Signal Communications, Inc. And Signal Equipment, Inc.

SIGNAL COMMUNICATIONS 423 Signal Communications, Inc. and Signal Equipment, Inc. and International Brotherhood of Electrical Workers, Local 46. Case 19-CA-17905 22 June 1987 DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND CRACRAFT On 21 May 1986 Administrative Law Judge Jer- rold H. Shapiro issued the attached decision. The Respondents filed exceptions and a supporting brief, and the General Counsel filed a response to the Respondent's exceptions. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, fmdings, 1 and conclusions, to modify his remedy, 2 and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondents, Signal Communications, Inc. and Signal Equipment, Inc., Seattle, Washington, their officers, agents, succes- sors, and assigns, shall take the action set forth in the Order. I The Respondents have excepted to some of the judge's credibihty 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 Product's, 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Ch.. 1951). We have carefully examined the record and find no basis for re- versing the findings. In adopting the judge's reliance on Garwood-Detrott Truck Equipment, 274 NLRB 113 (1985), we note that the judge cited that case only for the proposition that an employer is obligated to bargain over the effects of its decision to cease busmess. We therefore find it unnecessary to pass on the Board's other holdings in that case. 2 In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 (1987), interest will be computed at the "short-term Fed- eral rate" for the underpayment of taxes as set out in the 1986 amend- ment to 26 U.S.C. § 6621. Eduardo Escamilla, Esq., for the General Counsel. Gary M. Carlson, for the Respondents. John Tobey, for the Charging Party. DECISION STATEMENT OF THE CASE JERROLD H. SHAPIRO, Administrative Law Judge. This proceeding, in which a hearing was held March 11, 1986, is based on an amended unfair labor practice charge filed on December 4, 1985, by International Brotherhood of Electrical Workers, Local 46 (Union) 284 NLRB No. 54 against Signal Communications, Inc. (Respondent SO) and Signal Equipment, Inc. (Respondent SEA' and on a complaint issued December 9, 1985, by a Regional Di- rector of the National Labor Relations Board (Board), on behalf of the Board's 'General Counsel, alleging that Respondents have engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Na- tional Labor Relations Act (Act). 2 More Specifically, the complaint in effect alleges that on October 15, 1985, Re- spondent DCI ceased doing business and terminated its union-represented employees without prior notice to the Union and without having afforded the Union an oppor- tunity to bargain about the effects of the shutdown on the employees, thereby violating Section 8(a)(5) and (1) of the Act. The complaint in effect also alleges that Re- spondent SEI is a successor employer and, as such, is jointly and severally liable with Respondent SCI to remedy Respondent SCI's aforesaid unfair labor practice. Lastly, the complaint alleges that Respondent SE!, as a successor employer, was obligated to recognize and bar- gain with the Union as the collective-bargaining repre- sentative of the unit employees, and that on November 5, 1985, it rejected the Union's request that it do so, there- by violating Section 8(a)(5) and (1) of the Act. Respond- ents filed an answer, which was amended at the hearing, denying the commission of the alleged unfair labor prac- tices.3 On the entire record, from my observation of the de- meanor of the witnesses, and having considered the posthearing briefs filed by the General Counsel and Re- spondents, I make the following FINDINGS OF FACT L THE ALLEGED UNFAIR LABOR PRACTICES A. The Evidence Respondent SCI is a State of Washington corporation. Its president, Harold Lander, owns 90 percent of the business and the remainder is owned by John Pieroth, its vice president. SCI's place of business was located in Se- attle, Washington. It sold, installed, and serviced fire alarm systems, fire suppression Halon systems, and audio communication and telecommunication systems. Early in the 1980s SCI successfully bid on several jobs, which required that it install special electronic sys- tems in prisons and county jails in the State of Washing- ton. This work involved a completely new concept of electronic systems with which SCI had no previous ex- perience. The cost to complete the work was substantial- ly higher than anticipated. On one of the jobs, a $1.7 mil- lion contract involving the King County Jail, the costs got completely out of control. By early 1984 SCI was in The original charge was filed October 29, 1985, against Respondent SCI. 2 The complamt was amended at the hearing. 3 In their answer Respondents admit the Union is a labor organization within the meaning of Sec. 2(5) of the Act. Also Respondents admits, and the record establishes, that during the times material Respondents were employers engaged in commerce within the meaning of Sec. 2(6) and (7) of the Act and met one of the Board's applicable discretionary jurisdic- tional standards. 424 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD serious financial difficulties and this situation continued into 1985. Early in 1985 SCI's owners began to look for another company to purchase SCI's existing contracts or some of its assets. It appeared that SCI and the Pyrotronics Cor- poration had reached such an agreement, but in late Sep- tember 1985 Pyrotronics informed SCI's owners that the deal was off. Also, in late September 1985, SCI's bank, whom SCI owed $1.7 million, notified SCI that the com- pany's line of credit was discontinued,4 that the bank in- tended to foreclose on the lien that the bank had placed on SCI's assets, 6 and suggested that SCI's owners "go out and find some new financing so that you can buy some of the assets of SCI to [form] a new smaller oper- ation." SCI's owners, Lander and Pieroth, followed this suggestion (Tr. 110, LL. 17-21) and, with some other in- dividuals, as described infra, they formed Respondent SEI to take over what remained of SCI's business, and on October 15, 1985, when the bank exercised its right of foreclosure against SCI's assets, SCI ceased to do busi- ness. On October 16, 1985, SEI took over the business. On the date of the hearing in this case, March 11, 1986, Respondent SCI owned no assets and employed no employees and its debts totaled approximately $1.5 mil- lion. SCI has the potential, however, to pay off all of its debts if it prevails in