Swift Independent Packing Co. And New Sipco, Inc.

SWIFT INDEPENDENT CORP. Swift Independent Corporation, Swift Independent Packing Company, and New Sipco, Inc., Joint and/or Single Employer and alter ego to, and/or Joint and/or Single Employer with, Esmark, Inc., Swift & Company, and Swift In- dependent Packing Company, Joint and/or Single Employer and United Food and Commer- cial Workers International Union, AFL-CIO. Cases 13-CA-21156 and 13-CA-21274 June 29, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND BABSON On March 9, 1983, Administrative Law Judge William F. Jacobs issued the attached decision. The General Counsel and the Charging Party (the Union) filed exceptions, supporting briefs, and an- swering briefs.' The Respondents filed cross-excep- tions, supporting briefs, and answering briefs. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge' s rulings, findings,2 and conclusions3 only to the extent consistent with this Decision and Order. ' The Union has requested oral argument. The request is denied as the record, exceptions, and briefs adequately present the issues and the posi- tions of the parties. 2 Respondents Swift Independent Corporation (SIC), Swift Independ- ent Packing Company (SIPCO), and New Sipco, Inc. (New Sipco) have excepted to some of the judge's credibility findings . The Board's estab- lished policy is not to overrule 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), enfd. 188 F.2d 362 (3d Cit. 1951). We have carefully examined the record and find no basis for reversing the findings. In the findings of fact section of his decision , the judge inadvertently indicated that the $50 per-share price that Solomon Brothers had deter- mined to be a "justifiable" price for the stock of Respondent Esmark, Inc. (Esmark) was substantially below the market value of the stock at that time. The record shows, and the judge correctly indicated at fn. 31 of his decision, that Esmark's stock was then trading around $25 to $30 per share. Therefore, a $50 per-share price would be substantially above, not below, the then market value of the stock . In that same section of his decision, the judge indicated that an April 25, 1979 meeting in the office of William Watchman , the then president of Respondent Swift & Co. (Swift), was attended by Watchman and Donald Kelly and Karl Becker, president and assistant general counsel , respectively, of Esmark. The record indicates that this meeting was attended by Watchman , Kelly, and John Copeland, then president of the fresh meats division of Swift. These inadvertent errors are insufficient to affect the results of our decision. 8 We find merit in Esmark's exception to the judge's finding that it, along with the other Respondents, had admitted to being an employer en- gaged in commerce within the meaning of Sec . 2(6) and (7) of the Act. Contrary to the judge's finding, the record shows that, unlike Swift, SIPCO, and New Sipco, Esmark in its amended answers denied being an employer engaged in commerce. In this regard, it in essence denied that it meets the Board's standard for retail enterprises inasmuch as it derives no revenue from retail sales and provides services only to companies in which it has an ownership interest. We find, nevertheless, that the record clearly establishes that Esmark is an employer engaged in commerce within the meaning of Sec. 2(2), (6), and (7) of the Act. Thus, we note 423 This case presents allegations of 8(a)(3) and (5) violations stemming from Respondent Esmark's 1982 divestiture of the fresh meats division of a subsidiary then known as Swift & Co. At all rele- vant times prior to the events presently at issue, Swift & Co., a meatpacking, food production, and sales operation, was a wholly owned subsidiary of Esmark and consisted of a fresh meats division and a processed meats division. In this capacity, Swift operated many facilities nationwide and its employ- ees were represented by the Union in separate units designated in and covered by one master agree- ment. The last relevant agreement was effective September 1, 1979, to September 1, 1982. Esmark, a holding company, provided its subsidi- ary, Swift, with certain services in the areas of public relations, legal counsel, financial matters, benefits programs, and labor relations. Until 1976 Esmark directly participated in the collective-bar- gaining negotiations between Swift and the Union. In April 1980, Esmark undertook the first in a series of steps that ultimately resulted in its divesti- ture of Swift's fresh meats division and its restruc- turing of that division into two corporations known as SIPCO and New Sipco. Thus, following a series of transactions detailed more fully in the judge's decision, Esmark, in essence, split the operations of the original Swift & Co., i.e., the processed meats operations were carried on by a new corporation using the old name of Swift while the fresh meats operations were carried on by SIPCO, which oper- ated most of the fresh meats plants with the excep- tion of the two located in Moultrie, Georgia, and Guymon, Oklahoma, which were operated by New Sipco. During the period of restructuring, SIPCO and New Sipco in substance remained wholly that the record shows that Esmark is a Delaware corporation with its principal office in Chicago, Illinois. Esmark's 1981 annual report, intro- duced into evidence by the General Counsel , indicates that it is a holding company that provides financial planning and management services to its subsidiaries, including International Playtex , Inc., Estech, Inc., Eschem, Inc., and Estronics, Inc., as well as Respondent Swift. The annual report indicates that for the fiscal year ending October 31, 1981 , Esmark's total revenues were over $3 billion, which "ranks it among the largest industri- al corporations in the United States ." In addition, Esmark reported ex- penditures of close to $3 billion to cover cost of goods sold and selling, administrative, advertising, sales promotion, and interest costs in addition to other expenditures listed for pension, health care, and profit-sharing plans. The report further indicates that Esmark incurred a pretax loss of some $66.5 million from transactions pertaining to its divestiture of SIPCO. In this regard, the report reflects Esmark 's assumption of SIPCO's liability for certain outstanding checks and its purchase of guar- anteed income contracts to fund accrued pension and pensioners' health care liability related to SIPCO's ongoing operation. Respondent Esmark does not contend that these assertions in its annual report are incorrect. Additionally, the record shows that Esmark annually provides services clearly valued in excess of $50,000 to its subsidiaries, which in turn admit jurisdiction here. In light of all the above, as noted, we agree with the judge's finding that jurisdiction is properly asserted over Esmark. See generally NLRB v. Erlich 's 814, Inc., 577 F.2d 68 (8th Cit. 1978); Glen Manor Home v. NLRB, 474 F.2d 1145 (6th Cit . 1973), cert. denied 414 U.S. 826 (1973). 289 NLRB No. 51 424 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD owned by Esmark until April 1981 when through a public stock sale Esmark reduced its ownership in- terest to 35 percent.4 The actual process of severing the fresh meats division was initiated in April 1980. At that time Esmark's president, Donald Kelly, told John Cope- land, then a vice president of Swift, that the deci- sion had been made that Esmark should divest itself of the fresh meats division. Copeland was in- structed that he was thereafter to report directly to Kelly and that he and his staff were to assemble a company that could be sold as a unit. Copeland was at this time also involved in Esmark's attempt to develop an employee stock option plan wherein around 60 percent of the stock in the fresh meats operation would be owned by employees. In June 1980 the Union rejected Esmark's proffered em- ployee stock option plan. Thereafter, certain of Es- mark's management officials and Copeland met with Kelly to discuss various alternatives concern- ing the disposition of the fresh meats operation. Kelly was interested in Copeland's proposals. Ulti- mately, as a result of these discussions, Esmark's board of directors, on June 26, 1980, approved a proposal that certain of the fresh meats plants, in- cluding Moultrie and Guymon, be closed, with Esmark paying all closing costs, and that the re- maining units of the division should become a sepa- rate independent company known as SIPCO, which Esmark would sell. Thereafter, Copeland, who later became SIPCO's president, headed the effort to implement this decision, including the cre- ation of the departments necessary for SIPCO's in- dependent functioning and the selection of SIPCO's staff. Copeland appointed the individuals to sit on the board of directors, including two indi- viduals suggested by Esmark's president, Kelly. By letter of June 30, 1980, Swift's vice president of personnel, James Farren, wrote to union official Anderson formally announcing that the Moultrie and Guymon plants would be closed on December 28, 1980, and offering to meet to discuss the effects of the closings. In August 1980, Copeland and Farren met with Anderson. At that meeting, Cope- land indicated that the plants at Guymon and Moultrie were good, modern plants that would fit in well with the new company but for their uncom- petitive labor costs. Copeland asked Anderson about the possibility of getting relief from the master agreement at these plants. Anderson re- sponded that the Union did not make midterm 4 The stock sold was that of SIC, a holding company for the fresh meats operation that Esmark incorporated in January 1981 Accordingly, Esmark's 35-percent ownership of SIPCO and New Sipco is by virtue of its ownership of SIC stock. These matters are discussed in greater detail in the judge's decision changes in the master agreement. Copeland indicat- ed that, despite his wish to keep these two plants open, he would not do so if he had to pay master agreement rates . Anderson reiterated that there could be no reduction in benefits and that the master agreement would have to stand. Later in August, Copeland and Richard Knight, then a vice president of Swift and subsequently ap- pointed by Copeland to be SIPCO's vice president in charge of beef, lamb, and labor, met with An- derson in Anderson's office. At that meeting, Co- peland told Anderson that potential buyers would find the new company a more attractive purchase if the Moultrie and Guymon plants were operating. He further indicated, however, that these plants would have to be closed absent some relief from the uncompetitive labor costs set out in the master agreement. Copeland said that SIPCO would con- tinue to apply the master agreement at any plants where it was competitive. Anderson indicated that he could not see how any changes could be made in the master agreement. Copeland, Knight, and Anderson met again on September 10 to discuss, inter alia, the efforts being made to sell SIPCO and the status of certain plants, including Moultrie and Guymon. 5 Copeland and Knight again asked Anderson if he could change the master agreement at these plants to make them more competitive. Anderson again indi- cated that he could not do so. Copeland testified that he told Anderson that our plan was to let Esmark go ahead with the closing of these plants in line with the master agreement terms and then after the company was sold to interests other than Esmark, we would reopen those plants, recognizing that the union still had bargaining rights, but would insist on a competitive labor rates [sic] in the new contract. The parties discussed wage rates for various plants. Anderson questioned the legality of Esmark's plans concerning SIPCO. No agreement was reached. At a September 18, 1980 meeting of Anderson, Knight, and SIPCO Counsel Bruce Thompson, the parties again discussed the planned closing of S At this time the formal steps necessary to separate the fresh meats division were proceeding Thus, on September 3, 1980, Swift set up a subsidiary called Transitory Food Processors, Inc. (Transitory) and on October 21 transferred Swift's assets, except for the fresh meats division, to it. Transitory's name was then changed to Swift & Co On October 24, the name of the remaining original Swift & Co was changed to SIPCO At this time, various tangible and intangible assets, including property, trademarks, notes, etc., were divided between the two entities In essence, everything related to the fresh meats operation went to SIPCO, while ev- erything else went to Swift On October 27, SIPCO declared a dividend of all of (new) Swift & Co stock to Esmark SWIFT INDEPENDENT CORP. Moultrie and Guymon by Esmark and their subse- quent reopening by SIPCO. Anderson reiterated that the Union would not agree to any midterm modification of the master agreement. He added that he would not "stir the pot" concerning the planned closing and reopening of these plants if the plans were legal, but he added that he doubted their legality. Knight reiterated that Moultrie and Guymon would be operated under competitive local agreements when they were reopened. In October 1980, Knight kept in touch with An- derson by telephone, advising him of the progress made toward the splitting off of SIPCO from Swift and Esmark. He also told Anderson that he under- stood that Moultrie and Guymon would be closed on December 28 and reopened on January 10 or 15, 1981. Anderson responded that as long as it was legal they could go ahead. Knight and Anderson met again on November 5, 1980, and Knight again advised Anderson that SIPCO was to be independent and would not apply the master agreement at Moultrie and Guymon. Anderson again refused to make any con- cessions, advising Knight that he felt the plan was unlawful. Knight told Anderson that the incorpora- tion papers had been filed and a brokerage firm en- gaged to handle the public sale of stock, but that the sale of the Company probably could not be fi- nalized until February 1981. Knight indicated that all plants then currently under the master agree- ment would continue to operate as before except for Guymon and Moultrie. Knight reiterated that he intended to close these plants and to have SIPCO reopen them after 2 weeks, at which time SIPCO would negotiate a more competitive local contract. Knight inquired whether, in view of the delay in selling the Company, it would be possible to reopen the plants before the actual sales date or to delay the closing. Anderson stated again that the master agreement could not be altered and that if the procedure that Knight had suggested was not legal he would not go along with it. Anderson later advised that a delay in closing would require a second closing notice and a 6-month extension of operations. By letter of December 11, 1980, Knight indicat- ed to Anderson that SIPCO had become a separate corporate entity on October 27, 1980, and that the terms and conditions of the master agreement would remain in effect at certain named plants.6 The letter further indicated that SIPCO has begun the process of becoming a publicly owned corporation. Upon completion of this procedure [SIPCO] will be truly independent SIPCO at this time was a wholly owned subsidiary of Esmark 425 of Esmark . . . . There should be little doubt in the minds of [the Union] that the process of making Swift Independent Packing Company a publicly held corporation completely sepa- rate from Esmark had begun, and that it will be completed early in the spring of 1981 .. . . As part of the creation of [SIPCO] Esmark an- nounced the closing of . . . meat packing plants located at Guymon, Oklahoma and Moultrie, Georgia. These two plants will be closed on December 28, 1980, and all closing benefits provided under the labor agreement will be paid to eligible employees by Esmark. The Guymon and Moultrie facilities will be owned by [SIPCO] and it is intended that these plants will be opened in early 1981 as non-Master Agreement units and it is intended that the [Union] will be recognized as the bar- gaining agent . . . . The Company will assure the Union that, if the process of becoming a publicly held independent corporation is not completed within a reasonable length of time after the opening of the Guymon and Moultrie facilities, the Company will recognize retroac- tively the terms and conditions previously pro- vided to the employees at these locations under the [master agreement].? On December 17, 1980, Knight and Anderson, along with their respective attorneys, Thompson and Gacek, met again. Knight tried to get Ander- son and Gacek to agree to the reopening of Moul- trie and Guymon before the completion of the public stock sale, then rescheduled for March, but ultimately not occurring until April 1981. In es- sence, Knight and Thompson did not wish to keep two plants closed for an extensive period dating from December 28, the then-scheduled date of the closings, through the completion of the public of- fering. Knight reiterated that the Company would retroactively apply the provisions of the master agreement to employees if the public stock sale was not completed within a reasonable period after the opening. Anderson responded that he felt the Company's plan was illegal, that SIPCO would not be independent of Swift and Esmark, and that the Union would not go along with it. Gacek added that if Moultrie and Guymon were opened before the sale of stock, it would be an alter ego situation and the openings would have to be under the master agreement. Thompson indicated that an- other corporation was being set up to protect against any legal problems concerning Moultrie 7 As noted earlier, supra at fn 3, Esmark actually retained a 35-percent ownership interest in the holding company, SIC, of which SIPCO was, along with New Sipco, a wholly owned subsidiary 426 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD and Guymon. Anderson and Gacek responded that the Companies could change their names all they wanted but that they were still the same and the master agreement should apply. Thereafter, Knight advised Anderson in a letter of December 22 that "[i]t is our present intention to close the Moultrie and Guymon plants on or about March 7, 1981, or just prior to [SIPCO] be- coming a publicly held corporation." Ultimately, the plants did not close until April 17, about a week before the public stock offering on April 22, 1981. In the meantime, Anderson and Knight met again on February 13, 1981, and Knight again re- quested relief from the master agreement at Moul- trie and Guymon. Anderson again refused. There- after, on February 24, 1981, an entity named New Sipco was incorporated. Thompson testified that the incorporation of New Sipco followed a discus- sion he had had with SIPCO' s general counsel, Tom McKay, wherein McKay had suggested the creation of a separate subsidiary, New Sipco, to open and operate the plants at Moultrie and Guymon so that employees would clearly distin- guish between the employer that would terminate their employment and the one that would reopen these facilities. As noted, the plants closed on April 17, 1981. Esmark paid employees the closing benefits speci- fied in the provisions of the master agreement. The stock offering of April 22, 1981, consisted of the sale of SIC stock, the holding company that Esmark had incorporated in January 1981. The prospectus accompanying the sale indicated that the principal assets of SIC consisted of all the stock of SIPCO. The prospectus also indicated in rele- vant part that: SIPCO is the successor to and owns and oper- ates . . . what was formerly . . . the Fresh Meats Division of the original Swift & Co. ... SIPCO's Guymon, Oklahoma and Moul- trie, Georgia plants are in the opinion of man- agement, efficient facilities capable of success- ful and competitive operations. However, labor costs at these plants under the Master Agreement . . . with the [Union] were signifi- cantly higher than those prevailing at many plants in their respective areas. A new subsidi- ary of the Company intends to open Guymon and Moultrie shortly after completion of this offering with the objective of achieving com- petitive labor costs at these facilities. On April 8, 1981 [the Union] advised the Company that it . . . would contest any attempt to operate these plants under labor terms other than those of the [master agreement]. In the opinion of management, the aforementioned steps taken or being taken by Esmark, coupled with the anticipated reduction of labor costs at the Des Moines plant and the possible reduction of such costs at the Guymon and Moultrie plants will add further strength to SIPCO's ability to compete effectively and profitably in the fresh meats industry. There is no assurance that any reduction in labor costs will be achieved at the Guymon or Moultrie plants. As alluded to in the prospectus, Anderson had written to Knight on April 8, 1981, as follows: You have openly announced that the Compa- ny intends to go through the purported closing of these two plants, and then immediately to reopen them and continue operations at the plants. You have made clear it is your inten- tion, upon such "reopening" to treat the plants as if they are no longer covered by the Master Agreement which now clearly covers them. I want to make sure that there is no possibility of misunderstanding and accordingly I repeat to you that it is the Union's position that, re- gardless of the name of the particular corpora- tion which you may choose as the entity under which the "reopening" is accomplished, this entire body of maneuvers is simply a charade intended to attempt to rid yourself of your col- lective bargaining and contract obligations and to enable you to attempt to accomplish a re- duction in employee benefits and an evasion of contract obligations at these plants. We again want to be sure that you clearly understand that it is the Union's position that if those plants are reopened after your announced "closing," employees presently in those plants are entitled to . . . their employment in those plants and it is the Union's position that the Master Agreement will continue to apply to those plants. In his letter of April 21, 1981, in response, Knight advised Anderson that the law provides that new owners can establish initial terms and conditions of employment as well as hire a work force of their own choosing. Knight added that "once the new ownership is in place and has had an opportunity to review its intentions and make a determination with respect to this subject, I am certain that it will be in touch with you." Thereafter, on April 30, 1981, Knight wrote two letters to Anderson advising that the public offer- ing of SIC stock had been completed, that SIC had purchased the assets of SIPCO, and that SIC's wholly owned subsidiary, New Sipco, now owned the Moultrie and Guymon facilities. One of these SWIFT INDEPENDENT CORP. 427 letters, on New Sipco stationery, further indicated that "the ownership, through their Boards of Di- rectors," had decided to open the Moultrie and Guymon facilities on May 5, 1981, with terms and conditions of employment that were still under consideration and that applications from former SIPCO employees would be considered. The second letter, on SIPCO stationery, indicated that the "ownership, through their Boards of Direc- tors," had decided to retain their current work force, and, as a successor employer, had decided to adopt the master agreement at the listed SIPCO fa- cilities. Most of the employees formerly employed at the Moultrie and Guymon plants, including plant man- agers and salaried employees, as well as unit em- ployees, were rehired as employees of New Sipco. The terms and conditions of employment of Moul- trie were set by Knight in consultation with local management. The terms and conditions of employ- ment at Guymon, however, were those set out in a new local collective-bargaining agreement negotiat- ed with Local 340 of the Union." Guymon was re- opened on May 14, 1981, and Moultrie was re- opened on May-4, 1981. Subsequently, in August 1981, SIPCO's Tampa sales unit facility was closed. The Tampa employ- ees, who were covered by the master agreement, were permitted to transfer to SIPCO facilities also operating under the master agreement but were not permitted to transfer to Moultrie, Guymon, or any Swift & Co. facilities. The provisions of the master agreement permitted transfer to any plant under the master agreement whenever a plant closed. Following the public sale, the SIPCO and New Sipco facilities have continued the fresh meats op- erations and have annual sales of around $1.6 bil- lion. Customers and suppliers have remained essen- tially the same. As noted, their personnel and offi- cers have also remained essentially the same. Al- though most of the officers that Copeland chose for SIC, SIPCO, and New Sipco had previously been employed by Swift, there has been no ex- change of personnel since April 1981. Also since April 1981 no one from SIC, SIPCO, or New Sipco has reported to anyone from Esmark. Of SIPCO's nine-member board of directors, only one, Roger Briggs, still held a position with Esmark or Swift after the sale of SIC stock. Except for Esmark's 35-percent ownership inter- est, its previously existing connections with SIPCO 8 We agree with the judge's fording, to which no exceptions were filed, that Respondents SIC, SIPCO, and New Sipco violated Sec. 8(a)(5) and (1) by recognizing, bargaining with , and executing a collective-bar- gaining agreement with this local union rather than with the Union, which is the sole and exclusive collective-bargaining representative of the Guymon unit employees. and New Sipco have apparently been discontinued. In this regard, Esmark no longer plays any role in the health care or pension plans, insurance, adver- tising, day-to-day operations, or labor relations of SIPCO and New Sipco. No employees of SIC, SIPCO, or New Sipco participate in Esmark's stock option, incentive, or growth plans. SIPCO and New Sipco do, however, continue to have some business transactions with Swift. Swift does make some purchases from SIPCO and vice versa; they also have entered into a copacking ar- rangement in San Antonio, Texas. These transac- tions, however, appear to be conducted at arm's length. Some SIPCO sales units do sell Swift prod- ucts, but they also sell those of competitors. SIPCO continues to rent office space from Swift at a reasonable rate made possible by Swift's favor- able long-term lease. Based on the above, the General Counsel alleged that each of the Respondent corporations violated Section 8(a)(3) by closing the plants and terminat- ing employees at Moultrie and Guymon, and vio- lated Section 8(a)(5) by repudiating the master agreement at Moultrie and Guymon and refusing to afford employees of the Tampa facility the full range of transfer rights set out in the master agree- ment. The judge dismissed these allegations. With respect to the 8(a)(3) allegations, the judge concluded that Respondent Esmark had closed the Moultrie and Guymon plants as part of its lawful and economically