Smc, Inc.

SMCO, INC. 1291 SMCO, Inc. and its wholly owned subsidiaries RCA Truck Lines, Inc. and Georgia Southern Trans- portation, Inc. and Highway and Local Motor Freight Employees, Local No. 667, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Case 26-CA- 11172 30 November 1987 DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND STEPHENS On 19 March 1986 Administrative Law Judge Lawrence W. Cullen issued the attached decision. The Respondent filed exceptions and a supporting brief, and the General Counsel filed a brief in sup- port of the judge's decision. 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' and conclu- sions, to modify the remedy,2 and to adopt the rec- ommended Order. In 1985 the Respondent discharged the union- represented drivers at its Memphis, Tennessee trucking terminal and subcontracted the drivers' work to an independent cartage company and inde- pendent owner-operators. The judge found that by earlier threatening to take this action, if the Mem- phis terminal employees did not rid themselves of the Union, the Respondent violated Section 8(a)(1) of the Act. He also found that the Respondent dis- charged the drivers and subcontracted their work for discriminatory reasons and without bargaining with the employees' collective-bargaining repre- sentative about the decision or its effects on em- ployees, and thereby violated Section 8(a)(3), (5), and (1) of the Act. He further found that by there- after withdrawing recognition from the bargaining representative, the Respondent violated Section 8(a)(5) and (1) of the Act. We adopt the judge's conclusions that the Respondent violated Section I The Respondent has excepted to some of the judge's credibility find- ings The Board's established policy is not to override an administrative 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), enfcl. 188 F 2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for reversing the findings. 8 In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 ( 1987), interest on and after 1 January 1987 shall be computed at the "short-term Federal rate" for the underpayment of taxes as set out in the 1986 amendment to 26 U S.C § 6621 Interest on amounts accrued prior to 1 January 1987 (the effective date of the 1986 amendment to 26 U S.C § 6621) shall be computed in accordance with Florida Steel Corp, 231 NLRB 651 (1977). 8(a)(1) by threatening to subcontract work and vio- lated Section 8(a)(5) by withdrawing recognition from the Union. For the following reasons, we agree with the judge's conclusions that the Re- spondent by discharging its employees and subcon- tracting their work without bargaining with the Union violated Section 8(a)(3), (5), and (1). I. FACTS3 A. Background RCA Truck Lines, Inc. (RCA), Georgia South- ern Transportation, Inc. (GST), and SMCO, Inc. (created in 1984 as a holding company for RCA and GST) is a single employer within the meaning of the Act. Operating through RCA and GST, the Respondent transports freight and commodities in the Southeastern United States. The Respondent opened its first RCA terminal in Atlanta, Georgia, in 1946, then shortly afterwards opened another terminal in Chattanooga, Tennes- see. Since the early 1950s the drivers at the two RCA terminals have been represented by Team- sters locals and have been covered under the Teamsters national master freight agreement pursu- ant to successive contracts between the Respondent and the locals. More recently the Respondent established termi- nals in Birmingham, Decatur, and Montgomery, Alabama; Calhoun, Georgia; Tupelo, Mississippi; and Knoxville, Memphis, and Nashville, Tennes- see.4 Rather than directly operating these termi- nals, the Respondent had agreements with inde- pendent cartage agents to provide local pickup and delivery of the Respondent's freight.5 The cartage agents employed their own drivers, used their own tractors, and owned or leased the terminal facili- ties. In 1979, after the cartage agent in Decatur began to experience difficulties, the Respondent pur- chased the Company and continued the agent's trucking operations under a new name, Georgia Southern Transportation. The Respondent replaced independent cartage companies with its own oper- ations under the GST name in Birmingham in 1980, Memphis in 1983, and Montgomery in 1984. At its GST locations the Respondent owns or leases the terminal space under its RCA name and provides RCA trucks. The local (city) and line- haul (over-the-road) drivers at these locations, ' The following recitation of facts corrects some inadvertent errors and discusses facts the judge did not mention 4 Seven of these terminals have opened since 1978 The eighth, Cal- houn, opened in 1967 5 Long-distance hauling was performed by independent owner-opera- tors or RCA drivers from Atlanta and Chattanooga 286 NLRB No. 122 1292 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD however, are paid by GST. Unlike the drivers at the RCA terminals in Atlanta and Chattanooga, none of the Respondent's GST drivers are union- ized. B. Bargaining Negotiations at Memphis and Discharge of the Memphis Drivers In early October 1984 Charging Party Local 667 (the Union) notified the Respondent that a majority of the Memphis terminal GST drivers had signed cards designating the Union as their collective-bar- gaining representative. The Union demanded rec- ognition as the representative for the Memphis em- ployees. After checking the cards, the Respond- ent's attorney, David Vaughan, sent the Union a letter dated 19 October 1984 stating that the Re- spondent would recognize the Union, but insisting that "by recognizing Local 667, our client is not agreeing to be bound by the National Master Freight Agreement or by any current labor agree- ment between RCA Truck Lines and any other local of the Teamsters International Union." Vaughan's letter continued, "RCA will wish to ne- gotiate a separate agreement for its Memphis city and over-the-road drivers covering their wages, hours and working conditions." On 21 November 1984 the parties met for their first bargaining session. Local 667 Representative Duria Jones proposed that the Respondent agree to a rider to the master freight agreement. 6 The Re- spondent, represented by Vaughan, RCA President James Smith, and GST President and RCA Vice President Arthur Parker, rejected Jones' proposal and reasserted the Respondent's position that it wanted to negotiate a separate agreement for the Memphis employees. The Respondent's representa- tive submitted a document containing a number of proposed terms.7 The parties reviewed the docu- ment item by item, but Jones agreed to only a few of the document's substantive provisions. The parties met for a second bargaining session on 18 December 1984. The Union again suggested a rider to the master freight agreement. The Re- spondent rejected the proposal and resubmitted the same document it offered in November. The Union rejected the document, asserting that the Respond- ent's proposal was not applicable to a trucking op- eration. The Respondent, on the other hand, felt that the national master freight agreement was too restrictive for the Memphis terminal. As a result of a scheduling conflict, the parties were unable to keep a meeting commitment on 31 January or 1 February 1985.8 On 1 February, how- ever, Vaughan sent the Union a letter claiming that, after two meetings, the parties had "reached the point in negotiations where it would be a waste of both parties' time and money" to meet again. Vaughan enclosed a "complete contract proposal," consisting of the contract proposal the Respondent submitted at the two bargaining sessions, with sev- eral minor modifications, plus the Respondent's first proposed economic terms.9 Vaughan gave the Union until 13 February to accept, and stated that the Respondent was considering temporarily lock- ing out the Memphis employees and substituting an independent contractor or nonunit personnel. On 21 February the Union by letter rejected the Respondent's proposal and requested another meet- ing. On 27 February Vaughan by letter replied that another meeting would not be "worthwhile" and resubmitted the Respondent's 1 February proposal. Vaughan wrote: The simple economic fact is Georgia South- ern has great difficulty competing with non- union trucking operations under its current wage and benefit structure in Memphis. Should Georgia Southern agree to a contract similar to the National Master Freight Agree- ment, as the local union has been proposing, I doubt very seriously that the Company could operate in Memphis at all. Therefore, I would strongly suggest that the Memphis employees take another look at our February 1 contract proposal and seriously consider its acceptance. Sometimes "half a loaf' is better than no loaf at all! On 8 March the Union by letter again rejected the 1 February proposal and requested a meeting. Vaughan wrote the Union on 19 March telling the Union to contact him after 26 March to discuss the possibility of another bargaining session. Local 667 President Jimmy Carrington responded by letter on 3 April stating: At the present time I am tied up on the Na- tional Freight Agreement and will be in Chica- go next week. Since the contracts have expired in Chatta- nooga and Atlanta we all have agreed to meet together and work out an agreement. 