a $4 million lawsuit it has filed against King County in connection with the King County Jail job. In addition to its office, sales, engineering, and drafting department, Respondent SCI employed production workers classified as installers, assemblers, and electronic technicians, who were employed in its installation, manu- facturing, and service departments. Each department was supervised by a department manager who reported to President Lander and Vice President Pieroth. Lander testified he managed Respondent SCI's business oper- ations (Tr. 161). The record, Respondent's Exhibit 11, shows that early in May 1985 SCI employed 34 production workers-as- semblers, installers, and electronic technicians-of whom 6, electronic technicians Steve Doherty, Dennis Doyle, Richard Gregory, William Klemm, Mike Hoover, and Harold Rask, were employed in the service department located at SCI's Seattle facility. They were supervised by service department manager Dennis Forbes. On Octo- ber 15, 1985, all that remained of SCI's above-described production work force were four electronic technicians (Doherty, Doyle, Gregory, and Klemm) employed at its Seattle facility in the service department, Service De- partment Manager Forbes and seven installers and assem- blers employed by SCI to do installation work on a prison project located in Clallam Bay, Washington. As described infra, on October 15, 1985, Respondent SCI ceased doing business and terminated its five service de- partment employees, and the next day these five workers began to work for Respondent SE!. The seven produc- tion workers performing installation work at the prison 4 As early as the middle of August 1985 the bank warned SCI that unless its financial situation improved, the bank would discontinue fund- ing it. 5 SCI's bank had placed a hen on SCI's assets as security for SCI's debt. project in Clallam Bay continued to work there until the completion of the project, but Respondent stopped paying their wages and benefits about October 15, 1985; the project's general contractor paid them until they were terminated.6 In August 1985, after SCI's owners had informed the employees about the Company's precarious fmancial situ- ation, SCI's sales manager and five other employees quit their jobs with SCI and formed a new company, Signal Systems, Inc., with SCI's former sales manager as presi- dent. In August 1985 SCI and Signal Systems, Inc. en- tered into an agreement whereby Signal Systems took over that portion of SCI's business which involved the sale, installation, and servicing of audio communication and telecommunication systems, leaving SCI to sell, in- stall, and service fire alarm and fire suppression Halon systems. Subsequently, in 1985 when SCI laid off em- ployees, a substantial number of them went to work for Signal Systems. Since at least 1965 the Union represented Respondent SCI's electronic technicians, installers, and assemblers, and they were covered by a series of collective-bargain- ing contracts between SCI and the Union, the most recent one being effective from October 1, 1984, to Sep- tember 30, 1986. It was negotiated with the Union by SCI's owners Pieroth and Lander, who, Pieroth testified, were jointly responsible for SCI's labor relations policy. On various dates in the spring and summer of 1985, SCI laid off union-represented employees. Several days prior to these layoffs, SCI's vice president, Pieroth, tele- phoned Union Business Representative John Tobey and told him about the scheduled layoffs, the names of the employees selected for layoffs, the order in which they would be laid off, 7 and explained that the employees were being laid off because the Company's business was shrinking, and that because of this there was a reduction in work. During one of these conversations, Pieroth also informed Tobey about the Company's financial difficul- ties. In September 1985, commencing on September 13, SCI laid off six additional union-represented employees. Several days prior to September 13, Pieroth telephoned Tobey and notified him about these scheduled layoffs. Pieroth testified that in addition to speaking to Tobey about the layoffs, that he told him "SCI was going to go out of business," and that Tobey responded by stating, "He was sorry." Tobey testified that Pieroth did not make such a statement. I reject Pieroth's testimony be- cause his testimonial demeanor was poor when he gave this testimony, whereas Tobey's was good. Moreover, Pieroth's testimony that he unequivocally stated to Tobey that "SCI was going out of business," is not con- sistent with his later testimony that, "I told Tobey that I thought the company would go out of business" and his 6 Pieroth testified there were approximately 12 installers employed on October 15, 1985, at Clallam Bay. However, the record, R Each 11, shows there were seven and shows they were terminated on various dates in October 1985, November 1985, January 1986, and February 1986. Robert Almeda, who supervised the Clallam Bay installers for Re- spondent, was the last worker terminated. 7 The governing collective-bargaining contract provides that an em- ployee's seniority "shall govern" in cases of "layoffs and recalls." SIGNAL COMMUNICATIONS 425 later testimony that, "I told Tobey that the company probably would go out of business." In addition, his testi- mony is implausible because SCI's owners did not decide to go out of business until 2 or 3 weeks following Pieroth's conversation with Tobey, when the deal with Pyrotronics failed to materialize. 9 Nonetheless, Pieroth, in an effort to explain why he advised Tobey early in September that SCI intended to go out of business, testi- fied that "The reason I told him [SCI] was going out of business, that's when I was sort of disappointed with the fact that I thought I had a solution with Pyrotronics and that all fell through." It is for all these reasons, in par- ticular Pieroth's poor demeanor, that I find Pieroth did not indicate to Tobey in September 1985 that SCI in- tended to go out of business On October 15, 1985, SCI employed five workers in its service department: electronic technicians Doyle, Do- herty, Gregory, and Klemm and Service Department Manager Forbes. On October 15, or at the start of the workday on October 16 in Gregory's case, SCI's owners Lander and Pieroth informed the service department workers that their employment with SCI was terminated because it was going out of business, that a new compa- ny named SEI had been formed to take its place, and of- fered them employment with the new company. They all accepted. On