motivated plan to divest itself of the fresh meats holdings. With respect to the 8(a)(5) allegations, he concluded that Respondents SIC, SIPCO, and New Sipco were free to set new terms and conditions of employment on the reopen- ing of the Moultrie and Guymon plants after the public stock sale because these Respondents were then in the posture of successor employers within the meaning of NLRB v. Burns Security Services, 406 U.S. 272 (1972), and thus were not obligated to adhere to the master agreement. The judge thus re- jected the General Counsel's contention that SIC/SIPCO/New Sipco were alter egos/single in- tegrated enterprises/joint employers with Esmark and Swift. The judge noted that SIC/SIPCO/New Sipco were newly incorporated entities which, fol- lowing the stock sale, were owned by a new set of owners totally independent of the previous owners. The judge further concluded that neither Esmark nor Swift had played any part in the decisions to reopen the Moultrie and Guymon plants and to refuse to apply the master agreement . Accordingly, he concluded that neither Swift nor Esmark had violated Section 8(a)(5) by the failure to apply the master agreement at these facilities. Finally, the judge dismissed the allegation regarding the refusal 428 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD to transfer the Tampa employees to Swift & Co. or New Sipco facilities inasmuch as he found Swift to be a completely separate entity and that New Sipco legitimately refused to honor the master agreement. The General Counsel and the Union have ex- cepted to these findings, and we find merit in these exceptions. In so doing, we initially fmd that Re- spondents Esmark, SIC, SIPCO, and New Sipco violated Section 8(a)(5) by failing to apply the pro- visions of the master agreement at the Moultrie and Guymon plants on their reopening in May 1981, shortly after the April stock sale. We reject the judge's reasoning that the April 1981 stock sale brought about a change of employers and, conse- quently, freed Esmark, SIC, SIPCO, and New Sipco from the obligations of the master agreement under which the plants had operated prior to the stock sale. In disagreeing with the judge, we set out the following observations from EPE, Inc., 284 NLRB 191, 198 (1987): The principal thrust of the Respondent's argu- ment . . . is that the liabilities and responsibil- ities of that corporate entity ceased to exist once the controlling shares therein were ac- quired by another shareholder or group of shareholders and the new shareholder set about making and executing plans for an en- largement or improvement of the business. This rule, if consistently followed, would mean that every day's transactions on every major stock exchange and every purchase or sale of a corporate subsidiary would carry with it the potential for total disruption of the labor rela- tions of the business being bought or sold. It is a rule which is at a marked variance with most Board and court holdings, and it flies squarely in the face of traditional corporation law as it has developed in this country over many years because it is irreconcilable with the fundamen- tal rule of corporation law that the corpora- tion and its shareholders are separate and dis- tinct entities. In those rare instances in which the corporate veil is pierced, it is done for the benefit and protection of a third party or outsider, not at the instance and behest of the shareholders or corporate officers, as is the Respondent's im- plied request herein. Western Boot & Shoe, 205 NLRB 999, 1005. Applying these principles to the facts of the present case, we find that the April 1981 stock sale to the public did not achieve any substantive changes in the SIPCO/New Sipco corporate enti- ties such that they were privileged to repudiate the master agreement in effect at the fresh meats plants. We note that the corporate restructuring of the fresh meats operation from a division of Swift to a new corporation, SIPCO, was essentially achieved by October 1980, some 6 months prior to the stock sale. In the ensuing 6 months the SIPCO/New Sipco management operated the fresh meats business under the SIPCO corporate banner and under Esmark ownership. During this period the SIPCO/New Sipco management applied the provisions of the master agreement to its employ- ees and thereby adopted that agreement. The April 1981 sale of stock did not substantively change the fresh meats operation in any respect. Instead, the April stock sale merely accomplished the transfer of stock from Esmark to an essentially different set of shareholders.9 In all other respects the fresh meats operation after the stock sale continued in fundamentally the same fashion as it had before under the same corporate banner, SIPCO, which had been operating the fresh meats business for some 6 months under Esmark stock ownership. Thus, following the sale, SIPCO/New Sipco con- tinued to process and sell fresh meats and related products at the same locations with the same equip- ment and with essentially the same personnel as it had before. Its management remained the same as that selected by John Copeland in line with his di- rection from Esmark's president, Kelly.I0 Accord- ingly, Esmark's sale of stock in April 1981 accom- plished a mere transfer of stock ownership, which did not substantively change the fresh meats oper- ation and did not absolve SIC/SIPCO/New Sipco from their obligation to adhere to the provisions of the master agreement. See Western Boot & Shoe, 205 NLRB 999 (1973); Phil Wall & Sons Distribut- ing, 287 NLRB 1161 (1988). We therefore conclude that Respondents Esmark, SIC, SIPCO, and New Sipco have violated Section 8(a)(5) and (1) by fail- ing to apply the terms and conditions of the 1979- 1982 master agreement to unit employees at the Moultrie and Guymon plants following their re- opening. I i 9 Esmark did retain a 35-percent ownership interest in the SIPCO group. 1° We further note that except for the brief closure of the Moultrie and Guymon plants, which we find to be, in effect, a sham, there was no hiatus in the fresh meats operation. 11 To the extent that the Respondents may contend that the reorgani- zation, rather than the stock sale, effectuated a substantive change such that the reorganized entities, the SIPCO group, constituted a successor, as set forth above, the SIPCO group adopted and applied the master agreement during the 6 months of operation prior to the stock sale The SIPCO group thus became bound to the agreement, for as the Supreme Court noted in NLRB v. Burns Security Services, 406 U.S. 272, 291 (1972)• [l]n a variety of circumstances involving a merger, stock acquisi- tion, reorganization, or assets purchase, the Board might properly Continued SWIFT INDEPENDENT CORP. In this regard, we find Respondent Esmark to be liable because the actual repudiation of the master agreement was, as discussed below with respect to the 8(a)(3) allegation, the fulfillment of an unlawful plan, in which Esmark was an active participant, to close and then reopen these plants for the purpose of evading the application of the master agreement. As noted, infra, Esmark's direct participation in this unlawful conduct at pertinent times forecloses Esmark from evading liability under the criteria set out in Gerace Construction, 193 NLRB 645 (1971), and McEwen Mfg. Co., 172 NLRB 990 (1968).12 Because the evidence does not establish that Re- spondent Swift participated in this conduct, we shall dismiss this allegation with respect to Re- spondent Swift. We further find that Respondent SIPCO violated Section 8(a)(5) and (1) by failing to provide the unit employees at its Tampa, Florida facility the full range of transfer opportunities set forth in the master agreement.13 As the record does not estab- lish that any of the remaining Respondents played any direct role in this conduct, we shall dismiss this allegation with respect to the remaining Respond- ents. We additionally conclude that Respondents Esmark, SIC, SIPCO, and New Sipco violated Section 8(a)(3) and (1) by closing the Moultrie and Guymon plants. In this regard, we note that the fmd as a matter of fact that the successor had assumed the obliga- tions under the old contract See, e.g , JR R. Realty Co., 273 NLRB 1523 (1985), enfd 785 F 2d 46 (2d Cir 1986), cert. denied sub nom . Babab v. NLRB, 123 LRRM 2592 (1986) We agree with the judge's conclusion that this finding of a violation is not barred by the 6-month limitation proviso to Sec 10(b) Thus, we agree that the 6-month period began to run at the closing of the plants in April 1981 and not in June 1980 when the closings were announced in Farren's letter We note that the actionable violation alleged was the actual closures of the plants, not the announcement of the closures We also note that Farren's June 1980 letter announced that the closings would take place in December 1980, yet they did not actually occur until some months later in April 1981 . Evidently, at the time of Farren's letter, the plans for the plants were inchoate and imprecise and both the timing and circumstances of the closings assertedly contemplated were unclear This was borne out, as set forth earlier in this decision , by the subsequent and various changes in the Respondents' plans In these circumstances we agree that the 10(b) period began to run as of the date of the actual clo- sures Bay Medical Center, 252 NLRB 1138 (1980) See also Teamsters Local 42 v NLRB, 825 F.2d 608, 615 (1st Cir 1987). 12 Gerace presented the question of whether two separate legal entities operated as a single employing enterprise and thus constituted a single employer under the Act McEwen presented the question of whether one entity operated as a joint employer with another separate legal entity. As we have found that Esmark was a principal actor in the unlawful clo- sures, its liability for this conduct does not require any finding that it was a single/joint employer within the SIPCO group See In 17, infra is We agree with the judge's conclusion that Sec 10(b) does not pre- clude the finding of this violation In this regard , we disagree with the Respondents' contention that the "transfer opportunity sheets" given the Union in July 1980 were sufficient to constitute notice of the Respond- ents' intent to limit employee transfer rights upon the closure of the Tampa facility in August 1981 American Olean Tile Co, 265 NLRB 1625 (1982), enf denied on other grounds 826 F 2d 1496 (6th Cir 1987) See also Teamsters Local 42 v NLRB, supra. 429 Supreme Court in NLRB v. Great Dane Trailers, 388 U.S. 26, 34 (1967), set forth the following mode of analysis: First, if it can reasonably be concluded that the employer's discriminatory conduct was "inherently destructive" of important employ- ee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on em- ployee rights is "comparatively slight," an an- tiunion motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct. Thus, in either situation, once it has been proved that the employer engaged in discriminatory con- duct which could have adversely affected em- ployee rights to some extent, the burden is upon the employer to establish that he was motivated by legitimate objectives since proof of motivation is most accessible to him. Thus, the Supreme Court has found that while nor- mally an affirmative showing of unlawful motiva- tion must be found, an exception may be made where the allegedly unlawful conduct is inherently destructive of employee rights. Such conduct car- ries with it "`unavoidable consequences which the employer not only foresaw but which it must have intended' and thus bears `its own indicia of intent."' Great Dane Trailers, supra at 33. See also Metropoli- tan Edison Co. v. NLRB, 460 U.S. 698 (1983). In- herently destructive conduct has been found to be of the sort which would inevitably hinder future bargaining or create visible and continuing obsta- cles to the future exercise of employee rights. Cf. Inter-Collegiate Press v. NLRB, 486 F.2d 837 (8th Cir. 1973); Portland Willamette Co. v. NLRB, 534 F.2d 1331 (9th Cir. 1976); and NLRB v. Transporta- tion Consultants, 607 F.2d 290 (9th Cir. 1979). We conclude that the Respondents' conduct here, which culminated in the termination of em- ployees for the purpose of evading obligations under a collective-bargaining agreement, was inher- ently destructive of Section 7 rights. See Los Ange- les Marine Hardware Co. v. NLRB, 602 F.2d 1302 (9th Cir. 1979), enfg. 235 NLRB 720 (1978).14 In 14 In Milwaukee Spring Division , 268 NLRB 601, 604 (1984), a Board majority overruled that portion of Los Angeles Marine which held that the employers' transfer of work from one location to another was viola- tive of Secs 8(a)(5) and 8(d) The Board did not, however, overrule that portion of Los Angeles Marine pertaining to the 8(a)(3) violation found 430 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD the present case, the record clearly establishes that Moultrie and Guymon were closed for the purpose of evading the application of the master agreement at these two plants. This purpose is evident from the very outset of Esmark's reorganization of the fresh meats and processed meats divisions of the old Swift & Co. Indeed, we note that, from Cope- land's first meeting with Anderson on this topic in August 1980, he made it quite clear to the Union that these two plants would be closed if the Union would not capitulate to a midterm modification in the master agreement. This theme was reiterated repeatedly throughout the numerous meetings that followed between Knight and Anderson wherein relief from the master agreement was sought. In finding that the closure of these two plants was merely a part of a lawful economic plan to sell the fresh meats business, the judge failed to appre- ciate the significance of the substantial evidence es- tablishing that the closures were intended from the outset to escape the terms of the master agreement. Indeed, the record shows the "closures" them- selves were not genuine closures, but were merely maneuvers designed to achieve indirectly what the Respondents could not directly obtain from the Union.' 5 Thus, we note that the "closures" were effectuated with the preconceived intent to reopen the plants shortly thereafter under new terms and conditions of employment at variance from those in the master agreement. This intent is evident in the numerous meetings detailed above that took place prior to the closures and is documented in Knight's December 11, 1980 letter to Anderson indicating that "[t]hese two plants will be closed . . . and it is intended that these plants will be opened in early 1981 as non-Master Agreement units." We also note particularly the representations made in the prospectus accompanying the stock sale that "[a] new subsidiary of the Company intends to open Guymon and Moultrie shortly after completion of this offering with the objective of achieving com- petitive labor costs at these facilities." Thus, the Respondents openly and repeatedly professed their intent should the Union not consent to abrogate the agreed-upon contract.' 6 Particularly in this con- text, the closing of the plants, the termination of the employees, and, as Knight himself testified, the rehiring of those employees "as new employees of the corporation" under new terms and conditions 15 As the record establishes that the closings were a sham, we note that the analysis pertaining to genuine plant closures set out in Textile Workers v. Darlington Mfg, 380 U S 263 (1965), is mapplicable to the 8(a)(3) allegations in the present case is Pursuant to Sec 8(d), the Union was under no obligation to consent to the modification or abrogation of the contract See also Oak Cliff- Golman Baking Co, 207 NLRB 1063 (1973), enfd 505 F.2d 1302 (5th Cir 1974), cert denied 423 U S 826 (1975). of employment must be considered conduct that would naturally hinder collective bargaining and as conduct inherently destructive of employee rights. Accordingly, we find that Respondents Esmark, SIC, SIPCO, and New Sipco, in concert, by caus- ing the termination of the Moultrie and Guymon unit employees, have engaged in conduct inherent- ly destructive of employees' Section 7 rights.'' Having found that Respondents Esmark, SIC, SIPCO, and New Sipco have engaged in conduct inherently destructive of employees' Section 7 rights, the burden has shifted to them, under Great Dane, to establish legitimate objectives for this con- duct.18 Respondents SIC, SIPCO, and New Sipco 17 We note additionally that in NLRB v. City Disposal Systems, 465 U S. 822, 831-832 (1984), the Supreme Court stated: The invocation of a right rooted in a collective-bargaining agree- ment is unquestionably an integral part of the process that gave rise to the agreement. That process-beginning with the organization of a union, continuing into the negotiation of a collective-bargaining agreement, and extending through the enforcement of the agree- ment-is a single, collective activity Thus it is evident that conduct deemed discriminatory within the meaning of Sec 8(aX3), which is intended to deprive employees of bar- gained for contractual rights and benefits, may be analogous to discrimi- natory conduct designed to deprive them of a bargaining representative in the first instance. Accordingly, based on our findings with respect to the Respondents' conduct, we find that actual unlawful motive on their part can be found. 58 We reject the contention of Respondents SIC/SIPCO/New Sipco that they are not liable for the closing of the Moultrie and Guymon plants because the decision to close was made solely by Esmark prior to their existence. The record clearly shows that these Respondents acted in concert with Esmark in closing these facilities. In this regard , we note that it was Respondent SIPCO's vice president, Knight, who played the major role in negotiating with the Union over the effects of the closure and in attempting to persuade Anderson to forgo application of the master agreement at these two plants We further note SIPCO's active participation in the closure and planned reopening of the plants as evi- denced in Knight's December 22, 1980 letter to Anderson on SIPCO sta- tionery in his capacity as vice president, which indicates that "It is our present intention to close the Moultrie and Guymon plants on or about March 7, 1981, or just prior to [SIPCO] becoming a publicly held corpo- ration " Finally, we note that the record shows that the filing for the in- corporation of Respondent New Sipco was accomplished by SIPCO's at- torney, Thompson, at the suggestion of SIPCO'S general counsel, McKay, and we find that this step was taken as a further part of the scheme to close and reopen the Guymon and Moultrie plants to evade the obligations of the master agreement We similarly reject the contention of Respondent Esmark that it is not liable for closing of these plants on the grounds that the decision to close was made in June 1980 solely by Respondent SIPCO, through John Co- peland, and that Esmark, as a mere parent corporation, did not partici- pate in nor have any control over the labor relations decisions of its (then) wholly owned subsidiary In rejecting this contention , we note that the record convincingly establishes that Esmark was a principal actor in the closures. We first note that at the time the decision was made to close these plants in June 1980 Copeland was reporting directly to Esmark's president, Donald Kelly. Copeland's plans for reorganizing the former fresh meats operations and for closing Moultrie and Guymon were made at the direction of and in consultation with Kelly Esmark admits that its board of directors approved the decision to close the plants. Moreover, the record also shows that Esmark paid the resulting closing costs and assumed the unfunded pension liability resulting from the closings. In these circumstances, we find unavailing Esmark's reliance on Gerace Con- struction, 193 NLRB 645 (1971), and McEwen Mfg. Co, 172 NLRB 990 (1968), as support for its proposition that it did not participate in or have any control over the labor relations decisions of SIPCO As Esmark was a principal actor in the unlawful plant closures, its liability for these Continued SWIFT INDEPENDENT CORP. 431 contend, in pertinent part, that Moultrie and Guymon were closed to make the fresh meats op- eration more attractive to prospective purchasers and to enhance Esmark's ability to sell it. Respond- ent Esmark contends, in pertinent part, that the plants were closed because Copeland and Knight had decided that these plants would not fit into the new corporation (SIPCO) and because Swift, no longer in the fresh meats business, had no use for them. We fmd these contentions to be implausible, in- consistent with the record, and insufficient to meet the burden of establishing "legitimate objectives" for the conduct in question. Moreover, even assum- ing that the Respondents' conduct was not "inher- ently destructive" but had only a comparatively slight adverse effect on employee Section 7 rights, within the meaning of Great Dane, we would fur- ther reject the Respondents' contentions on the basis that they do not establish adequate business justification for the discriminatory conduct. In this regard, we note first that insofar as the destiny of Moultrie and Guymon was to be used to attract potential purchasers, the record shows that it was their planned reopening, not their closure, that was pointed out to potential purchasers in the prospectus prepared for the stock sale. Moreover, the record shows that the plants were closed not because Copeland or Knight felt them to be unsuit- able for inclusion in the new corporation, but be- cause the Union would not agree to a midterm modification of the master agreement in effect at these two plants. We note that in an August 1980 meeting with Anderson, Copeland advised Ander- son that these two plants would fit in well with the new company but that he would not keep them open if he had to pay master agreement rates. A desire to escape collective-bargaining obligations, though economically motivated, is not a legitimate justification in this context. See Los Angeles Marine, supra, 235 NLRB at 735-736, and Dahl Fish Co., 279 NLRB 1084 (1986), enfd. mem. 813 F.2d 1254 (D.C. Cir. 1987). The record establishes that such a desire was the Respondents' sole motivation for their action. Accordingly, we find that Respond- ents Esmark, SIC, SIPCO, and New Sipco have failed to establish legitimate objectives for their conduct and we conclude that they have violated Section 8(a)(3) and (1) by closing the plants in Moultrie and Guymon and terminating the employ- ees for the purpose of evading the obligations under the 1979-1982 master agreement with the unfair labor practices does not require any fording that it had the status of alter ego/single employer, etc ., with the SIPCO group . See fn. 12, supra. Union.19 Because the record does not show that Respondent Swift participated in this conduct, we shall dismiss this allegation with respect to Re- spondent Swift. ORDER The National Labor Relations Board orders that A. The Respondents, Esmark, Inc.; Swift Inde- pendent Corp.; Swift Independent Packing Co.; and New Sipco, Inc., Chicago, Illinois, their offi- cers, agents, successors, and assigns, shall 1. Cease and desist from (a) Closing facilities in Guymon, Oklahoma, and Moultrie, Georgia, and terminating employees at those facilities for the purpose of evading obliga- tions under the 1979-1982 master collective-bar- gaining agreement with United Food and Commer- cial Workers International Union, AFL-CIO. (b) Failing to apply the terms and conditions of the 1979-1982 master collective-bargaining agree- ment to unit employees employed in the Guymon, Oklahoma, and Moultrie, Georgia plants without the express written consent of United Food and Commercial Workers International Union, AFL- CIO. (c) Recognizing and bargaining with and execut- ing a contract or authorizing the same with Local Union 340, United Food and Commercial Workers International Union (AFL-CIO-CLC) as the ex- clusive collective-bargaining representative of the unit employees at the Guymon, Oklahoma plant unless requested to do so by United Food and Commercial Workers International Union, AFL- CIO. (d) Giving effect to the collective-bargaining agreement with Local 340, United Food and Com- mercial Workers International Union (AFL-CIO- CLC) executed on May 6, 1981, or to any exten- sion, renewal, or modification thereof; provided, however, that nothing in this Decision and Order shall be construed as requiring the Respondents to revoke any increase in wages or benefits or other substantive terms and conditions of employment that the Respondents have established in the per- formance of this agreement, or to prejudice the em- 19 For the reasons set forth supra at In. 11, we agree with the judge that this finding is not barred by the 6-month limitations proviso to Sec. lOChairman Stephens agrees with his colleagues that Respondents Esmark, SIC, SIPCO, and New Sipco closed the Moultrie and Guymon plants and terminated the plant employees for the purpose of reopening the plants in a guise that would allow continued operation free of the terms of the still unexpired collective-bargaining agreement. Because of this fording concerning the motive of the Respondents, Chairman Ste- phens finds it unnecessary to analyze the case under the Great Dane test employed in the absence of "proof of an underlying improper motive." NLRB v. Great Dane Trailers, supra, 388 U.S. at 33. 