8 Vaughan testified that Jones insisted the Respondent accept a rider to the master freight agreement. Although Jones admitted he proposed a rider to the master freight agreement, he denied that he insisted on such an agreement The judge did not specifically resolve this conflict We find it unnecessary to resolve this conflict. ' The document was not a complete contract proposal It contained no economic terms a All subsequent dates are in 1985, unless otherwise stated 9 The Respondent's wage proposal provided for increases over 3 years of 60 cents an hour for new city drivers ($6.60 to $7 20), 70 cents an hour for city drivers with 18 months ' service ($7 to $7 .70), 2 cents per mile for over-the-road drivers (20 to 22 cents), and 60 cents an hour for over-the- road drivers' "drop time " SMCO, INC. 1293 Please advise us of the time and date most suitable with you and your client. According to Parker's testimony, the Respondent did not want the Memphis unit involved in joint negotiations with employees at the other two ter- minals because in 1982 the Respondent had "very hard and tough negotiations with the Teamsters in Chattanooga and Atlanta." The parties had become "polarized" in the negotiations and "with that ex- perience in 1982, we did not feel like we needed Memphis in there with that." When Vaughan, in a letter to the Union dated 11 April, communicated the Respondent's rejection of the Union's request for joint negotiations, he stated that the Respond- ent's reason for doing so was that the Atlanta and Chattanooga drivers were RCA employees where- as the Memphis drivers were GST employees, not RCA employees. In the same letter, Vaughan noti- fied the Union for the first time that the Respond- ent was "contemplating shutting down its unprofit- able Memphis operations," laying off the drivers, and subcontracting the cartage work to an inde- pendent cartage agent. Vaughan offered to meet with the Union to discuss the decision and its ef- fects on employees. At some point in March or April, the Respond- ent's sales manager, Jim Hewlet, suggested to an employee another reason for the possible shutdown of the terminal. Hewlet was the direct supervisor of the Memphis location's terminal manager/- salesman and was visiting Memphis from the Re- spondent's headquarters in Georgia. In a conversa- tion between Hewlet and Lee Thompson, a Mem- phis driver who had earlier attempted without suc- cess to get signatures on a decertification petition, Thompson asked Hewlet what he thought the Re- spondent would do if the employees did not get rid of the Union. Hewlet replied, "if [the employees] did not get rid of the Union, that the company would get them a cartage agent to handle their business." Hewlet continued that he "would like to see [the employees] dissolve the Union and keep on-go on and work, because: [the employees] had plenty of work to do and [Hewlet] would hate to see [Thompson] . . . out of a job."10 Duria Jones met with Parker and Vaughan on 30 April. Parker told Jones the Memphis terminal was losing money and that revenue had declined signifi- cantly due to the loss of a major customer. Parker also stated that the Respondent was losing money at its other terminals as well and that revenue was 10 In agreeing with the judge that Hewlet' s statement was attributable to the Respondent, we do not rely on the ,fudge's finding that Hewlet was involved in the decision to subcontract the Memphis hauling work to a cartage agent We agree with the judge that Hewlet's statement consti- tuted a threat in violation of Sec 8(axl) of the Act down about 50 percent. Parker informed Jones that the Respondent's lease at the Memphis terminal was going to expire soon and that the Respondent did not intend to renew the lease . Jones offered to help the Company find other less expensive lease arrangements . Jones was told the Respondent was not interested because the terminal was definitely going to be closed and the work subcontracted to "the cheapest cartage company" the Respondent could find. Jones proposed that the Respondent sign a contract with the Union covering only the over-the-road drivers, or enter into Teamsters con- tracts for owner-operators if the Respondent in- tended to replace GST employees with owner-op- erators. Both requests were refused. Jones asked what the Respondent was offering "for the effects of closing or severance pay." Parker answered, "Bullshit, the sum is zero." Jones requested another meeting, but Vaughan told him it would be futile. At the end of the meeting, as Jones rose to leave, Jones was asked, "Why don't you get them a job at a union truck line since they want a union so bad?" The same day Vaughan sent the Union a letter reiterating the Respondent's final decision to close. In a letter dated 6 May the Union informed the Re- spondent it was still "demanding the continuing of negotiation." Vaughan responded by letter on 10 May, "[T]here would be no purpose in continuing to meet for contract negotiations for an employee unit that will cease to exist once the Memphis ter- minal is closed." On 15 May Parker sent a letter to Local 667 President Carrington notifying the Union that the Respondent would close its Memphis terminal on 17 May. Parker's letter stated, "Should you wish to discuss this decision further, or the effects it will have on existing personnel, please contact Mr. Vaughan in Atlanta." On Friday, 17 May, the Respondent reached an agreement with East Memphis Delivery Service (EMDS) to provide local freight-hauling in the Memphis area. On the same day, the Respondent closed the terminal facilities it had been operating and discharged the unit drivers. The Respondent continued to employ one over-the-road driver at Memphis for 2 more weeks, after which the Re- spondent contracted with owner-operators to per- form over-the-road hauling for the Memphis termi- nal or used other terminals' over-the-road drivers. The Respondent continues to service the Memphis area with its own salespersons. EMDS uses the Re- spondent's trailers, and its local pickup and deliv- ery work for the Respondent is directed by the Re- spondent's own dispatcher. 1294 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD C. The Respondent's Business Defense Arthur Parker, the only witness who participated in the Respondent's decision to terminate the Mem- phis drivers and subcontract the hauling work, stated the reasons for the decision were that the Respondent was suffering large corporatewide losses in the first quarter of 1985 and closed the Memphis terminal to cut costs. He added that the Respondent made a tentative decision about the Memphis terminal on 11 April, but did not make a final decision until 20 April when Parker and James Smith received information on the first quar- ter losses. The profit-and-loss information they al- legedly relied on was drawn from monthly GST and RCA operating budget reports, copies of which were submitted in evidence. Parker claimed that RCA suffered heavy losses in late 1984 and early 1985, but stated that the losses were attributable to all terminals and the Re- spondent was unable to break down the losses ter- minal by terminal. Nonetheless, according to Parker, the Memphis terminal was the only loca- tion where the Respondent took cost-cutting action in 1985 that adversely affected employees. In fact, during 1985 the over-the-road drivers at every other terminal directly operated by the Respondent received wage increases. So did the city drivers in Atlanta, Chattanooga, and Decatur. Parker admit- ted that in late 1984 and early 1985 the Respondent was aware that the Decatur terminal in particular was a drain on corporatewide resources. Yet in late January 1985, 1 week after the Decatur employees voted against union representation, the Respondent raised the city drivers' wages from $7.20 an hour to $8 an hour. At the time, Memphis city drivers were being paid $6.60 to $7 an hour." Parker asserted that GST was losing money op- erating the Memphis terminal for RCA. Indeed, the GST operating reports show that the Memphis ter- minal's expenses exceeded terminal revenue. But RCA and GST were, and are, a single employer, and the budget reports for RCA at Memphis show terminal revenue exceeding expenses. The Re- spondent failed to offer a plausible explanation of how to combine the reports to demonstrate that the Memphis terminal in fact was operating at a loss for the Respondent in early 1985. On their face, the operating budget reports indicate that in the first quarter of 1985 the Memphis terminal brought in more revenue than all but the Atlanta 11 Parker denied that the Decatur city drivers received a wage in- crease in 1985 until presented on cross -examination with the Respond- ent's payroll records. Parker then clauned that the terminal employees had "probably" gone some time without a raise and the raise would "probably" have been given earlier if not for the union election cam- paign. and Chattanooga terminals. The operating budgets also indicate that for March 1985 and for the first quarter of 1985, the Memphis terminal's cost ratio, i.e., terminal expenses per dollar of terminal reve- nue, was comparable to or significantly less than the corresponding ratio at the other five terminals the Respondent directly operated.12 Parker testified that the Respondent replaced its drivers with an independent cartage agent and owner-operators in order to cut costs. Yet the cost ratio for EMDS in the months following the change in operations was not shown to be any better than the cost ratio when the Respondent was using its own drivers.13 There is also no evidence the owner-operators who replaced the GST over- the-road drivers were any more cost-efficient for the Respondent. Further, if the Respondent be- lieved it cheaper to use independent cartage agents rather than its own drivers, the Respondent has not explained why, after firing its Memphis drivers, it continued to use its own city drivers at 5 out of its 10 terminals, and its own over-the-road drivers at at least 6 out of its 10 terminals. According to Parker, the reason the Respondent terminated only its Memphis drivers was that the Memphis