Capitol Tire Systems, Debtor In-Possession

CAPITOL TIRE SYSTEMS 677 Billy Boys, Inc. d/b/a Capitol Tire Systems, Debtor- in-Possession and United Food and Commercial Workers Union, Local 1439, affiliated with United Food and Commercial Workers Interna- tional Union, AFL-CIO-CLC and United Food and Commercial Workers Union, Local 367, af- filiated with United Food and Commercial Workers International Union, AFL-CIO-CLC and United Food and Commercial Workers Union, Local 1001, affiliated with United Food and Commercial Workers International Union, AFL-CIO-CLC. Cases 19-CA-19441, 19-CA- 19465, and 19-CA-19486 April 27, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND BABSON Upon charges filed by the United Food and Commercial Workers Union, Local 1439, affiliated with the United Food and Commercial Workers International Union, AFL-CIO-CLC (Local 1439) October 23, 1987, the United Food and Commer- cial Workers Union, Local 367, affiliated with the United Food and Commercial Workers Internation- al Union, AFL-CIO-CLC (Local 367) October 30, 1987, and the United Food and Commercial Work- ers Union, Local 1001, affiliated with the United Food and Commercial Workers International Union, AFL-CIO-CLC (Local 1001) November 10, 1987, the General Counsel of the National Labor Relations Board issued a consolidated com- plaint December 7, 1987, against the Respondent, alleging that it has violated Section 8(a)(5) and (1) of the National Labor Relations Act. Although properly served copies of the charge and com- plaint, the Respondent has failed to file an answer. On February 24, 1988, the General Counsel filed a Motion for Summary Judgment. On March 1, 1988, the Board issued an order transferring the proceeding to the Board and a Notice to Show Cause why the motion should not be granted. The Respondent filed no response. The allegations in the motion are therefore undisputed. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. Ruling on Motion for Summary Judgment Section 102.20 of the Board's Rules and Regula- tions provides that the allegations in the complaint shall be deemed admitted if an answer is not filed within 14 days from service of the complaint, unless good cause is shown. The complaint states that unless an answer is filed within 14 days of service "all of the allegations in said Consolidated Complaint shall be deemed to be admitted to be true and may be so found by the Board." Further, the undisputed allegations in the Motion for Sum- mary Judgment disclose that counsel for the Gen- eral Counsel, at the request of the Respondent's counsel, granted four extensions of time for the Re- spondent to file an answer. About February 2, 1988, counsel for the General Counsel was in- formed that the Respondent had named a new at- torney-of-record. Counsel for the General Counsel sent the new attorney-of-record a letter on Febru- ary 3, 1988, indicating that the Respondent had not yet filed an answer and stating that counsel for the General Counsel would move for summary judg- ment if the Respondent did not file an answer by the close of business on February 9, 1988. On Feb- ruary 10, 1988, the Respondent's new attorney-of- record informed counsel for the General Counsel that the Respondent did not intend to file an answer as the Respondent was bankrupt and had no money. In the absence of good cause being shown for the failure to file a timely answer, we grant the General Counsel's Motion for Summary Judgment. Ou the entire record, the Board makes the fol- lowing FINDINGS OF FACT I. JURISDICTION The Respondent, a Nevada corporation, with an office and place of business in several States includ- ing the State of Washington, was engaged in the business of operating a chain of tire stores/auto service centers. The Respondent, during the 12- month period ending December 7, 1987, in the course and conduct of its business had gross sales of goods and services valued in excess of $500,000. During the same 12-month period, the Respondent sold and shipped goods or provided services from its facilities within the State of Washington to cus- tomers outside the State, or sold and shipped goods or provided services to customers within the State of Washington, which customers were themselves engaged in interstate commerce by other than indi- rect means, of a total value in excess of $50,000. During the same 12-month period, the Respondent purchased and caused to be transferred and deliv- ered to its facilities within the State of Washington goods and materials valued in excess of $50,000 di- rectly from sources outside the State, or from sup- pliers within the State of Washington, which in turn obtained such goods and materials directly from sources outside the State. We find that the Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the 288 NLRB No. 66 678 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Act and that the Unions are labor organizations within the meaning of Section 2(5) of the Act. II ALLEGED UNFAIR LABOR PRACTICES The following employees of the Respondent con- stitute a unit appropriate for the purposes of collec- tive bargaining within the meaning of Section 9(b) of the Act: All tire servicemen, mechanics, and trainees (tire servicemen and mechanics) employed by Respondent at its facilities located in the State of Washington in the cities of Kent, Everett, Spokane, and