432 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ployees' assertion of their rights under the agree- ment. (e) 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) Offer employees of the Guymon, Oklahoma, and Moultrie, Georgia plants immediate and full re- instatement to their former jobs or, if those jobs no longer exist, to substantially equivalent positions, without prejudice to their seniority or any other rights or privileges previously enjoyed, and make them whole for any loss of earnings and other ben- efits suffered as a result of the discrimination against them as prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), with interest as computed in New Horizons for the Retarded.20 (b) On request, apply the provisions of the 1979- 1982 master collective-bargaining agreement with United Food and Commercial Workers Internation- al Union, AFL-CIO to employees in each of the following appropriate units: All production and maintenance employees employed at the Moultrie, Ga. plant, but ex- cluding production incentive department em- ployees, time office employees, superintend- ent's office employees, canteen manager, curing department scaler, watchmen, general foremen, foremen, assistant foremen, the super- intendent, division superintendents, and all su- pervisors as defined in the Act. All production and maintenance employees in- cluding truckdrivers employed at the Guymon, Oklahoma plant, but excluding the plant man- ager, plant superintendent, plant auditor, chief clerk, department managers, salesmen, service truck salesmen, office clerical employees, plant clerical employees, quality assurance employ- ees, livestock buyers, livestock buyer trainees, livestock clerical employees, livestock scalers, livestock yardmen and handlers, medical de- partment employees, professional employees, protection employees, and all supervisory em- ployees as defined in the Act. 20 In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 (1987), interest on and after January 1 , 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 January 1, 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) In requiring that employees be made whole, interim earnings will be deducted from lost wages. In the circumstances of this case, the measure of interim earnings should include payments of closing benefits by Esmark pursuant to the terms of the master agreement. A. S. Abell Co, 230 NLRB 17, 21 (1977), affd 590 F 2d 554 (4th Cir 1979) (c) Make whole employees for any losses suf- fered by reason of the failure to apply the terms and conditions of the 1979-1982 master agreement to employees employed in each of the bargaining units noted above, with interest. Ogle Protection Service, 183 NLRB 682 (1970). (d) Withdraw and withhold all recognition from Local 340, United Food and Commercial Workers International Union (AFL-CIO-CLC) as the ex- clusive bargaining representative of their employ- ees for the purposes of collective bargaining at the Guymon, Oklahoma plant unless and until United Food and Commercial Workers International Union, AFL-CIO shall have requested the Re- spondents to recognize Local 340 as its agent for such purposes. (e) On request, bargain collectively with United Food and Commercial Workers International Union, AFL-CIO as the exclusive bargaining rep- resentative of the employees in the Guymon, Okla- homa unit and, if an understanding is reached, embody such understanding in a signed agreement. (f) 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 amount of backpay due under the terms of this Order. (g) Post at its plants located in Guymon, Oklaho- ma, and Moultrie, Georgia, copies of the attached notice marked "Appendix A."21 Copies of the notice, on forms provided by the Regional Direc- tor for Region 13, after being signed by the Re- spondents' authorized representative, shall be posted by the Respondents immediately upon re- ceipt and maintained for 60 consecutive days in conspicuous places including all places where no- tices to employees are customarily posted. Reason- able steps shall be taken by the Respondents to ensure that the notices are not altered, defaced, or covered by any other material. (h) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondents have taken to comply. B. The Respondent, Swift Independent Packing Co., Chicago, Illinois, its officers, agents, succes- sors, and assigns, shall 1. Cease and desist from (a) Failing to provide unit employees of the Tampa, Florida facility the full range of transfer 21 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 " SWIFT INDEPENDENT CORP. opportunities as required by the 1979-1982 master collective-bargaining agreement with United Food and Commercial Workers International Union, AFL-CIO. (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. (a) On request, implement the full range of trans- fer opportunities provided for in the 1979-1982 master collective-bargaining agreement with United Food and Commercial Workers International Union, AFL-CIO, for employees in the following appropriate unit: All production and maintenance employees, in- cluding truck drivers, engineers, maintenance men, electricians, conveyor operators, continu- ous frank machine operators , at the Processing Sales Unit, Tampa, Fla., excluding the manag- er, the superintendent, salesmen, sales promo- tion men, sales demonstrators, service truck salesmen, shippers, assistant shippers, foremen, assistant foremen, all office and all office-cleri- cal and plant clerical employees, guards, and all supervisors as defined in the Act. (b) Make whole all unit employees of the Tampa, Florida facility for any losses they may have suf- fered as a result of the Respondent's denial of the full range of transfer opportunities provided for in the 1979- 1982 master collective-bargaining agree- ment, as prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), with interest as computed in New Horizons for the Retarded.22 (c) 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 amount of backpay due under the terms of this Order. (d) Mail a copy of the attached notice marked "Appendix B"23 to the Union and to the last known address of each unit employee who was em- ployed at the Tampa, Florida facility on the date of its closing in August 1981. Copies of the notice, on forms provided by the Regional Director for Region 13, after being signed by the Respondent's authorized representative , shall be mailed by the Respondent immediately upon receipt as above di- rected. 22 See fn. 20, supra. 23 See fn. 21, supra. 433 (e) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. APPENDIX A NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice. WE WILL NOT close our facilities in Guymon, Oklahoma, and Moultrie, Georgia, and terminate employees at those facilities for the purpose of evading our obligations under the 1979-1982 master collective-bargaining agreement with United Food and Commercial Workers International Union, AFL-CIO. WE WILL NOT fail to apply the terms and condi- tions of the 1979-1982 master collective-bargaining agreement to unit employees employed in the Guymon, Oklahoma, and Moultrie, Georgia plants without the express written consent of United Food and Commercial Workers International Union, AFL-CIO. WE WILL NOT recognize and bargain with or execute a contract or authorize the same with Local 340, United Food and Commercial Workers International Union (AFL-CIO-CLC) as the ex- clusive collective-bargaining representative of the unit employees at our Guymon, Oklahoma plant unless requested to do so by United Food and Commercial Workers International Union, AFL- CIO. WE WILL NOT give effect to the collective-bar- gaining agreement with Local 340, United Food and Commercial Workers International Union (AFL-CIO-CLC) executed on May 6, 1981, or to any extension, renewal, or modification thereof; however, nothing in the Board's Decision and Order requires us to revoke any increases in wages or benefits or other substantive terms and condi- tions of employment that we have established in the performance of this agreement, or to prejudice the employees' assertion of their rights under the agreement. 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 offer employees of the Guymon, Okla- homa, and Moultrie, Georgia plants immediate and full reinstatement to their former jobs or, if those 434 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD jobs no longer exist, to substantially equivalent po- sitions, without prejudice to their seniority or any other rights or privileges previously enjoyed and WE WILL make them whole for any loss of earnings and other benefits resulting from the discrimination against them, less any net interim earnings, plus in- terest. WE WILL, on request, apply the provisions of the 1979-1982 master collective -bargaining agreement with United Food and Commercial Workers Inter- national Union, AFL-CIO to employees in each of the following bargaining units: All production and maintenance employees employed at the Moultrie, Ga. plant, but ex- cluding production incentive department em- ployees, time office employees, superintend- ent's office employees, canteen manager, curing department scaler, watchmen, general foremen, foremen, assistant foremen, the super- intendent, division superintendents , and all su- pervisors as defined in the Act. All production and maintenance employees in- cluding truckdrivers employed at the Guymon, Oklahoma plant, but excluding the plant man- ager, plant superintendent, plant auditor, chief clerk, department managers , salesmen, service truck salesmen, office clerical employees, plant clerical employees, quality assurance employ- ees, livestock buyers, livestock buyer trainees, livestock clerical employees, livestock scalers, livestock yardmen and handlers, medical de- partment employees , professional employees, protection employees, and all supervisory em- ployees as defined in the Act. WE WILL make whole employees for any losses suffered by reason of our failure to apply the terms and conditions of the 1979-1982 master agreement to employees employed in each of the bargaining units noted above, with interest. WE WILL withdraw and withhold all recognition from Local 340, United Food and Commercial Workers International Union (AFL-CIO-CLC) as the exclusive bargaining representative of our em- ployees at our Guymon, Oklahoma plant unless United Food and Commercial Workers Internation- al Union, AFL-CIO requests us to recognize Local 340 as its agent. WE WILL, on request, bargain collectively with United Food and Commercial Workers Internation- al Union, AFL-CIO, as the exclusive bargaining representative of the employees in the Guymon, Oklahoma unit and, if an understanding is reached, we will embody it in a signed agreement. ESMARK, INC. SWIFT INDEPENDENT CORP. SWIFT INDEPENDENT PACKING CO. NEW SIPCO, INC. APPENDIX B 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 fail to provide unit employees for- merly employed at our Tampa, Florida facility the full range of transfer opportunities as required by the 1979-1982 master collective-bargaining agree- ment with United Food and Commercial Workers International Union, AFL-CIO. 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, implement the full range of transfer opportunities provided for in the 1979- 1982 master collective-bargaining agreement with United Food and Commercial Workers Internation- al Union, AFL-CIO, for employees employed in the following appropriate unit: All production and maintenance employees, in- cluding truck drivers, engineers, maintenance men, electricians, conveyor operators, continu- ous frank machine operators, at the Processing Sales Unit, Tampa, Fla., excluding the manag- er, the superintendent, salesmen, sales promo- tion men, sales demonstrators , service truck salesmen, shippers, assistant shippers, foremen, assistant foremen, all office and all office-cleri- cal and plant clerical employees, guards, and all supervisors as defined in the Act. WE WILL make whole employees for any losses suffered by reason of our denial of the full range of transfer opportunities provided for in the 1979- 1982 master collective-bargaining agreement, with interest. SWIFT INDEPENDENT PACKING CO. Rochelle Golub, Esq., for the General Counsel. SWIFT INDEPENDENT CORP. George P. Blake and Lawrence J. Casazza, Esqs. (Vedder, Price, Kaufman & Kammholz), of Chicago, Illinois, for Respondent Swift Independent Corporation et al. Bruce H. Thompson, Esq., of Chicago, Illinois, for Re- spondent Swift Independent Packing Company. Phillip V. Carter, Douglas Darch, and John Schauer, Esgs. (Seyfarth, Shaw, Fairweather & Geraldson), of Chicago, Illinois, for Respondent Esmark. George V. Gallagher and Donald H. Bussman, Esqs., of Chicago, Illinois, for Respondent Swift & Company. Irving M. King, Esq. (Cotton, Watt, Jones, King & Bowlus), of Chicago, Illinois, and Carol Clifford, Esq., of Wash- ington, D.C., for the Charging Party. DECISION STATEMENT OF THE CASE WILLIAM F. JACOBS, Administrative Law Judge. These consolidated cases were heard in Chicago, Illinois, on various dates from February 17 to May 5, 1982.' The charge in Case 13-CA-21156 was filed on May 29, 1981, by United Food and Commercial Workers International Union, AFL-CIO (the Union). The complaint issued on July 10, 1981, alleging that Respondents Swift Independ- ent Corporation (SIC), Swift Independent Packing Com- pany (SIPCO), New Sipco, Inc. (New Sipco), Swift & Company (Swift), and Esmark, Inc. (Esmark) as joint and/or single employers and/or alter egos, violated Sec- tion 8(a)(1) and (3) of the Act by closing plants in Moul- trie, Georgia, and Guymon, Oklahoma, and terminating unit employees at these facilities and violated Section 8(a)(1) and (5) of the Act by repudiating the master agreement between the Union and Swift, by refusing to adhere to and apply the terms of that agreement when the plants at Moultrie and Guymon were reopened and by bypassing the Union and negotiating with Local Union 340, a local of the Union, for a separate agreement covering the employees at the Guymon plant. Answers and amended answers filed by the various Respondents denied the commission of any unfair labor practices. The charge in Case 13-CA-21274 was filed by the Union on July 6, 1981. The complaint issued on August 17, 1981, alleging that the Respondents, named above, re- pudiated the transfer rights of employees under the master agreement by unlawfully limiting the transfer rights of employees of the Tampa, Florida processing sales unit without affording the Union an opportunity to bargain about such unilateral limitations or about the ef- fects thereof. The answers and amended answers denied the commission of any unfair labor practices. The two cases were consolidated on August 20, 1981. In addition to the general denials contained in the an- swers of each Respondent, there were also affirmative responses. Thus, Esmark pleaded that the alleged unfair labor practice occurred, if indeed it had occurred, prior to November 29, 1980, and was thus barred by Section ' On May 5, 1982, the hearing was adjourned sine die pending the re- ceipt of interim briefs necessitated by the offer into the record of almost 500 exhibits and the desire to avoid argument as to the relevancy of each Interim briefs were subsequently received and the case closed on August 30, 1982 435 10(b). Esmark also pleaded that it had never had a col- lective-bargaining relationship with or a bargaining obli- gation to the Union. Swift pleaded that the original charge, Case 13-CA-21156, did not name Swift as a re- spondent and that Swift was never served a copy of the charge as required by Section 10(b). Similarly, Swift pleaded that a copy of the charge in Case 13-CA-21274 was never served on it as required by Section 10(b). SIC filed an answer in which it admitted that SIPCO imple- mented the plant closings at Moultrie and Guymon and terminated bargaining unit employees at these facilities, that New Sipco thereafter refused to apply the master agreement at Moultrie and Guymon when those plants were reopened and that upon the closing of the Tampa processing sales unit, SIC permitted eligible bargaining unit employees to exercise their master agreement senior- ity to transfer only to other SIPCO facilities covered by the master agreement. SIC, however, denied that any of these activities violated the Act. It denied all other alle- gations contained in the complaint and asserted that the allegations regarding the closing of Moultrie and Guymon and the subsequent refusal to apply the master agreement were barred by the limitations period con- tained in Section 10(b). All parties were represented at the hearing and were afforded full opportunity to be heard and present evi- dence and argument . All parties filed briefs. On the entire record, my observation of the demeanor of the witnesses, and after giving due consideration to the briefs, I make the following FINDINGS OF FACT Respondents are admittedly employers engaged in commerce within the meaning of Section 2(6) and (7) of the Act. The Union is admittedly a labor organization within the meaning of Section 2(5) of the Act. I. THE UNFAIR LABOR PRACTICES A. Background The original Swift & Company began operations late in the 19th century as a meatpacking company. In 1945, the Union2 and that company reached agreement for the Union's representation of the Company's employees, and in 1945 the first master agreement was executed by the parties. At the same time, other meatpacking companies reached agreement with the Union for similar master agreements. In 1948, John Copeland became associated with Swift & Company, was appointed a vice president3 of that cor- poration in 1965 and remained in its employ until Octo- ber 24, 1980. In 1956, Richard Knight became associated with Swift & Company4 and in 1974 was appointed vice president of services. He also managed several of the corporation's plants. Later, both of these individuals became associated with newly formed companies that are 8 Then called United Packinghouse Workers of America, CIO I Swift fresh meats division. 4 Copeland also served as a member of the board of directors 436 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD alleged in the complaint to be alter egos of Swift & Company. Until the later 1950s and early 1960s the meatpacking business was concentrated primarily in the hands of a few old line companies, Swift & Company among them, with plants located primarily in large meatpacking cen- ters such as Chicago, Kansas City, St. Paul, and Omaha. During the 1960s, however, new companies came into existence, known generally as the new breed companies, and these built modern plants mostly located closer to the sources of supply. Swift & Company and other old line companies, because of outmoded facilities and equip- ment, poor locations, and high labor costs began closing various plants that could no longer compete. They also built new modern plants themselves with new equipment and techniques that were better able to compete with the newer companies. Despite the modernization undergone by the old line companies, however, they still suffered in competition with the new breed companies because of being saddled with heavy labor costs due to their being under master agreement while the new breed companies either had no labor unions at all or less costly local con- tracts. Swift & Company in 1960 had 40 meatpacking plants in operation and produced about 15 percent of the na- tions inspected slaughtered beef, 16 percent of the pork, and 31 percent of the lamb . By 1980 these percentages dropped to 3-1/2, 6-1/2, and 16, respectively. Most of the decline occurred in the 1960s, although it continued thereafter. Despite economic adversity in the 1960s and thereaf- ter, Swift & Company endeavored to remain a viable part of the meatpacking industry by building or purchas- ing new plants and by expanding the number and type of commodities it sold. Also, during this period Swift & Company continued to negotiate consecutive master agreements with the Union5 covering its employees throughout the country. In 1969 there was a reorganization of Swift & Compa- ny and at that time the corporation was divided into di- visional companies, one of which was Swift Fresh Meat Company. At this time, Copeland was asked to resign his position at Swift & Company and was appointed vice president of Swift Fresh Meat Company. Meanwhile, the merged unions, the United Packinghouse Workers and the Amalgamated Meat Cutters, combined their master agreements into a single document that was applied to the employees of Swift & Company, which the new union continued to represent. A new master agreements was negotiated in 1970. 5 During this period the Union's name was changed to Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO. This followed a merger of two separate unions engaged in similar work within the industry. 6 The negotiation of the 1970 master agreement took the form of previ- ously negotiated contracts A national conference of packing plant dele- gates, 300400 in number, was called Resolutions prepared earlier by the various locals as well as resolutions prepared at the conference outlining proposed demands to be made later on the packing industry were intro- duced for consideration Proposed demands agreed on at the conference were later taken back to the chain (delegates from plants of a particular company) for consideration of such demands as well as of the needs of the local Once decisions were made at the local level, a date was re- In the early 1970s Swift & Company undertook further attempts at diversification . In particular, less emphasis was placed on fresh beef and pork and more on con- sumer branded food products and nonfood products. In April 1973, further attempts at diversification were un- dertaken when Swift & Company, with the approval of its shareholders, created Esmark. Esmark was conceived of strictly as a holding company with no production fa- cilities of its own. All production facilities were divided among its several wholly owned subsidiaries while Esmark itself provided only advisory counseling to them in areas of public relations , legal counsel, and fiscal mat- ters.7 The subsidiaries were left free to run their own businesses; to buy, sell, and distribute; and to do their own research and engineering. Esmark did, however, audit each subsidiary's books and pay their taxes. The top managerial positions of the newly created Esmark were filled with individuals previously employed by Swift & Company. Thus, President Robert W. Ren- eker, Swift & Company, became the first president of Esmark and Robert Palenchar,8 Swift & Company's vice president of personnel and public relations, became Es- mark's vice president of personnel and public relations. The subsidiaries that evolved in 1973 as a result of the reorganization were five or six in number, including Estech, Eschem,9 and Swift & Company. Estech, a newly formed company, was separated from Swift & Company. It produced primarily fertilizer, leather, and adhesives. Estech's employees, t 0 when it was part of Swift & Company, had been represented by the Union. After its separation from Swift & Company, its employ- ees continued to be represented by the Union, under the master agreement. Eschem, a speciality chemical compa- ny previously wholly owned by Swift & Company, also continued to have its employees represented by the Union, under the master agreement, after separation. Swift & Company, following the reorganization, contin- ued its food production operations, producing meat, peanut butter, edible oils, turkeys, and cheese. Its em- ployees also continued to be represented by the Union under the master agreement. In 1973 a new master agreement was negotiated. The procedure was exactly the same as it had been in prior years. t t At the negotiating table, representing the Union quested of each company for the undertaking of full -fledged negotiations At the negotiations, union representatives from the Swift & Company plants were present as well as a spokesman from the International. The Union was represented by 40 to 60 people , while a dozen company repre- sentatives and a company spokesman were also present. The 1970 labor agreement was eventually agreed on in this fashion. 7 Esmark also took over the administration of certain pension plans from Swift & Company. ' Palenchar represented Swift & Company during the 1970 negotia- tions with the Union. 9 Initially known as Unitech. 10 Estech's managerial personnel also came from the ranks of Swift & Company's management Thus, Joseph Sullivan, president of Swift Agri- cultural Chemical Corporation, part of Swift & Company, became Es- tech's first president. i i The Union was, however, notified of the restructuring of the com- panies, that they were all separate corporate entities but that all would be parties to the agreement SWIFT INDEPENDENT CORP. 437 was Jesse Prosten and representing Swift & Company and Estech were several individuals including Palenchar, still a vice president with Esmark, who acted as spokes- man. Palenchar signed the document on behalf of Swift & Company and Estech both of whom were specifically named as parties in the document. The 1973-1976 master agreement was administered on a day-to-day basis at the local level despite the fact that it had been negotiated by Palenchar as vice president of Esmark. Palenchar, however, handled the more impor- tant matters.12 Thus, it was Copeland's office t s at Swift & Company and Richard Green at Estech that handled grievances at all steps up to arbitration at which time Pa- lenchar at Esmark made the final decision whether the grievance should go to arbitration. The pension and in- surance programs, however, were Esmark's so that the various divisional personnel departments worked togeth- er with Esmark's people to administer these programs. During the 1973-1976 period, following the creation of Esmark, it was determined that the program of diver- sification should continue and that expansion into other areas where a more reasonable rate of return on invest- ments and more consistent profits could be expected than could ordinarily be obtained from a strictly commodity- oriented business. Through the years prior to the cre- ation of Esmark, the profits on sales of beef and pork had been inconsistent. Some years there had been reason- able profits while other years the profits were small or nonexistent. In the late 1960s and in 1971 and 1972, Swift & Company's earnings were poor. In 1973 its earnings suddenly increased. This, of course, was good for Swift & Company because the purpose of its existence was to sell its products. It was not, however, good for Esmark, which, as a holding company producing nothing, was in- terested in seeing the value of its stock increase; stock value being measured by the P/E14 ratio. When Swift & Company was earning less in previous years, Esmark's stock P/E had been 10 or 12. When its earnings sudden- ly increased in 1973, the P/E of Esmark's stock suddenly dropped to about 4 or 5. In short, the value of Esmark's stock failed to increase proportionally as Swift & Com- pany's earnings increased. It was determined through a survey that the probable reason for the failure of Es- mark's stock value to increase was the fact that Esmark was still unknown. It was therefore determined that an advertising campaign should be undertaken in order to educate the public as to what Esmark was and of what its holdings consisted. The advertising campaign was ini- tiated in 1974. In 1975 Swift & Company closed a plant in Kearny, New Jersey, and sold another in Wilson, North Carolina. Costs of closing were charged by Esmark to Swift & Company. After the sale of the Wilson plant, the new 12 Palenchar, during this period, had a number of personal contacts with Prosten concerning labor matter, and the administration of the con- tract. He also had two Esmark employees, Bob Lillian and Bruce Thompson, aiding him in his liaison labor work with Swift & Company. 13 Clyde Aud and Dick Tagg handled grievances for the Fresh Meats Company's labor department . Aud was vice president and Tagg was the head of the staff. 