terminal had lost a major customer ac- count, the Southern States account, on 17 January 1985. Parker asserted that hauling for Southern States constituted 50 percent of the "outbound rev- enue" at the Memphis terminal . Parker testified, however, that the Respondent calculates a termi- nal's total freight revenue by combining fractions of "outbound" and "inbound" revenue.14 Under the Respondent's method of calculating terminal revenue, 50 percent of a terminal's outbound reve- nue constitutes only 30 percent of the terminal's total revenue. While the loss of the Southern States account would have meant a loss of Memphis ter- minal outbound revenue, it would also have meant a significant loss of inbound revenue to the Bir- mingham and Decatur terminals where much of the Southern States freight was shipped. Yet the Respondent took no employment-related cost-cut- ting measures in Birmingham and Decatur in re- 12 The Respondent asserts that a comparison of first quarter expenses is unreliable because the terminal expense figures in the January and Feb- ruary operating reports were erroneous , but does not claim that the fig- ures in the March report are erroneous 13 Although the operating budget report figures suggest EMDS was operating at a marginally better cost ratio, these figures do not include as a terminal expense the salary of the terminal's salesman , an amount that had been included as a terminal expense before June 1985 . When the EMDS terminal figures are adjusted to include this expense, the advan- tage in cost ratio disappears 14 Because a freight shipment typically requires hauling work by dnv- era at both the terminal of origin and the destination terminal , the Re- spondent divides the revenue from the shipment between terminals (60 percent to the terminal of origin, and 40 percent to the destination termi- nal) SMCO, INC. 1295 sponse to this loss of revenue. Indeed, the Decatur employees received their postelection raises just a week after the Respondent lost the Southern States account. Further, the Respondent did not demonstrate what effect the loss of the account had on the eco- nomic viability of its Memphis operations. The Re- spondent presented no evidence correlating the loss of the account to a loss of corporate profits.15 The operating budget reports reveal that the freight revenue at Memphis remained very high in com- parison with the Respondent's other terminals, and Sales Manager Hewlet, in his conversation with Memphis driver Thompson at ]least 2 months after the loss of the account, told 'Thompson that the Memphis drivers had "plenty of work to do." Although the Respondent claims the lost account imperiled the Memphis terminal's operations, at no time during negotiations with the Union before 11 April did the Respondent mention to the Union that the Memphis terminal was having difficulties because of the loss of the Southern States ac- count" or inform the Union that the Respondent was contemplating permanently closing the termi- nal. The Respondent never sought wage conces- sions from the Union during this period. In fact, in the month-and-a-half following the date the Re- spondent lost the account, the Respondent made proposals to the Union that included wage in- creases and threatened a lockout if the Union did not accept its proposals. II. DISCUSSIO N The General Counsel contends the record com- pels an inference that the Respondent fired its union-represented GST drivers at Memphis and subcontracted their work in retaliation for Local 667's rejection of the Respondent's final contract proposal and attempt to set up joint negotiations with the Teamsters locals representing drivers at other terminals, and in order to avoid contract ne- gotiations with Local 667. We agree. The Respondent's animus toward the Union is evidenced by Sales Manager Hewlet's unlawful threat that the Respondent would close the Mem- phis terminal unless the employees got rid of the Union. Its animus is also evident in Attorney Vaughan's 30 April statement that Jones should find jobs for the Memphis drivers at a union truck line "since they want a union so bad." From the very outset of the negotiations with Local 667, the Respondent made clear its adamant opposition to extending the Teamsters master freight agreement to the Memphis terminal. It sought instead to negotiate an entirely separate agreement with Local 667. The parties had met but twice when the Respondent suddenly asserted that further bargaining meetings would not be worth- while. The Respondent then repackaged its initial noneconomic proposals, coupled them with its first set of wage proposals, presented the package as a final offer, and threatened a lockout. When the Union did not accept, the Respondent reoffered the proposal, this time with a veiled threat of closure if the Union and the employees persisted in their de- mands.17 The Union again rejected the Respondent's pro- posals. Shortly afterwards the Union notified the Respondent that it had agreed with the Teamsters locals representing the Respondent's Atlanta and Chattanooga drivers to negotiate jointly with the Respondent. The Atlanta and Chattanooga termi- nals were long-unionized, and the Respondent had consented to master freight agreement riders at these two terminals for years. The Respondent had difficulties with the two locals in their previous set of negotiations and apparently looked forward to the 1985 contract talks with concern. The Re- spondent wanted to keep labor relations at its GST terminal in Memphis separate from labor relations at these two RCA terminals. Within a week after learning that the three locals would be pressing for joint bargaining negotiations, the Respondent re- jected the proposal under the pretext that the Memphis employees worked for a different em- ployer than the Atlanta and Chattanooga employ- ees, and announced that it was making plans to eliminate the Memphis unit. As discussed above, the Respondent's proffered business reasons for its decision do not withstand scrutiny. Indeed, they are so baseless as to warrant an inference that they were offered to conceal an unlawful motive. Thus, for example, while the Re- spondent contends that corporate losses in early 1985 demanded drastic cost-cutting measures at its recently unionized terminal in Memphis, those losses were apparently not so serious as to preclude pay increases well beyond the Memphis wage levels for the drivers at Decatur a week after they voted against union representation. is According to the operating budget reports , RCA's losses declined after the Respondent lost the account 16 Vaughan, the Respondent's negotiator, admitted that the first time he heard about the Southern States account was in a phone conversation with Parker on I I April when Parker and Vaughan were discussing the Union's request for joint negotiations 17 There is no allegation-nor do we make any finding-that the Re- spondent's unyielding refusal to accept the extension of the master freight agreement to the Memphis terminal constituted a refusal to bargain in good faith. We are merely considering the course of the negotiations as they bear on the question of the Respondent's motive for closing the Memphis terminal. 1296 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD In finding that the Respondent engaged in dis- criminatory conduct, we do not suggest that the Respondent's only lawful course of action in its ne- gotiations with Local 667 would have been to accede to the Union's demand for joint negotiations and a rider to the master freight agreement. The Respondent was free to pursue its own bargaining positions through good-faith bargaining. The Re- spondent was not free , however, to retaliate against the employees for their union activity, to discharge them, and to subcontract their work in order to avoid dealing with their bargaining representative. We conclude that by engaging in this conduct the Respondent violated Section 8(a)(3) of the Act. We also agree with the judge that the Respond- ent violated Section 8(a)(5) by refusing to bargain about the decision to subcontract the Memphis ter- minal operation . 18 Where, as here, such a decision is motivated by antiunion reasons , the Employer is not exempt from a bargaining obligation under First National Maintenance v. NLRB, 452 U.S. 666 (1981), or Otis Elevator Co., 269 NLRB 891 (1984). See Strawsine Mfg. Co., 280 NLRB 553 (1986). ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, SMCO, Inc. and its wholly owned subsidiaries RCA Truck Lines, Inc. and Georgia Southern Transportation, Inc., Memphis, Tennessee, its officers, agents, suc- cessors, and assigns, shall take the action set forth in the Order. 