Tacoma, but excluding all office clerical employees, guards and supervisors as defined in the Act. Since at least about February 1, 1984, the Unions have been and' continue to be the designated exclu- sive bargaining representative of the bargaining unit employees within the meaning of Section 9(a) of the Act. Since that time, the Unions have been recognized as the exclusive bargaining representa- tive by the Respondent and its predecessor. Such recognition has been embodied in successive collec- tive-bargaining agreements, the most recent of which is effective for the period February 1, 1987, to January 31, 1990. About September 14, 1987, the Respondent closed its Spokane, Washington facilities. About November 2 and 25, 1987, Local 1439, by letter, requested the Respondent to bargain collectively with the Unions as the exclusive bargaining repre- sentative of the employees in the unit with respect to the effects of the Respondent's closure of its Spokane, Washington facilities on the unit employ- ees. About October 24, 1987, the Respondent closed its Tacoma, Washington facility. About Oc- tober 29 and November 25, 1987, Local 367, by letter, requested the Respondent to bargain collec- tively with the Unions as the exclusive collective- bargaining representative of the employees in the unit with respect to the effects of the Respondent's closure of its Tacoma facility on the unit employ- ees. About October 24, 1987, the Respondent closed its Everett and Kent, Washington facilities. About November 9 and 25, 1987, Local 1001, by letter, requested the Respondent to bargain collec- tively with the Unions as the exclusive collective- bargaining representative of the employees in the unit with respect to the effects of the Respondent's closure of its Everett and Kent, Washington facili- ties on the unit employees. The Respondent closed its Spokane, Tacoma, Everett, and Kent, Washing- ton facilities without prior notice to the Unions and without affording the Unions an opportunity to ne- gotiate and bargain with respect to the effects of such acts and conduct on the unit employees, and the Respondent has failed and refused to bargain with the Unions over the effects of its closing of the Spokane, Tacoma, Everett, and Kent, Washing- ton facilities on the unit employees. We find that, by this conduct, the Respondent violated Section 8(a)(5) and (1) of the Act. About March 16, 1987, the Unions and the Re- spondent entered into a collective-bargaining agree- ment relating to wages, hours, and other terms and conditions of employment of the unit. The agree- ment was to remain in effect until January 31, 1990, and thereafter from year to year unless either, party served a written notice upon the other party of its desire to terminate or modify the agreement at least 60 days prior to that date. Since at least about September 14, 1987, the Respondent has failed and refused to continue in full force and effect all the terms and conditions of its agreement by ceasing to make payments to, or on behalf of, its unit employees at its Spokane, Washington fa- cilities for their wages, commissions, vacation pay, sick leave pay, and fringe benefits, such as health and welfare and pension plans. Since at least about October 24, 1987, the Respondent has failed and re- fused to continue in full force and effect all the terms and conditions of its agreement by ceasing to make payments to, or on behalf of, its unit employ- ees at its Everett, Kent, and Tacoma, Washington facilities for their wages, commissions, vacation pay, sick leave pay, and fringe benefits, such as health and welfare and pension plans. The terms and conditions the Respondent has failed to contin- ue involve terms and conditions of employment and are mandatory subjects of bargaining. The Re- spondent engaged in this conduct without prior notice to any of the Unions and without affording any of the Unions an opportunity to negotiate and bargain as the exclusive representative of the Re- spondent's unit employees with respect to its acts and conduct, and the effects of its acts and conduct and notwithstanding that prior thereto a written notice of the proposed modifications of the agree- ment was not served on any of the Unions.' We fmd that, by its acts and conduct as set forth above, the Respondent violated Section 8(a)(5) and (1) of the Act. This factual findmg tracks allegations of the complaint that the Re- spondent "failed and refused to continue in full force and effect all the terms and conditions" of the bargaining agreement "without prior notice to any of the Umons and without having afforded any of the Unions an opportunity to negotiate and bargain. . ." These unilateral changes, however, would be unlawful regardless of notice and an opportunity to bargain being given to the Unions because they occurred while the bar- gaming agreement was in effect In light of Sec. 8(d) of the Act, such midterm contract changes cannot be made without the consent of the Unions. See, e.g., Dunham-Bush, Inc., 264 NLRB 1347, 1348 (1982); C S Industries, 158 NLRB 454, 456-459 (1966). CAPITOL TIRE SYSTEMS 679 CONCLUSIONS OF LAW 1. By closing its Spokane, Tacoma, Everett, and Kent, Washington facilities without prior notice to the Unions as exclusive collective-bargaining repre- sentative of the Respondent's unit employees and without affording any of the