14 Price/earnings ratio. owners15 negotiated a new contract with the Union at much lower rates. The Wilson plant, a modern one, well located, had been closed because its labor costs were too high compared to that of its competition. Other plants, t 6 which were modern and well located, were also closed during the 1960s, 1970s, and early 1980s solely because of the disadvantageous comparative labor costs under the master agreement. Thus, despite the reorganization of 1973 and the dramatic increased earnings enjoyed by Swift & Company that year, economic difficulties reap- peared thereafter, at least in part due to labor costs. In 1975, Palenchar decided that since Esmark was not involved in the actual operations of any of its subsidiar- ies, the labor relations function was not appropriately a part of Esmark. He suggested to Swift & Company that it take over that function. However, since the 1976 nego- tiations were near at hand, the personnel at Swift & Company requested that he stay on the job as bargaining head rather than have Swift & Company undertake ob- taining an outside consultant to represent Swift & Com- pany in bargaining . Palenchar agreed to the request after discussing the matter first with Donald Kelly, newly ap- pointed president of Esmark, on condition that Swift Fresh Meat Company provide a major executive to be part of the negotiating team since Palenchar was no longer close to the operations of Swift. The condition was agreed on and Richard Knight, vice president of services, fresh meat division, Swift & Company, was as- signed to aid Palenchar.17 Similarly, Richard Green was present representing Estech's interests while Carl Mar- shall represented the processed meats division. Jesse Prosten was the Union's chief negotiator" and Palen- char was chief spokesman for both Swift & Company and Estech. On local problems subcommittee meetings were held. On health and welfare and pension matters, t s the Union's William Bums negotiated with Robert Bell, manager of benefits. The negotiations resulted in the signing of the 1976-1979 master agreement with Palen- char signing for Swift & Company and Estech and Pros- ten signing for the Union. Following execution of the 1976 master agreement, there was no immediate changes in the method of its ad- ministration. Most grievances that arose under that agreement concerned the reasonable and customary clause of the health benefit provision matters. These 15 Dinner Bell Foods. 16 Clovis, New Mexico ( 1980), Grand Island, Nebraska (1976), Tolle- son, Arizona, and Scottsbluff, Nebraska. 17 Palenchar was accompanied by two members of his own staff, Thompson and Lillian, who, despite being employees of Esmark , contin- ued to maintain their offices at the Swift & Company site. 18 Prosten was aided by the Union's Lewie Anderson. 19 Increased benefits of retirees was of particular concern during these negotiations because the Union had set the pattern with Wilson Packing but Swift & Company had far more retirees receiving benefits than any other company under the master agreement . Thus, Swift had more to lose than other companies even though the master agreement signed by each company was virtually the same . With over 19,000 retirees to re- ceive increased benefits under the new master agreement the management bargaining representatives were disturbed by the additional costs to them relative to the cost to be encountered by its competitors . The Company offered counterproposals to the Union but these were rejected and ulti- matley the master agreement pattern proposal on this matter was accept- ed. 438 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD grievances were handled by William Burnes for the Union and Robert Bell who was initially manager of benefits of Swift & Company but who later took the same title as Esmark. In 1976, William Watchman was brought into Swift & Company and made president in 1977. His backgound was in marketing and under his direction Swift & Com- pany instituted a new program emphasizing the sale of consumer branded products, a change in direction that Esmark had repeatedly advocated. As part of the new program's implementation, Swift's fresh meat division's sales units, that had been selling turkeys and processed meat items along with their own fresh meats on a rental basis, 2 ° were, beginning in 1977, no longer permitted to do so. Rather, Swift & Company set up its own sales or- ganization to handle the retail sale of processed meats and turkeys through its own salesmen and through out- side brokers. Thus, in certain areas of the country Swift's fresh meat division salesmen would be selling fresh meats while other salesmen or brokers in the same area would at the same time be selling consumer branded products, processed meat items, and turkeys to retail customers.21 Thus, there took place in 1977 the first of several steps, which eventually culminated in a complete separation of fresh meat business from the rest of the businesses oper- ated within the Esmark family of companies. Along with the business reorganization in 1977 there was also a labor relations reorganization that took place at the same time. The two were to complement each other. Thus, Palenchar for Esmark and Watchman for Swift & Company determined to remove Esmark from the labor relations field, and place all relations of this kind in the hands of those who dealt with them on a day-to-day basis. To accomplish this purpose, Watchman selected Director of Personnel of Playtex22 James Farren to become vice president of personnel of Swift & Company. Lillian and Thompson were transferred from Palenchar's staff and from Esmark's payroll to Farren's staff and to Swift & Company's payroll to support Farren.23 Palenchar also shifted all of his Swift & Com- pany and Estech files to Farren's office. At the same time, personnel matters previously under control of Swift & Company's divisional offices were transferred to cen- tralized control under Farren's office at Swift & Compa- ny. This was part of a larger reorganization wherein other divisional offices having to do with credit, taxes, etc., were consolidated under Swift & Company's imme- diate central control. In short, what occurred was that Watchman moved all control of labor relations from Swift & Company's divisions and from Esmark to a single point of control-Swift & Company's centralized office. Palenchar advised the Union through Jesse Prosten of the reorganization of labor relations and the change in 20 Sales to stores and supermarkets as opposed to sales to service com- pames such as chain restaurants and fast food operations. 21 Swift's fresh meat division sales units continued to sell to some food service customers, but only in isolated instances to retail outfits. 22 Another Esmark company 23 Similarly, since both Aud and Tagg of the Fresh Meat Company's labor department had already retired, it was their replacements that were placed under Farren's control to help administer the labor contract responsibilities. He, Prosten, and Farren, in fact, had lunch together24 during which Prosten and Farren were introduced and it was explained how responsibility for labor relations had been transferred to Farren's Swift & Company industrial relations department.25 The various respondents continued to honor the master agreement with the Union throughout this period of time. By 1978 Esmark had become the holding company for six principle subsidiaries, thus successfully carrying out the diversification plan as previously envisioned. These six subsidiaries were: International Playtex, Inc; Interna- tional Jensen, Incorporated; STP Corporation; Swift & Company; Estech, Inc.; and Vickers Energy Corpora- tion. At this time Swift & Company continued its in- volvement in the food manufacture and distribution busi- ness. Negotiations toward a 1979 master agreement went forward with union representatives of employees at the various plants participating, whether these plants were producers of fresh meats, processed meats, adhesives, chemicals, or whatever. Farren was chief spokesman for Swift & Company. Present also were Knight and Jaracz of the fresh meat division and Lee Lochmann of the processed foods division. Farren was aided by Bruce Thompson. Prosten was chief spokesman for the Union at these negotiations.26 Subcommittee meetings also took place as they had during previous contract negotiations. On pension and health and welfare matters, William Burns represented the Union. Farren and Douglas Empey represented Swift & Company.27 Negotiations on these subjects followed a pattern established in earlier 1979 negotiations with John Morrell. However, the Morrell pattern required a number of changes in arrangement and language so that negotiations28 were fairly time-consuming. Empey sug- gested certain changes in the medical and pension plans contained in the Morrell pattern agreement, which Farren presented at the main bargaining table. The Union, however, rejected these proposals and the con- 24 The luncheon occurred on June 5, 1977, and according to Palen- char, he never saw Prosten on any occasion thereafter, although he did speak with him by telephone on one or two occasions shortly thereafter On these occasions, when Prosten brought up particular labor problems, Palenchar referred him to Farren , advising Prosten that he, personally, was no longer involved 25 The newly formed Swift & Company's industrial relations depart- ment had three functions - ( 1) responsibility for master agreement units, (2) negotiation and administration of local agreements, and (3) safety Al- though the administration of benefit plans had nominally been centralized in Farren's department Esmark, nevertheless, remained in charge of ad- ministering the pension plan and advising with respect to the insurance plan 26 Farren had earlier been introduced to Prosten, the Union's chief ne- gotiator, by Palenchar, Farren's predecessor in negotiations Farren re- ported to Watchman as president of Swift 27 Empey had replaced Bell and was, at the time , director of pensions and benefits for Esmark Empey worked for Larry Magner, director or personnel, who was directly under Palenchar 28 It was during these negotiations that the merger of the two unions occurred and whereas the Union began negotiations as the Amalgamated, it completed these negotiations as the United Food and Commercial Workers SWIFT INDEPENDENT CORP. tract eventually signed by the parties, for the most part, followed the Morrell pattern agreement.29 In 1979, about the time the above-described negotia- tions were taking place, the Esmark people were under- going economic self-analysis. Esmark was then ranked about 30th in terms of industrial companies with annual revenues of about $6 billion. As in the past, it remained strictly a holding company, owning other manufacturing companies but manufacturing, producing, or selling nei- ther products nor services itself. Its primary concerns were seeing to it that its subsidiaries remained economi- cally healthy and that the price of its own stock was re- flective of its true value, or if possible was priced even higher. To these ends, Esmark would oversee the cash accounts between itself and its subsidiaries that reflected the flow of funds between them and that, in part, deter- mined the size and type and growth or shrinkage of its investments in particular subsidiaries at a particular time. As to considerations affecting the price of Esmark stock at this time, there were several under review. One such consideration was the possibility of selling one or more subsidiaries in order to change the image of Esmark as perceived by potential investors. Standing in the way of such divestments were the pension plans in effect at the time and accrued liabilities thereunder. A study was un- dertaken in mid-1979 to determine how the two pension plans30 administered by Esmark could be rearranged and pension liability reduced to make purchase of the subsidi- aries more attractive. The study resulted in a finding that any possible sale of the subsidiaries participating in the Esmark pension plans would be severely undermined by the fact that the employees of those subsidiaries and re- tired employees of those subsidiaries had vested rights in the pension plans that would be considered a serious en- cumbrance by any potential buyer. The pension liability of each subsidiary had not yet been broken down at this time so that an immediate sale of any subsidiary was made impossible because the true worth of that subsidi- ary could not accurately be known until its pension li- ability was determined and this would take time to calcu- late. An outside actuarial firm was hired to compute the breakdown of pension liability for each subsidiary. It would appear from the record that in late 1979 Esmark was, in fact, contemplating a sale of some of its subsidiaries because in November 1979 the president of Esmark, while in Europe, was discussing with certain in- vestors the possibility of their purchasing the Esmark subsidiaries or directly investing in Esmark.3 i Aside 29 In the months following completion of the 1979 negotiations, Bums and other union officers would occasionally call Empey concerning grievances falling within his expertise After suggesting that he call local plant management, Empey would sometimes answer the question himself as a matter of courtesy 90 There was a pension plan for salaried employees and one for hourly employees The salaried plan covered employees of Swift & Company, Estech, and Vickers Energy. The hourly plan covered employees of Swift & Company and Estech Other subsidiaries already had pension plans in existence at the time of acquisition, which were kept in place thereafter 31 There was, among other possibilities, the offer of selling Esmark shares at $50 per share These shares were selling at the time for $25 to $30 per share, and for this reason were not seen as a particularly good investment by the Europeans questioned on the matter 439 from the fact that Esmark was interested in divesting itself of certain subsidiaries in order to increase the value of Esmark stock, it was interested in selling certain hold- ings because at the time it was having liquidity problems. It had borrowed substantial sums for investment pur- poses and the costs of servicing these loans were proving excessive. To resolve the liquidity problem and to deter- mine the reason for the relatively low price on the market of Esmark stock, Esmark hired Solomon Broth- ers to look into both of these questions. Solomon Broth- ers determined that $50 per share for Esmark was a justi- fiable figure, the figure Esmark was asking per share of its stock, but a figure substantially below its market value. Even while Solomon Brothers was conducting its study, Esmark's management was concerned that Esmark investors were not receiving a reasonable return on their investments. It was believed that Esmark' s investment in food producing companies was the direct reason for its lack of substantial return on investment. Experts in the field had determined that basic food companies' stock sold at a multiple of six, i.e., that the puce of stock of food producing companies was six times greater than their annual earnings while hybrid oil company stocks sold at a multiple of eight or nine. From the expert find- ings it was determined that the general populace con- ceived of Esmark as a food company, more particularly connected with the fresh meat industry and that this per- ceptual connection caused more problems with respect to the value of Esmark stock than did any other consid- eration. It was determined that Esmark's image had to be changed. Meanwhile, by December 1979, the study of how to rearrange the Esmark pension plans had been completed and it was determined that the existing plans should be separated among the various major subsidiaries already participating and that, in addition, a separate plan for re- tired employees32 should be created. The separate pen- sion plan for employees already retired appeared more desirable because it could be funded for less money since there would not be a steady stream of additional employ- ees constantly being added to it. The decision to split the Esmark pension plan was to be effectuated by May 1980 and each subsidiary was to be charged independently for its contributions toward its own pension plan. The target dates of May 1980 was, in fact, met. The beginning of 1980 witnessed no appreciable change in the economic situation under which Swift & Company continued to operate. In particular, its Clovis, New Mexico plant was having difficulties due to the contractual requirements of the master agreement. After discussing the matter with Esmark management and ob- taining its approval, Copeland sought relief from the Union on such matters as cost-of-living and clothes changing allowances and vacation pay computations. It was Copeland's belief that because Clovis was a modern plant, ecomomic in size, its recent losses were due pri- marily to a poor competitive position vis-a-vis labor 32 At the time there were more people on pension than there were working and the unfunded pension liability was large 440 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD costs. He felt that if the Union would grant the relief re- quested Clovis could eventually once again become prof- itable. In accordance with its historical position against making midterm changes in the master agreement, how- ever, the Union refused Copeland's request for relief during a meeting in February.33 On March 27, the Com- pany announced that the plant would close on Septem- ber 28 and the plant was, in fact, closed34 as per the an- nouncement, but a few months later. 1. The sale of the fresh meats operation In April 1980, at a meeting of the board of directors, after serious consideration by certain members of man- agement over a period of months, it was suggested that Esmark divest itself of the fresh meats division. The di- vestiture was part of a larger package of proposals that were made based on various considerations : the Solomon Brothers study, the liquidity problem, and the need for certain restructuring of the subholding companies. The board was receptive to certain portions of the suggested package, but not inclined to accept others. It was in favor of exploring the possibility of disposing of the fresh meats division as well as the energy segment .35 No im- mediate, final decision on these proposals were made at this time. On April 25, a meeting took place in Watchman's office. This meeting was attended by Kelly, Watchman, and Assistant General Counsel for Esmark Karl Becker.36 Kelly announced that Watchman had resigned as president of Swift & Company and that he was ap- pointing Sullivan, then president of Estech, as the new president of Swift & Company.37 He also announced that a decision had been made that Esmark would divest itself of the fresh meats division one way or the other, either by selling it to private investors or through an em- ployee stock ownership plan.38 Kelly, at this meeting or at another held shortly thereafter, told Copeland that he should henceforth report directly to him and should, along with his staff, begin putting together a company that could be sold as a unit by adding to the existing fresh meats division additional staff functions to permit it to operate independently. He also told him to decide which of the already existing units of the fresh meats di- vision should be included in the new company. Following the April meeting of the board of directors and the above-described meeting of April 25, Becker, as instructed, educated himself as to ESOPs in general and to the feasibility of divesting the fresh meats division 93 Since the Union had virtually the same master agreement with van- ous other companies, it could not afford to grant such changes without adversely affecting Swift & Company's competitors, particularly those in the same general geographic area . The Company's argument that there were no competitors under the master agreement in the same geographi- cal area did not influence the Union's decision S* Closing costs were borne by Esmark and charged against the fresh meat division ss Reasons have been discussed supra 36 Sullivan later joined the group 84 This announcement was in accordance with a decision reached the day before at the board of directors ' meeting. 38 The subject of an employee stock ownership plan (ESOP) had come up earlier and Becker had been asked by Harrison to look into the feasi- bility of utilizing an ESOP as a possible means of Esmark 's divesting itself of the fresh meats division through the utilization of an ESOP. He discussed these matters with the fresh meats division management and advised them of his opinion that such an approach was worth pursuing. At the same time, Becker worked on the problem of Esmark's divesting itself of the energy seg- ment, the wrinkle here being how to get in excess of a billion dollars for it, as management was expecting, when the total market value of its stock was about $550-$650 million. It was expected that Esmark would receive in excess of 10 times the value for the energy segment than it would for the sale of the fresh meats division. Copeland, pursuant to Kelly's directions, undertook a study of the fresh meats division and determined that it was without and therefore needed the addition of certain departments in order to operate independently. These in- cluded treasury, personnel, tax, credit, legal, and other departments. He and his staff had to consider not only the creation of such additions but the staffing of each new department.39 After the new personnel department was created, the other new departments were staffed through it. The question of which plants and other physical units were to be included in the new company was also con- sidered and the answer to this question would depend to a certain degree on whether the divestiture would even- tually take the form of an ESOP or an outright sale of the entire company as a unit. A closing down of all fa- cilities with piecemeal sales of individual plants and sales units was also a possibility. Each plant and sales unit was considered in light of its history-whether profitable, marginal, or had operated at a loss . Similarly, each plant's potential was also considered in light of possible changes including changes in existing labor contracts. Thus, in the Midwest where pork plants were operating under the master agreement but where competitors were also operating under the master agreement, it was decid- ed that these plants would remain open. The same was felt regarding non-UFCW pork and beef plants that were also operating at a profit. Sales units and plants not oper- ating at an acceptable margin of profit were to be closed.40 It was concluded that if the Union rejected the ESOP plan a company with $2 billion in annual sales could be put together and operate at a profit. This com- pany would be sold to outside investors. All decisions as to the inclusion or exclusion of certain plants and sales were, of course, subject to the approval of Esmark. The Esmark board of directors' meeting was sched- uled for May 29, 1980. In preparation for that meeting there were certain preparations that ultimately resulted in the proffering of an economic package plan for con- sideration by the board. The week before the board 39 The new departments were staffed with personnel from Swift & Company, Esmark, and from outside. Many of the personnel obtained from Swift & Company had worked for the fresh meats division (Compa- ny) prior to an earlier reorganization. 