1s We also agree with the judge that the Respondent refused to bar- gain about the decision's effects on employees At the parties' 30 April meeting in response to the Union's question about the closing 's effects, the Respondent replied , "Bullshit, the sum is zero " Under the circum- stances, the Respondent's written offers to bargain about effects cannot insulate it from its refusal to do so John Goree, Esq., for the General Counsel. David Vaughan, Esq. and Richard Hankins, Esq. (Elarbee, Thompson & Trapnell), of Atlanta, Georgia, for the Re- spondent. DECISION STATEMENT OF THE CASE LAWRENCE W. CULLEN, Administrative Law Judge. This case was heard in Memphis, Tennessee, on 16, 17, and 18 October 1985 and 6, 7, and 8 November 1985. The original charge was filed by the Highway and Local Motor Freight Employees, Local No. 667, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the Union) on 21 June 1985, and the first amended charge was filed by the Union on 2 August 1985. The complaint in this case issued on 2 August 1985. The complaint, as amended at the hearing, alleges that SMCO, Inc. and its wholly owned subsidiaries RCA Truck Lines, Inc. and Georgia Southern Transportation, Inc. (referred to separately as SMCO, RCA, or GS, or collectively as the Respondent or the Employer) violated Section 8(a)(1) of the National Labor Relations Act (the Act) by threatening the layoff of its employees because of its employees' membership and activities on behalf of the Union and by interrogat- ing an employee regarding his union membership , activi- ties, and sympathies, and that it violated Section 8(a)(3) and (1) of the Act by subcontracting bargaining unit work and laying off its employees James Dickson, Robert Tate, Robert Holloway, Charles Parks, and others (identified at the hearing as Lee Thompson and Cottrill Crutcher) because its employees joined, support- ed, or assisted the Union and engaged in concerted ac- tivities for the purpose of collective bargaining or other mutual aid or protection, and in order to discourage em- ployees from engaging in such activities or other con- certed activities for the purpose of collective bargaining or other mutual aid or protection. The complaint, as amended, further alleges that the Union is the designated and selected collective-bargaining representative of the bargaining unit and that Respondent violated Section 8(a)(5) and (1) of the Act by withdrawing recognition from the Union and by failing and refusing to furnish the Union with information requested by the Union concern- ing Respondent's claim that it was losing money in its business operations as justification for the layoff of the aforesaid employees, and by failing and refusing to nego- tiate its decision to subcontract unit work, and to negoti- ate the effects of this decision, which resulted in the layoff of employees in the unit since about 30 April 1985. The Respondent, by its answer, has denied any violations of the Act. On the entire record, including my observations of the demeanor of the witnesses, and after due consideration of the briefs filed by the General Counsel and the Respond- ent, I make the following FINDINGS OF FACT' 1. JURISDICTION The complaint alleges, Respondent admits, and I find that Respondent SMCO, Inc. and its wholly owned sub- sidiaries RCA Truck Lines, Inc. and Georgia Southern Transportation, Inc., in the course of its business oper- ations maintained at all times material herein a corpora- tion and office and place of business in Memphis, Ten- nessee, herein called Respondent's facilities, and has been engaged in the transportation of freight and commodities, and that Respondent, in the course and conduct of its business operations, derived gross revenues in excess of $50,000 for the transportation of freight and commodities in interstate commerce within the State of Tennessee, di- rectly between points in Tennessee and points in Georgia and other States, and that Respondent is now and has been at all times material herein an employer engaged in 1 The following includes a composite of the testimony of the witnesses at the hearing All dates are in 1985 unless otherwise stated. SMCO, INC. 1297 commerce within the meaning of Section 2(2), (6), and (7) of the Act. II. THE LABOR ORGANIZATION The complaint alleges, the answer admits, and I find that the Respondent Union is and has been at all times material herein a labor organization within the meaning of Section 2(5) of the Act. III. THE BARGAINING UNIT The complaint alleges, the answer admits, and I find that the appropriate unit is: All over-the-road truck drivers, city truck drivers and dockworkers at Respondent's Memphis, Ten- nessee, terminal, but excluding all office clerical em- ployees, watchmen, guards, and supervisors as de- fined in the Act. IV. THE ALLEGED UNFAIR LABOR PRACTICES A. Background SMCO and its subsidiaries RCA and GS are engaged in the transportation of freight and commodities. SMCO operates solely as a holding company for RCA and GS, both of which have common officers and are represented by the same legal counsel. SMCO is owned by James Smith, his mother Mrs. James R. Smith, and his sister Glenda S. Parker. James R. Smith is the president of RCA. Arthur Parker, the husband of Glenda S. Parker, is the president of GS and vice president of RCA and is responsible for the labor relations policies of RCA and GS along with James R. Smith. All three corporations are Georgia corporations located at the same address in Cartersville, Georgia. It is undisputed from the record in this case derived from the unrebutted testimony of Arthur C. Parker concerning the operations and relation- ship of these three corporations and I have found that they are a single employer within the meaning of the Act. RCA operates trucking terminals located in Atlanta, Georgia; Chattanooga, Tennessee; Birmingham, Ala- bama; Montgomery, Alabama; Decatur, Alabama; Mem- phis, Tennessee; Nashville, Tennessee; Knoxville, Ten- nessee; Tupelo, Mississippi; and Calhoun, Georgia. GS also operates in Atlanta, Georgia, as a terminal operation primarily for a single shipper. RCA directly operates its terminals in Atlanta and Chattanooga, but has a verbal agreement with GS to operate its Birmingham, Mont- gomery, and Decatur terminals. RCA also has agree- ments with independent cartage agents to provide local pickup and delivery of freight for RCA at its Nashville, Knoxville, Tupelo, and Calhoun terminals. RCA also had a verbal arrangement with GS to operate its Mem- phis terminal until 17 May 1985 when it closed down its Memphis terminal, and GS laid off its truckdrivers (city drivers and line-haul drivers) working out of that termi- nal, and turned this operation over to a private cartage agent, East Memphis Delivery Service, which operates out of its own terminal in Memphis. RCA-operated ter- minals are owned or leased by RCA and either operated by RCA or GS, whereas the terminals operated under agreements with the independent cartage agents are owned or leased by the cartage agents. In October 1984 the Union presented the Employer with a demand for recognition of the local (city) and over-the-road (line haul) drivers at the Memphis terminal by its letter of 9 October 1984. On 19 October 1984 Re- spondent's legal counsel, David Vaughan, met with Union President Jimmy Carrington and Union Repre- sentative Duria Jones at the Memphis International Air- port and performed a card check. At that time Vaughan indicated to Carrington and Jones that it appeared that the Union had a majority, that Respondent RCA would probably recognize the Union, but that its Memphis ter- minal was a small operation and RCA was not interested in entering into a copy or version of the Teamsters na- tional master freight agreement, but wanted to enter into an agreement consistent with its operations, according to the unrebutted testimony of Vaughan, which I credit. Vaughan testified further that he returned to his office in Atlanta that afternoon and drafted a letter recognizing the Union on behalf of RCA for all its city drivers, over- the-road drivers, and dock workers at the Memphis ter- minal . Vaughan testified further that although his firm had represented Respondent in the past, he personally had only initially at this time been asked to handle this matter by one of his partners, and subsequently learned that the employees in the unit were actually employed by GS rather than RCA. On 2 November 1984 the initial bargaining session was held in Atlanta and was attended by Arthur Parker, James Smith, and Vaughan on behalf of the Respondent, and Duria Jones on behalf of the Union. At that time Jones was informed that the employees were employed by GS rather than RCA and the parties commenced bar- gaining. At this initial meeting Vaughan presented Jones with its contract proposal (G.C. Exh. 4) and reviewed the document item by item, and the parties reached ten- tative agreement on several clauses, according to the un- rebutted testimony of Vaughan, which I credit. Howev- er, according to the testimony of Vaughan, Jones took the position at the meeting that the agreement would have to essentially track or serve as a rider to the Team- sters master freight agreement. Jones testified he did not take such a position, but contended at the hearing that the agreement proposed by the Respondent was not suit- able to a trucking operation. It is undisputed that one of the central items of disagreement between the parties concerned the grievance procedure with the Respondent proposing grievance arbitration and the Union proposing a multistate grievance committee. Jones testified that he also suggested another variation of this grievance com- mittee. Vaughan denied that he had made such a propos- al. The parties subsequently met on another occasion with Vaughan and Parker meeting with Jones in Memphis on 12 December 1984. According to the testimony of Vaughan and Parker, at that meeting Jones told them he had received a directive from the International Union that all labor agreements must be in compliance with the national agreements and Jones also withdrew his tenta- tive agreement to several items in Respondent's proposed 1298 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD contract. Jones contended at the hearing that he never took a hard and fast position that the agreement must comply with the national agreements , but contended that Respondent's proposed agreement was not applicable to a trucking operation . On 7 January 1985 Vaughan wrote to Jones setting out the course of negotiations to that date including what had transpired at the November and December bargaining sessions and expressed Respond- ent's concern with "the Union's intransigent position that it would never accept the company's proposals for a grievance procedure and