Unions an opportunity to negotiate and bargain with respect to the effects of its acts and conduct on the unit employees, and by failing and refusing to bargain with any of the Unions over the effects of closing its Spokane, Tacoma, Everett, and Kent. Washington facilities, the Respondent has engaged in unfair labor prac- tices affecting commerce within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7) of the Act. 2. By failing and refusing to continue in full force and effect all the terms and conditions of its collective-bargaining agreement with the Unions by ceasing to make payments to, or on behalf of, its unit employees at its Spokane, Tacoma, Everett, and Kent, Washington facilities for their wages, commissions, vacation pay, sick leave pay, and fringe benefits, such as health and welfare and pen- sion plans, the Respondent has engaged in unfair labor practices affecting commerce within the meaning of Section 8(a)(5) and (1), Section 8(d), arid Section 2(6) and (7) of the Act. REMEDY Having found that the Respondent has engaged in certain unfair labor practices, we shall order it to cease and desist and to take certain affirmative action designed to effectuate the policies of the Act. To remedy the Respondent's unlawful refusal to bargain about the effects of its decision to close its Spokane, Tacoma, Everett, and Kent, Washington facilities, we shall order it to bargain with the Unions, on request, concerning the effects of its de- cision. We shall accompany the bargaining order with a limited backpay requirement designed to make whole the employees for losses sustained as a result of the violation, and to recreate in some practicable manner a situation in which the parties' bargaining positions are not entirely devoid of eco- nomic consequences for the Respondent. There- fore, we shall require the Respondent to pay back- pay to its employees in a manner similar to that re- quired in Transmarine Corp., 170 NLRB 389 (1968). We shall order the Respondent to pay employees backpay at the rate of their normal wages when last in the Respondent's employ from 5 days after the date of this Decision and Order until the occur- rence of the earliest of the following conditions: (1) the date the Respondent bargains to agreement with the Unions concerning the effects on unit em- ployees of its decision to close its Spokane, Tacoma, Everett, and Kent, Washington facilities; (2) a bona fide impasse in bargaining; (3) the failure of the Unions to request bargaining within 5 days of this decision, or to commence negotiations within 5 days of the Respondent's notice of its desire to bargain with the Unions; or (4) the subse- quent failure of the Unions to bargain in good faith; but in no event shall the sum paid to any of these employees exceed the amount the affected employee would have earned as wages from the date on which he was laid off to the time he was recalled or secured equivalent employment else- where, or the date on which the Respondent 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 the Respondent's employ. Inter- est on all such sums shall be paid in the manner prescribed in New Horizons for the Retarded, 283 NLRB 1173 (1987). To remedy the Respondent's unlawful refusal to continue in effect the terms and conditions of the February 1, 1987 contract by ceasing to make pay- ments to, or on behalf of, its unit employees, we shall order it to make whole its unit employees for any loss of wages or other benefits they may have suffered as a result of the Respondent's unlawful conduct2 as prescribed in Ogle Protection Service, 183 NLRB 682 (1970), and with interest as pre- scribed in New Horizons, supra. Finally, in view of the Respondent's closure of its Spokane, Tacoma, Everett, and Kent, Washing- ton facilities, we shall provide for mail notice to employees.3 2 These losses apparently include payments on the employees' behalf to certain employee fringe benefit funds. Because the provisions of employ- ee benefit fund agreements are variable and complex, the Board does not provide for interest at a fixed rate and on fund payments due as part of a "make whole" remedy. We therefore leave to further proceedings the question of any additional amounts the Respondent must pay into the benefit funds to satisfy our remedy here. These additional amounts may be determined, depending upon the circumstances of each case, by refer- ence to provisions in the documents governing the funds involved and, where there are no governing provisions, to evidence of any loss directly attributable to the unlawful action, which might include the loss of return on investment of the portion of funds withheld, additional administrative costs, etc., but not collateral losses. See Merryweather Optical Co., 240 NLRB 1213, 1216 fn. 7 (1979). The Respondent shall also reimburse its employees for any expenses ensuing from its failure to make contributions to various funds established by the collective-bargaraing agreement between the Respondent and the Unions. Kraft Plumbing & Heating, 252 NLRB 891 fn. 2 (1980), enfd. 661 F.2d 940 (9th Cir. 1981). We shall leave to compliance the issue of the effect the Respondent's closure of Its facilities may have on our remedial order. 