40 About 50 sales units plus the Clovis, New Mexico; Rochelle, Illi- nois, Moultrie, Georgia; and Guymon, Oklahoma plants fell into this grouping However, if the Union were to accept the ESOP proposal, it was planned to request that the Union grant concessions to keep these plants operating, which concessions were to take the form of adjustments in labor costs. It was felt, however, that these plants could not continue to operate under the master agreement. SWIFT INDEPENDENT CORP. meeting, a preliminary meeting was held, which was at- tended by certain Esmark officers plus representatives of Solomon Brothers. At this earlier meeting a procedure for selling the energy segment was revealed and dis- cussed whereby the maximum price could probably be obtained. This was to be part of the package plan pre- sented at the forthcoming meeting of the board. Similar- ly, Becker had put together facts and figures on a pro- posed ESOP plan to be offered at the meeting for con- sideration by the board. He calculated the total wage earnings of the employees who were to purchase the new company and determined the size of the loan that sum could sustain, i.e., $135 million . He also worked out the mechanics of how the ESOP was to be set up. The amount of return to Esmark for the assets was similarly calculated for presentation to the board. At the May 1980 board meeting the economic package was presented including the plan to sell the energy seg- ment; the plan to dispose of the fresh meats operation, hopefully through the ESOP wherein 10 percent of the new company would be distributed among Esmark stockholders as a dividend, 30 percent would be owned by Esmark, and 60 percent by the employees; a plan to sell Swift International; a tender offer for roughly 50 percent of Esmark stock, priced between $55 and $60 per share; and the funding of certain outstanding pension obligations. Thus, the ESOP proposal was just a minor portion of a very large economic package, as measured in dollar values. The board was in favor of the entire package, as pre- sented, including the ESOP plan .41 Direction was given to finalize and to put into proper form all the proposals contained therein. Subsequent to the May board meeting, Kelly called a meeting, which was attended by certain management of- ficials of Esmark and of the fresh meats operation. At this meeting, presentation of the ESOP plan to the Union was discussed and it was determined that the plan should be in writing and should reflect that the new fresh meats company would be a viable entity. The fresh meats people, Becker and others, thereafter worked up an ESOP proposal that provided for, among other things, changes in the master agreement at Guymon, Moultrie, and Clovis and the retention of those plants.42 Other concessions were also envisioned. Esmark people con- tributed language dealing with the financial part of the ESOP as well as language suggested by the fresh meats people regarding contract concessions.43 41 Certain changes in the percentage of ownership were agreed on; for example, it was decided Esmark would retain 37.5 percent of the new company or the total value of the assets that the new company would own, assets obtained from Esmark, were in excess of the amount that could be obtained from a loan based on the employees' wages. Since the employees could not finance the entire transaction , Esmark decided to retain part ownership The investment was also considered as a means of showing faith in the new venture 42 In the alternative plan to ESOP, these plants were to be closed, along with a lamb plant in Chino , as well as the plant in Rochelle, Illi- nois 49 Robert Palenchar and Karl Becker were responsible in large part for the preparation of the ESOP document on recommendations from Copeland and Farren 441 On June 10, 1980, the ESOP plan was presented to the Union. The meeting44 took place in the office of the president of the Union.45 Palenchar, at the request of Copeland, acted as spokesman. He described to the Union's representatives the total ESOP plan and then gave them copies of the written document. At the end of his presentation, the union representatives asked ques- tions and there was some discussion concerning the plan. William Wynn, president of the Union, stated that he recognized the seriousness of the situation and said that the plan would be given study and review in that light, although it was against the Union's philosophy to pro- mote employee ownership in companies. He promised an answer in a matter of days. On receipt of the ESOP plan, the Union had an attor- ney review it. The attorney suggested that the Union reject the proposal and it was agreed by union officials that they should do so. The Union contacted Carl Taylor and a meeting was scheduled for June 23 in Washington. On that date Palenchar, Copeland, and Farren flew to Washington, D.C. for the meeting at which they expect- ed to hear from the Union regarding acceptance or re- jection of the ESOP plan. When they arrived at Carl Taylor's office, they were informed that he was already over at Wynn's office and were advised to wait. When Taylor returned, he told them that he had already met with Wynn, that the Union had rejected the ESOP pro- posal, had offered no counterproposal, and saw no need for further meetings. After advising Kelly in Chicago of the events of the evening, the management group in Washington was instructed to return to Chicago in time for an early morning meeting. At 8 a.m. on June 24 a meeting took place in Kelly's office, attended by various members of management of Esmark, Swift & Company, and the fresh meats division as well as by outside counsel. The purpose of the meet- ing was to decide what to do with the fresh meats units in light of the Union's rejection of the ESOP plan, con- sidering the fact that all other pieces of the restructuring program, including sale of the energy segment, were in place. Those present had to determine how to dispose of the fresh meats operations and it was generally agreed that all of fresh meats units should be closed down, but only after giving proper notice to the Union as required by the contract and providing an opportunity to negoti- ate concerning the closings as required by law. Available alternatives were discussed, including shut- ting down the entire fresh meats operation and selling off the assets. Kelly asked Sullivan if he wanted to keep any of the fresh meats units, reminding him that he was ex- pected to run a consumer branded products company. With few exceptions, however, it was determined that all fresh meats units were going to be closed. Later in the afternoon, Copeland got together with his people to consider whether there might be some other alternative to dissolving the fresh meats division. They 44 Present for management were Palenchar , Copeland, Farren, and Carl Taylor, Swift & Company's labor counsel . Present for the Union were William Wynn, president, and Lewie Anderson , acting vice presi- dent and director, packinghouse division 41 The president's office is in Washington, D C. 442 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD decided that they should offer the plan considered earlier by him and his staff as an alternative to ESOP, that is the plan to close all units and sell the assets . Institution of the latter plan, however, would have meant the loss of 6000 jobs, including Copeland's. As a result of this real- ization, Copeland made arrangements to speak with Kelly to see if yet a third plan could be worked out. At the subsequent meeting, Copeland met with Kelly to see if he could convince him that there were viable possibili- ties superior to the considerations previously contemplat- ed. At the meeting, Copeland showed projected profit- and-loss statements with supporting balance sheets. He identified those units that could be operated at a profit and indicated how much money would be necessary to support them over the next several years. He also specifi- cally indicated which plants, in his opinion, should be closed and ventured that closing costs at these plants should be stood by Esmark. He pinpointed Guymon, Oklahoma, and Moultrie, Georgia, as plants that should be closed and noted that Clovis, New Mexico, already- scheduled for closing, should be closed also.46 In short, he outlined the possibility of establishing a new fresh meats company, and offered profit projections to support its existence. Kelly was receptive and indicated that cer- tain European investors might be interested in investing in such a newly formed company, if not others. He sug- gested that Copeland put the idea into a brochure form for him to take to Europe with him on an already- planned summer trip. Other members of management, present at the time, agreed. Sullivan, who was present during this meeting, asked Kelly if he should continue to consider which fresh meats units he would want to keep. Kelly, apparently taken with Copeland's argument, re- plied negatively, advising Sullivan to discontinue any such study, and indicating that, at this point, it would be certainly better to sell the fresh meats business as a unit. On June 26, 1980, Esmark's board of directors met and approved the proposed disposal of the fresh meats divi- sion and the energy segment,47 the tender offer of $55 million, and the funding of the pension plan, in short, the entire package. The decision was made at the meeting that certain plants and other facilities of Swift & Compa- ny should be closed48 or otherwise disposed of with Esmark picking up the closing costs;49 that the remain- ing units of the Swift fresh meats division should become a separate company known as Swift Independent Pack- ing Company (SIPCO), to be sold by Esmark with Esmark possibly retaining an ownership position; and that Swift & Company should continue to operate in the processed foods area. Following the decision by the board of directors to ap- prove the entire package, steps were undertaken to effec- tuate its decision. Investment bankers were retained to sell the energy segment to major oil companies through a bidding procedure. Meanwhile Copeland and his subor- dinates had already decided which plants and sales units 46 The closing of these plants did not necessarily mean that the new company would divest itself of them This had not yet been decided 47 Vickers Energy Corporation. 48 Guymon and Moultrie were included 49 Such costs included severance pay, pension adjustments, and costs of retraining transferees would go into the new company and which ones were to be closed or kept open. Similarly, they had the responsi- bility of carrying out the decision as to the creation and manning50 of newly created departments made necessary by the separation of the new company from both Swift & Company and Esmark. Completion of all these tasks was targeted for the end of the fiscal year, October 1980, at which time SIPCO was scheduled to be entirely inde- pendent. Esmark personnel were responsible for the ac- counting and auditing functions involved in the split up of operations and the closing of facilities. In particular, the Esmark people had to set up a reserve against the ex- pected losses connected with the closings. On June 26, Farren contacted Anderson to inform him of the forthcoming formal announcement concerning the closing of certain master agreement facilities. Farren had previously informed Anderson that the rejection of the ESOP plan would result in such closings, and during the conversation of June 26 Farren specifically mentioned Moultrie, Guymon, Rochelle, and five sales units. On June 30 the closing notice was sent by Farren to Ander- son announcing the plants to be closed and the dates of closing, and offering to meet and discuss the effects of the planned closings. All announced closings were ap- proved by Kelly on behalf of Esmark. In August, Copeland continued to pursue his staffing efforts on behalf of SIPCO. At that time, during a dis- cussion with Kelly, the latter suggested that Edward Harrison and R. T. Briggs sit on SIPCO's board of di- rectors and that the compensation committee of the board of directors consist of the two Esmark representa- tives and Copeland. Kelly also suggested that the board be comprised mostly of outsiders rather than of employ- ees and officers of the Company. Copeland complied with these suggestions although he also included on the board the officers of SIPCO, also agreed to by Kelly. At the same time, further work was being done on for- mulating which plants and sales units should be included within SIPCO. Permission was obtained to include the Des Moines plant, which had been closed for some time. In August also, it was finally decided to include the Moultrie and Guymon plants. In August, while SIPCO was still being put together, Copeland asked Farren to try to set up a meeting with Anderson to inform him of his plans with regard to SIPCO. A meeting was scheduled attended by Copeland, Farren, and Anderson. Although termed by Copeland as "a get-acquainted meeting," during which he advised Anderson of the plan to sell SIPCO51 and leave Esmark, he also, for the first time, personally broached the sub- ject of getting relief from the master agreement in effect at Moultrie, Guymon, and Clovis. Copeland felt that these were good, modern plants which would fit in very well with the new company but for the sole deficiency so For example, Niese who had been in charge of personnel at Swift & Company came over to SIPCO as vice president in charge of employee relations. Similarly, Copeland in late July or early August appointed Knight, vice president in charge of beef, lamb, and labor. 51 At the time Kelly was planning a trip to Europe to sell the compa- ny to investors in Great Britain or Germany. The trip took place, as planned, on September 2 but was unsuccessful SWIFT INDEPENDENT CORP. that they were noncompetitive because of the labor costs. Anderson reminded Copeland that Moultrie and Guymon were both under the master agreement and that the Union did not make midterm changes in the master agreement. Copeland stated that he wanted to keep Moultrie and Guymon open, but would not do so if he had to pay master agreement rates. Anderson said that there could be no reduction in benefits and that the master agreement would have to stand . Copeland sug- gested that Anderson keep an open mind. Later, after Copeland put Knight in charge of labor relations for SIPCO, he decided that he would introduce him to Anderson. A meeting was scheduled for August 25 both for this purpose and to keep the Union posted on the most recent events. He also wanted to discuss Moul- trie and Guymon once again with Anderson. The meet- ing took place in Anderson's office in Washington. After introductions, Copeland described to Anderson the progress made toward separating SIPCO from Esmark, and informed him of future plans. Later in the meeting, Copeland again attempted to impress Anderson with the fact that the Moultrie and Guymon plants, if operating, would make the purchase of the company more attrac- tive to potential buyers but that under the present cir- cumstances they were not viable plants. He pointed out that Moultrie was paying $14 per hour under the con- tract while competitors were paying only $6.50 per hour under contracts with the same union and that neither Moultrie nor Guymon was competitive. He told Ander- son that without relief those plants would have to be closed. On the other hand, Copeland assured Anderson that SIPCO would continue to apply the master agree- ment at any plants when it was competitive. Anderson, in response, was noncommittal, stating that he could not see how any changes could be made in the master agree- ment. On September 10 the same three individuals met again to discuss SIPCO. This meeting took place in Chicago52 at the behest of management, the purpose being to dis- cuss efforts being made to sell SIPCO and to also con- verse once again on the status of Guymon, Moultrie, Clovis, and the possible reopening of Des Moines. More specifically, Copeland and Knight asked Anderson if he had come up with any way that he could change the master agreement at these plants to make SIPCO more competitive and permit it to operate these plants. Ander- son replied that he had not. Copeland then told Ander- son that other packers had voiced interest in these plants, particularly in Moultrie. He advised Anderson that at present the plan was to let Esmark go ahead with the closing in accordance with the master agreement terms, have Esmark to pick up all the closing costs, then sell the company to outside interests, and then have the new owners open those plants, recognizing that the Union still had bargaining rights but insisting on a new contract 52 Anderson described a meeting with Copeland in September in Washington, D.C Copeland denied meeting with Anderson after Septem- ber 10 I credit Copeland I believe Anderson was confused as to the Chi- cago meeting on September 10 with Copeland and a later meeting with Knight and Thompson in Washington 443 with competitive labor rates. 53 He analogized the plan to the sale of a few years previously of the plant in Wilson, North Carolina, to Dinner Bell, which, after Swift & Company closed the plant, opened it up again the fol- lowing week with a new labor agreement far more com- petitive than the one Swift had had prior to the closing. Copeland argued that SIPCO, being a new company, was in the same position as Dinner Bell and that the Union should treat it the same way-that since SIPCO would no longer be owned by Esmark, but would be an entirely new and independent company, it should have the opportunity of negotiating a new, local, competitive contract. Anderson replied that negotiations toward a new, local, more competitive contract could take place after the sale only if the company could get out from under the master agreement legally. That meant, accord- ing to Anderson, that Esmark would first have to sell over 50 percent of the ownership of SIPCO. With this caveat, Anderson then entered into a discussion with Co- peland and Knight concerning possible new competitive rates at the various plants. Generally, Anderson quoted certain rates, lower than master agreement rates, while Copeland argued that these rates were still noncompeti- tive. No agreement was reached. However, when Cope- land advised Anderson of SIPCO's interest in reopening the Des Moines plant'54 Anderson commented that he thought he could organize the employees and negotiate a new competitive contract with SIPCO for Des Moines once it was reopened. The parties agreed to discuss the Des Moines plant at a later date. On September 18, Knight and SIPCO counsel Bruce Thompson 55 met with Anderson and Al Vincent, his as- sistant, in Washington, D.C., to continue the discussion concerning the Moultrie, Guymon, and Des Moines plants. At this meeting, the plans concerning the closing of Moultrie and Guymon by Esmark and their reopening by the newly sold SIPCO were reviewed with Anderson as was SIPCO's plan to reopen Des Moines if agreement could be reached with the Union for competitive labor rates at that point. Anderson stated that with regard to Moultne and Guymon he wanted to go on record once again in stating the Union's position that it would not agree to any midterm modifications of the master agree- ment. He added that he understood what Knight was saying about closing and opening plants at Moultrie and Guymon and that the Union, meaning the International, as The position of management at this time was that as long as Esmark owned Swift & Company and SIPCO, all three were bound by the master agreement, that since Moultrie and Guymon were not economical- ly viable under the master agreement rates and the Union refused to agree to make changes in these rates, these plants had to be closed, but once Esmark sold SIPCO, the new owners would no longer be bound by the master agreement and could negotiate a new contract after reopening these plants 54 The Des Moines plant had been closed in 1979, was no longer under the master agreement, and was therefore in a different position from the other plants A similar offer, according to Copeland, was made by An- derson regarding Clovis Anderson denies this Other plants were like- wise discussed as Anderson testified concerning a meeting he had with Knight in Washington in September He denied, however, that Thompson was present Elsewhere he testified that he may have attended a meeting at which Thompson was present I credit Knight and Thompson on this point DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD would not "stir the pot" regarding these plans provided they were legal. He added that he did not think they were. He informed Knight and Thompson that although the International would not cause any problems at this point, if the International changed its position regarding the Moultrie and Guymon situaton, he would so advise them.56 The discussion then moved to which units were to be included within the new company and what con- tracts were to be applied. Knight informed Anderson that certain plants and sales units would continue to op- erate under the master agreement whereas there were others that would not. Specifically, Knight reiterated that Des Moines, if opened, and Moultrie and Guymon, when opened, would operate under competitive agree- ments but all other plants then operating under the master agreement would continue to do so. Following the September 18 meeting, and throughout October, Knight kept in touch with Anderson by telephone, advis- ing him of progress made toward splitting off SIPCO from Swift & Company and Esmark. Des Moines, Moul- trie, and Guymon were also discussed. Regarding Des Moines, Anderson and Knight agreed to meet in Novem- ber to discuss the reopening of that plant. Concerning Moultrie and Guymon, Knight relayed to Anderson his understanding that those plants would be closed as of December 28 as scheduled and would be reopened Janu- ary 10 or 15, 1981. Anderson replied that as long as it was legal they could go ahead. On September 30 and October 1 and 2, a major step toward the restructuring of Esmark was accomplished. The energy segment was disposed of in three pieces to three different buyers on these days. The total energy disposition was valued at $1.1 billion. One of the pur- chasers, Mobil Transocean Corporation, a subsidiary of Mobil Oil, offered $60 per share for Esmark stock to Es- mark's public stockholders. The total value of the stock was $715 million. The Esmark stock was then exchanged for Esmark's stock in its subsidiary, Vickers Energy Cor- poration. The actual restructuring of Swift & Company, when it finally occurred, was a piecemeal operation that ex- tended over a period of months. Thus, Swift & Compa- ny, as a subsidiary of Esmark, set up its own subsidiary on September 3, 1980, called Transitory Food Proces- sors, Inc. On October 15, the name of Transitory Food Processors, Inc. was changed to Swift & Co., effective October 24. On October 21 the original Swift & Compa- ny transferred all of its assets except for its ongoing fresh meat division to Transitory Food Processors, Inc. (now the new Swift & Company) effective October 27. On Oc- tober 24, the name of the original Swift & Company was officially changed to Swift Independent Packing Compa- ny (SIPCO).57 At this time the various tangible and in- tangible assets, physical properties, as well as trademarks, notes, etc., were divided between SIPCO (originally Swift & Company) and Swift & Company (previously Transitory Food Processors, Inc.). This amounted to 66 Specific rates for the Des Moines Plant were discussed, but no agreement was reached at this time. sv In this way SIPCO became the successor to the original Swift & Company This was preferrable for financial purposes and tax consider- ations transferring back to new Swift & Company its name, trademarks ,68 and everything else that did not apply di- rectly to fresh meat. The things that were directly relat- ed to the fresh meat end of the business were taken by SIPCO. On October 27, SIPCO declared a dividend of all of (new) Swift & Company stock to Esmark. The net result of all of these transactions was the splitting of the original Swift & Company into two separate wholly owned subsidiaries o f Esmark; SIPCO, which owned and operated the fresh meats business, and the new Swift & Company, which operated the remainder of the oper- ations. Along with these changes there were also some changes made in personnel. The board of directors of the original Swift & Company resigned and then , for the most part, became members of the board of directors of the new Swift & Company, previously Transitory Food Processors, Inc. It was also about this time that Cope- land appointed a new board of directors for SIPCO and also appointed Knight both president of beef, lamb, and labor, and a member of the board of directors of SIPCO. After finally completing the separation in late October, the decision then had to be made as to how Esmark would dispose of SIPCO. Of the various alternatives, public offering, over a period of time, gained ascendancy as a consideration. Solomon Brothers and other invest- ment people were again consulted and it was agreed that sale to the public was a viable option. It was therefore agreed between Esmark and their various consultants that a public offeringb9 should be put together. Becker and others worked on the problem from then on. The primary concern of those assigned to work on the public offering issue was the pricing. A price multiple of four was being discussed, that is that the price for stock should be four times the company's earnings. This was determined to be the correct ratio because since high technology companies were selling at price multiples of 20 or 25, hybrid energy companies were selling at a P/E ratio of 8 or 9, and food companies normally sold at a price multiple of 6, it was felt that SIPCO would be most salable at a P/E of 4. The next thing to think about was the form of the sale, that is whether to sell direct to the public, to create another holding company and sell stock publicly in that holding company, or to use some other approach. All of these considerations were worked on beginning in October 1980 and extending into January 1981. In October there was a meeting attended by officials of Esmark, SIPCO, and certain investment underwriters. Thereafter, members of the investment firms visited the various plants and interviewed Copeland and other SIPCO officials in order to get an overview of the oper- ation. Meanwhile, another meeting between Knight and Anderson was scheduled for and took place on Novem- ss Since Esmark was keeping the consumer branded products, the name "Swift" and "Swift Premium" on those products was important to them. 69 A publ'c offering seemed feasible at this time because the facilities being operated at their locations seemed capable of being run at a profit, the product was proven, and Esmark had agreed to take the pension li- ability problem out of the picture SWIFT INDEPENDENT CORP. ber 5 in Chicago at Knight's request; the purpose being to keep Anderson abreast of progress being made at SIPCO. At the meeting, Knight reiterated that SIPCO was to be independent, that in order to operate the plants at Moultrie and Guymon, relief would be necessary for this reason, SIPCO would not apply the master agree- ment at those plants. Once again Anderson refused to make any concessions and advised Knight that in his opinion the plan was unlawful . Nevertheless, Knight ad- vised Anderson that incorporation papers had been filed for SIPCO, that brokerage firms had been engaged to handle the forthcoming public sale of stock, which would probably occur in January 1981. Knight then listed the plants and units that SIPCO planned to operate and those planned to close. He advised Anderson that all plants currently under the master agreement would con- tinue to operate as before except for Moultrie and Guymon. With respect to those two plants, Knight told Anderson that it was his present intention to close those two plants and have SIPCO open them up again after 2 weeks. At the time of reopening, SIPCO negotiated a new local contract with the Union, which would be more competitive than the master agreement ; that is to say, it would contain provisions less favorable to the em- ployees. Yet, Knight assured Anderson that continuous service would be recognized for all employees at Moul- trie and Guymon as well as elsewhere. Anderson asked that Knight put everything in writing and Knight agreed to do so. Finally, Knight advised Anderson that the Company probably could not be sold by January 15. In order not to have Moultrie and Guymon closed for too long a period of time, he asked Anderson about the pos- sibility of the Company opening up these facilities before the sale was completely finalized. Knight explained that too long a period of closure would interfere with the supply of animals, distribution, and sales, and the experi- enced labor supply. As things stood at the time, the two plants were scheduled to close down December 28 and the sale was not expected to be finalized until February 1. The 5 or 6 weeks of shut down was considered unac- ceptable to Knight. Anderson refused to go along with Knight's request stating once again that the master agree- ment could not be altered and that if the procedure that Knight suggested was not legal he could not go along with it. Knight then requested, as an alternative, that the closing dates be extended. Anderson did not commit himself at the time and the two agreed to meet and dis- cuss it again in a few days. Two days later, however, they talked by telephone and Anderson took the position that if the closings were delayed, it would require, ac- cording to the contract, a second closing notice and a 6- month extension of operations for the plants. Knight re- jected this position. On December 8, Knight met with Anderson in Wash- ington and brought with him a draft containing the infor- mation that Anderson had asked on November 5 to be put in writing. The draft listed the SIPCO plants that were to continue under the master agreement, the pro- posed action to be taken at Moultrie and Guymon, as previously discussed, and the fact that SIPCO was going public with a timetable for accomplishing it. The con- tents of the draft were discussed as were other matters of 445 mutual interest, including the opening of Des Moines and the possible closing of the Tampa80 and Chino facilities. During the meeting Knight made notes on how the letter should be changed to reflect what Anderson wanted to get in writing. Regarding the Moultrie and Guymon plants, Anderson advised Knight that if what manage- ment was planning to do was legal the Union would not obstruct its action although it would not give the plan its blessing. On December 11 Knight sent to Anderson the letter containing the information requested by Anderson on November 5 and discussed by those two individuals on that date and on December 8. Shortly after the mailing of the December 11 