the top of p 20. The unopposed motion to correct is granted. 3 This is not to suggest that the Emsings have only one son. As we shall see, Alan &ming has at least one brother 4 In December 1982 Alan and Tern arising formed Respondent Rocky's. Alan Emsmg has the nickname of Rocky (117). In January 1983 RSI opened a retail supermarket in Hammond, Indiana The Ham- mond store is about 11 miles from the Griffith store (1.10), 5 The Board's discretionary standard for retail enterprises is an annual gross volume of business of at least $500,000. Carolina Supplies Cement Co., 122 NLRB 88 (1958). In theory, however, an employer's operation could meet the discretionary standard, but fail to meet the legal standard of "affecting commerte." In every Federal case, therefore, there must be a showing of legal Jurisdiction. Longshoremen ILA Local 13 (Catalina Island Sightseeing Lines), 124 NLRB 813 (1959) In our case ESI admitted the interstate commerce facts establishing legal jurisdiction 308 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD The pleadings and stipulations do not include the com- merce facts for RSI. They presumably were omitted as unnecessary in view of the single-employer allegation. Nevertheless, the record shows that RSI meets both the legal and discretionary standards. As to the latter, the evidence reflects that during calendar year 1984 RSI had a gross volume of business (sales at retail) well in excess of $500,000 (R. Exh. 10a). Alan Emsing testified that among Rocky's many pur- chases, it obtained a brand of bread from a Chicago firm (5:871). It bought its lunchmeat from a Chicago firm too (5:879). However, Rocky's biggest, by far, interstate pur- chase was of various grocery products from Scot Lad, a grocery wholesaler (1:71: 5:882, 884). Alan Emsing testi- fied that Rocky's purchased about 70 percent of its gro- ceries from Scot Lad (1:73). As RSI's cost of groceries for 1984 exceeded $1 million (R. Exh. 10a), it is clear that RSI's 1984 purchases from Scot Lad amounted to about $700,000. The record does not show where Scot Lad is located. I take administrative notice that during the relevant time Scot Lad Foods, Inc. was, and is, located in Lansing, II- linois. 8 The 1985 Rand McNally Atlas, at 28, shows that Lansing is a suburb of Chicago and adjoins Hammond, Indiana. As RSI meets the legal and discretionary commerce standards, I find that it is an employer within the mean- ing of Section 2(2), (6), and (7) of the Act. II. LABOR ORGANIZATION INVOLVED Respondent admits, and I find, that Local 1460 is a labor organization within the meaning of Section 2(5) of the Act. As the record reflects, in January 1985 Local 1460 merged with UFCWU Locals 1504 and 1550, with 1550 being the surviving, and successor, local (1:183; 184; 4:674-676; G.C. Exhs. 10a, b). I further find that Local 1550 is a labor organization within the meaning of Section 2(5) of the Act. HI. THE ALLEGED UNFAIR LABOR PRACTICES A. The Evidence 1. The Emsing family stores This case is about two grocery stores owned by the Emsing family through two separate corporations, ESI and RSI, and the problems that developed when ESI became insolvent. 7 ESI owns Emsing's Supermarket (Emsing's). Emsing's is located at 118 Griffith Boulevard in Griffith, Indiana.8 Some 11 miles north of Emsing's is Rocky's Supermar- ket (Rocky's) at 5600 Sohl in Hammond, Indiana (1:69; 5:1018). As disclosed by an atlas, Hammond is situated 6 Million Dollar Directory, Series P-Z at 4120 (Dun's Marketing Serv- ices, 1985). 7 The parties stipulated that ESI has been incorporated under Indiana law since 17 January 1967, and RSI likewise since 17 December 1982 (1:26, 2-365) 8 Although the Griffith store has closed, presumably the building re- mains. Alan Emsing, not ESL leased the premises from the Jewel Tea Company, the owner, because Jewel Tea requires an individual signatory (1 68, 71; 5-858, 887) near the southeast corner of Chicago, Illinois. The build- ing and premises housing Rocky's in Hammond are leased by Scot Lad, and Scot Lad subleases the property to Alan and Terry Emsing and not RSI (1:71; 5:888). Rocky's is owned by RSI (1:33, 45). As already mentioned, Alan Emsing's parents, Joseph and Lee Emsing, formed ESI and established the Griffith store in 1967 (1:24). Between 1967 and 1980 the senior Emsings held all the stock of ESI (1:25, 59). In 1980 Alan and Terri Emsing purchased ESI from Alan's par- ents (1:21, 24, 5:927). With the exception of some treas- urxisbges retained by Joseph Emsing to secure the pur- chase note, Alan and Terri have owned the balance of the common stock issued by ES! (1:23-24; 5:782-783, 942-943). Since his retirement in 1980, Joseph Emsing has not been involved in the operation of Emsing's and he has never worked at Rocky's (1:30-31). Since purchasing ESI in 1980, Alan Emsing (Emsing) has been president of the firm and Terri Emsing (Terri) the secretary-treasurer (1:17-18). Emsing testified that his brother, Joseph "Mitch" Emsing, served as vice presi- dent of ESI from 1981 to 1983 (1:20), but he did not know whether anyone held the office thereafter (1:22). The directors of ESI are Alan, Terri, and Butch Emsing (2:370-371; 4:602). Since forming RSI in December 1982, Alan Emsing has been the firm's president and Terri Emsing has held the office of vice president (1:17-18; 5:781, 784). They have owned all the outstanding stock of RSI (1:24, 25; 5:783), and they are the directors of the corporation (2:370-371; 5:784). Dave Davis has been the secretary- treasurer of RS1 from the beginning, but Emsing testified that Davis was so appointed in order that he could sign checks for the corporation and accept deliveries at the store in Emsing's absence (1:21, 51-52; 5:896-897). Alan Emsing opened Rocky's for business on 7 Janu- ary 1983 and he thereafter split his time between both stores (1:33, 38-39; 5:894). Terri began working some at the Hammond store about mid-1983 (1:34, 36), but appar- ently she spent the great majority of her time at the Grif- fith store until it closed near mid-August 1984 (1:39-40). About 15 persons worked at Emsing's (the Griffith store) before it closed, with about 8 or 9 employees being in the bargaining unit represented by the Union.9 Rocky's (the Hammond store) had about the same number of persons, but with about 12 clerks. Emsing tes- tified that the difference is explained by understanding that the Griffith store had more family members em- ployed than the store at Hammond (1:56-58; 5:886). 2. Collective-bargaining history It appears that at least as far back as 1970 Local 1460 has represented the clerks at Emsing's (1:25). The most recent collective-bargaining agreement covers the period of 1 November 1980 through 31 October 1983 (G.C. Exh. 3). As we shall see, there is a dispute over whether the collective-bargaining agreement was extended pend- ing agreement on a renewal collective-bargaining agree- 9 Local 1460 represented the clerks, but not the meat department em- ployees (G.0 Exh 3) EMSING'S SUPERMARKET 309 ment with the Union and the General Counsel claiming the affirmative, and Respondent arguing the negative. In about October or November 1983 the parties met at the Griffith store to negotiate a renewal contract." Alan Emsing represented ES! and Arthur Primm Local 1460. 