October 16, 1985, without a hiatus in their employment, they began work for SE!. On October 17, 1985, Pieroth telephoned Tobey and told him that SCI had gone out of business effective Oc- tober 15, 1985, and that its place had been taken by a new company named SEI and, in response to Tobey's in- quiry, stated that the wages and benefits paid by SEI to the former SCI employees would be modified from what they had been while the employees were employed by SC!. The entire conversation lasted 2 or 3 minutes Tobey credibly testified that this was the first notice to him that SCI had gone out of business and further testi- fied that prior to this he had not been informed that SCI intended to go out of business. On November 5, 1985, Union Representative Tobey went to SCI's former place of business, now occupied by SE!, and spoke to Lander and Pieroth, the president and vice president of both companies. Lander told Tobey that the reason SEI had been formed to take SCI's place was that SCI was broke. Tobey told Lander and Pieroth that the Union retained the right to represent and bar- gain on behalf of SCI's service department employees who were now employed by SE!. Neither Lander nor Pieroth replied. Tobey also expressed his concern about the workers employed by SCI at the Clallam Bay, Wash- ington prison project. In response Lander stated that after October 15, 1985, the wages and benefits of these workers would be taken care of by Howard Wright, the project's general contractor. Tobey then asked how Lander intended to handle the vacation and sick leave owed to SCI's other employees, including the service de- 8 I note that Pieroth testified that his September 1985 conversation with Tobey had to have taken place before September 13, 1985, the date of the first of the senes of scheduled September layoffs, and that Pieroth's main reason for telephoning Tobey was to inform him about these scheduled layoffs. partinent employees now employed by SEI. 9 Lander re- plied that those back benefits would be taken care of in the future. Tobey said nothing further and this ended the meeting. On October 16, 1985, Respondent SEI went into busi- ness. It is a State of Washington corporation that was in- corporated in October 1985. Its president, John Pieroth, and its vice president, Harold Lander, each own 15 per- cent of the business, and the remainder is owned by three other individuals. Pieroth testified that SEI's labor relations are jointly handled by himself and Lander, and the record, General Counsel's Exhibits 3g and 3i, shows that Lander is SET's "business manager" and Pieroth is its "sales manger." Virtually all (approximately 90 prcent) of SErs office furniture and equipment, business inventory, shop equip- ment, and motor vehicles were owned and used by SCI in its business These assets of SCI were purchased by SE! from SCI's bank that, as described supra, had placed a lien on the assets as security for SCI's debt. Respondent SEI is in the same business as SCI, when SCI went out of business, namely, the sale, installation, and servicing of fire alarms and fire suppression Halon systems. For approximately its first 2 months of oper- ation SEI did business at SCI's former facility and then moved to a new location on the same street approximate- ly 50 to 100 feet away. On October 16, 1985, when SCI commenced doing business, it employed 11 employees, all of whom had been employed by SCI, as follows: Electronic technicians Doherty, Doyle, Gregory, and Klemm and Service Manager Forbes in the service de- partment; Business Manager Lander; Sales Manager Pieroth, drafter Raybell; engineer Starks; accountant Tillman; and Office Manager Wahlen. On the day of the hearing in this case, March 11, 1986, all these workers were still employed by SE!. The only persons employed by SEI since its inception were a salesman employed on December 2, 1985, and a secretary who only worked for a period of 3 weeks in November 1985. The four electronic technicians employed in SEI's service department do the same work for SEI that they did for SCI, using the same tools, equipment, and skills as when they worked for SCI, and work for SEI under the immediate supervision of the same service depart- ment manager who supervised their work for SCI. The vast majority of SEI's customers whom the technicians service are the same ones they serviced while working for SCI, 1° and the station wagons or vans the techni- cians drive for SEI still identify their employer as SCI. Last, with respect to the terms and conditions of em- ployment of the four electronic technicians who came from SCI to work for SE!, the record reveals that their work schedule did not change when they went to work for SEI, but that while SCI's contract with the Union re- 9 Under the governing collective-bargaming contract SCI was obhgat- ed to pay terminated employees for all their accrued sick leave and ac- crued vacation time. 10 The record establishes that as of the date of the hearing in this case, March 11, 1986, between 70 and 95 percent of SEI's customers had been customers of scr when it operated the business. 426 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD quires that they be paid $15.95 an hour, that SEI pays three of them $14.08 an hour and the fourth $15.35 an hour. Otherwise the record is silent concerning their other terms and conditions of employment. B. Discussion and Conclusions 1. Respondent SCI violated Section 8(a)(5) and (1) of the Act by failing to bargain with the Union over the effects of its decision to terminate its operations on the unit employees An employer who decides to terminate its operations and go out of business is obligated by Section 8(a)(5) of the Act to bargain with the union that represents its em- ployees about the effects of that decision on the bargain- ing unit employees. First National Maintenance Corp. v. NLRB, 452 U.S. 666, 681 (1981); Cross Co., 274 NLRB 392 (1985); Gar Wood-Detroit Truck Equipment, 274 NLRB 113 (1985). The General Counsel contends, and I agree, that Respondent SCI unlawfully failed to bargain with the Union about the effects of its decision to cease operations and go out of business on the employees rep- resented by the Union. In agreeing with the General Counsel's contention, I rely on the fact that Respondent SCI failed to give the Union advance notification of its intention to go out of business and did not notify the Union of this until October 17, 1985, 2 days after SCI closed its Seattle facility and terminated the unit employ- ees. Moreover, Respondent SCI's representatives, in their