final and binding arbitration, se- niority, vacations, union representation, and several other important provisions. At that meeting you took the posi- tion that the Union would only accept language that was exactly the same, or very similar to, language presently contained in the Teamsters National Freight Agreement for city drivers." Vaughan further stated in that letter that at the second bargaining session in December Jones had informed the Respondent that the Union was re- scinding "the tentative agreements on language that were reached at the November 21 meeting and taking the posi- tion that the new contract at Georgia Southern would have to conform to language contained in the national master freight agreements for over-the-road and local freight drivers," as a result of the directive by the Inter- national that local unions could not enter into "collective bargaining agreements that contained language other than the National Master Freight Agreements" (R. Exh. 12). Jones responded by letter on 11 January 1985 to Vaughan's 7 January 1985 letter that "You presented em- ployees a contract proposal geared to production and maintenance, plant work, nothing geared toward truck- ing business." Jones further stated in this letter, "We cannot and will not sign a contract without a grievance procedure" (R. Exh. 13), but did not otherwise address the statements in the letter by Vaughan as to what had transpired at the November and December bargaining sessions. According to the unrebutted testimony of Parker, which I credit, on 17 January 1985 RCA lost a major customer of its Memphis terminal operation without prior warning as a result of service failure by GS. Prior to this time, this customer (Southern States Warehouse & Distribution) had accounted for approximately 50 per- cent of the total outbound revenue at the Memphis ter- minal in 1984. As a result of a scheduling conflict, the parties were unable to keep a meeting commitment on 31 January or 1 February . Vaughan then sent a letter to the Union on 1 February and enclosed a contract proposal to the Union, which he termed "a complete contract pro- posal, containing both economic and non-economic items, and calling for a 30-month agreement to become effective Monday, February 18 , 1985," which he request- ed the Union to consider and "show it to the Memphis terminal employees for their possible acceptance." Vaughan further stated in this letter: In the event the local union does not accept the enclosed contract proposal by 4:00 p .m. CST on Wednesday, February 13, 1985, we shall consider that the proposal has been rejected in its entirety. Moreover, my client has advised me that it is presently considering locking out its Memphis employees on a temporary basis and, further, is considering the con- tracting out of its freight-hauling work to an independ- ent contractor or utilizing its own non -unit personnel on a temporary basis. Naturally, we would prefer not to take such drastic action at Memphis but, under the present circumstances, my client may have no other viable alternative. If the local union should wish to accept the com- pany's contract proposal or, in the alternative, dis- cuss the possibility of a lockout and/or contracting out of unit work, please call me by Wednesday, February 13 , 1985. [R . Exh. 18 . Emphasis added.] The Union did not respond to the Respondent's con- tract proposal of 1 February until 21 February 1985, when it sent two letters signed on behalf of Jones and Carrington and acknowledged receipt of the proposal that they characterized in one letter as "very disappoint- ing" and stated, "Your proposal addresses very little in the field of transportation." In that letter the Union also asked for 2 days to be set aside for bargaining (R. Exh. 19). In the second letter of that date, the Union stated: It has been brought to our attention that RCA Truck Lines is in violation of the Act by using con- tract carriers and other employees ahead of our bar- gaining unit employees to erode the unit and create a labatory [sic] of fear and discontent because of their union activities in behalf of the Teamsters Local 667. [R. Exh. 20.] On 27 February 1985 Vaughan responded by letter to the 21 February letters sent by the Union . In his 27 Feb- ruary letter Vaughan stated that he did not "see how an- other meeting would be worthwhile since there is no in- dication that either party has changed its position." Vaughan also responded to the charges in the Union's letter of 21 February concerning the erosion of the unit by the use of noncontract carriers and other employees ahead of bargaining unit employees . He also stated his understanding that "the company has operated at a loss since last fall, and that the owner/operator (in question) has been used to obtain additional business . .. ." He concluded by stating: The simple economic fact is Georgia Southern has great difficulty competing with non-union trucking op- erations under its current wage and benefit structure in Memphis. Should Georgia Southern agree to a con- tract similar to the National Master Freight Agree- ment, as the local union has been proposing , I doubt very seriously that the Company could operate in Memphis at all. Therefore, I would strongly suggest that the Memphis employees take another look at our February 1 contract proposal and seriously con- sider its acceptance . Sometimes "half a loaf' is better than no loaf at all! [R. Exh. 21 . Emphasis added.] On 8 March Jones responded to the 27 February letter of Vaughan rejecting the proposal of Respondent and again requesting a 2-day meeting to negotiate a contract. SMCO, INC. 1299 Vaughan was out of town and noted the letter and agreed to respond and set up another bargaining session. On 3 April Union President Carrington wrote to Vaughan that he was unavailable the next week for a meeting but noted that the contracts had expired in Chattanooga and Atlanta (the two other terminals wherein Respondent had Teamsters contracts with two different local unions), and informed Vaughan "we all have agreed to meet together and work out an agree- ment." On 11 April 1985 Vaughan responded to the 3 April letter of Carrington as follows: In your April 3 letter you indicate that you are presently involved in the negotiations for the new National Master Freight Agreement and that you will be in Chicago all of this week. You further state that "since the contracts have expired in Chat- tanooga and Atlanta we have all agreed to meet to- gether and work out an agreement." By that state- ment I assume you refer to the labor contracts be- tween RCA Truck Lines, Inc. and the respective Teamsters Locals in Atlanta and Chattanooga that represent the drivers at those two facilities. First of all, my client will not agree to negotiate jointly the labor agreements at the Atlanta and Chat- tanooga facilities along with the Memphis facility since the former are RCA terminal's whereas the latter is an RCA leased terminal sub-leased to and operated by Georgia Southern Transportation. As you know, the, local and over-the-road drivers at Memphis are em- ployees of Georgia Southern, not RCA Truck Lines. Moreover, Georgia Southern is presently contemplat- ing shutting down its unprofitable Memphis operations and permanently laying off the five or so remaining drivers at that facility. RCA Truck Lines is currently negotiating with an independent cartage agent in the Memphis area for the latter to assume the local and over-the-road business presently handled by Georgia Southern and, if those negotiations are finalized, there will be no further work for Georgia Southern drivers to perform in the Memphis area. Naturally, my client would be willing to meet with you at your earliest con- venience to discuss the contemplated decision to shut down the Memphis operations and the effects such a managerial decision would have on the Memphis em- ployees. Should the local union desire such a meeting to discuss this managerial decision and/or the effects it will have on bargaining unit personnel , please call me no later than 12:00 noon CST on Friday, April 19, 1985. If we do not hear from you by that time, we will assume no such meeting is desired. [R. Exh. 26. Emphasis added.] On 18 April 1985 the Union responded to the 11 April 1985 letter of the Respondent as follows: Please be advised that we have received your letter dated April 11, 1985, certified mail, in which you indicated that the operation in Memphis by RCA was unprofitable and that your client would be willing to meet with us at our earliest conven- ience to discuss the contemplated decision to shut down the Memphis operation and the effect such a managerial decision would have on the Memphis employees. This local union will also desire a meeting to dis- cuss this managerial decision and/or the effect it will have on the bargaining unit personnel. We whole heartly [sic] disagree on the use of cartage companies doing bargaining unit work. Please advise us of the time and place most con- venient for your client and you for this meeting. [R. Exh. 27] Vaughan testified that on 11 April Parker telephoned and advised him that RCA had sustained a corpor- atewide loss in the first quarter of 1985 and a $67,000 loss in December 1984 and that GS had lost money in November, December, and January, that RCA had been unable to replace the Southern States account and had to reduce operating costs at the Memphis terminal and was considering closing the terminal, contracting with an in- dependent cartage agent to perform local pickup and de- livery service, and hiring owner operators to perform the over-the-road operations. Parker also testified at length concerning the financial situation of RCA and GS and the Respondent's efforts to