11 Apparently no employee committee accompa- nied Primm. Terri Emsing occasionally passed through the negotiations area, but did not participate in the ses- sions. As with their uncertainty on the date of the initial meeting, the parties are uncertain about the number of bargaining sessions. 12 There appears to have been three sessions. The first in October or November 1983, the second on 16 December 1983, 13 and the third apparently in January 1984 (5:815, 823). The initial meeting was short. Primm described the modifications desired by Local 1460. Emsing responded that Emsing's was in a deteriorating financial situation and needed substantial economic concessions to survive. Emsing initially wanted the reductions to be retroactive to 31 October (3:534), but he later, apparently at the second meeting, withdrew the retroactivity portion of his proposal (3:579). At the first meeting Prirnm asked if Emsing would agree to continue the contract until a new one was rati- fied. Emsing said, "We will see." Based on that ex- change, Primm assumed that the contract was extended beyond the date of 31 October when it was due to expire (3:535, 577-579).14 At the second meeting Alan Emsing presented his final proposal to Primm (R. Exh 4; 2:420-421; 5:808) It called for reduced benefits and a 10-percent reduction in the wage rates. Alan Emsing also laid his financial records on the table for Primm and Ogborne to inspect, and began to explain the financial situation to the union rep- resentatives (1:96; 5;803, 982, 989, 1008). Primm concedes Emsing made the books available (5:1031). Pritnm told Emsing that he was not capable of examining the books and asked if the union auditors could inspect them, to which Emsing replied, yes, they could bring in their auditors anytime (5:804, 982-983, 1018, 1031). No audi- tors ever came to inspect the books (5:806). Emsing told Primm and Ogborne that he could not change his proposal and, if the Union did not accept it, he could not keep the store open (1:96; 5:803). Primm re- sponded that perhaps the employees would accept a wage freeze, but that he would have to recommend they reject Respondent's proposal (1:96; 5:1032). Emsing re- 1° Alan Ernsing initially testified that the first meeting occurred about November (1:94, 95, 2.372). He subsequently testified that it was in Octo- ber (5:796). His counterpart at the bargaining table, Arthur Primm, secre- tary-treasurer of Local 1460, was even less certain than Emsing, although Primm's pretrial affidavit says October (4:624, R. Exh. 5). The point is not very material. " Another Local 1460 representative, Jerry Ogborne, attended begin- ning with cither the first or second meeting. Ogborne did not testify. 12 For example, Alan Emsing initially testified there were two sessions (1 93), but later said there were three (5.801, 810, 823). Primm suggests there were three to four meetings (2:442, 4:623). 13 That date is marked on Respondent's final offer to the Union (R. Exh. 4). 14 Ernsing recalls Pnmm's request occurring at the second meeting and that he made no reply (5:813). I credit Primm's version. sponded that a wage freeze would not help, and that major concessions were needed (5:1045). Before the third bargaining session, Primm met with store employees who were members of Local 1460. It is unclear when the meeting occurred, and it could have been as late as 16 January 1984. It is clear that Primm recommended that the employees reject ESI's proposal. They voted to reject it. Either before or after the third bargaining session, Alan Emsing held a meeting with all employees of Ems- ing's15 (5:824). To the 15 or so assembled employees, Emsing reported to them on what his proposal was to the Union, why it was economically necessary, that a layoff was in prospect, and that wages had to be reduced by 10 percent (5:$24-827)." Little was accomplished at the third and fmal bargain- ing session. Primm said the employees had rejected ESI's proposal. Alan Emsing repeated that his financial records were available for inspection, and that his proposal was his only offer because the store was losing money. Primm said he would still recommend rejection (5:815- 816, 983). Primm met with his union members (only three mem- bers were present) on 9 February and, by a vote of 2 in favor and 1 against, they voted to reject ESI's proposal and to go on strike (4:626-627; C.P. Exhs. 3a, b). Primm reported the results to Emsing by telephone (1:96; 4:627). Emsing testified that Primm asked for another meeting to make some proposals, but Emsing said that was ESI's only proposal (5:817). Primm said he would have to get authorization to strike, and Emsing told him to do what he had to and that ESI would do what was necessary to operate (1:96; 5:$17, 929). On 22 March Local 1460 received a mailgram from the International Union's president authorizing Local 1460 to strike ES! "pending final release from Vice President Turner but not to be exercised against more than one employer at a time." (R. Exh. 6; 4:631, 643.) About a week or so following his receipt of the Inter- national's strike sanction, Primm telephoned Emsing, in- formed him of the sanction, and asked if they found things out because the Union would prefer not to strike. Emsing said he could not afford it, that he had expressed his position, and that they would have to do whatever each felt necessary (4:645). 17 Emsing's initiated a series of cost-cutting measures. Emsing testified that, without notice to the Union, in about January he began reducing the store's inventory and changed the mix of products, reducing the variety, to convert the supermarket into a convenience store (1:68; 5:819, 820, 823). As part of 15 At one point Emsing testified that it took place before the third ses- sion (5:824), and at another he placed it after (5.933). 16 According to Emsing, he gave advance notice to Primm of the meeting, but could not recall Primm's response (5.931, 934, 981). He con- cedes he did not tell the employees he had told Primm (5:981). Primm denies he was given advance notice by Emsing (5:1032). Emsing did not testify with a favorable demeanor on this point, and I credit Primm's 17 Although Emsing was not asked about this specific conversation, he indirectly denies it elsewhere by stating that he did not hear, from Primm between his call in February giving notice of the strike vote, and their conversation in August (5.848, 980). I credit Primm and find that he did call Emsing and inform him of the strike sanction by the International. 