October 17 communication to the Union, did not even offer to bargain about the effects of SCI's cessation of business on the unit employees, but merely informed Union Business Representative Tobey that it had already gone out of business effective October 15 and had been replaced by another employer, and that the new employ- er intended to change the unit employees' wages and benefits. Likewise, the November 1985 meeting between Tobey and SCI's representatives, which was held at Tobey's request, occurred 3 weeks after SCI had gone out of business and terminated the unit employees and, at this meeting, SCI did not even offer to bargain about the effects of its cessation of business on the unit employees. In these circumstances, I conclude that Respondent SCI violated Section 8(a)(5) and (1) of the Act by its failure to afford the Union adequate timely notice and a mean- ingful opportunity to bargain about the effects on the employees represented by the Union of its cessation of business." Gar Wood-Detroit Truck Equipment, supra. " In general, when an employer decides to take action that significant- ly impacts on employees' terms or conditions or tenure of employment, the employer must afford the union an opportunity to bargain in advance of the actual implementation of the employer's decision. See NLRB Y. Katz, 369 U.S. 736, 747 (1962); Machinists v. Northeast Airlines, 473 F.2d 549, 557 (1st Cir. 1982); Ladies Garment Workers v. NLRB, 463 F.2d 907, 919 (D.C. Or. 1972). In cases dealing with an employer's duty to bargain with a union about the effects on employees of the employer's decision to close its business, the Board has found a violation of Sec. 8(a)(5) of the Act even though the employer, after the plant has been closed and the employees terminated, invites the union to bargain over the effects of the closure. Transmarine Navigation Corp., 170 NLRB 389 (1968); Thompson Transport Co., 184 NLRB 38 (1970); National Terminal Baking Corp., 190 NLRB 465, 466 (1971). As the Board explained in Stone & Thomas, 221 NLRB 573, 576 (1975), "meaningful bargaining over effects can only occur prior to the employer's maldng and acting upon its decision." See 2. Respondent SE!, as a successor employer, was obligated to recognize and bargain with the Union as the unit employees' bargaining representative and violated Section 8(a)(5) and (1) of the Act by its refusal to do so As described supra, since at least 1965 the Umon-rep- resented SCI's electronic technicians. As described supra, on November 5, 1985, Union Representative Tobey went to SCI's former place of business, then occupied by SE!, and informed SEI's president and vice president, Pieroth and Lander, that despite the change in the ownership of the business, the Union still retained the right to repre- sent the unit employees and bargain with the Employer on their behalf. Neither Lander nor Pieroth replied. I find that Tobey's statement constituted a demand for rec- ognition and bargaining and that the failure of SEI's offi- cials to respond constituted a refusal to recognize and bargain with the Union. Accordingly, the question is whether SEI is a successor employer, so that it was under a legal obligation on November 5, 1985, to recog- nize and bargain with the Union as the exclusive bargain- ing representative of the electronic technicians employed in its service department. In determining whether an employer is obligated to bargain with the exclusive representative of a predeces- sor employer's employees, the traditional test is whether there is substantial continuity in the employing enter- prise. Lincoln Private Police, 189 NLRB 717 (1971); see also NLRB v. Burns Security Services, 406 U.S. 272, 279- 281 (1972). Where there is such continuity, the presump- tion of majority status by the union under the predeces- sor is not affected by a change in ownership. The tradi- tional criteria for this test include whether there has been substantial continuity in the following: (1) business oper- ations; (2) plant; (3) work force; (4) jobs and working conditions; (5) supervisors; (6) machinery, equipment, and methods of production; and (7) product or service. E.g., Premium Foods, 260 NLRB 708, 714 (1982), enfd. 709 F.2d 623 (9th Cir. 1983). Continuity of customers has also been considered as a factor in determining continui- ty in the employing industry. See, e.g., Stewart Chevrolet, 262 NLRB 362, 364 (1982). Applying these criteria to the totality of circumstances here, I conclude that for collective-bargaining purposes Respondent SEI is a suc- cessor employer. The record shows: SEI is in the same business as SCI; SEI Performs the same services with the same equipment as SCI; between 70 and 95 percent of SEI's customers were SCI's; SEI's place of business is located between 50 and 100 feet from where SCI's business was located, and also First National Maintenance Corp. v. NLRB, 452 U.S. 666, 681-682 (1981) ("Under Section 8(a)(5), bargaining over the effects of a decision must be conducted in a meaningful manner and at a meaningful time.") In any event, here, after Respondent SCI went out of business and terminat- ed the unit employees, even then it did not invite the Union to bargain over the effects of that decision on the termmated unit employees. Nor does the record reveal, or Respondent SCI contend, that this is a case in which the need for imperative action made it impossible for SCI to notify the Union about its decision prior to its implementation. Rather the record reveals that SCI made its decision to cease doing business in late September 1985, approximately 3 weeks prior to its implementation. (Tr. 109-110, 136-137). SIGNAL COMMUNICATIONS 427 for approximately the first 2 months of its operation, SE! used SCI's place of business; SEI took over SCI's busi- ness operation without any hiatus; 90 percent of SEI's equipment, inventory, and motor vehicles were SCI's;12 and SEI's motor vehicles still identify SCI to the public as the Employer. Respondent SEI's unit employees, the electronic tech- nicians, perform the same work for SEI as they did for SCI, using the same tools and equipment and skills as when they worked for SCI, and are supervised by the same supervisor who supervised their work for SCI. Respondent SEI's president and vice president, Pieroth and Lander, who own 30 percent of SEI and jointly de- termine its labor relations policies and manage its daily business affairs, are also SCI's president and vice presi- dent's and its sole owners, and jointly determined its labor relations policies and managed its daily business