reduce costs. He testified he was aware that RCA had sustained a substantial loss in December 1984 and was in- curring losses in the first quarter of January, that he was unable to replace the Southern States account in Mem- phis, and looked to the closure of this terminal as one of many items of cost reduction. He testified that the lease at the Memphis terminal was due to expire and currently cost $2000 per month and was expected to increase. Parker testified further that management of RCA and GS issued instructions to its sales force to increase reve- nue and to reduce costs such as repairs and sought to reduce costs overall. He testified further that RCA con- sidered closing down its Decatur, Alabama terminal, and utilizing a cartage agent to reduce operating costs, but that RCA was unable to find a cartage agent to handle the complete operation. On cross-examination by the General Counsel, Parker acknowledged that the Deca- tur, Alabama employees had recently rejected union rep- resentation in December 1984 and had been subsequently given a pay raise in January 1985, but contended that the raise had been previously withheld pending the election. The General Counsel in its brief has compared the actual performance of the Memphis terminal for the month of March 1985, and for the first quarter of 1985 as compared with other terminals. This comparison high- lights the actual figures contained in RCA's budget (G.C. Exh. 6) for the month of March and the first quar- ter of 1985, and shows that the profit ratios for Memphis exceeded those of the other terminals for both periods. This budget also reflects that the Memphis terminal made a greater contribution to overhead (net income) of RCA than all but the Atlanta and Birmingham terminals. Additionally, the General Counsel utilized the RCA budget and the GS budget and highlighted in its brief a comparison of the cost ratio of revenues to expense for the four terminals operated by GS for RCA. That com- parison shows that the Memphis terminal operated at a 1300 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD lower cost than the Decatur and Montgomery terminals for the month of March and at a lower cost than all three of the other terminals for the first quarter of 1985. The General Counsel also contends that the Respondent did not present any evidence correlating the loss of the Southern States account (which Parker conceded was a highly labor intensive account) with a loss of profits. On 19 April Vaughan sent a letter to Carrington agreeing to meet with the Union (R. Exh. 28). The meet- ing was rescheduled to 30 April at which time Jones met with Parker and Vaughan in Vaughan's office. Accord- ing to the testimony of Jones, almost immediately after he arrived at the meeting he was told by Parker that the Memphis terminal was losing money and that the loss was occurring "all over" and that other terminals were losing "approximately 50 percent." Jones testified he asked Parker "if he had any proof of the loss but they didn't have anything with them, it was unavailable and also . . . ." In answer to another question Jones testified that Vaughan had told him the proof was not available. He also testified that he asked what Respondent was of- fering "for the effects of closing or severance pay?" and that the answer he received from Parker was "bullshit, the sum is zero." He attempted to discuss their lease and suggested other terminals but was told that they were not interested and that the Memphis terminal was defi- nitely to be closed and he would be informed about a week in advance of the closing date and Respondent would post a notice for the employees and also inquired of Jones, "Why don't you get them a job at a union truck line since they want a union so bad?" and that "what he [Charlie Parks-one of the bargaining unit members] wants out of it is retirement: you ought to try to get him a job." Jones testified he also inquired con- cerning the over-the-road drivers and was told they were going to be leased as well as the services of a cartage agent. Jones testified he asked to meet again but was told it would not be necessary. On the afternoon of 30 April Vaughan wrote a letter to Jones as follows: As we discussed at the meeting in my office this morning, my client sees no viable alternative to the closing down of its Memphis operations and the permanent laying off of existing bargaining unit per- sonnel, possibly as soon as May 10 but, more likely, by Friday, May 17, 1985. As you know, Georgia Southern is presently under contract with RCA Truck Lines, Inc. to op- erate the Memphis terminal and furnish the drivers and supervisory personnel necessary to pickup and deliver freight and perform over-the-road oper- ations as dictated by RCA. However, since Novem- ber 1984, the outbound revenue at Memphis has been reduced approximately 60%, largely due to the loss of a major customer (Southern States Ware- house & Distribution), but also due to the uncertainty over labor negotiations. During the first quarter of 1985 RCA suffered a corporate-wide loss of unprece- dented proportions, which included the unprofitable Memphis operations. These losses cannot continue and the Memphis terminal must therefore be closed. As you requested, a notice is being posted in the Memphis terminal advising those employees that a meeting will be held at the union hall this Saturday, May 4, at 1:00 p.m. When the exact closing date of the Memphis ter- minal is ascertained, you will be notified. [R. Exh. 30. Emphasis added.] The Union responded by its letter of 6 May to Vaughan's letter of 30 April as follows: You stated that due to the lost [sic] of Southern States Warehouse and Distribution Center and also due to the uncertainty over labor negotiations and other loses [sic] the Memphis Terminal must be closed and the work subcontracted out. As I stated at the meeting in Atlanta, we are definitely not in favor of the terminal closing or subcontracting the work to another Truck Line. Bear in mind that we are the Certified Bargaining Representative for the Memphis, Tennessee unit and are still demanding the continuing of negotiation, plus starting to nego- tiate with Atlanta, Georgia and Chattanooga, Ten- nessee. [R. Exh. 32.] Vaughan responded to this letter by his letter of 10 May: There are several points in your letter that should be addressed. First of all you state that the local union is "definitely not in favor of the terminal clos- ing or subcontracting the work to another truck line." This is not surprising since the local union has no capital investment in the Memphis terminal, trucks, equipment, etc., and is not the party that is suffering a pecuniary loss every day that terminal is in operation . Georgia Southern and RCA Truck Lines are not so fortunate and, as we pointed out to Mr. Jones at the April 30 meeting and in my letter, my client sees no other viable alternative to the sit- uation. You further state in your letter that management should bear in mind that the local union is the "Cer- tified Bargaining Representative for the Memphis, Tennessee unit and are still demanding the continu- ing of negotiations, plus starting to negotiate with Atlanta, Georgia and Chattanooga, Tennessee." In actuality, Local 667 is not a certified bargain- ing representative since my client recognized the local union as bargaining representative on October 19, 1984 on the basis of an informal card check at the Memphis airport. [Furthermore, there would be no purpose in continuing to meet for contract nego- tiations for an employee unit that will cease to exist once the Memphis terminal is closed. The local union has made it clear that it will not accept Geor- gia Southern's final contract proposal and, in fact, will not accept any contract for Memphis short of a duplication of the Teamsters' National Master Freight Agreement.] (R. Exh. 33.) SMCO, INC. 1301 B. The Alleged 8(a)(1) Violation2 I credit the unrebutted testimony of employee Lee Thompson that in March or April 1985 RCA Sales Man- ager Jim Hewlett told him that the Respondent would get a cartage agent to handle its business in the event the employees did not get rid of the Union. Although this statement was made in response to an inquiry by Thomp- son regarding what he thought the Respondent would do if the employees did not get rid of the Union, it never- theless constituted a threat of the loss of employment for the employees and constituted a violation of Section 8(a)(1) of the Act. The initiation of an inquiry by an em- ployee concerning what effects the support of a union will have does not obviate the coercive nature of a re- sponse that threatens loss of employment for the employ- ees if they continue in their support of a union. I also find that the evidence is substantial that Hewlett was a supervisor within the meaning of Section 2(11) of the Act and an agent of Respondent within the meaning of Section 2(13) of the Act, as he supervised several sales- persons, was involved in the decision to contract out the work to the cartage agent, and was assigned the respon- sibility of carrying out the decision by finding a cartage agent in Memphis to take over the operation. I thus conclude that Respondent violated Section 8(a)(1) of the Act by the threat issued to its employee Lee Thompson by Jim Hewlett in March or April 1985. C. The Alleged 8(a)(3) Violation I find that the General Counsel has established a prima facie case that the Respondent violated Section 8(a)(3) and (1) of the Act by discharging its employees James Dickson, Robert Tate, Robert Holloway, Charles Parks, Lee Thompson, and Cottrill Crutcher, and subcontract- ing their work to a cartage agent and to owner-operator drivers. I find that the evidence presented by the