310 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ESI's converting Emsing's to a convenience store, in February Emsing cut the size of the floor space being utilized by erecting a wall down the center of the store (5:819, 822-823, 830). In February ESI laid off four or five unit employees by seniority (1:55, 100, 114, 116; 5:820, 823), and in March Emsing, without regard to seniority, reduced hours for all employees by about 20 percent (1:114, 116; 5:822, 829). Also in March Emsing cut employees' pay by the 10 percent he earlier had proposed to the Union (1:97; 5:828, 837, 988-989). Employees learned of the pay cut when they were given their check. (1:99). Emsing admits that no advance notice was given to the Union on any of these unilateral changes (1:99; 5:930). Most of the changes apparently were consistent with the proposed changes he had made to the Union at the bargaining sessions (1:111; R. Exh. 4). The complaint contains no allegation concerning these changes (but does concerning some changes made in the summer)," and their chief relevance appears to relate to Respond- ent's contention that the Union's failure to object to these changes justified Emsing in assuming, inconjunc- tion with other matters, that Local 1460 had waived any objection, and abandoned the bargaining unit. Moreover, Emsing, it is contended, believed that there was no con- tract after 31 October 1983. During this timeframe some of the store's employees began an effort to bring the subject of contract ratifica- tion and strike up for a revote. This effort resulted in a union meeting on 23 May at which the handful of em- ployees in attendance, going against Primm's recommen- dation," voted 3 to 2 not to strike and 3 to 2 to accept ESI's contract offer (2:427, 3:538; C.P. Exhs. 2a, b). According to Primm, the next morning he telephoned Emsing and informed him that the employees, in a revote, had voted to accept his proposal and to ratify the contract (2:425, 449; 3:539). Emsing denies such a call (5:979). For several reasons I do not credit Primm. First, I note that he could not recall any response by Emsing (2:449). Second, Primm wavered on whether he notified Alan Emsing or someone else (3:539). It seems highly unlikely that Primm would give such an important mes- sage to someone other than the person he had been ne- gotiating with. Third, Primm did not testify with a per- suasive demeanor on this topic. After the meeting, but possibly not until the first of June, Primm turned ESI's ratified proposal over to the clerical employee at Local 1460 who types the collec- tive-bargaining agreement (2:425, 450; 3:517). Primm never checked on the status of the ratified agreement thereafter (2:455), and he never received a typed docu- ment from the clerk before the Griffith store closed in August (2:453). The clerical employee did not testify. 12 At the hearing (2.291) and by the remedy requested in his posthear- ing bnef, counsel for the General Counsel makes clear that the General Counsel attacks the unilateral changes made in the summer, not those in the spring. 12 Employee and union member Lisa Hinton credibly testified that Prunm recommended that it would be to the benefit of employees to stnke because the Union could picket the Hammond store as well as the one in Griffith (2-263). 3. Respondent closed the Griffith store Primm concedes that as early as the period around the 23 May ratification vote he began to hear rumors from employees, vendors, and others that the Griffith store was going to close (3:506, 507, 519). Employees asked Primm whether there was any truth to the rumors, and Primm told them he had no way of knowing (3:504). Primm testified that the Union believed that if an em- ployer plans to close a store "he will let us know," and that "We try to sit back and wait" for the employee to notify the Union (3:504). Primm admits that he did not go,ko his clerk and ask her to expedite the typing of the renewal collective-bargaining agreement when he began hearing the rumors (2:455; 3:516). As the weeks passed and the days approached August, the rumors, Primm concedes, became more intense (3:504, 507, 513). Primm testified that he cannot follow up on every rumor he hears each day, but that he pays close attention if the rumors become intense (3:513, 514). Finally, employee Jackie Jensen called and told Primm she had heard from a reliable source that there was a basis for the store-closing rumors. Primm told her he would seek to verify the rumor (3:515-516). Accordingly, Primm sent the following letter, dated 8 August, 2° to Alan Emsing". (G.C. Exh. 5): Rocky Emsing Emsings Super Mkt 118 N. Griffith Blvd Griffith, In 46319 Dear Rocky: There have been calls coming into this office about a rumor that your store, located at 118 N. Griffith Blvd Griffith, Ind, will be closing as of Sat- urday, 8-11-84. Please advise this office as to the truth of this rumor. If the rumor is true, I would request a meet- ing with you to discuss store closing. Thank you in advance for your cooperation in this matter. Very truly yours, Art Primm, Secretary-Treasurer There is a minor dispute concerning whether Primm also telephoned Alan Emsing on 8 August (Emsing), or whether Emsing called Primm on 9 August in response to Primm's letter of 8 August (Primm).22 I need not re- solve that issue because it is clear they had a single con- versation on one of those dates. Emsing testified that the decision to close the Griffith store was made about 1 August (1:100, 118, 916), and that the store actually closed on Saturday, 11 August, or 22 As earlier noted, Alan Einsing has the nickname of Rocky (1.17). 21 The parties stipulated that the certified letter was received at the store on Thursday, 9 August (2:389-390). It is undisputed that Emsing never sent an answering letter. However, they did confer by telephone on either 8 or 9 August. 22 Emsing (5838-841); Pnmm (1-141; 3-511). EMSING'S SUPERMARKET 311 Sunday, 12 August when the remaining employees were terminated (5:841, 845, 899).23 Emsing further testified that beginning around 1 August he and Terri Emsing, in conferences with indi- vidual employees, informed the employees the store would close on 11 or 12 August (1:101; 5:845-847, 916, 939). As stated, it is undisputed that on either 8 or 9 August Primm and Emsing had a telephone conversation. Aside from some minor differences in their versions, the two witnesses agree that Emsing said the store-closing rumors were true (1:101, 141; 3:511; 5:839), and that the store would close on 11 or 12 August (3:498, 937). Primm asked if they could set up a meeting to discuss store-closing matters, and Emsing said yes, any time, and did Primm want to meet then. Primm responded that he was tied up at the time and could he call Erasing back to set a date.24 Starting the following week, Primm began telephoning the Griffith store in an effort to reach Emsing to estab- lish an appointment (1:143). Between the telephone con- versation of 9 August and 27 August, the date of Primm's next letter to Emsing, Primm testified that he called the Griffith store about three to five times (1:143; 4:666). . An additional reason prompting Primm's calls may have been the information relayed to him by his clerical staff between 11 and 27 August that ESI had failed to send in the latest payments for dues checkoff and health and welfare (1:149-150, 153, 156), and three employees reported that they had not received their vacation pay- ments (1:149. 