letter, Knight contacted Anderson and suggested another meet- ing to be attended by not only himself and Anderson but also by their attorneys, the object being to discuss cer- tain problems that had evolved due to the Union's refus- al either to permit SIPCO to extend the closing date for Moultrie and Guymon beyond December 28 or to open the plants early and the fact that the public sale probably was not going to take place until some time in March. The meeting was held in Chicago on December 17 and was attended by Knight and his attorney, Bruce Thomp- son, while Anderson was accompanied by in-house coun- sel Stan Gacek. At this meeting, Knight explained once again that SIPCO was going public and would be com- pletely independent from both Swift & Company and Esmark. He reiterated that the plan was for SIPCO to close down while still owned by Esmark and to be re- opened after the public sale. He attempted to convince Anderson and Gacek that the procedure was totally legal. He noted, however, that the Company was in a bind because it had already given notice that it was clos- ing Moultrie and Guymon on December 28, but that it now appeared that the public sale of stock could not be completed until March. Knight explained the problems that would attend a prolonged period of closure and tried to obtain agreement from Anderson and Gacek to let SIPCO open Moultne and Guymon early, before the public sale in order to cut down the period of closure. He offered his assurances as he had in his December 11 letter that if the process of becoming a publicly held in- dependent corporation were not completed within a rea- sonable length of time after the opening of the Guymon and Moultrie facilities, the company would recognize retroactively the terms and conditions previously provid- ed to the employees at these locations under the contract between Swift & Company and the Union, i.e., the master agreement. Anderson replied that in his opinion what the Company was doing was illegal, that SIPCO was not going to be independent of Swift & Company and Esmark, and that what it was doing at Moultrie and Guymon was likewise illegal. He added that the Union would not go along with it. Gacek added that the Union's position was clear-that if the Company opened Moultne and Guymon before the sale by Esmark of the SIPCO stock it would be an alter ego situation, and the 60 Tampa was a facility that was under the master agreement and was suffering competitively Knight informed Anderson that if relief were not obtained it too might have to be closed Anderson replied that he could do nothing about the situation at the time 446 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Union would object to such an action on the Company's part as illegal unless the openings were under the master agreement. Any opening of the plants after the sale of stock would be all right provided it was legal. Thomp- son explained how there would be a new corporate structure that would hopefully insulate the Company from legal problems arising from the alter ego situation at Moultrie and Guymon, which at any rate would be a very short period, subsequently corrected by the public offering. Despite Thompson's argument, neither Ander- son nor Gacek were convinced and maintained their po- sition that the Union would not agree to the opening of these facilities prior to the completion of the public of- fering. They added that the Companies could change their names all they wanted but they were still all the same and the master agreement should apply . Having failed with this approach, Knight then asked, once again, about the possibility of extending the closing notice at Moultrie and Guymon. Anderson refused and suggested that the company might rescind its earlier notices but added that if it did, it would be obligated under the con- tract to give the workers another 6-month notice of clos- ing. Knight replied that the company would likely be forced to unilaterally extend the notice of closing at Moultrie and Guymon. On December 22 Knight contact- ed Anderson by phone once again regarding the exten- sion of the closing notice and informed him that the company had decided to extend the closing date to March 7, 1981.61 Knight confirmed this conversation in a letter to Anderson of the same date. Similarly, notices of the extended closing date were posted at each plant. In December work was undertaken on the filing of the SIPCO prospectus after meetings attended by underwrit- ers and members of SIPCO management. The actual work in the prospectus, registration, and other docu- ments began in December and continued on into January and February. This work was done by underwriters, their counsel, as well as SIPCO and Esmark people. At the same time discussions took place during which con- sideration was given as to the form of the forthcoming public sale, that is whether SIPCO should simply issue the stock itself or whether there should be created an- other holding company. For accounting and tax purposes the latter course was decided upon. On January 26, Esmark incorporated Swift Independent Corporation62 with an authorization of 10 million shares of voting common stock and 155,00063 shares of nonvoting con- vertible common stock. On February 13 Knight met with Anderson once again to bring him up to date on progress made toward SIC's going public. During this meeting he furnished Anderson with a draft of SIC's prospectus and informed him of progress made so far. Once again he broached the subject of the Moultrie and Guymon plants and their scheduled reopening in April after the public offering of the SIC stock. These subjects were also discussed in the prospectus. When Knight reit- 61 Subsequently, the closing dates were extended to April 3, with notice being given to the Union by letter dated February 17, then ex- tended further to April 17 or 18 62 Initially Swift Independent Holding Company. 53 The 155,000 shares were subsequently issued to SIC officers as pay- ment to them for work performed during its organization erated his desire of relief from the master agreement at these two locations, Anderson refused once again to grant relief and told Knight that the plan outlined by Knight and contained in the prospectus was illegal. Knight disagreed and no change in the position of either party resulted. Following the incorporation of SIC, Arthur Rollin was chosen as its sole director. 64 Rollin, an outside at- torney and not connected with Esmark, immediately un- dertook the election of officers and directors, adoption of bylaws, and other necessary organizational procedures for the new corporation. After accomplishing the organi- zational aims, Rollin resigned and elected a replacement board of directors, which consisted of 10 persons who were affiliated with SIPCO. The officers and directors of SIPCO thus became officers and directors of SIC. Sever- al additional outside individuals unconnected with SIPCO or Esmark were also chosen as directors. The di- rectors were actually chosen by Copeland. On February 23 Esmark and SIC entered into an agreement in which all the outstanding stock of SIPCO would be sold by Esmark to SIC. In payment SIC agreed to deliver to Esmark $100 million 65 in the form of a demand note at 15 percent. SIC agreed in the same document to file with the Security and Exchange Com- mission a registration statement to sell shares of its own (SIC's) stock through public distribution; Esmark to ac- quire the option of purchasing from SIC 4.5 million shares of such stock conditioned upon a firm underwrit- ing agreement whereby the underwriters would agree to purchase at least 2.5 million shares from Esmark. It was further agreed that SIC would deliver the 4.5 million shares of SIC stock and a $35 million subordinated note to Esmark in return for the $100 million note previously delivered to Esmark for the SIPCO stock. It was agreed about this time also that Esmark would retain a certain minority percentage of the SIC stock because the under- writers did not feel they could sell all of it to the public and because Esmark's keeping a certain percentage would indicate faith in the new venture. Back in December 1980, SIPCO had hired a new gen- eral counsel, Thomas McKay. Bruce Thompson subse- quently advised McKay of SIPCO'S plan to close Moul- trie and Guymon and open them up again after the public sale as a new and independent company. Thomp- son informed McKay that inasmuch as the closings would take place at a time when SIPCO was still owned by Esmark, and would subsequently be reopened at a time when SIPCO was publicly owned and independent of Esmark, SIPCO would at the time of the reopening be a successor company and the plan was therefore legally justified.66 McKay agreed with Thompson as to the jus- 64 Rollin, who was chosen by Esmark's assistant general counsel, Becker, also became SIC's sole stockholder when he was issued 100 shares of voting stock at the price of $1000 65 It was agreed in the document that SIPCO 's assets were book valued at approximately $166 5 million so that the $100 million being paid for them was considerably less than their worth 66 The time between the closing and reopening was considered by Thompson to be an interim transitional period SWIFT INDEPENDENT CORP. 447 tification of the planned course of action but during sev- eral conversations in January and February noted that since the employees at Moultrie and Guymon were being treated differently from the employees of the other SIPCO plants,67 perhaps it would be beneficial for pur- poses of communication to create a new subsidiary com- pany just to operate Moultrie and Guymon to impress on their employees that they were, indeed, working for an entirely new and independent company.°8 On February 24, New Sipco, Inc. was incorporated. SIC became its sole stockholder and SIC's board of di- rectors and principal officers became the board of direc- tors and principle officers of New Sipco, Inc. On the same day SIC filed its registration statement, effective April 22, the latter date being the earliest date when stock in that company could, by law, be sold. Esmark, of course, was responsible for issuance of the stock. In late March, Knight received a telephone call from Anderson who advised him that he and the Union's at- torney had reviewed the various documents that had been filed and it appeared to them that SIPCO was noth- ing more than Swift & Company with a new name and therefore if Moultrie and Guymon were reopened they would still be under the master agreement. Anderson told Knight that the Union intended to take action, that is file an unfair labor practice charge if the company pur- sued its announced plans with regard to Moultrie and Guymon. Knight advised Anderson that in his opinion there was nothing illegal about the Company's plan and suggested a meeting between the attorneys for the parties and themselves to discuss the matter. On April 2 the meeting took place in Chicago. The positions of the par- ties were repeated but the problem was not resolved. It was agreed that resolution of the problem would likely have to be through arbitration, through the filing of an unfair labor practice or through the initiation of a law- suit. Though an additional telephone conversation fol- lowed the next day and at least one letter from Anderson to Knight followed thereafter, both of which dealt with the same problem, the problem remained unresolved. On April 11, the February 23 agreement between Esmark and SIC was effectuated. On that date Esmark became the holder of the $100 million note89 from SIC with the conditional option to purchase SIC stock as noted supra. SIC, on the same date, acquired all of SIPCO's outstanding stock. Esmark assumed all of SIPCO's liability for outstanding checks as of the close of business that day. On that day also, the connection be- tween SIPCO's banking system and Esmark's banking system, which required daily adjustments to take care of 67 Moultrie and Guymon employees, unlike employees at other SIPCO plants, would receive benefits under the closing provisions of the master agreement, would then be out of work for a short period of time, and then would be hired under new local contract provisions with fewer ben- efits than employees at other plants continuing to work under the master agreement 86 Thompson testified that labor law considerations were not discussed when the creation of the entirely new company was under discussion Al- though I agree with the General Counsel that this statement is difficult to credit, I nevertheless find, in either case, that the answer is irrelevant and would not affect the decision here. 69 The book value of SIPCO'S assets were calculated at $166 5 million, in accordance with the earlier agreement, described supra. surpluses and deficits was permanently severed and SIPCO, in this respect also, became independent of Esmark management. Similarly, SIC/SIPCO thereafter picked up all charges relating to SIPCO operations except for the closing costs for Moultrie and Guymon that, by prior agreement, were paid for by Esmark as part of the cost of the reorganization. On April 17 Moultrie and Guymon were closed. All employees received their full closing benefits from Esmark as required by the master agreement.70 Benefits were paid to separated employees at Moultrie and Guymon at special offices away from the plants to which personnel files and other records had been transported. The purpose was apparently to emphasize the fact that SIPCO and the old fresh meats division of Swift & Com- pany were entirely different companies from New Sipco, Inc.; that SIPCO and the old fresh meats division, both of which had been owned by Esmark and both of which had employed the employees being terminated, should not be considered the same as New Sipco, Inc.; that New Sipco, Inc., which was to be owned by SIC and to which the plants and other assets had been transferred on April 11, and for whom most of the employees would work if and when hired by New Sipco, Inc., should be recognized as a new employer.7 i On April 21 the underwriters of the SIC stock met with Esmark management and agreed on the price at which the stock would be sold. The stock was to be sold to the public at $15 per share with $1.05 of each share to go to the underwriters. The following day, April 22, Esmark entered into an underwriting agreement with Solomon Brothers, then exercised its option to acquire the stock72 and the $35 million SIC note in exchange for the $100 million SIC note. The registration statement became effective and the public offering took place. The underwriters purchased 2.5 million shares of SIC stock from Esmark for resale to the public. The offer was completely sold out in less than 2 hours. Since the under- writers had an option to buy an additional 250,000 shares, they exercised that option and sold these addi- tional shares, also on April 22. In addition there were the 345,000 shares issued in connection with a SIC employee benefit plan73 and 155,000 shares of nonvoting stock issued to certain SIPCO employees for a total of $5 mil- lion shares issued. Thus, as of April 22 Esmark ceased its 100-percent control of SIC and SIPCO and became a 35- percent minority stockholder with no option or agree- ment outstanding to purchase additional SIC stock. With the completion of all transactions, Esmark in effect real- ized just under $100 million for its sale of SIPCO in the form of the $35 million note from SIC, approximately 70 A grievance was filed by the Union concerning the Company's ex- tension of the closing date, which was still pending at the time the hear- ing was in progress 71 Since the Union had been apprised of the entire plan over a period of several months, this separation of termination and hiring can hardly be considered a subterfuge of any kind 72 There were 1,750,000 shares of stock The transaction was complet- ed April 29 73 The outstanding shares previously owned by Rollin were purchased on April 22 by SIC 448 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD $38 million in cash from the public We of SIC stock, and the retention of about $25 million in SIC stock. On April 26 Phil Immesote, secretary-treasurer of Guymon, Local 340 of the Union called Richard Knight. Knight knew Immesote from their previous contacts concerning grievances at the Guymon plant. Immesote advised Knight that when the plant was ready to open, he, Immesote, was ready to sit down and work out an agreement. Knight advised Immesote that he would keep in touch, but did nothing more. In particular, Knight did not call Anderson to let him know of Immesote's call. According to Knight, he believed that Immesote had Anderson's blessing on entering into a local agreement. Following receipt of the telephone call from Imme- sote, Knight discussed its content with Copeland. To- gether they decided to take Immesote up on his offer. On April 30 Knight sent Anderson two letters, one bear- ing the SIPCO letterhead, the other on New Sipco, Inc. stationery. The SIPCO letter advised Anderson that SIC had gone public and had purchased the assets of SIPCO. It also informed Anderson that SIC's wholly owned sub- sidiary, the newly created New Sipco, Inc., now owned the Moultrie and Guymon plants. The letter also stated that SIPCO's board of directors had decided to retain its current work force at each of its existing operations cur- rently operating under the master agreement, listing Glenwood, Iowa; National City, Illinois; Sioux City, Iowa; Charleston, South Carolina; Columbia, South Carolina; and New Orleans, Louisiana. It then stated that as a successor employer it recognized its obligation to bargain with the Union concerning these locations, but stated also that it had the right under the circumstances to establish initial terms and conditions of employment at each of the facilities named pending the outcome of such bargaining. The SIPCO letter then announced that "the SIC and SIPCO Boards have opted to have SIPCO adopt the terms and conditions of the Master Agree- ment-regarding the SIPCO facilities listed. . . ." Final- ly, the letter advised Anderson that SIC/SIPCO had elected to credit all previous service to employees work- ing under the master agreement. The second letter, the New Sipco, Inc. letter, in addi- tion to repeating certain information contained in the first letter, also advised Anderson that SIC and New Sipco, Inc. had decided to open their Moultrie and Guymon facilities effective May 5, 1981, and that em- ployees at these new operations would be working under terms and conditions "still under consideration." The letter advised Anderson that the new terms and condi- tions of employment would be made known to applicants at the time offers of employment were made and that ap- plications from former employees would be considered. Although neither of the two April 30 letters to Ander- son mentioned Immesote, about the same day, Knight in- structed Guymon Plant Superintendent Ray Heimbouch to contact Immesote and request a meeting to start nego- tiations toward a new contract. Heimbouch did so, and a meeting was scheduled for and was held on May 1 at which contract negotiations were initiated. Beginning about May 3, interviews of job applicants were undertaken at Moultrie. Most of the old SIPCO employees were rehired as new employees of New Sipco, Inc. after filling out applications, taking physicals, and being advised of the new terms and conditions of employment. These terms and conditions of employment were determined by Knight, with input from local plant management. No one from Swift & Company or from Esmark had any input into these considerations. Meanwhile, regarding Guymon, Knight and the local management had decided on wages and other conditions of employment for the employees at that plant just as they had at Moultrie. The same procedure was used during the interviews-new applications, physicals, etc.-but then contract negotiations that had begun on May 1 resulted in a contract being finalized on May 6. The conditions of employment of the employees were therefore governed by the provisions of this local agree- ment, which was eventually ratified by the Guymon em- ployees on May 11. As was the case at Moultrie, almost all the newly hired employees were the same employees who previously had worked for SIPCO. The contract was negotiated by Immesote and local management.74 No one from Esmark or Swift & Company participated. On May 7 Anderson heard indirectly that a contract had been finalized at Guymon. He called Knight who ac- knowledged that a contract had, in fact, been reached. Anderson objected that Immesote had no authority to enter into any local agreement and stated that the local contract was invalid. Knight replied that he thought that Immesote had Anderson's "blessing" to negotiate the contract. Anderson denied that Immesote had his "bless- ing" and reiterated that the local contract was void. The following day, May 8, Anderson sent Knight a telegram in which he noted that discussion between the Company and a local union representative concerning terms and conditions of employment at Guymon had taken place. He advised that the Company was required to continue to recognize and bargain with the International and that the terms of the master agreement still applied to the Moultrie and Guymon plants. He added that the Compa- ny had always bargained on contract terms only with the International and that no local union had authority to enter into any bargaining agreement covering either Moultrie or Guymon without the International's approv- al. He further noted that the International had not ap- proved any negotiations at the local level at Moultrie or Guymon nor approved any of the terms and conditions of employment discussed or agreed at those locations. Anderson demanded that negotiations for local contracts at Moultrie or Guymon cease and that the Company continue to bargain solely with the International and continue to apply the terms of the master agreement. De- spite Anderson's telegram, the Immesote contract was ratified by the local membership that night and Guy- mon's management was so informed by telegram the fol- lowing day. On May 12 Knight replied to Anderson's a: Immesote had negotiated other local labor agreements on behalf of Local 340 where the plants were not covered by the master agreement Other local unions' officials had done likewise at other locations In March 1981 a new program was approved by the Union's International executive board whereby any local agreement would first have to be sub- mitted to the International for approval before it could be finalized or ratified locally SWIFT INDEPENDENT CORP. telegram informing him of the local contract's ratifica- tion and the fact that the Company planned to com- mence operations at Guymon on May 14 under the terms of the local agreement. Knight advised Anderson further that the Company's actions had been legal but offered to meet and discuss the labor situation. Guymon was, in fact, opened on May 14.75 On May 29 Immesote wrote Knight a letter in which he stated that the contract that he had signed was void and that he was recinding both his signature and the rati- fication.76 On June 1, Anderson wrote a letter to Knight referring to Immesote's position and reiterating the Inter- national's position that it alone was the sole representa- tive of the Guymon employees and the master agreement continued in effect. On June 377 Anderson wrote a simi- lar letter to Knight regarding the Moultrie plant. Despite the positions taken by Immesote in his letter of May 29 and by the International in Anderson's letter of June 3, the Guymon local contract was, according to Knight, nevertheless implemented and dues continued to be de- ducted in accordance with that contract and turned over to the Union right up to the time of the hearing. Similar- ly, again according to Knight, grievances have been filed and processed under the new contract. 2. Tampa Prior to the reorganization, the conversion of the fresh meats division into SIPCO and the public sale of SIC and its subsidiaries, employees of Swift & Company had the right under the master agreement to transfer to other plants whenever a plant closed. SIPCO took the posi- tion, once it became independent from Swift & Company and from Esmark, that it no longer had any obligation regarding the transfer under the master agreement be- cause the master agreement no longer applied. This too was the position of Swift & Company at that point in time. Prior to the public sale of SIC in April 1981, Swift & Company's fresh meats division (SIPCO), still owned by Esmark, announced the closing of its Tampa sales unit facility. In a memorandum from B. H. Cowart at the Tampa installation to Copeland, dated February 4, 1981, Cowart noted how Swift & Company had operated the sales and distribution system located at Tampa since 1962. He further commented in the memorandum how in November 1980, with the reorganization of Swift & Company, jurisdiction of the sales operation was as- sumed by SIPCO with Swift & Company serving as landlord.78 He recommended in this memo that for eco- nomic reasons the Tampa facility be closed and that in accordance with the master agreement the announcement of closure be made on February 6 with the final shut- 76 Neither Esmark nor Swift & Company played any part in the deci- sion to reopen Moultrie or Guymon 76 This letter was sent sometime after a meeting took place in Wash- ington, D.C at which Immesote was threatened by the International with removal from office and the local with receivership unless the local con- tract was voided 77 There is some question whether the June 1 and 3 letters were re- ceived 78 Swift & Company continued to operate a processing facility on the same premises adjacent to the SIPCO operation 449 down scheduled for August 8, 1981. Copeland, in a memorandum to Sullivan dated February 5, agreed with Coward and recommended that notification of the clos- ing and the giving of the 6 months' notice to employees should come from Swift & Company rather than from SIPCO as the contract (master agreement) that con- trolled was between Swift & Company and the Union. On February 979 Knight wrote to Anderson notifying him of the planned closing of the Tampa sales unit as of August 7, 1981.80 The notice of closing contained an offer to meet to discuss implementation of the closing provisions of the master agreement. Upon closing of the Tampa sales unit in August, employees working there under the master agreement were permitted to transfer to other master agreement facilities of SIPCO. They were not, however, permitted to transfer to Moultrie or Guymon or to Swift & Company facilities. B. Respondents' Operations Before and After the Public Sale 1. Esmark Following the public sale of SIC stock, Esmark con- tinued to operate, as it had before, as a holding company. The president of the corporation, Donald Kelly, contin- ued as chief executive, and the top officials of the corpo- ration and its subsidiaries continued to report directly to him. These were the various presidents of the wholly owned subsidiaries, including Swift & Company and Estech; Edward J. Harrison, vice president and general counsel of Esmark; Robert E. Palenchar, vice president, corporate affairs and personnel of Esmark; and Robert Briggs,81 senior vice president, finance, Esmark. Follow- ing the public sale, however, no one from SIC, SIPCO, or New Sipco, Inc. reported to Kelly nor to anyone else from Esmark. Palenchar, who in his role as vice presi- dent for corporate affairs and personnel, continues to hire Esmark executives and occasionally executives for its subsidiaries, and who still is in charge of their com- pensation as well as incentive plans, stock options, long- term growth plans, and pension plans, has had nothing to do with the hiring of executives for SIC, SIPCO, or New Sipco, Inc. since prior to the public sale of SIC stock in April 1981. Similarly, Palenchar's chief assistant, manager, supervises three management employees: Douglas Empey, director of benefits, who is in charge of pension plans, hospitalization plans, and life and disability plans; Norris Ewald, director of compensation (Esmark's personnel director), who is in charge of stock option plans, management incentive, and growth plans; and Steve Ward, pension administrator, who keeps pension records current and implements action initiated by sub- sidiary companies. These people who historically have acted as advisers to the operating (subsidiary) companies in their special fields have had no such contacts with SIC, SIPCO, or New Sipco, Inc. since April 1981. 