Gener- al Counsel is sufficient to warrant the inference that the Respondent closed its Memphis terminal, subcontracted out the work, and discharged the above employees be- cause of their support for the Union. In making this de- termination I find that the General Counsel has estab- lished animus on the part of the Respondent against the Union and its supporters as evidenced by the violation of Section 8(a)(1) as found above. I also consider and rely on the Respondent's positions taken against entering into the national master agreements with the Union, its threat of an offensive lockout, and the temporary contracting out of the bargaining unit work should the Union refuse to agree to the contract proposed by the Respondent, the suddenness of the Respondent's i inal contract proposal after only two meetings, the reference to the Union's re- fusal to change its position in the Respondent's 11 Febru- ary letter to the Union notifying the Union of the Re- spondent's decision to close the Memphis facility as well as the reference by Respondent's counsel to "uncertainty over labor negotiations" as a reason for closing the Memphis facility. I have also considered the raise given 2 In its brief the General Counsel withdrew the complaint allegation concerning interrogation of employee Lee Thompson by Vice President Parker and this allegation is not herein considered to the Decatur, Alabama employees, who had voted to reject the Union, and the favorable comparison of cost- profit ratios of the Memphis terminal operations as com- pared with other terminal operations as set out in the General Counsel's brief. Having found that the General Counsel has established a prima facie case of a violation of Section 8(a)(3) and (1) of the Act by Respondent's discharge of its employ- ees, I now consider Respondent's defenses. At the outset, Respondent contends that its decision to shut down its Memphis terminal by failing to renew its lease at the ter- minal, and discharging its employees and contracting with a cartage company for local delivery and with owner operators to handle its over-the-road business, was occasioned by several factors: the overall losses of RCA corporatewide and a general need to cut costs; losses in- curred by GS in Memphis; and the loss of the Southern States account in Memphis. That Respondent RCA in- curred a subtantial loss in its overall operations in De- cember 1984 and the first quarter of 1985 has not been disputed by the General Counsel. These losses for the 4- month period from December 1984 to March 1985 were estimated by Respondent at $165,000. However, corpor- atewide the Respondent, through RCA or GS, operated 10 terminals with its Atlanta, Georgia terminal constitut- ing the largest operation. A comparison of the terminals' profit-cost ratios and contribution to overhead (net income) as set out by the General Counsel in his brief discloses that the Memphis terminal compared favorably with the other terminals. Respondent points to the loss of the major customer (Southern States), which allegedly accounted for 60 percent of its outbound revenue. How- ever, as contended by the General Counsel, this was a highly labor-intensive account and its profitability and the effects of its loss were not demonstrated by the Re- spondent, notwithstanding the assertion of Parker that Respondent had made money servicing the account. I thus do not find convincing the Respondent's defense that it closed the Memphis terminal to reduce overall op- erating expenditures. Although at first impression this ar- gument has appeal because of the reduction of the termi- nal costs and other costs of maintaining the trucks, it does not withstand close scrutiny. It may well be that the loss of the major customer in Memphis was a moti- vating factor for Respondent to close its terminal in Memphis and lay off its employees, and that Respondent considered the closure of the Memphis terminal as one means of cutting costs, but I find that the Respondent has failed to demonstrate that these were the real reasons for its decision, rather than to rid itself of troublesome contract negotiations with the Union. Thus, analyzing this case under Wright Line, 251 NLRB 1083 (1980), I have found that the General Coun- sel has made a prima facie case that antiunion animus was a motivating factor in the subcontracting out of this work and the discharge of Respondent's employees. I find that the Respondent has not carved its burden to demonstrate by the preponderance of the evidence that it would have taken these actions even in the absence of the support of the employees for the Union. Roure Ber- trand Dupont, Inc., 271 NLRB 443 (1984); NLRB v. 1302 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Transportation Management Corp., 462 U.S. 393 (1983); Hunter Douglas, Inc., 277 NLRB 1179 (1985). D. The Alleged 8(a)(5) Violations 1. Alleged failure to furnish information to the Union This allegation is based on the testimony of Union Representative Duria Jones, that he asked Respondent's representative David Vaughan and Arthur Parker, whether they had any proof to substantiate their claim made at the April meeting that Respondent was losing money and that either Vaughan or Parker stated it was not available. Both Vaughan and Parker denied that such a request was made by Jones and the detailed notes taken by Vaughan at this meeting and those taken by Parker and by Jones do not make any reference to such a re- quest. Moreover, there is no reference to this request in the exchange of letters between Respondent and the Union subsequent to this meeting. Accordingly, I credit Vaughan and Parker that no request was made by Jones for proof. Assuming arguendo that Jones did request proof and was told it was unavailable, I nonetheless would not find a violation of the Act on this basis alone, as Jones' own testimony indicated he accepted this reply and did not further press for this information, as he was primarily concerned about negotiating concerning the ef- fects of this decision because he regarded the decision as final. I would thus find that this inquiry and reply did not constitute a refusal to furnish information by Re- spondent so as to give rise to a violation of the Act. 2. Alleged refusal to bargain concerning decision to close Respondent's Memphis terminal As both parties point out in their briefs, it is well es- tablished that employers are not required to bargain con- cerning contemplated changes in the direction of the business that are at the core of entrepreneurial control and that do not turn on labor costs. However, contract- ing out of work has not been held to be such a funda- mental decision such as to excuse the Employer's obliga- tion to bargain. In the instant case the Employer continued its pres- ence and operations in Memphis but contracted out its local delivery work to a cartage agent and contracted with an owner-operator to replace its line-haul drivers. This did not constitute a fundamental change in the busi- ness, but rather constituted contracting out of bargaining unit work, which is a mandatory subject of bargaining. I thus find that Respondent had an obligation to bargain with the Union concerning this decision. The testimony of Duria Jones, which I credit in this regard, demon- strates that Respondent presented him with a fait accom- pli that the terminal would be closed and the employees laid off. There was no evidence that the Respondent did other than announce this decision to the Union and made some minimal effort to go through the motions of bar- gaining on the single occasion of their 30 April meeting with Jones after which they finalized their decision through the letter of Vaughan sent to the Union on the same afternoon of this meeting. I thus fmd that the Re- spondent failed to bargain concerning this decision and accordingly violated Section 8(a)(5) and (1) of the Act. First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981) (re : obligation to bargain over a partial closing); Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964) (wherein subcontracting was held to be a mandatory subject of bargaining); Otis Elevator Co., 269 NLRB 891 (1984); Oak Rubber Co., 277 NLRB 1322 (1985); Griffith-Hope Co., 275 NLRB 487 (1985); Clinton's Ditch Co., 274 NLRB 728 (1985). I further credit the unrebutted testimony of Jones that when he requested severance pay for the employees the retort of Respondent's representative Parker was "bull- shit." I have reviewed the testimony of Vaughan and Parker and see no evidence therein that they engaged in bargaining with the Union concerning the effects on the employees. I further note Jones' unrebutted testimony that he was told to obtain the employees a union job and that employee Parks' chief interest was in retirement. I thus find that Respondent further violated Section 8(a)(5) and (1) of the Act by refusing to bargain with the Union concerning the effects on its employees of its decision to close its terminal . See P. J. Hamill Transfer Co., 277 NLRB 462, 463 (1985). 