151-52). Emsing admits that ESI unilateral- ly ceased making all such payments around late June (1:103-108; 855, 942). An exception to this was vacations, which were paid until the store closed, but accrued vaca- tions were not paid after the closing (5:903). Emsing tes- tified that he ceased making the payments for two rea- sons. First, ESI had no money. Second, in Emsing's opinion there had been no contract because the previous one had expired on 31 October, and although benefits had been maintained for a while, Emsing finally assumed the Union had abandoned the employees when he had not heard from Primm (1:121; 5:849, 853, 915). The Gen- eral Counsel, in paragraphs 7(a)-(e) of the complaint, al- leges that these unilateral changes (discontinuation of pension trust contributions, health and welfare trust con- tributions; dues-checkoff payments, and vacation pay- ments) violate Section 8(a)(1) and (5) of the Act. Out of the three to five times Primm telephoned the Griffith store after 9 August, Primm obtained an answer only once, and that was on 20 August when Joseph 23 Et-ming initially testified that the store closed around 15 August (1:100). The financial records report that the store "terminated oper- ations" on l August (R. Exh 9c). Because most of the testimony speci- fies the closing date as 11 August, I shall use that date merely for con- venience. The difference of a day or two is not a critical issue here. 24 Pnrrim testified that his schedule during August and September was "extremely heavy" because of midterm contract negotiations with several employers and because of a strike that began in September at certified stores in Cedar Lake, Indiana, some 24 miles south of Gary, Indiana Prinini testified that his Gary office is about 5 miles from the Griffith store (2:405; 4 610, 656). As we recall, the Hammond store is 11 miles north of the Griffith store (1.110). "Butch Emsing, Alan's brother (4:602), answered (3:494, 500, 521; 4:666).25 Butch Emsing said his brother was working "between" (in both) the Griffith and Hammond stores and that Primm might be able to catch him at Rocky's in Hammond. Instead of asking for the number of Rocky's, Primm asked Butch if he would ask Alan Emsing to call him and Butch said he would give that message to his brother (1:144; 3:489-490, 500-501). Primm never heard from Alan Emsing after that call (1:145). Emsing testified that no one gave him any mes- sage to call Primm (1:102; 5:892). Emsing testified that after the Griffith store closed he spent most of his time at Rocky's, and that Rocky's telephone number is pub- lished in the same directory that lists the numbers for Griffith, Indiana (5:892, 894-895). He further testified that during the 2-week period after Emsing's closed, there were family members there most of the time for the purpose of moving out equipment and merchandise (5:858, 890). The Griffith store had a working telephone number until about 1 September (5:890). Butch Emsing did not testify. Primm concedes that following his 20 August conver- sation with Butch El-rising he made no attempt to locate the number for Rocky's or to call the Hammond store (3:490-491, 523). According to Primm, he did not drive to Rocky's because he had no time to do so (3:491, 523; 4:666). As previously mentioned, the distance from Primm's office in Gary to the Griffith store is about 5 miles, with Rocky's in Hammond being 11 miles north of the Grif- fith store. The miles are not listed from Primm's office to Rocky's, but as Hammond and Gary, Indiana, are adja- cent, the distance from Primm's office to Rocky's must surely not be more than 10 to 12 miles. During the timeframe around the closing of the Grif- fith store, certain transfers were made between Emsing's and Rocky's. RSI transferred $5000 to ESI so that Ems- ing's could meet its final payroll. This cash transfer is se- cured by the equipment and merchandise removed from Emsing's at the closing (1:62-65; 5:9000-902, 965-966, 998). RSI purchased the inventory remaining on hand at Emsing's (5:899-900, 948). All the transfers were record- ed with appropriate entries on the books of the two cor- porations (1:63; 5:900). The equipment presently has no saleable market because when the A&P stores closed in the Chicago and northern Indiana areas, the market became flooded with used equipment (1:79; 5:901, 966). Rocky's has no need for the equipment, and the equip- ment currently is stored in a back room at the Hammond store (5:902, 1018). One of the items transferred to RSI was a 1983 Olds- mobile 98 titled to ESI that had been purchased with the personal funds of Alan and Terri Emsing and that the Emsings still drive. Einsing testified that he has not transferred the title to RSI because of the $1000 or so it would take to pay the sales tax (5:973-974, 1016-1017). 25 Primm testified that so far as he could remember, his 20 August conversation with Butch Ernsing was the last time he called the Griffith store (1.157). 312 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 4. Subsequent letters and events On 27 August Primm sent one more letter to Emsing at the Griffith store, but received no response (1:145, 156, 161). The letter, sent by certified mail, reads (G.C. Exh. 7): Rocky Emsing Emsings Super Mkt 118 N. Griffith Blvd Griffith, IN 46319 Dear Rocky: This letter is to confirm a phone conversation we had on August 9th when you agreed to meet with me to discuss the store closing August 11th. Although my schedule has been heavy and I am sure you have been busy too, I tried to reach you a week ago and I spoke to Butch. He informed me that you were in and out of the Hammond store. I have been unable to reach you to discuss any of the outstanding issues such as, vacation owed, union dues owed and Health & Welfare owed. I would appreciate you issuing checks covering the above items or contact me so that we can discuss these matters. Thanking you in advance for your cooperation. Very truly yours, Art Primm, Secretary-Treasurer - The parties stipulated that Terri Emsing signed her re- ceipt of the letter no later than 7 September (2:390-392). Terri Emsing testified that although all the equipment and merchandise had been moved from the Griffith store, which was closed, by 27 August, mail addressed to the store would be delivered to the Emsings' personal residence (5:1021).2 6 During the timeframe of late August to early Septem- ber, Terri