af- fairs. The record also shows that all of Respondent SEI's unit employees were former employees of SCI and that SEI employed a substantial and representative comple- ment of unit employees when on November 5, 1985, the Union requested recognition and bargaining. Based on the foregoing, I find that Respondent SEI is a successor employer and as a successor employer was obligated to recognize and bargain with the exclusive bargaining representative of the unit employees acquired from the predecessor employer unless it demonstrates either that the representative no longer enjoyed majority support on the date of its refusal to bargain or that it had a good-faith doubt of the representative's continued ma- jority support. Westwood Import Co., 251 NLRB 1213, 1225 fn. 21 (1980). Respondent SEI demonstrated nei- ther. I therefore conclude that Respondent SE! violated Section 8(a)(5) and (1) of the Act by its refusal on No- vember 5, 1985, to recognize and bargain with the Union as the exclusive bargaining representative of the unit em- ployees. In concluding that there was a substantial continuity in the employing enterprise so as to make SEI a successor employer, I have considered that when SCI ceased doing business on October 15, 1985, that it was in the midst of performing an installation job at Clallam Bay, Washing- ton, where it employed seven installers and assemblers performing installation work, who continued to work there for the next few months until their work ended. Consistent with the cessation of its business operations, SC!, about October 15, 1985, ceased to pay the Clallam Bay workers their wages or other benefits, which for the remainder of their employment were paid by the project's general contractor. These installers and assem- blers were a part of the bargaining unit of assemblers, in- stallers, and electronic technicians employed by SCI who /,4 The foreclosure and sale of SCI's assets to SEI by a third party, a bank, did not affect the continuity of the SCl/SEI entity where, as here, the record establishes there is a continuity of the employing industry. See NaB v. Ethan Allen, Inc., 544 F.2d 742, 743-744 (4th Cir 1976) (fore- closure and resale of assets by bank to successor); NLRB v. Zayre Corp., 424 F.2d 1159, 1161 (5th Cir. 1970) (purchase of assets from Ch. XI creditors' committee). As noted supra, Lander is SCI's president and Pieroth its vice presi- dent. were represented by the Union." Respondent SEI, how- ever, only employed SCI's electronic technicians. This change in the operational structure of the unit does not detract from SEI's status as a successor employer for as the Board has recently stated, "Nt is well established . . . 'that successorship obligations are not deft..Ited by the mere fact that only a portion of a former union-rep- resented operation is subject to the sale or transfer to a new owner, so long as the employees in the conveyed portion constitute a separate appropriate unit, and they comprise a majority of the unit under the new oper- ation." Louis Pappas' Restaurant, 275 NLRB 1519, 1529 (1985), citing Stewart Granite Enterprises, 255 NLRB 569, 573 (1981), and cases cited therein. In the instant case, Respondent SEI stipulated that "the appropriate unit is all employees employed as electronic technicians" and, as described supra, the former SEI electronic technicians comprise a majority of the unit under the new operation. On the basis of the foregoing findings of fact, and on the entire record, I make the following CONCLUSIONS OF LAW 1. Respondents SCI and SEI are employers engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. Respondent SEI is a successor employer to Re- spondent SCI for purposes of Section 8(a)(5) and Section 9(a) of the Act. 3. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 4. All employees employed as electronic technicians by Respondents SCI and SEI at their Seattle, Washing- ton facilities, but excluding engineers, office clerical em- ployees, confidential employees, management trainees, administrative employees, and supervisors as defmed in the Act constitute an appropriate bargaining unit within the meaning of Section 9(a) of the Act. 5. During all times material the Union has been and is the exclusive bargaining representative of all the employ- ees in the aforesaid bargaining unit within the meaning of Section 9(a) of the Act. 6. By failing to afford the Union adequate timely notice and a meaningful opportunity to bargain about the effects on the employees employed in the appropriate unit of its decision to close its Seattle facility, Respond- ent SCI has engaged in unfair labor practices affecting commerce within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the Act. 7. By refusing to recognize and bargain with the Union as the exclusive collective-bargaining representa- tive of the employees in the appropriate unit, Respond- ent SEI has engaged in unfair labor practices affecting commerce within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the Act. 14 The fact that SEI took over only SCI's service department that em- ployed the electronic technicians and that SCI completed the Clallam Bay project, where its assemblers and installers were doing the installa- tion work, does not alter the fact, with respect to the service department, that the business operation of SEI remained substantially the same as that of SCI. See Miami Industrial Trucks, 221 NLRB 1223 (1975); NLRB v. Band-Age Inc, 534 F.2d 1, 4 (1st Cir. 1976). 428 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD THE REMEDY Having found that Respondents have engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act, I shall recommend that they cease and desist therefrom, and take certain affirmative action de- signed to effectuate the policies of the Act. As a result of Respondent SCI's unlawful failure to bargain about the effects of its cessation of operations, the terminated unit employees have been denied an op- portunity to bargain through their collective-bargaining representative at a time when Respondent Sc! might still have been in need of their services, and a measure of bal- anced bargaining power existed. Meaningful bargaining can not be assured until some measure of economic strength is restored to the Union. A bargaining order alone, therefore, can not serve as an adequate remedy for the unfair labor practice committed. Accordingly it is necessary in order to effectuate the purposes of the Act, to require Respondent SCI to bar- gain with the Union concerning the effects of the closing of its Seattle facility on its