78 Notice to employees of the closing was made the same day 80 Though Knight was at the time vice president of beef, lamb, and labor for SIPCO, the letter was under the Swift & Company letterhead 81 Briggs is one of SIPCO's board of directors 450 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Historically, there have been in existence several pen- sion plans affecting various employees of Esmark and its wholly owned subsidiaries, including plans for Esmark salaried employees, Swift & Company salaried employ- ees, Swift & Company nonsalaried employees, Swift re- tirees, Eschem salaried employees, Eschem nonsalaried employees, Estech salaried employees, and Estech nonsa- laried employees. Each of these plans has its own pen- sion board, each manned by Esmark. In addition, certain subsidiaries have their own pension plans that are not a part of the Esmark plan. When an employee of Swift & Company wishes to retire, that employee fills out a re- tirement form at his own company. This form is for- warded to Esmark where the amount in question is cal- culated. Questions concerning the amounts due under the various Esmark plans are forwarded to its board for review. Palenchar is chairman of the pension board at Esmark and various members of management are its members. Since April 1981 and the public sale, none of the Esmark pension boards nor any Esmark employee has had anything to do with any pension plan covering SIC, SIPCO, or New Sipco, Inc. employees. Esmark had historically maintained stock option plans covering salaried employees of Esmark and its subsidiar- ies. Esmark, through its compensation committee, its chairman, Palenchar, and its director, Ewald, determines how much stock is to be made available for itself and for its subsidiaries. The subsidiaries then each decide how much of the amount of stock made available to it should be allocated among its own eligible employees and, based on this decision, makes a request. The stock so allocated is Esmark stock. The Esmark compensation committee next considers the requests received from the subsidiaries and presents these requests to the board of directors for approval. No employee of SIC, SIPCO, or New Sipco has participated in these plans since April 1981 and in fact no employee of SIC or New Sipco, Inc. had ever done so. Esmark, over the years, has operated incentive plans and growth plans on behalf of certain of its employees and employees of its subsidiaries. Since April 11, 1981, however, employees of SIC, SIPCO, and New Sipco have not participated in these plans either. Esmark has historically filed a consolidated tax return reflecting its earnings and the earnings of its subsidiaries (those of which it owns 80 percent) including Swift & Company and Estech. The 1981 fiscal year tax report will include SIPCO income up to April 11, 1981, but not thereafter. The 1982 fiscal year tax report will not in- clude SIPCO earnings. SIC and New Sipco have never been included in Esmark tax returns. Over the years Esmark has been self-insured where state law permitted. Otherwise, where state law required, Esmark obtained outside insurance. In the former case, the practice has been for Esmark's subsidiaries to main- tain risk management departments, which self-insured for product liability up to $50,000. Esmark's own risk man- agement department maintained additional coverage to a certain higher dollar value. Outside insurance companies furnished insurance to a still higher amount. Subsequent to April 1981 Esmark continued these practices for Swift & Company and other subsidiaries. In October 1980, in preparation for its independence, SIPCO began to handle its own insurance, and by April Esmark no longer per- formed any insurance functions for SIC, SIPCO, or New Sipco. Esmark's subsidiaries have always done their own ad- vertising of their products. Esmark would advertise solely to the financial community in such newspapers as the Wall Street Journal and leading newspapers based in the financial centers of the country. The advertising was undertaken for the purpose of making potential Esmark investors aware of the various holdings of Esmark and, for that reason, would mention the subsidiaries by name as well as their chief products. Similarly, and for like reasons, Esmark would advertise on television. Since April 1981, Esmark has had no connection with advertis- ing of SIC, SIPCO, or New Sipco products or services. Although Esmark has itself prepared booklets describ- ing health care available to employees, the administration of the health care plan is handled by an outside service agency. Esmark has nothing to do with any health care plan covering SIC, SIPCO, or New Sipco employees. In sum, Esmark does not perform any services for SIC, SIPCO, or New Sipco nor does it share physical fa- cilities or departmental or staff functions with SIC, SIPCO, or New Sipco. 2. Swift & Company Since its separation from SIPCO, Swift & Company has been engaged in the manufacture, sale, distribution, and marketing of processed meats, turkeys, cheese, and dry grocery products in the United States, United King- dom, Europe, Panama, Puerto, and Japan. Unlike before the separation of SIPCO, it no longer slaughters animals except turkeys. Swift operates no fresh meat plants in the United States.82 Its executive offices are still located in Chicago at 115 W. Jackson Blvd. on the 11th and parts of the 8th, 9th, and 10th floors. Swift & Company board of directors and officers, in large part, remained the same after the separation of its fresh meats division and the latter's conversion to SIPCO and public sale in April 1981 as they had been in 1980. Notable among the exceptions are, of course, Copeland and Knight, both of whom left Swift & Company for po- sitions with SIPCO. Copeland, who had been on Swift & Company's board of directors and who was, at the time, president, fresh meats division and Knight who had been vice president, service, then vice president, beef, lamb and labor, broke all ties with Swift & Company when SIPCO became independent in April 1981. Swift & Company's labor relations are procedurally administered today as they were prior to the creation of SIPCO. Joseph Sullivan, Swift & Company's president, is responsible for its labor relations but has delegated au- thority in this area to Richard Greene, vice president of industrial relations at the corporate level. At the plant level each plant manager negotiates his own contract,83 82 Swift & Company's international division does operate fresh meats facilities overseas 83 In such areas as insurance, Swift & Company may seek advise from specialists at Esmark dust as it could in the past SWIFT INDEPENDENT CORP. 451 assisted by his vice president and general manager in a given area. These people work closely with Greene. In plants covered by the master agreement, the same proce- dure is used for negotiating purposes as well as for pur- poses of administering the contract. In the grievance and arbitration field, the individual plant managers and the legal departments work closely with Green until the ar- bitration level is reached, at which point Greene and the Swift & Company legal department handle the matter. The individuals in charge of industrial relations and who negotiate on behalf Swift & Company are different from those who are in charge of industrial relations at, and who negotiate on behalf of, SIPCO and New Sipco. During the fiscal year 1981 Swift & Company' s sales grossed $1.5 billion and purchases were valued at $1 bil- lion. Of the purchases, between $70 and $80 million worth of products came from SIPCO and New Sipco. Purchases were of fresh meats for processing at Swift & Company's own plants. The same guidelines were used in making these purchases as were used in making pur- chases from any other sources, i.e., competitive price, quality of product, and service. 3. SIC, SIPCO, and New Sipco Today, SIC is a publicly owned holding company that owns SIPCO and New Sipco. Like Esmark, it does not produce nor manufacture goods. Its primary concern is with selling its own stock, and this can best be achieved by making certain that the financial community is aware that its subsidiaries, SIPCO and New Sipco, are success- ful in selling their products. Since April 1981, SIC has paid quarterly dividends to all of its stockholders of common stock, including Esmark.84 As a matter of fact, following the separation of SIPCO from Swift & Company and the public sale of SIC stock, Esmark has been enjoying better returns from its combined investments in Swift & Company and in SIC85 than it had from Swift & Company before the re- structuring. SIPCO is one of SIC's wholly owned subsidiaries. It processes fresh beef, lamb, pork, and manufactures frozen meats and markets them at various plants throughout the United States. New Sipco, Inc. is the other of SIC's two wholly owned subsidiaries. It processes fresh beef at its Guymon, Oklahoma plant and fresh pork at its Moultrie, Georgia plant. After April 1981, personnel at the various SIPCO and New Sipco plants remained pretty much the same as before. Plant managers and salaried employees86 at the 84 Before April 1981 Esmark also received dividends. 85 SIC is now sold on the American Exchange whereas previously it had been sold over the counter. 86 Richard Knight openly testified that there was never any question that the same executives who were in charge before the closing of Guymon and Moultrie would remain in charge after their reopening. Thus, he, himself, who had been vice president, beef, lamb, and labor since October 1980, later became a vice president with SIC and responsi- ble for beef and labor at New Sipco as of the spring of 1981. Knight was a member of the board of directors of SIPCO and SIC up until the public offering of April 1981. His responsibilities at New Sipco after April 1981 were the same as his responsibilities at SIPCO and SIC. These responsi- bilities were assigned to him by Copeland who, as noted above, has been fresh meats plants as well as rank-and-file employees87 remained the same after the public sale, after the closing of Guymon and Moultrie, and after their reopening as before. Similarly, customers and suppliers also remained the same. During the hiatus, between the time that the Guymon and Moultrie plants were closed by SIPCO while owned by Esmark and the time they were re- opened by New Sipco while owned by SIC, which in turn was owned 65 percent by the public, management of these plants remained on the payroll, even though it required certain management personnel to take vacations and even though it required other management personnel to busy themselves at the plant doing maintenance work. Management personnel, in addition to Copeland and Knight, include Douglas Gray, executive vice president for SIC, SIPCO, and New Sipco, who had been with the fresh meats division; Charles Bedrosian, vice president and comptroller for SIC and SIPCO and director of New Sipco, who had been comptroller of fresh meats di- vision; Joseph O'Bryant, vice president of public rela- tions and marketing for SIC, SIPCO, and New Sipco, who had been president of the processed foods division of Swift & Company and a member of its board of direc- tors; Richard Jaracz, in charge of pork for SIPCO and of the Moultrie plant, who had been with the fresh meats division; R. T. Vernam, director of purchasing for SIPCO, who had been with Swift & Company; Ed Heiter, director of quality assurance for SIPCO, who had held the same office at Swift & Company; W. J. Zautke, general sales manager for SIPCO, who had held the same position at Swift & Company; K. A. Nilson, general superintendent of operations for SIPCO sales units, who had held the same position at Swift & Compa- ny; H. G. Kuhlken, director of plant accounting for SIPCO, who had held the same position at Swift & Company's fresh meats division; L. D. Nye (retired) who had held a position in SIPCO's sales department and who had also held a similar position in Swift & Company's fresh meats division; W. D. Dillman, respon- sible for public relations, SIPCO who had been with the public relations department at Esmark; J. W. Swanson, director of taxes for SIPCO, who had held the same po- sition at Swift & Company; and H. W. Vincent, director of sales unit accounting for SIPCO, who had held the same office at Swift & Company. All or most of these officers had been chosen by Copeland to be a part of the newly established SIC, SIPCO, and New Sipco group of companies. Similarly, other officers presently with SIC, SIPCO, and New Sipco had previously been employed at Swift & Company. Many of the senior officers of these companies are on the board of directors of SIPCO and New Sipco. Although all of these officers originally came over from Swift & Company, there has been no ex- change of personnel between SIC, SIPCO, and New the president and chief executive officer of SIPCO since October 24, 1980, of SIC since January 26, 1981 , and of New Sipco since February 24, 1981. 87 Twenty-five to fifty of SIPCO' s employees remained covered by the Union's master agreement, while New Sipco's coverage by the master agreement remains here in dispute. (Compare the testimony of Copeland, Tr. 2373 and Thompson Tr. 2505, on UFCW master agreement cover- age.) 452 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Sipco on the one hand and Swift & Company on the other hand since April 1981. After April 1981 only one member of the SIPCO board of directors , Roger Briggs, still held any position with Esmark or Swift & Company. He is only one of nine members and has no more control than any of the other members. Accordingly to the cred- ited testimony of John Copeland, no one from Esmark or Swift & Company has had any authority to control the day-to-day operations of SIC, SIPCO, or New Sipco after April 1981 nor has anyone from the latter group of companies had any authority or control over the day-to- day operations at Swift & Company. No employees of SIC, SIPCO, or New Sipco maintain any option to return to Swift & Company or Esmark, nor do any offi- cers of the latter two companies have any rights to em- ployment at SIC, SIPCO, or New Sipco. At the time of the hearing , the legal department of SIC, SIPCO, and New Sipco was composed of Thomas McKay Jr., Bruce Thompson, and Dennis Goth. Thomp- son had been with the Esmark and Swift & Company legal departments at one time or another in the past. Goth too had worked for Swift & Company. At the time of the hearing, the headquarters of SIC, SIPCO, and New Sipco was still located at 115 W. Jack- son Boulevard on the 7th floor88 and part of the 10th. As noted earlier, this is the same street address as Swift & Company although the latter is located in different of- fices and, in some cases, on different floors. SIPCO con- tinues to rent its office space from Swift & Company, which enjoys a favorable long-term lease and can and does therefore offer reasonable rental rates. SIC and SIPCO share the same telephone numbers while New Sipco does not have a Chicago listing . Besides its head- quarters in Chicago, SIC, SIPCO, and New Sipco have 5 pork plants, 3 beef plants, 1 lamb plant, 71 sales and dis- tribution units, and 1 specialty plant. The labor relations policies of SIC, SIPCO, and New Sipco are determined by Knight ,89 but Harry Niese,90 vice president of personnel, and Copeland work on such matters as do other officers of these companies along with Knight. No one from Esmark or from Swift & Company have had anything to do with labor relations at these companies since the public sale nor have the of- ficers of SIC, SIPCO, or New Sipco had anything to do with labor relations at Esmark or Swift & Company since the public sale. According to Copeland, the Guymon and Moultrie plants would never have been reopened at all if it had to be done under the master agreement.91 Rather, they would have been sold unless a competitive contract could be worked out. Moultrie, at the time of the hear- ing, was being operated without a contract while Guymon, as noted above, was operating under the terms of the local agreement negotiatied with Immesote. Cope- land testified that New Sipco is saving $4 million per year by operating the Guymon and Moultrie plants out- side the master agreement. Since the public offering, Knight has negotiated 15 or 20 contracts on behalf of SIC, SIPCO, and New Sipco including labor agreements covering Des Moines, Iowa; Brownwood, Texas; San Antonio, Texas; and various sales units. No one connected with Esmark or with Swift & Company participated in these negotiations, nor did Knight consult with anyone from those two companies concering these negotiations or labor relations in general after April 1981.92 In fact no departments or services are shared by SIC, SIPCO or New Sipco with Esmark or Swift & Company.93 Regarding the sales , SIPCO annually sells approxi- mately $1.6 billion worth of products, about $1.1 billion of which is fresh meats produced at SIPCO's and New Sipco's own facilities. The remaining $.5 billion consists of purchased products, resold through SIPCO's sales units, 25 percent of which is processed meats. Certain changes have occurred in the operation of SIPCO and New Sipco since October 1980 and April 1981. Thus, before October 1980 if Swift and Company did not want its fresh meats division to sell the products of other companies, it could not do so, although it did authorize certain sales of other companies ' products. Today, the amount of SIPCO's resale of other compa- nies' products is very large and its decision to sell or not to sell is independently its own. Today SIPCO has ar- rangements with a large number of producers in no way connected with Esmark or Swift & Company to sell processed meats. Thus, SIPCO counts among its suppli- ers of processed meats, Sunnyland, Pantry Pride, Peschke, Marval, Motts, and Rocco. It sells brands such as Plantation Pride,94 American Farms,95 Tender Pride, and Cornfield and the decision to do so is its own. The products consist of frankfurters, bacon, and bologna-all products in competition with Swift & Company's own Swift Premium brand. SIPCO also sells turkeys, cornish hens, geese, and ducks under copacking agreements with Marval, Motts, and Rocco . Some of these agreements had been made before and some after the public sale. SIPCO still conducts business with Swift & Company. However, whereas prior to October 1980 transactions be- tween the fresh meats division and Swift & Company were treated by means of intracompany transfer account- ing rather than as cash accounts or accounts receivable and no charge was made because the purchase was merely a paper transaction after SIC, SIPCO, and New Sipco went public, transactions between the new compa- nies and Swift & Company were handled just the same as any other transaction between Swift & Company and an independent unrelated customer . Purchases and sales 98 Knight had been located on the seventh floor for 6 years while with Swift & Company In October 1980, he moved to new offices still on the seventh floor 89 Knight is in charge of contract negotiations. 90 Niese is in charge of labor administration and benefit programs, in- cluding pension plans 81 This decision was made by Knight at Guymon, Jaracz at Moultrie, and by Copeland and other key officers. 92 Labor relations manuals used at SIPCO are based on the old Swift & Company manual , with modifications as they envolve based on changes decided on by SIPCO management 93 SIC, SIPCO, and New Sipco still purchase services from Swift & Company's R & D Laboratory, which had always done this work before the public sale. The cost of this work is about S 125,000 annually , this sum having been arrived at through arm 's-length negotiation. 94 Sunnyland's trademark. SIPCO by agreement has exclusive use. 95 SIPCO's own trademark to which Swift & Company has no rights. SWIFT INDEPENDENT CORP. between SIC, SIPCO, and New Sipco and Swift & Com- pany were thereafter handled on an accounts receivable basis with the same carrying charges applicably charged to strangers. After April 1981 Swift & Company sold, and today sells, the same products to SIPCO as it does to its other customers on the same credit terms. If SIPCO finds Swift & Company's prices too high, it will not buy those products. Some SIPCO sales units sell both Swift & Company products and competing products. In North Carolina and South Carolina, for example, SIPCO today sells Swift & Company's processed meats to supermarkets whereas prior to the public sale SIPCO was permitted by Swift & Company to sell its products only to restaurants, hospi- tals, and institutions (food services). It sells Swift & Company's Butterball line while at the same time it also sells its own brands, unlike the situation prior to April 1981. Similarly, though it has the exclusive rights in these areas to sell certain Swift & Company brands of processed meats, it can still sell competing brands, again unlike the situations prior to April 1981. In one instance SIPCO has a copacking arrangement with Swift & Company similar to copacking arrange- ments with other companies . This one exception is in San Antonio, Texas, where both fresh and processed meats have been produced since 1934. Here, the plant9e that had been owned by Swift & Company was transferred along with the other fresh meats plants to SIPCO at the time of its creation. Swift & Company, however, request- ed that SIPCO continue to produce certain Swift & Company products, hams, picnics, etc., which had his- torically been produced at that site for Swift & Compa- ny. SIPCO agreed and though the employees producing these same products are the same employees working for the same supervisors, they are now SIPCO employees. The sales of these products are still handled as before, SIPCO selling to food service accounts ; Swift & Compa- ny selling to supermarkets (retailers). The agreement, which requires SIPCO to sell raw materials to Swift & Company with SIPCO employees to process the materi- als on Swift-owned equipment and which also requires SIPCO to turn over a certain amount of the products to Swift & Company sales units for resale, was negotiated initially on October 27 , 1980, and was renewed in Febru- ary 1981 . The agreement97 appears to be a legitimate arm's-length transaction. New Sipco, which is a wholly owned subsidiary of SIC, operates a pork plant at Moultrie and a beef plant at Guymon. It has no sales units of its own and does its marketing through SIPCO's sales organization. Some of Moultrie's production is sold locally to retail stores and some for further processing . Its marketing procedure has not changed since the public sale. Guymon produces car- cass beef. It was stated at the hearing that SIC would file a consolidated tax return for SIC, SIPCO, and New Sipco. 