Emsing recalls picking up three certified enve- lopes addressed to Emsing's at the post office in response to certified slips left at the residence (5:1022). Terri Emsing was on her way to work at Rocky's that morn- ing. She admits that she placed the three envelopes, one of which she observed was from the Union, next to her on the car seat. According to Terri, that is the last she remembers seeing it. She testified that they were receiv- ing a lot of mail then, mostly from vendors they owed, and that they did not answer a lot of the mail (5:1022- 1025). Alan Emsing testified that he has "no recollec- tion" of seeing any letter such as this (1:102). Even so, it was received by ESI. Finally, by letter dated 26 September, Primm referred the matter to the Union's attorneys for arbitration to re- cover amounts owed for August union dues ($91), health and welfare contributions, and liquidated damages for July and August ($1,118.40), and for unspecified sums of vacation money due to the employees (R. Exh 7). On the same date Primm sent a certified letter to Emsing, addressed to the closed store in Griffith, informing him 26 Alan El-ming testified that their personal residence is located adja- cent to the Griffith store (5 843-845, 854) that the Union was invoking arbitration (G.C. Exh. 8; 1:162; 3:526; 4:716). Primm testified that the letter was returned unclaimed (3:525). Primm also testified that in lieu of pursuing any contractual remedies, the Union, on 5 November, filed the original charge in this case (4716- 717). B. Analysis and Conclusions 1. The unilateral changes Admitting that it failed to consult with the Union before unilaterally discontinuing the contractual pay- ments in the summer of 1984, Respondent defends on two grounds. First, the contract had not been extended. Second, by its conduct the Union abandoned the bar- gaining unit and waived any payments. It is true that the 1982-1983 collective-bargaining agreement was not extended. Nevertheless, an employer is not at liberty to discontinue benefits existing under an expiring contract where the parties, as here, did not dis- cuss such a discontinuation before an impasse in bargain- ing. Stone Boat Yard, 264 NLRB 981 (1983), enfd. 715 F.2d 441 (9th Cir. 1983). It therefore is unnecessary to decide whether the 23 May ratification was untimely or, if timely, whether it constituted a renewal of the 1980- 1983 collective-bargaining agreement, as modified, where the fact of the ratification was never communicated to ESI. See generally Teamsters Local 688 (Crown Cork) v. NLRB, 756 F.2d 659 (8th Cir. 1985). A different rule applies to the checkoff of union dues that must be supported by a contract, and Respondent's duty to deduct and transmit union dues expired with the collective-bargaining agreement on 31 October 1983. Hassett Maintenance Corp., 260 NLRB 1211 (1982). I find no waiver by the Union. Even if Primm was aware that ESI had implemented the changes mentioned during negotiations, that does not justify unilateral changes on matters not discussed. Stone Boat, supra. As for waiver through abandonment, that argument is without a factual basis. Primm posted notices at the Grif- fith store of several union meetings in 1984, and Emsing admits that he saw Primm posting such notice in either April or May (5:818, 922, 929). Moreover, about a week before the ratification meeting of 23 May, Primm or Jerry Ogborne posted the notice for that meeting (3:537). The notice to union members about the meeting is on the stationery of Local 1460 and is from Primm as secretary- treasurer (C.P. Exh 2a) Finally, Emsing admits that he was aware of the union meeting of 23 May because he read the notice posted in his store (5:913). And if Primm can be faulted for not being more dili- gent in having the new contract typed following the rati- fication, 27 that lack of diligence does not rise to the level of abandonment nor does it excuse Respondent's failure to continue the benefit payments. Accordingly, I find that Respondent violated Section 8(a)(1) and (5) of the Act as alleged. 27 Pnmm testified that the delay was not unusual, and gave as an ex- ample Certified Stores in Cedar Lake, Indiana, where negotiations con- cluded in October or November, but a contract did not issue until March 1985 (3558-559; 4'633) EMSING'S SUPERMARKET 313 2. Meaningful bargaining over effects precluded by Respondent's failure to notify the Union of closing The General Counsel alleges and argues that Respond- ent unlawfully refused to bargain over the effects of its decision to close the Griffith store. Respondent's princi- pal defense is that Local 1460 waived any right it had to bargain by its failure to contact Respondent until 8-9 August despite rumors as far back as 2-3 May of an im- pending sale. Respondent's position is without merit here. The Ems- ings did not decide until about 1 August to close the Griffith store. Thus, even had Primm contacted Alan Emsing in June or July and inquired about the matter, Primm would have been told that there was no decision to that effect. There is no evidence that the Emsings had any plans in May, June, or July to close the Griffith store in the near future. Thus, we can only presume that had Primm called Emsing in June, for example, and asked whether there were any plans to close in the future, Emsing would have replied no. I find no waiver in the weeks before August. In the conversations of 8 and 9 August Emsing said he was willing to discuss the effects. When Primm said he would have to call back later, Emsing said Primm could reach him either at Griffith or Hammond (5:937). Re- spondent argues that the Union thereafter waived its right to bargain about the effects by, in essence, sleeping on that right until well after the store had closed and the opportunity for meaningful bargaining had expired. Respondent had the legal duty to notify the Union of its decision to close the Griffith store. Blu-Fountain Manor, 270 NLRB 199, 208 (1984). If Respondent had notified the Union as early as it began informing the em- ployees, around 1 August, then perhaps Primm could have recontaeted Emsing before the store closed the weekend of 11-12 August and arranged a mutually agreeable meeting date. Time was of the essence. Even the meeting date might have preceded the store's closing and allowed for a meaningful settlement of store-closing matters. We will never know because Respondent unlaw- fully failed to notify the Union promptly of its decision to close the Griffith store. By the time Primm learned of the situation, the closing was almost a fait accompli. Primm was not required to cancel his other engage- ments on such short notice and press for an immediate meeting. Thus, by its failure to notify the Union, Re- spondent precluded meaningful bargaining over its deci- sion to close. In these circumstances, I find that Re- spondent violated Section 8(a)(1) and (5) of the Act about I August by failing to notify the Union of its deci- sion to close its Griffith store on 11 August 1984. Al- though the complaint alleges the violation in terms of in- forming the employees on 1 August and refusing on and after 9 August to negotiate with the Union, the nature of the finding I have made was fully litigated. 