3 The General Counsel requests a visitatorial clause authorizing the Board, for compliance purposes, to obtain discovery from the Respond- ent under the Federal Rules of Civil Procedure under the supervision of the United States , court of appeals enforcing this Order. Under the cir- Continued 680 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ORDER The National Labor Relations Board orders that the Respondent, Billy Boys, Inc. d/b/a Capitol Tire Systems, Spokane, Tacoma, Everett, and Kent, Washington, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain collectively with United Food and Commercial Workers Union, Locals 1439, 367, and 1001, affiliated with United Food and Commercial Workers International Union, AFL-CIO-CLC about the effects of its decision to close the Spokane, Tacoma, Everett, and Kent, Washington facilities on the employees in the fol- lowing appropriate unit: All tire servicemen, mechanics, and trainees (tire servicemen and mechanics) employed by Respondent at its facilities located in the State of Washington in the cities of Kent, Everett, Spokane, and Tacoma, but excluding all office clerical employees, guards and supervisors as defmed in the Act. (b) Failing and refusing to comply with the terms and conditions of the February 1, 1987 col- lective-bargaining agreement with the Unions by ceasing to make payments for wages, commissions, vacation pay, sick leave pay, and fringe benefits, such as health and welfare and pension plans, to, or on behalf of, its employees in the unit. (c) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. (a) On request, bargain with the Unions as the exclusive representative of its employees in the above-described unit about the effects of its deci- sion to close its Spokane, Tacoma, Everett, and Kent, Washington facilities, and pay limited back- pay to the unit employees in the manner set forth in the remedy section of this decision. (b) Comply with the terms and conditions of the February 1, 1987 collective-bargaining agreement by making payments to, or on behalf of, its unit employees for wages, commissions, vacation pay, sick leave pay, and fringe benefits, such as health and welfare and pension plans. (c) Make its unit employees whole by reimburs- ing them for any medical, dental, or other expenses ensuing from the Respondent's unlawful failure and refusal to make payments to the fringe benefit plans cumstances of this case, we find it unnecessary to include such a clause. Accordmgly, we deny the General Counsel's request. See Cherokee Marine Terminal, 287 NLRB 1080 (1988) pursuant to the February 1, 1987 collective-bar- gaining agreement, in the manner set forth in the remedy section of this decision. (d) Preserve and, on request, make available to the Board or its agents for examination and copy- ing, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the pay- ments due under the terms of this Order. (e) Mail a copy of the attached notice marked "Appendix"4 to the Unions and to all unit employ- ees who were employed at the Spokane, Tacoma, Everett, and Kent, Washington facilities. Copies of the notice, on forms provided by the Regional Di- rector for Region 19, after being signed by the Re- spondent's authorized representative, shall be mailed by the Respondent immediately upon re- ceipt as above directed. (f) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. 4 If this Order is enforced by a judgment of a United States court of appeals, the words m 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." APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice. WE WILL NOT refuse to bargain with United Food and Commercial Workers Union, Locals 1439, 367, and 1001, affiliated with United Food and Commercial Workers International Union, AFL-CIO-CLC, about the effects of our decision to close the Spokane, Tacoma, Everett, and Kent, Washington facilities on our employees in the fol- lowing appropriate unit: All tire servicemen, mechanics, and trainees (tire servicemen and mechanics) employed by Respondent at its facilities located in the State of Washington in the cities of Kent, Everett, Spokane, and Tacoma, but excluding all office clerical employees, guards and supervisors as defined in the Act. WE WILL NOT refuse to continue in full force and effect the terms and conditions of the February 1, 1987 collective-bargaining agreement covering CAPITOL TIRE SYSTEMS 681 the unit, by ceasing to make payments to, or on behalf of, our unit employees for wages, commis- sions, vacation pay, sick leave pay, and fringe ben- efits, such as health and welfare and pension plans. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7 of the Act. WE WILL, on request, bargain with the Unions, about the effect on the unit employees of our deci- sion to close the Spokane, Tacoma, Everett, and Kent, Washington facilities, and WE WILL pay unit employees limited backpay as required by the Na- tional Labor Relations Board. WE WILL make payments to, or on behalf of, our unit employees for wages, commissions, vacation pay, sick leave pay, and fringe benefits, such as health and welfare and pension plans, pursuant to the February 1, 1987 collective-bargaining agree- ment. WE WILL make whole the unit employes by re- imbursing them for any medical, dental, or other expenses ensuing from our unlawful failure and re- fusal to make payments to the fringe benefit plans pursuant to the February 1, 1987 collective-bar- gaining agreement. BILLY BOYS, INC. D/B/A CAPITOL TIRE SYSTEMS