96 The processed meat equipment remained the property of Swift & Company 97 SIC Exh 4 453 Analysis A. Procedural Questions 1. The question of service Regarding the service of charges the record indicated that the original charge in Case 13-CA-21156 was filed on May 29, 1981, and named as respondents: Swift Independent Packing Company , formerly known as Swift & Company Swift Independent Corporation New Sipco, Inc. Esmark, Inc. All as alter egos, a single employer and/or joint employers. Although the charge form does not name Swift & Company as an "Employer Against Whom Charge Is Brought," the "Basis of the Charge" contains the follow- ing language: Swift & Company (now known as Swift Inde- pendent Packing Company) . . . The above respondents and Swift & Company, acting in concert . . . have engaged in a plan .. . to repudiate the Master Agreement . . . to oust the Charging Party . . . and unilaterally abrogate the collectively bargained terms and conditions of em- ployment at such plants. . . . By these actions the employer has violated Section 8(a)(1), (3), and (5) of the Act. Thus, although the charge does not specifically identify Swift & Company, in box 1,a of the form as an "Em- ployer Against Whom Charge Is Brought" it does, in fact, indicate in the body of the charge that Swift & Company is being charged with acting in concert with those companies, identified in box l,a, who are specifical- ly charged with violating the Act . In my opinion, if anyone from Swift & Company read this charge, he would be derelict if he were to ignore it as implicating his company in this case. The charge indicates that the employer representatives to contact were Robert Palenchar at 55 East Monroe Street, Chicago, Illinois, and Richard Knight, 115 West Jackson Boulevard , Chicago, Illinois. On June 2, 1981, copies of the charge were sent to Swift Independent Packing Co . et al., c/o Robert Palenchar at the East Monroe Street address and to Swift Independent Packing Company, formerly known as Swift & Company, Swift Independent Corporation, New Sipco , Inc. & Esmark, Inc. at the Jackson Boulevard address, to the attention of Richard Knight. At this time Palenchar was vice presi- dent of corporate affairs and personnel at Esmark and had earlier been deeply involved in personnel matters and in labor negotiations with the Union on behalf of Swift & Company. Knight's position at the time and pre- viously is fully described supra. The return receipt for the copy of the charge sent to the Monroe Street address was signed by one A. Lykes, otherwise not identified. The return for the copies sent 454 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD to the Jackson Boulevard address was signed by Jim Mellon, similarly unidentified . The dates of delivery were June 3 and 5, respectively. On July 10, the complaint based on this charge issued naming Swift & Company as joint and/or single employ- ers with and/or alter ego of the other Respondents. Swift & Company is specifically named in several allega- tions and included as one of the Respondents through- out. James Farren is specifically identified as "Vice-presi- dent of Respondent Swift" and is alleged to be a supervi- sor and agent of Respondent Swift & Company. Copies of the complaint were mailed to Palenchar at the Monroe Street address and to Swift & Company at the Jackson Boulevard address among others . The two copies of the complaint98 sent to the Monroe Street ad- dress were received on July 13 and 14 and signed for by A. Lykes. The copy sent to Swift & Company at Jack- son Boulevard was signed for by K. Small on July 13. Subsequently, orders scheduling hearing were mailed and return receipts were signed at Monroe Street , again by Lykes and at Jackson Boulevard by Small on behalf of both SIPCO and Swift & Company on July 20. All parties filed answers to the complaint including Swift & Company, whose answer was dated July 23. Swift & Company's answer denied that it was served as alleged in the complaint on June 3 by certified mail. On July 6 the charge in Case 13-CA-21274 was filed and named as respondents: Swift Independent Packing Company, formerly known as Swift & Company Swift Independent Corporation New Sipco, Inc. Swift & Company Esmark, Inc. All as alter egos, a single employer and/or joint employers. Thus, the charge in Case 13 -CA-21274 does, in fact, name Swift & Company as a respondent. Palenchar at the Monroe Street address and Farren and Knight at the Jackson Boulevard address were named as employer rep- resentatives to contact. On July 8, a copy of the new charge addressed to Palenchar was received at the Monroe Street address and the receipt therefore was signed by Small, the same individual who later signed the return receipt for the complaint address to Swift & Company at the Jackson Boulevard address on July 13. On July 8 also, a copy of the new charge addressed to Richard C. Knight and James Farren, Swift Independent Packing Company, was received at the Jackson Boule- vard address and the receipt was signed by Lykes, who had previously signed for the receipt of documents ad- dressed to Palenchar at the Monroe Street address. On August 17 the complaint in Case 13-CA-21274 issued. Copies of the complaint were served on Swift & Company, among others , to the attention of Donald Bussman, Esq. at the Jackson Boulevard address on August 18. The return receipt for the copy of the com- plaint addressed to Swift & Company was signed for by Joe Doria, not otherwise identified. Joe Doria also signed for copies addressed to SIPCO, New Sipco, and to SIC, all at the Jackson Boulevard address. Additional papers were served on the various Re- spondents after August 17. However, the above record of the various services convinces me that Swift & Com- pany received actual notice, if not legal notice, of the charge and subsequent pleadings sufficient to enable it to adequately defend its position. Thus, the initial charge fully outlined the problem, and described how Swift & Company was considered to be the alter ego of the vari- ous other respondent companies and responsible for the unfair labor practice allegedly perpetrated by them. This charge was served on Swift & Company's alleged alter egos, in particular on Palenchar, vice president of Swift & Company's parent company. The language of the charge, having come to the attention of Palenchar at the very beginning, charging Esmark and its wholly owned subsidiary, Swift & Company, with being engaged along with its alter egos, or its joint employers, or as part of a single employer with SIC, SIPCO, and New Sipco with violating the Act, I find it impossible to believe that the parties served did not discuss this charge among them- selves-all being charged as alter egos, among other things-as violators of the Act. All parties having only recently been totally entwined in each other's business, all having officers who had served on the staffs of each other's companies, all but Esmark doing business at the same address, how could Swift & Company not be actu- ally make aware of the content of the charge? How could Esmark Vice President Palenchar read this original charge specifically naming Swift & Company as Es- mark's alter ego, or as a joint and/or single employer with Esmark, as a correspondent and never advise Swift & Company, its wholly owned subsidiary, that it was so involved? How could Knight, on receipt of this charge, fail to discuss it with Swift & Company, named as the alter ego, etc., of SIC, SIPCO, and New Sipco, when Swift & Company, his prior employer, was located in the same building, perhaps the same floor, and the charge clearly alleged the same violations as having been com- mitted by all corporate entities together? I cannot con- clude otherwise but that Swift & Company obtained actual notice of the content of the charge about the same time notice was legally received by the other respond- ents, and that Swift & Company had plenty of time to organize its defense, offer evidence, and otherwise pre- pare for the hearing which, in any event, did not occur until January 1982. Thus, I feel that the minor procedur- al defect in the General Counsel's processing of the case did not in any substantial manner undermine Swift & Company's position, nor deny it due process. Indeed Swift & Company's subsequent full participation in all phases of these cases would certainly indicate otherwise. The notion to dismiss based on failure of service is denied. 98 Both were addressed to Esmark, one to the attention of Palenchar, the other to the attention of Edward J. Harrison. SWIFT INDEPENDENT CORP. 455 2. The 10(b) question a. Case 13-CA-21156 Respondents take the position that inasmuch as the public expression concerning the planned closing of the Moultrie and Guymon plants was made on June 30, 1980, and the decision not to apply the master agreement was announced in September 1980 and the charge in Case 13-CA-21156 was not filed until May 29, 1981, the allegations in the complaint concerning these matters should be dismissed because of the 10(b) period bar. The General Counsel and the Charging Party take the posi- tion that the 10(b) period began at the time these two plants closed in April 1981 and that the filing of the charge several weeks later was timely. I agree with the General Counsel and the Charging Party on this point. The numerous cases cited by Respondents in support of their positions are clearly distinguishable on the facts. b. Case 13-CA-21274 Respondent Swift & Company and Esmark take the position that the May 11, 1981 letter, which limited rights of employees to transfer to other locations cov- ered by the master agreement was not a violation in itself but was "merely the consequence of or the enforcement of a decision made and communicated to the Union in June 1980." These respondents claim that the June 1980 announcement was made more than 6 months prior to the filing of Case 13-CA-21274 and that therefore the filing of the charge was barred by the 10(b) provision. The General Counsel and Charging Party, however, take the position that the 10(b) period did not begin to run until the May 11, 1981 notice issued so that the filing of the charge was timely. Once again, I find the cases cited by Respondents in support of their positions easily distin- guishable. Consequently, all motions to dismiss based on Section 10(b) are denied. B. Merits of the Cases ship passed to a new set of owners through their pur- chase of SIC stock. The question at that point became, "Are the new owners bound to the old Teamster agree- ment or are they not?" The General Counsel and Charg- ing Party replied in the affirmative, Respondents argued to the contrary. None of the cases cited by the parties and none that I have independently analyzed are factually on all fours with the instant case. The General Counsel and Charging Party have cited a number of cases falling within the stock transfer line.99 But these cases appear to deal with situations where a single on-going corporate entity had a majority of its stock sold or transferred during the con- tinued operations of the same corporation. The instant case, on the other hand, involves the incorporation of an entirely new and independent company with the issuance of new stock and the sale of a majority of that stock to the public; to new owners completely independent of the previous owners. In light of these facts, I conclude that the instant case is governed more properly by the hold in NLRB v. Burns Security Services, 406 U.S. 272 (1972). The Supreme Court in Burns, might well have held that the existence of a valid collective-bargaining agree- ment between a labor organization representing the em- ployees of a predecessor company and that company is sacrosanct and inviolable and that any purchaser of that company must be bound to the terms and conditions of employment contained in the existing labor agrement won for those employees through the collective-bargain- ing process. In short, the Supreme Court might well have said, "let the buyer beware," as it must be with regard to all other aspects of such a purchase-the con- dition of the buildings and equipment and the economic state of the business. Indeed, the Charging Party would have it so. The Supreme Court in Burns, however, rec- ognized other considerations that had to be weighed along with the rights of employees covered by the exist- ing collective-bargaining agreement and of the parties thereto. Specifically, the Court (406 U.S. at 287 to 291) stated: 1. Case 13-CA-21156 Analysis of the background facts and of the circum- stances existing in 1980 convinces me that the reorgani- zation initiated in April of that year and Esmark's deci- sions to divest itself of the energy segment and of the fresh meats division of Swift & Company were economi- cally motivated. The subsequently offered ESOP propos- al was, in my estimation, made in good faith and its re- jection eventually gave rise necessarily to new plans: first to sell the fresh meats division as a unit to yet un- known buyers, and later to sell the fresh meats division by means of a public offering, both plans conceived out of economic considerations free of antiunion animus. Indeed, throughout the planning of the ESOP offer and the eventual subsequent public offering, the Union was continually kept informed of progress made toward di- vestiture of the fresh meats division and the creation of the new independent companies. When the public offering was made and Esmark ceased to be the sole owner of SIPCO and became in- stead a minority holder of SIPCO through SIC, owner- We also agree with the Court of Appeals that holding either the union or the new employer bound to the substantive terms of an old collective- bargaining contract may result in serious inequities. A potential employer may be willing to take over a moribund business only if he can make changes in corporate structure, composition of the labor force, work locations, task assignment, and nature of su- pervision. Saddling such an employer with the terms and conditions of employment contained in the old collective-bargaining contract may make these changes impossible and may discourage and inhibit the transfer of capital. On the other hand, a union may have made concessions to a small or fail- ing employer that it would be unwilling to make to a large or economically successful firm. The con- gressional policy manifest in the Act is to enable the parties to negotiate for any protection either deems 99 E.g., Hendricks-Miller Typographic Co., 240 NLRB 1082 (1979); To- pinkas' Country House, 235 NLRB 72 (1978). 456 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD appropriate, but to allow the balance of bargaining advantage to be set by economic power realities. Strife is bound to occur if the concessions that must be honored do not correspond to the relative eco- nomic strength of the parties. In many cases, of course, successor employers will find it advantageous not only to recognize and bargain with the union but also to observe the pre- existing contract rather than to face uncertainty and turmoil. Also, in a variety of circumstances involv- ing a merger, stock acquisition, reorganization, or assets purchase, the Board might properly find as a matter of fact that the successor had assumed the obligations under the old contract. Cf. Oilfield Maintenance Co., 142 NLRB 1384 (1963 ). Such a duty does not, however, ensue as a matter of law from the mere fact that an employer is doing the same work in the same place with the same employ- ees as his predecessor, as the Board had recognized until its decision in the instant case. See cases cited supra, at 184. We accordingly set aside the Board's finding of an 8(a)(5) unfair labor practice insofar as it rested on a conclusion that Burns was required to but did not honor the collective-bargaining contract executed by Wackenhut. In my opinion, the Supreme Court's concern that sad- dling a new employer with a predecessor's old collec- tive-bargaining contract might discourage or inhibit the transfer of capital has application to the facts contained in the instant case. Respondents SIC, SIPCO, and New Sipco freely admit that if Moultrie and Guymon had been forced to operate under the master agreement, they would not have been opened at all because they were not economically viable plants when operating under the agreement. I find that under Burns, SIC, SIPCO, and New Sipco are not bound by the master agreement. As it is, the Union and Respondents, as conceded successors, are free to negotiate new terms and conditions of em- ployment more acceptable, if not totally satisfactory, to both sides. The complaint in Case 13-CA-21156 alleges that Re- spondents Esmark, Swift & Company, SIC, SIPCO, and New Sipco Inc. are and have been at all times material a single-integrated business enterprise, a single and/or joint employer, and alter egos. I take the term "at all times material" to mean the dates listed in paragraphs XII and XIII, the dates when the unfair labor practices allegedly occurred. Regarding these dates, it is alleged that on April 17 Respondent collectively closed the Moultrie and Guymon plants and terminated the employment of employees at those plants in order to avoid its obliga- tions under the 1979-1982 master agreement in violation of Section 8(a)(1) and (3) of the Act. I find, however, that Esmark closed these plants in anticipation of, and as one of several steps to be taken in its overall lawful plan to completely divest itself of control of the fresh meats part of its holding i o o and as a transitional step in the 100 Esmark's role as a minority stockholder does not affect this deci- sion creation of an entirely new set of companies-SIC, SIPCO, New Sipco-publicly owned and independent of itself and its subsidiaries. Inasmuch as the closing of the Moultrie and Guymon plants was not unlawfully moti- vated nor in violation of the Act, I find that the organi- zational interrelationship among the various corporate entities at this time, April 17, is immaterial. The complaint further alleges that on May 4 Respond- ent reopened the Moultrie plant; that on May 14 they re- opened the Guymon plant; that since about April 30 Re- spondents have unilaterally refused to adhere to and apply the terms and conditions of the master agreement at Moultrie and Guymon; and that by these collective acts Respondents have violated Section 8(a)(1) and (5) of the Act. Analysis of the facts clearly indicates that by May 4 and 14, indeed as of the the end of April, all arrange- ments for the final separation of SIC, SIPCO, and New Sipco from its previous owner Esmark and from Es- mark's subsidiary Swift & Company had been completed. Neither Esmark nor Swift & Company can be considered the alter ego of SIC, SIPCO, or New Sipco because the latter three, as of the critical dates, could in no way be considered a disguised continuation of the former, if in fact, they' ° 1 ever could be. The splitting off of the fresh meats division was openly accomplished through its sale to a newly created corporate entity, publicly owned. Following the separation and public sale, SIC, SIPCO, and New Sipco became a separate entity or set of entities managed by individuals who had broken all ties with Esmark, and with Swift & Company as well as their op- erations and business purposes. SIPCO and New Sipco's operation, i.e., the production, processing, and sale of fresh meats and related products, though similar, to some degree, to their operations before SIPCO's separation from Esmark and Swift & Company, were by May 4 no longer subject to either control or review by Esmark or its subsidiary Swift & Company. Similarly, the business purpose of SIC, SIPCO, and New Sipco, i.e., obtaining a fair return on investments through these operations, became the concern of the officers, directors, and owners of the new company, no longer subject to the control or review of the officers, directors, or owners of Esmark or Swift & Company. By May 4 the officers of SIC, SIPCO, and New Sipco were responsible solely to their own boards of directors and to their own stockholders, a great majority of whom had no connection whatsoever with either Esmark or Swift & Company. Though most of the equipment and real property in use at SIC, SIPCO, and New Sipco locations as of May 1981 had also been used by SIPCO when it was owned by Esmark, this fact is a natural consequence of the sale of the equipment and property to the new corporations and in any event is not controlling.' 02 Similarly, many of the customers and suppliers of the new operating companies are the same, but, on the other hand, new ones have been added and the system of servicing has been 101 Contrary to other findings, it is quite apparent that after the public sale, SIC, SIPCO, and New Sipco operated as a single entity insofar as the matters have involved are concerned 1°2 John Fender Electric Co, 244 NLRB 957 (1979) SWIFT INDEPENDENT CORP. changed to a large degree. All in all, and with particular emphasis on the change in ownership, I conclude that as of the critical dates in May SIC, SIPCO, and New Sipco were not the alter ego of Esmark or of Swift & Compa- ny. Regarding the allegation that SIC, SIPCO, and New Sipco were collectively on May 4 and 14 a single-inte- grated enterprise or joint employer with Esmark and with Swift & Company, it should be recognized that to prove this allegation the General Counsel would have to show that the two latter corporations shared common management, interrelations of operations , and ownership as well as centralized control of labor relations with SIC, SIPCO, New Sipco on the dates in question. The record indicates, however, and I fmd that none of these indicia were present on those dates or subsequently. Esmark's and Swift & Company'stos officers and directors re- mained primarily the same after disposition of the fresh meats business as they had been before, but they no longer had control or right of review over the operations nor over the labor relations of the new corporation. Whereas before the sale, Esmark controlled 100 percent of SIPCO, and before SIPCO's existence, 100 percent of Swift & Company's fresh meats division, after the sale Esmark only another minority stockholders with no more control over the new corporation than any other minority stockholder relative to the number of shares held. I conclude, therefore, that Esmark and Swift & Company as of May 4 and 14 were not single enterprises nor joint employer with SIC, SIPCO, or New Sipco when the latter opened up the Guymon and Moultrie plants and refused to apply at those times the provisions of the master agreement. Indeed, I fmd that neither Esmark nor Swift & Company played any part in the de- cision of SIC, SIPCO, and New Sipco to open those plants and to refuse to apply the master agreement. Con- sequently, I find that neither Esmark nor Swift & Com- pany violated Section 8(a)(1) and (5) in this respect. I have found that SIC, SIPCO, and New Sipco became totally independent of Esmark and Swift & Com- pany at the time of the public stock sale in April. At that time SIPCO and New Sipco became successors to the fresh meats division of Swift & Company and to SIPCO when it was the transitional entity, both having been pre- viously owned 100 percent by Esmark. When SIPCO and New Sipco became successors under the new owners, they were free to implement initial conditions of employment, subject to later negotiations with the bar- gaining representative of their employees. When New Sipco interviewed and hired employees to work at Moul- trie and Guymon, it carefully advised these employees that they would be working for an entirely new corpora- tion under working conditions other than those provided for in the master agreement previously in effect at those plants. The applicants were free to accept work under these new conditions or to reject the offer. As it turned out most of the prior employees of Esmark's SIPCO ac- 103 Management personnel of the processed meats division and of the old Swift & Company remained in place to manage the new Swift & Company while management personnel of the fresh meats division of course moved on to manage SIC, SIPCO, and New Sipco. 457 cepted New Sipco's new conditions of employment and it is patently clear that if they had not done so or had insisted on the application of the master agreement, they would not have been hired. Thus, until a substantial number of the old employees accepted the new terms, the employer could not be certain that the Union would be representing a majority of them. Under these circum- stances New Sipco was within its rights as a successor to establish initial working conditions and not be saddled with the master agreement.104 SIC, SIPCO, and New Sipco therefore did not violate Section 8(a)(1) and (5) in this respect, as alleged. Inasmuch as I have found that neither Esmark nor Swift & Company were alter egos of nor operating as a single enterprise or joint employer with, SIC, SIPCO, or New Sipco after April 1981, and inasmuch as there is no evidence that anyone still connected with Esmark or Swift & Company participated in the negotiations with Local 340, which resulted in the May 6, 1981 contract between the local and New Sipco, I shall recommend dismissal of allegations XIII(d) as it refers to Esmark and Swift & Company. The record evidence, however, indi- cates that historically the International Union had been recognized as the sole and exclusive collective-bargain- ing representative for the employees at the Guymon plant. When New Sipco became the successor employer, a duty devolved on it to recognize and bargain with that Union concerning the wages, hours, and working condi- tions of employees in that unit. It chose, however, to cir- cumvent this duty and to enter into negotiations with Local 340, executing with it a labor agreement on May 6. It should have been apparent to management at New Sipco that the Union could not logically claim the lawful application of the master agreement to Guymon and Moultrie as it had been doing consistently for at least a month prior to May 6 and at the same time acquiesce in or "give its blessing" to the negotiations on the local level between Local 340 and New Sipco. I fmd that SIC, SIPCO, and New Sipcolos violated Section 8(a)(1) and (5) through the decision of Copeland and Knight to have New Sipco negotiate directly with Local 340 rather than with the Union. I have found that Swift & Company and Esmark, as of the date of the public sale, no longer had any control over SIC, SIPCO, or New Sipco, that they were not alter egos of, or single, or joint employers with SIC, SIPCO, or New Sipco but that the latter three corpora- tions were completely independent of the former two. This being the case, SIPCO no longer had any right after the April public sale to transfer its employees from the Tampa facility to Swift & Company-owned facilities. Likewise, because I have found that SIC, SIPCO, and New Sipco were free to establish initial terms and condi- tions of employment at Moultrie and Guymon following the public sale, and did so by deciding not to apply the master agreement at those facilities, they were likewise free on May 11 to limit the transfer rights of employees 104 NLRB v. Burns Security Service, supra. '05 The integrated operation of these three entities indicate that for purposes of this decision they should be considered a single employing enterprise. 458 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD at the closed Tampa facility to other facilities then cov- ered by the master agreement since much transfer rights vested solely by virtue of the application of the master agreement, and these rights were limited therein to facili- ties covered by the master agreement, in accordance with the seniority provisions covering master agreement employees . Consequently, I recommend that Case 13- CA-21274 be dismissed in its entirety. CONCLUSIONS OF LAW 1. Respondent Employers are employers 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. Neither Esmark nor Swift & Company is an alter ego of SIC, SIPCO, or New Sipco, Inc. 4. Neither Esmark nor Swift & Company is a joint em- ployer with SIC, SIPCO, or New Sipco, Inc. 5. Neither Esmark nor Swift & Company comprises a single enterprise with SIC, SICPO, or New Sipco, Inc. 6. SIC, SIPCO, and New Sipco, Inc. constitute a single integrated enterprise and are joint employers within the meaning of the Act. 7. At all times material, United Food and Commercial Workers International Union, AFL-CIO-CLC has been the exclusive collective-bargaining representative of the employees previously covered by the 1979-1982 master agreement at Moultrie, Georgia, and Guymon, Oklaho- ma. 8. The Guymon, Oklahoma plant unit and the Moul- trie, Georgia plant unit described in the 1979-1982 master agreement, each constitute a unit appropriate for the purpose of collective bargaining within the meaning of Section 9(b) of the Act. 9. The employees of New Sipco , Inc., currently em- ployed at the Moultrie, Georgia, and Guymon, Oklaho- ma plants are no longer covered by the 1979-1982 master agreement. 10. By recognizing and bargaining with and executing a contract or authorizing the same with Local Union 340, United Food and Commercial Workers International Union, AFL-CIO-CLC as the exclusive collective-bar- gaining representative of the employees at the Guymon, Oklahoma plant, SIC, SIPCO, and New Sipco, Inc. vio- lated Section 8(a)(1) and (5) of the Act. 11. The above unfair labor practices affecting com- merce within the meaning of Section 2(6) and (7) of the Act. REMEDY Having found that Respondents SIC, SIPCO, and New Sipco, Inc. have engaged in certain unfair labor practices, I shall recommend that they be ordered to cease and desist therefrom and to take certain affirmative action to effectuate the policies of the Act. [Recommended Order omitted from publication.]