3. The single-employer issue As my findings call for a remedial order, it becomes appropriate to discuss the General Counsel's allegation that ESI and RSI constitute a single employer. In his brief, counsel for the General Counsel recognizes that ESI no longer possesses any assets and that any order running only to ESI would be practically worthless (Br. 8)." For remedial reasons, therefore, the General Coun- sel alleges and seeks a single-employer finding." We turn now to a review of the relevant legal princi- ples. To determine whether two ostensibly separate enti- ties are sufficiently integrated so that they may be fairly treated as a single employer, the Board and the courts examine four principle factors: (1) functional integration; (2) centralized control of labor relations; (3) common management; and (4) common ownership. Radio Union Local 1264 v. Broadcast Service, 380 U.S. 255 (1965); NLRB v. Browning-Ferris Industries, 691 F.2d 1117, 1122 (3d Cir. 1982); FEDCO Freightlines, 273 NLRB 399 fn. 1 (1984); Truck & Dock Services, 272 NLRB 592 fn. 2 (1984). Viewed separately, none of the four factors is deemed controlling, and the Board has stressed the first three fac- tors, particularly centralized control of labor relations. FEDCO, supra; Truck & Dock, supra. Single-employer status depends on all the circumstances, and has been characterized as an absence of the arm's-length relation- ship found among unintegrated companies. Browing- Ferris, supra at 1122; FEDCO; Truck & Dock Before going further, I should note that there is a dis- tinction between the single-employer concept and that of a joint employer. The joint-employer concept recognizes that the business entities involved are in fact separate, but that they share or codetermine those matters govern- ing the essential terms and conditions of employment. Browning-Ferris, supra at 1123. There is no allegation here of a joint-employer situation, Similarly, the alter ego concept is distinct from either that of single employer of joint employer. Airport Bus Service, 273 NLRB 561 (1984). Typically, an alter ego is created for the purpose of evading the original employ- er's responsibilities under its collective-bargaining agree- ment. Consequently, the Board also considers whether the purpose behind the creation of the alleged alter ego was legitimate or whether, instead, its purpose was to evade responsibilities under the Act. Watt Electric Co., 273 NLRB 655 (1984). There is no allegation or contention that RSI is the alter ego of ESI. Indeed, Emsing testified that when he and his wife opened Rocky's in January 1983, there was no intention to phase out Emsing's in Griffith, and they expected both stores to exist (1:69). 30 Moreover, the 28 Erasing testified that although ESI still exists as a corporate entity, It is insolvent, has a negative balance of $112,000, and has no funds or other assets (1 108-109, 5903, 946). ESI's income statement for the year ending 25 August shows a net income loss of $112,739 (R Exh 9a), and the balance sheet of 25 August shows a deficit of $92,811 (G C Exh 11). Counsel for the General Counsel concedes that ESI's books reflect that it closed because of insolvency (5 1011) 29 There is no contention, even if there is a single-employer finding, that the Union represents the employees of Rocky's in any bargaining unit. 3° In the 12-week period of 5 June to 27 August 1983, the Griffith store posted a net loss of $1972 (R fish 11), and m November 1983 El-ming listed the Griffith store for sale through a broker (5 831, 836- 837) 314 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD money to open Rocky's in Hammond came largely from Scot Lad, a grocery warehouse, and none came from ESI (1:70; 5:882-884, 896). As to the four factors, we see immediately that there is substantially identical ownership. Of course, this is the least important of the four factors. There also is common management. The only person outside the Emsing family who carried any managerial title is Dave Davis, who has been secretary-treasurer of RSI and the designated store manager of Rocky's (1:21-22, 48, 51-52; 5:862, 896-897). Davis is a corporate officer in name only and serves in that capacity merely as a convenience to the owners, Alan and Terri Emsing, because initially (when Emsing's was open) Alan Emsing was frequently at Griffith when papers needed to be signed in Hammond (1:52; 5:897). All management decisions of any significance, including pricing, selecting vendors, and other such matters, are made by Alan and Terri Emsing. The Emsings are not absentee owners. They are (and were as to Emsing's) "hands-on" managers involved in every aspect of the management and operation of the stores. Alan and Terri Emsing were the comanagers of the Griffith store and they did everything from deciding whether the store would be a supermarket or a conven- ience store, to determining pricing, product mix, working the courtesy booth, preparing the work schedules, hiring, firing, stocking, cutting meat, to "cleaning johns" (1:29). Respecting the second factor, centralized control of labor relations, the finding is affirmative for much of the same reasons supporting a finding of common manage- ment. Emsing testified that on behalf of management he and Terri jointly established the labor relations policies for Emsing's, and that although he and Dave Davis ini- tially did so at Rocky's, Terri replaced Davis in that function when she began working at Rocky's (1:118- 119). As an example of who really controls labor rela- tions, when Dave Davis, the store manager at Rocky's and secretary-treasurer of RSI, wanted to hire Jeff Smith as a clerk 3 weeks after Smith's layoff from Emsing's, Davis first called Alan Emsing, and Diming raised no objection to Smith's being hired (1:52-53; 5:951). Smith was hired as a new employee at Rocky's, and seniority at Emsing's did not transfer to Rocky's (5:951). In short, I find that at all relevant times, and particu- larly from January 1983 to August 1984, the labor rela- tions policies of the stores at Griffith and Hammond were under the centralized control of Alan Emsing and his wife, Terri Emsing. Having initially skipped the first category, functional integration, we now consider that critical factor. Certain- ly, Emsing's and Rocky's were not directly integrated by serving a common production or sales goal such as where one firm exists to supply a sister firm with person- nel or equipment the other needs to accomplish the over- all corporate goal as in Consolidated Dress Carriers, 259 NLRB 627 (1981), and Malcolm Boring Co., 259 NLRB 597 (1981). Emsing testified that there was never any interchange of bargaining unit employees (5:862, 950). Some qualifi- cation is needed. The collective-bargaining agreement that expired 31 October 1983 provided for a few more classifications than the clerks mentioned by Emsing. Thus, article XIII recognizes the classifications of assist- ant manager, produce department head, and cashier- bookkeeper. The first two assist in "supervising" under the provisions of article XIII. Alan Emsing's brother, Joseph "Butch" Emsing, was an assistant manager at Emsing's before he was trans- ferred to Rocky's in January 1983 in the same capacity there (1:31-33). The same is true of Mike Finstermaker, although Emsing could not recall when Finstermaker transferred (1:50). John Best has been the butcher at Rocky's since it opened. He worked at Emsing's a day or two before Rocky's opened (1:48-49). It is not clear from the record, but presumably Best was on Rocky's payroll at all times and simply trained for a day or two at Emsing's. Clerk Jeff Smith was one of those laid off from Ems- ing's in the spring, and subsequently was hired as a new employee at Rocky's (1:52-53; 5:951). Like Smith, clerk Rhonda Finstermaker was laid off from Emsing's in the spring. She was hired about 2 weeks later at Rocky's and currently works in the cour- tesy booth (1:54-56). Finally, Terri Emsing's brother, an officer on the Gary, Indiana police department, occasionally wrapped meat in the meat department at Emsing's, and has worked on occasions as a security guard at Rocky's (1:92-93). In light of these qualifications, it is clear that there was never any interchange in the usual sense of bargaining unit employees. Two assistant managers were transferred to Rocky's, and one employee of Rocky's trained for 1 or 2 days at Emsing's. Of course, one of the owners, Alan Emsing, interchanged frequently as store manager ex officio, and eventually Terri Emsing transferred to Rocky's as another ex officio store manager.31 Turning to other matters, I note that one check was issued to cover health insurance premiums for both stores, but that was for the purpose of obtaining a lower premium. The other store then reimbursed the one issu- ing the check (5:950). Although at and near the time Emsing's closed, RSI advanced money to pay Emsing's final payroll, 32 that was handled on an arm's-length basis in that the transactions were duly recorded in the books of each corporation and with RSI taking merchandise and equipment as security. In any event, what happened in August misdirects the focus to Emsing's closing when the proper attention should focus on what took place when both stores were open and operating. During that period the Emsings ob- tained personal loans and in turn loaned the money to both EM and RSI, particularly to ESI (1:66; 5:831, 839, 863, 963, 965, 996-997). The loans remain unpaid (5:945). In addition, in about February 1984 Alan Emsing discon- tinued his salary at Emsing's (5:862-863), and the Ems- 3i Recall that Dave Davis has been the designated store manager of Rocky's from its opening. 32 Erasing testified without contradiction that the finances were sepa- rately maintained and that cash was not mingled or sent from one store to support the other (5.861). I take this to mean while the two stores were open and operating Even at the closing of Erasing's, the transac- tions were made on a secured basis EMS1NG'S SUPERMARKET 315 ings also began endorsing their dividend checks (record- ed as loans) back to ESI in an effort to save the Compa- ny (5:1006).33 Although there was no direct financial integration of ESI and RSI when both stores were open and operat- ing, 34 the personal loans made from Alan and Terri Emsing to ESI and RSI can be viewed as an indirect fi- nancial integration. I would attach more significance to such loans if it appeared they were mere paper transfers serving as a device to "launder" profits from Rocky's in order to support the normal business operations of Ems- ing's. The evidence here shows simply that Alan and Terri Emsing simply mortgaged their home (1:66; 5:964- 965) and borrowed money from their credit union (5:964, 965, 995) and Tern's parents (5:965, 995) in a vain at- tempt to save a failing business In the circumstances of this case, the loans do not constitute financial integration of ESI and RSI. On infrequent occasions there were spot sales between Emsing's and Rocky's (5:864). However, these were arm's-length transactions made for convenience and were typical of transactions made between Emsing's and other stores before Rocky's opened (5:864-865, 952). As men- tioned above, we do not have here the situation of one firm drilling and producing oil, or manufacturing widg- ets, with the second firm marketing, distributing, and selling the oil or widgets. The General Counsel does not argue that two firms that are separately incorporated, with separate books, banking accounts, and operating in a different customer market (whether geographical or product)," and not functionally integrated, as we have here with Emsing's and Rocky's, must necessarily be found a single employ- er simply because the other three factors are answered in the affirmative. If that were the law, then no owner could be actively involved in operating the separate cor- porations he owns even though his two or more firms are operated as separate and nonintegrated entities. Such is not the law. Aspen Leasing Systems, 271 NLRB 1536 (1984); Chippewa Motor Freight, 261 NLRB 455, 458-459 (1982). Because I find that Emsing's Supermarket in Griffith, Indiana, and Rocky's Supermarket in Hammond, Indiana, were not functionally integrated, I find that they were not operated as a single employer. Accordingly, the re- medial order in this case will not include Rocky's Super- market, Inc. (RSI). 33 Once Emsing's began losing money, there were no dividends, of course (5.1005). 