3. Alleged withdrawal of recognition and refusal to bargain I further fmd that the Respondent withdrew recogni- tion from the Union in violation of Section 8(a)(5) and (1) of the Act when it refused to meet further with the Union to negotiate and contended that there was nothing to negotiate with a unit that would no longer exist after the discharge of its employees, which discharge I have found to be violative of the Act. V. THE EFFECT OF THE UNFAIR LABOR PRACTICES ON COMMERCE The unfair labor practices as found here have a close, intimate, and substantial relation to trade, traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. CONCLUSIONS OF LAW 1. The Respondent, SMCO, Inc. and its wholly owned subsidiaries RCA Truck Lines, Inc. and Georgia South- ern Transportation, Inc., is a single employer and is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 3. By the threat issued to employee Lee Thompson about March or April 1985 that Respondent would close its terminal and contract with a cartage agent to operate its trucking business in Memphis, Tennessee, Respondent violated Section 8(a)(1) of the Act. 4. By the subcontracting of bargaining unit work and by the discharge of its employees James Dickson, Robert Tate, Robert Holloway, Charles Parks, Lee Thompson, and Cottrill Crutcher on 17 May 1985, Respondent vio- lated Section 8(a)(3) and (1) of the Act. SMCO, INC 1303 5. Respondent did not violate the Act by its alleged re- fusal to furnish information for bargaining to the Union. 6. By its refusal to bargain with the Union concerning its decision to close its terminal in Memphis , Tennessee, and concerning the effects of the decision on its employ- ees, Respondent violated Section 8(a)(5) and (1) of the Act. 7. By its withdrawal of recognition from the Union, Respondent violated Section 8(a)(5) and (1) of the Act. 8. The above violations have an effect up commerce within the meaning of the Act. THE REMEDY Having found that Respondent has engaged in certain unfair labor practices, I shall recommend that it cease and desist therefrom and take the following affirmative actions, including the posting of an appropriate notice, designed to effectuate the policies of the Act. Having found that Respondent violated Section 8(a)(5) and (1) of the Act by withdrawing recognition from the Union and by closing its terminal without affording the Union an opportunity to bargain concerning the decision and the effects on its employees„ and that Respondent violated Section 8(a)(3) and (1) of the Act by its subcon- tracting of bargaining unit work and the discharge of its employees and its refusal to reinstate them, I shall rec- ommend that Respondent restore the status quo ante to 17 May 1985, at the time of its unlawful actions, by re- opening the Memphis terminal and restoring the employ- ees to their former positions and make them whole for any loss of earnings or benefits suffered as a result of Re- spondent's discrimination against them, with interest thereon to be computed in the manner prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), and Florida Steel Corp., 231 NLRB 651 (1977). See, generally, Isis Plumbing Co., 138 NLRB 716 (1962). I find that the requirement that Respondent reopen its terminal is particularly appropriate in this instance as Re- spondent has maintained its presence in the Memphis area and has merely subcontracted its operations to others and has not alleged or demonstrated that such a remedy would threaten its continued viability or create an undue hardship. A lesser remedy of reinstatement for the employees at a terminal in another city would not remedy the harm suffered by these employees. It is fur- ther ordered that Respondent recognize and bargain in good faith with the Union on request concerning terms and conditions of employment and, if an understanding is reached, embody the understanding in a signed agree- ment. I do not recommend that the Order contain a visi- tatorial clause, authorizing the Board to engage in dis- covery pursuant to the Federal Rules of Civil Procedure, as requested in the General Counsel's brief. I do not find the cases set out by the General Counsel in its addendum to its brief support its position that a visitatorial clause should be granted in this case. I have not been referred to a specific case by the General Counsel wherein the Board has granted such discovery as a matter of course as the General Counsel seeks. See O. L. Willis, Inc., 278 NLRB 203 fn. 1 (1986), wherein the Board rejected a re- quest for a visitatorial clause under the circumstances of that case. On the foregoing findings of fact and conclusions of law and on the entire record, I issue the following rec- ommended3 ORDER The Respondent, SMCO, Inc. and its wholly owned subsidiaries RCA Truck Lines, Inc. and Georgia South- ern Transportation, Inc., Memphis, Tennessee, its offi- cers, agents, successors, and assigns, shall 1. Cease and desist from (a) Threatening its employees with the closure of its terminal, and the contracting out of their work and dis- charge because of their continued support for the Union. (b) Refusing to recognize the Union as the collective- bargaining representative of its employees in the appro- priate unit. (c) Closing its Memphis terminal and contracting out the work of its employees without first bargaining with the Union concerning the decision to close the terminal and the effects of the decision on the employees. (d) Contracting out bargaining unit work and discharg- ing its employees because of their support of the Union or their engagement in concerted activities. (e) In any like or related manner interfering with, re- straining, or coercing its employees in the exercise of their rights guaranteed them under Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Recognize and on request bargain with the Union as the exclusive representative of the employees in the following appropriate unit concerning terms and condi- tions of employment and, if an understanding is reached, embody the understanding in a signed agreement. The appropriate unit is: All over-the-road truck drivers, city truck drivers and dockworkers at Respondent's Memphis, Ten- nessee terminal, but excluding all office clerical em- ployees, watchmen, guards, and supervisors as de- fined in the Act. (b) Reestablish its terminal in Memphis, Tennessee, to the status quo ante as of 17 May 1985. (c) Offer to James Dickson, Robert Tate, Robert Holloway, Charles Parks, Lee Thompson, and Cottrill Crutcher reinstatement to their former positions, or to substantially equivalent positions with full backpay and benefits with interest in accordance with the remedy sec- tion of this decision with no loss of seniority or other rights and privileges previously enjoyed, severing all contractual relations, if necessary, with others utilized to perform the work formerly performed by the aforesaid employees. (d) Remove from its files any reference to its unlawful discharge and refusal to reinstate its employees as found here, and notify them in writing of this, and that said S 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 1304 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD action or notations on their personnel files shall not be used as a basis for future personnel actions concerning them. (e) 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. (f) Post at its facility to be reestablished in Memphis, Tennessee, copies of the attached notice marked "Appen- dix."4 Copies of the notice, on forms provided by the Regional Director for Region 26, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are cus- tomarily posted. Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, de- faced, or covered by any other material. (g) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. 4 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." work and with discharge because of their continued sup- port of Highway and Local Motor Freight Employees Local No. 667, affiliated with the International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. WE WILL NOT refuse to recognize and bargain with the Union in good faith. WE WILL NOT refuse to recognize and bargain in good faith with the Union by closing our terminal operations in Memphis, Tennessee, without bargaining that decision and the effects on our employees with the Union. WE WILL NOT subcontract out bargaining unit work and discharge and refuse to reinstate our employees be- cause of their continued support of the Union. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exercise of the rights guaranteed you by Section 7 of the Act. WE WILL recognize and, on request, bargain with the Union and embody in a written agreement any agree- ment reached therein concerning the terms and condi- tions of employment for our employees in the following bargaining unit: All over-the-road truck drivers, city truck drivers and dockworkers at Respondent's Memphis, Ten- nessee terminal, but excluding all office clerical em- ployees, watchmen, guards, and supervisors as de- fined in the Act. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has or- dered 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 representatives of their own choice To act together for other mutual aid or protec- tion To choose not to engage in any of these protect- ed concerted activities. WE WILL NOT threaten our employees with the clo- sure of our terminal and the contracting out of their WE WILL reopen our terminal operation in Memphis, Tennessee, and WE WILL offer to James Dickson, Robert Tate, Robert Holloway, Charles Parks, Lee Thompson, and Cottrill Crutcher reinstatement to their former posi- tions, or to substantially equivalent positions with full backpay and benefits, with interest, and with no loss of seniority or other rights and benefits previously enjoyed and if necessary will sever all contractual relations with others utilized to perform the work formerly performed by the aforesaid employees. WE WILL remove from our files all references to our unlawful discharges and notify the employees in writing that this has been done and that the discharges will not be used against them in any way. Our employees have the right to join and support Highway and Local Motor Freight Employees Local No. 667, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, or to refrain from doing so. SMCO, INC. AND ITS WHOLLY OWNED SUBSIDIARIES RCA TRUCK LINES, INC. AND GEORGIA SOUTHERN TRANSPORTA- TION, INC.