unit employees, and I shall in- clude in my recommended Order a limited backpay re- quirement designed to make whole the unit employees for losses suffered as a result of the violation and to recreate in some practicable manner a situation in which the parties' bargaining is not entirely devoid of economic consequences for Respondent. I shall do so by requiring Respondent SCI to pay backpay to its unit employees in a manner similar to that required in Transmarine Naviga- tion Corp., 170 NLRB 389 (1968). Thus, Respondent SCI shall pay the employees backpay at the rate of their normal wages when last in Respondent SCI's employ from 5 days after the date of this Decision and Order until the occurrence of the earlier of the following con- ditions: (1) the date Respondent SCI bargains to agree- ment with the Union on those subjects pertaining to the effects of the closing of Respondent's SCI's operations on the employees; (2) a bona fide impasse in bargaining; (3) the failure of the Union to request bargaining within 5 days of this Decision and Order, or to commence ne- gotiations within 5 days of Respondent's notice of its desire to bargain with the Union; or (4) the subsequent failure of the Union to bargain in good faith; but in no event shall the sum to any of the employees exceed the amount he would have earned as wages from October 15, 1985, the date on which Respondent terminated its operations, to the time he secured equivalent employ- ment elsewhere," or the date on which Respondent SCI shall have offered to bargain, whichever occurs sooner; provided, however, that in no event shall this sum be less than these employees would have earned for a 2- week period at the rate of their normal wages when last in Respondent SCI's employ." Interest on all such sums 15 The four unit employees terminated by SCI when it ceased doing business did not secure equivalent or substantially equivalent employment by going to work for Respondent SE!, in view of the fact that three of them suffered a loss of almost $2 an hour in wages and the fourth suf- fered a loss of 60 cents an hour in wages. 16 Transmarine Navigation Corp., supra. shall be paid in the manner prescribed in Florida Steel Corp., 231 NLRB 651 (1977). See generally Isis Plumbing Co., 138 NLRB 716 (1962). To further effectuate the policies of the Act, Respond- ent SCI shall be required to establish a preferential hiring list of the above-described terminated unit employees fol- lowing the system of seniority provided for in the collec- tive-bargaining agreement and, if Respondent SCI re- sumes operations anywhere in the Seattle, Washington area, it shall be required to offer these employees rein- statement. If, however, Respondent SCI were to resume its Seattle, Washington operation, Respondent shall be required to offer the unit employees reinstatement to their former or substantially equivalent positions." Furthermore, in view of the fact that Respondent SC1 is no longer in operation, I shall recommend that Re- spondent SCI mail copies of the attached notice signed by Respondent SCI to each of the unit employees termi- nated on the date it ceased operations. The above-described limited make-whole order issued in this case, sometimes referred to as the Transmarine backpay remedy, is the traditional remedy imposed by the Board and accepted by the courts for an employer's failure to bargain over the effects of the discontinuance of operations on unit employees. See Ladies' Garment Workers v. NLRB, 463 F.2d 907, 921 (D.C. Cir. 1972); Morrison Cafeterias v. NLRB, 431 F.2d 254, 258 (8th Cir. 1970); NLRB v. Drapery Mfg. Co., 425 F.2d 1026, 1028- 1029 (8th Cir. 1970); Globe Security Services, 229 NLRB 460, 462-463 (1977), enfd. mem. 582 F.2d 1275 (3d Cir. 1978); Empire Dental Co., 211 NLRB 860, 861 (1974), enfd. mem. sub nom. NLRB v. Williams, 538 F.2d 337 (9th Cir. 1976); Yorke v. NLRB, 709 F.2d 1138 (7th Cir. 1983); Burgmeyer Bros., 254 NLRB 1027, 1028-1029 fn. 7 (1981); Penntech Papers, 263 NLRB 264, 265-266 (1982); Gar Wood-Detroit Truck Equipment, 274 NLRB 113 (1985). Respondent SCI objects to its imposition. It argues that because the terminated unit employees ob- tained employment with the successor employer immedi- ately, that the Transmanne backpay remedy is impermis- sibly punitive as the terminated employees were not ad- versely affected by the closure of SCI's Seattle facility. I disagree. I believe that the traditional limited backpay remedy that I have re-commended serves to effectuate the remedial purposes of the Act. I recognize that the ability of Respondent SCI to make cash concessions at the time of the closure was limited due to its poor finan- cial situation, and I am aware that the terminated unit' employees were hired by the successor employer imme- diately, albeit with a lower hourly wage rate and per- haps with lesser fringe benefits. Nevertheless, several months after SCI's cessation of business, the Union can hardly hope to obtain the same benefits from bargaining that might have helped ease the unit employees' transi- tion into their employment with their new employer had "effects" bargaining taken place at the time required by law." The limited backpay remedy takes into account 17 Penntech Papers, 263 NLRB 264 (1982); Burgmeyer Bros., 254 NLRB 1027 (1981); Drapery Mfg. Co., 170 NLRB 1706 (1968). " I note that "effects" bargaining provides the 'Union in this case an opportunity to bargain in the employees' interest for, among other things, Continued SIGNAL COMMUNICATIONS 429 the changed circumstances since the closing, and 2 weeks of backpay for four employees represents an in- substantial amount, especially when viewed in the con- text of SCI's $4 million lawsuit against Kings County. Moreover, the minimum pay period may well discourage impasse in the bargaining that is to ensue. It is for all these reasons that I am persuaded that the traditional limited backpay remedy that has been recommended is not inappropriate.19 I also find, as the General Counsel contends, that Re- spondents SCI and SEI are jointly and severally liable for the backpay due to the unit employees under the lim- ited backpay remedy recommended in this case. As a successor employer, Respondent SEI may be required to remedy Respondent SCI's unfair labor practice, if it took over SCI's business operation with knowledge of SCI's unfair labor practice. Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973); Perma Vinyl Corp., 164 NLRB 968, 969 (1967), enfd. sub nom. United States Pipe & Foundry Co. v. NLRB, 398 F.2d 544 (5th Cir. 1968). I am persuad- ed that during the crucial period of time Respondent SEI had knowldedge of SCI's unfair labor practice, and am also persuaded that in striking a balance between the conflicting interests of SE!, the public, and the unit em- ployees affected by the unfair labor practice, that it is ap- propriate for SEI to be required to remedy SCI's unfair labor practice in the manner requested by the General Counsel. Almost all the decided cases, including Golden State Bottling and Perma Vinyl, which have dealt with the issue of a successor employer's obligation to remedy a predecessor's unfair labor practices, arose in the context of a successor's takeover of a predecessor's business which occurred subsequent to the predecessor's involve- ment in unfair labor practice litigation—the filing of a charge or the issuance of a complaint or the issuance of a Board or court order. As a result, the question of wheth- er a successor took over the business operation with knowledge of a predecessor's unfair labor practices is usually stated in terms of whether the predecessor took over the business with knowledge of the pending unfair labor practice litigation. In the instant case, because the unfair labor practice charge was not filed until after SEI took over SCI's business, Respondent SE][ did not know and could not have known that unfair labor practice liti- gation was pending when it took over SCI's business op- eration. In cases of this nature, however, the Board has required successor employers to remedy predecessor em- ployers' unfair labor practices so long as the record es- tablishes that the successors , took over the predecessors' such benefits as severance pay, accrued vacation and/or sick leave pay, pension fund payments, reference letters for jobs with other employers, and health coverage and conversion rights. " Raskin Packing Co„ 246 NLRB 78 (1979), the only case that I found, none were cited by the parties, that is similar to the instant case insofar as it involves a successor employer who offered to employ the employees termmated by a predecessor employer who unlawfully failed to engage in "effects" bargaining, is clearly distinguishable from the in- stant case. There, the predecessor employer closed its plant in an emer- gency situation and there was no possible way to bargain about the ef- fects on the unit employees before closing. Also, the successor employer recognized the union and entered mto a contract with the union covering the unit employees business operations with knowledge of the predecessors' unfair labor practices. Ocoma Foods Co., 186 NLRB 697 (1970) (successor employer took over predecessor's busi- ness several months before the unfair labor practice charge was filed); Bell Co., 243 NLRB 977 (1979) (suc- cessor employer took over predecessor's business on the same day the unfair labor practice charge was filed and there was no fmding that the successor was served with the charge or otherwise received notice of the charge prior to taking over the business). 20 And, in determining whether a successor employer knew during the crucial period if the predecessor had committed unfair labor practices, "[it is well settled that the responsibility of es- tablishing that a new employer was without knowledge of its predecessor's unfair labor practices at the time it took over a latter's operation rests with the alleged suc- cessor." Am-Del-Co., 234 NLRB 1040, 1041 (1978). Accord: Mansion House Center Management Corp., 208 NLRB 684, 686 (1974). In the instant case, Respondents presented no evidence that the officials of SEI who participated in the transac- tion with SCI that resulted in SEI's takeover of the busi- ness were unaware of SCI's unfair labor practice when they concluded the transaction Quite the contrary, as described below, an opposite inference is warranted from the record as a whole. As described in detail supra, SCI's president Lander and its vice president, Pieroth, owned SC!, managed its daily business affairs, and jointly determined its labor, re- lations' policies. Pieroth and Lander are also SET's presi- dent and vice president, own 30 percent of its business, manage its daily business affairs, and jointly determine its labor relations' policies. These circumstances, absent any evidence to the contrary, warrant the inference that Pier- oth and Lander acted as the principles on behalf of both SCI and SEI in the negotiations between those compa- nies that resulted in SEI's takeover of SCI's business op- eration. And, as described in detail supra, Pieroth and Lander were the company representatives responsible for the commission of SCI's unfair labor practice found herein. Under the circumstances, as the Board stated in Bell Co., 243 NLRB 977, 979 (1979), "[i]t is not hard to conclude that [SE!] succeeded to [SCI's] business with knowledge of the unfair labor practices committed by [SCI], because [Lander and Pieroth], the operating head(s) of both Companies, [were themselves] responsi- ble for the commission of most of the unfair practices and [were] certainly aware of them all."21 20 For a more complete description of when the charge was filed in Bell Co., in relationship to the successor's takeover of the predecessor's business, see Bell Co., 225 NLRB 474 (1976), and NLRB v. Bell Co., 561 F.2d 1264 (7th Cir. 1977). 21 See also Ocoma Foods Co., 186 NLRB 697, 701-702 (1970), and Thomas Engine Corp., 179 NLRB 1029, '1042 (1970), in which important officials of predecessor employers who participated in the predecessors' unfair labor practices continued in similar capacities for the successors, the Board imputed the officials' knowledge of these practices to the suc- cessor. Cf Golden State Bottling v. NLRB, 414 U S. 168, 173 (1973). I note that neither Pieroth nor Lander testified that Ins failure to give the Union an opportunity to engage in "effects]' bargaining was the result of their ignorance of the law. In this regard, I am persuaded that as a matter of law it must be presumed that they knew they were committing an Continued 430 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD In view of this and, as I have found supra, because Re- spondent SEI is a successor employer within the mean- ing of the Act, I find, therefore, that SEI is a successor to SCI, as successor is defined in Golden State Bottling, and that Respondents SCI and SEI are jointly and sever- ally liable for the backpay due to the unit employees under the limited backpay remedy recommended in this case. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed22 ORDER A. Respondent Signal Communications, Inc., Seattle, Washington, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain with International Brotherhood of Electrical Workers, Local 46, with respect to the ef- fects on its electronic technicians of its decision to close its Seattle facility. (b) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Jointly and severally with Respondent Signal Equipment, Inc. pay the electronic technicians who were terminated from its Seattle facility on October 15, 1985, for the period set forth in the remedy section of this de- cision. (b) On request, bargain collectively with the above- named labor organization, with respect to the effects on its electronic technicians of its decision to close its Seat- tle facility, and reduce to writing any agreement reached as a result of such bargaining. (c) Establish a preferential hiring list of all electronic technicians, following the system of seniority provided for under the collective-bargaining contract with the above-named labor organization and, if operations are ever resumed anywhere in the Seattle, Washington area, offer reinstatement to those employees. If, however, Re- spondent were to resume its operations at its former Se- attle, Washington facility, it shall offer all the electronic technicians reinstatement to their former or substantially equivalent positions, (d) Preserve and, on request, make available to the Board or its agents for examination and copying, all pay- roll records, social security payment records, timecards, personnel records and reports, and all other records nec- essary to analyze the amount of backpay due under the terms of this Order. unfair labor practice when they engaged in this conduct because at the time it had been the law, for at least 20 years that an employer was obli- gated under the Act to afford a umon an opportunity to engage in "ef- fects" bargaining when the employer terminated employees as the result of a cessation of its business operations. 22 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. (e) Mail a copy of the attached notice marked "Ap- pendix A" 23 to each of the electronic technicians who was employed by Respondent at its Seattle facility imme- diately prior to Respondent's cessation of operations on October 15, 1985. Copies of the notices, on forms pro- vided by the Regional Director for Region 19, after being signed by Respondent's authorized representative, shall be mailed immediately on receipt as hereinabove di- rected. (I) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. B. Respondent Signal Equipment, Inc., Seattle, Wash- ington, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain with International Brotherhood of Electrical Workers, Local 46, as the exclusive bargain- ing representative of the employees in the following ap- propriate unit: All employees employed as electronic technicians at its Seattle, Washington facility; but excluding engi- neers, office clerical employees, confidential em- ployees, management trainees, administrative em- ployees, and supervisors as defined by the Act. (b) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the righs guaranteed them by 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 above-named labor organization as the exclusive representative of employees in the appropriate unit with respect to terms and condi- tions of employment and, if an understanding is reached, embody the understanding in a signed agreement. (b) Jointly and severally with Respondent Signal Com- munications, Inc. pay the electronic technicians who were terminated by that employer on October 15, 1985, for the period set forth in the remedy section of this de- cision. (c) Post at its facility in Seattle, Washington, copies of the attached notice marked "Appendix." 24 Copies of the notice, on forms provided by the Regional Director for Region 19, 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. (d) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. 23 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." 24 See fn. 23, supra. SIGNAL COMMUNICATIONS 431 APPENDIX A NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT refuse to bargain with International Brotherhood of Electrical Workers, Local 46, with re- spect to the effects of our decision to close our Seattle facility on our electronic technicians. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exercise of your rights guaranteed by Section 7 of the Act. WE WILL, on request, bargain collectively with the above-named Union, with respect to the effects on our electronic technicians of our decision to close our Seattle facility, and reduce to writing any agreement reached as a result of such bargaining. WE WILL establish a preferential hiring list of all elec- tronic technicians, following the system of seniority pro- vided for under the collective-bargaining contract with the above-named Union and, if we ever resume oper- ations anywhere in the Seattle area, offer reinstatement to ,those employees. If, however, we resume operations at our former Seattle facility, we shall offer all the elec- tronic technicians reinstatement to their former or sub- stantially equivalent positions. WE WILL, jointly and severally with Signal Equip- ment, Inc., pay the electronic technicians we terminated on October 15, 1985, from our Seattle facility their normal wages' for a period of time required by the Na- tional Labor Relations Board. SIGNAL COMMUNICATIONS, INC. APPENDIX B NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT refuse to bargain with International Brotherhood of Electrical Workers, Local 46, as the ex- clusive bargaining representative of the employees in the following appropriate unit: All employees employed as electronic technicians at our Seattle, Washington facility; but excluding engi- neers, office clerical employees, confidential em- ployees, management trainees, administrative em- ployees, and supervisors as defined by the Act. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exercise of your rights guaranteed by Section 7 of the Act. WE WILL, on request, bargain with the above-named Union as the exclusive representative of employees in the appropriate unit with respect to terms and conditions of employment and, if an understanding is reached, embody the understanding in a signed agreement. WE WILL, jointly and severally with Signal Communi- cations, Inc., pay the electronic technicians terminated by that employer on October 15, 1985, from its Seattle facility their normal wages for a period of time required by the National Labor Relations Board. SIGNAL EQUIPMENT, INC.