34 By financial integration, I mean direct transfers between ESI and RSI of cash loans, or other financing as part of normal operations for purchasing, payroll, or whatever 35 In addition to the different geographical areas and different custom- ers of Emsing's and Rocky's, their meat products, a very significant aspect of their operation, catered to the different tastes of their locale Thus, 'Erasing's customers preferred beef, and Rocky's preferred pork and chicken (1:75, 76) And as earlier noted, in February 1984 Emsing's was changed to a convenience store in contrast to a supermarket such as Rocky's (1:68, 5:819, 820, 823) CONCLUSIONS OF LAW 1. During all times relevant, Emsing's Supermarket, Inc. (ESI) was an employer within the meaning of Sec- tion 2(2), (6), and (7) of the Act. 2. Rocky's Supermarket, Inc. (RSI) is an employer within the meaning of Section 2(2), (6), and (7) of the Act. 3. During all times relevant, United Food and Com- mercial Workers Union, Local 1460, AFL-CIO, CLC was a labor organization within the meaning of Section 2(5) of the Act. 4. United Food and Commercial Workers Union, Local 1550, AFL-CIO, CLC is a labor organization within the meaning of Section 2(5) of the Act. 5. At all relevant times the following employees con- stituted a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act: All employees working in the retail stores of Ems- ing's Supermarket, Inc. who are actively engaged in handling or selling of merchandise, including all employees working in existing departments of the store which may hereafter be leased, but excluding employees in newly created leased departments, which departments were not formerly operated by the Employer, and wherein the employees are under the exclusive control direction of the lessee and wherein the employees work exclusively in the leased department. Also excluded are those employ- ees in the meat department, one (1) day manager, one (1) night manager, and one (1) co-manager (for stores over ten (10) employees). Stores having less than ten (10) employees shall have one (1) day man- ager and one (1) night manager only. 6. At all times material Local 1460 was the exclusive collective-bargaining representative of all the employees described above for the purposes of collective bargaining within the meaning of Section 9(a) of the Act. 7. By failing to make vacation payments to employees during the summer of 1984, and by unilaterally discon- ,.tinuing payments on behalf of its employees to the health and welfare trust fund, and to the pension trust fund, jointly administered by ES! and Local 1460, ES! violat- ed Section 8(a)(1) and (5) of the Act. 8. By failing about 1 August 1984 to notify Local 1460 of its decision to close its supermarket in Griffith, Indi- ana, about 11 August 1984, and instead notifying only its employees of such decision, ESI precluded meaningful bargaining over the effects of its decision to close its Griffith facility and thereby violated Section (8)(a)(1) and (5) of the Act. 9. The foregoing unfair labor practices affect com- merce within the meaning of Section 2(6) and (7) of the Act. 10. ES! and RSI never operated as or constituted a single employer. 316 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD THE REMEDY Although ESI is insolvent and has closed its store in Griffith, Indiana, the corporation remains in existence. A remedial order is appropriate in the event bankruptcy or other insolvency proceedings have been filed and the General Counsel desires to file a claim. An order and notice are appropriate also because Alan and Terri Emsing, with new funding, conceivably could reopen Emsing's Supermarket, or a successor store by some other name. I shall order that the notice be mailed 36 to all employ- ees on the payroll of ESI as of 1 June 1984, a date ap- proximately the period just before ESI began discontinu- ing its payments to the benefit funds, and that the notice be mailed to any others on the payroll as of 1 August 1984. The names and amounts of money due, with inter- est, to employees for vacations will be determined in the compliance stage. Interest on the vacation money due shall be computed in accordance with Florida Steel Corp., 231 NLRB 651 (1977). See generally Isis Plumbing Co., 138 NLRB 716 (1962). Interest also shall be due and payable on the payments withheld from the benefit funds. Ogle Protection Service, 183 NLRB 682 (1970). However, because the provisions of employee benefit fund agreements are variable and complex, the Board does not provide at the adjudicatory stages of a proceeding for the addition of interest at a fixed rated or unlawfully withheld fund payments. The Board leaves to the compliance stage the question of whether the respondent must pay any additional amounts into the benefit funds in order to satisfy the "make- whole" remedy. Howard Barthelmass Painting Co., 269 NLRB 346 fn. 2 (1984), Merryweather Optical Co., 240 NLRB 1213 (1979). I also shall order ESI to establish a preferential hiring list of all employees it terminated about 11 August 1984. The list shall be compiled following the seniority system continued from the collective-bargaining agreement that expired 31 October 1983. If ESI or its successors or as- signs ever resume operations in the Griffith, Indiana area, it must offer such employees reinstatement. Authen- tic Furniture Products, 272 NLRB 552 (1984). ESI also shall be ordered to bargain over the effects of its 1 August 1984 decision to close Emsing's Supermar- 38 Print-Qutc, 262 NLRB 857, 862 (1982). ket on 11 August. However, meaningful bargaining cannot be assured until some measure of economic strength is restored to the Union. A bargaining order alone, therefore, is an inadequate remedy for the unfair labor practice committed. Accordingly, I additionally shall include a Transmarine limited backpay requirement as part of the remedial order." ESI shall pay the unit employees on the payroll as of 1 August 1984 amounts at the rate of their normal wages when last in ESI's employ from 5 days after the date of the Board's order until the occurrence of the ear- liest of the following conditions: (1) The date ESI bargains for agreement with the Union on those subjects pertaining to the effects of the closing on the unit employees. (2) A bona fide impasse in bargaining. (3) The failure of the Union to request bargaining within 5 days of the Board's order," or to commence bargaining within 5 days of ESI's notice of its willing- ness to bargain with the Union. (4) The subsequent failure of the Union to bargain in good faith. The sum paid to any of these employees shall not exceed the amount he would have earned as wages from 11 August 1984, the date Emsing's Supermarket closed; to the time he secured equivalent employment elsewhere, or the date on which ESI offers to bargain, whichever occurs sooner; provided, however, that in no event shall this sum be less than the employees would have earned for a 2-week period at the rate of their normal wages when last in ESI's employ." Interest shall accrue on such wages, and interest shall be computed in the manner prescribed in Florida Steel Corp., 231 NLRB 651 (1977). See generally Isis Plumbing Co., 138 NLRB 716 (1962). [Recommended Order omitted from publication.] 37 Transmarine Navigation Corp., 170 NLRB 389 (1968), 38 In light of occasional delays in the mail, a reexamination of the 5 days might be appropriate. Even without a delay, the 5 days could expire before the responsible official could read the order if he were out of his office for even 2 or 3 days. A period of 10 days would be reasonable. 39 Although the minimum amount of backpay due under this provision Will be 2 weeks of normal wages, plus interest, in theory the maximum could extend over several calendar quarters. In the unlikely event calen- dar quarters are involved, backpay shall be computed in the manner es- tablished in F. W. Woolworth Co., 90 NLRB 289 (1950).