Mid Hudson Leather Goods Co. Inc.

MID HUDSON LEATHER GOODS CO Mid Hudson Leather Goods Co Inc and its succes sor or alter ego Patricia Handbag of New York, Inc and Four Joint Boards of International Leather Goods, Plastics and Novelty Workers Union, Local 29 Case 2-CA-22041 October 27 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On March 31 1988 Administrative Law Judge James F Morton issued the attached decision The Respondent filed exceptions and the Charging Party filed an opposing brief 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 brief and has decided to affirm the judge s rulings findings I and conclusions2 and to adopt the recommended Order ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent Mid Hudson Leather Goods Co Inc its successor or alter ego Patricia Handbag of New York Inc Newburgh New York its officers agents successors and as signs shall take the action set forth in the Order The Respondent has excepted to some of the judge s credibility find rags The Board s established 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 Cir 1951) We have carefully examined the record and find no basis for reversing the findings 2 We note that no exceptions were filed to the judge s rejection of the Respondent s deferral argument We also note that Los Angeles Marine Hardware Co 235 NLRB 720 (1978) enfd 602 F 2d 1302 (9th Cir 1979) relied on by the judge for other reasons was overruled in Milwaukee Spring Division 268 NLRB 601 (1984) only insofar as it held that an em ployer s transfer of work from one location to another location violates Sec 8(a)(5) if done during the term of a contract without union consent In view of our adoption of the judge s alter ego findings we find it un necessary to pass on the judge s alternative successorship findings James Wasserman Esq for the General Counsel Alan R Lewis Esq (Rider Weiner Lewis & Melchiori PC) of Newburgh New York for Respondent Mid Hudson Leather Goods Co Inc Michael 0 Gittelsohn Esq (Frinkelstein Kaplan Levine Gittelsohn and Tetenbaum) of Newburgh New York for Respondent Patricia Handbag of New York Inc Ira Cure Esq (Lewis Greenwald Kennedy & Lewis PC) of New York New York for the Charging Party DECISION STATEMENT OF THE CASE 449 JAMES F MORTON Administrative Law Judge The complaint alleges first that Mid Hudson Leather Goods Co Inc (M H) unlawfully terminated its collective bar gaining agreement with Four Joint Boards of Interna tional Leather Goods Plastics and Novelty Workers Union Local 29 (the Union) and unlawfully discharged its employees and operated thereafter in a disguised con tinuance under the name Patricia Handbag of New York Inc (Patricia) to evade its obligation to continue to rec ognize the Union as the collective bargaining representa tive of its production and maintenance employees and also to evade its contractual commitments to the Union The complaint alleges that by these acts M H and its alter ego Patricia has violated Section 8(a)(1) (3) and (5) of the National Labor Relations Act (the Act) Alter natively the complaint alleges that Patricia is the succes sor to M H that it unlawfully declined to recognize the Union as the collective bargaining representative of its employees that it has without bargaining changed cer tarn terms and conditions of their employment and sub contracted out work Patricia is thus alleged under this alternative theory to have violated Section 8(a)(1) and (5) of the Act The answers filed respectively by M H and Patricia deny that the latter is the alter ego of the former Patn cia further denies that it is the legal successor to M H and contends that it is not obligated to recognize the Union as the representative of its employees The pleadings also raise subsidiary issues that are best treated in conjunction with the foregoing I heard this case in New York City on 13 14 and 15 July 1987 On the entire record including my observa tion of the demeanor of the witnesses and after due con sideration of the briefs filed by each of the parties I make the following FINDINGS OF FACT I JURISDICTION In 1986 when the unfair labor practices allegedly began M H was a New York corporation engaged in the manufacture and sale of ladies handbags at its plant in Newburgh New York In that year it sold and shipped handbags valued at more than $50 000 to customers lo cated outside the State of New York I find that its oper ations meet the Board s nonretail standard for asserting jurisdiction The operations of Patricia separately meet the same ju nsdictional standard II THE LABOR ORGANIZATION As discussed further the Union has for many years negotiated collective bargaining agreements with an em ployer association Those arrangements set forth the wages hours and other terms and conditions of employ ment of employees of M H and of employees of other employers who were members of that association 291 NLRB No 75 450 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD III THE ALLEGED UNFAIR LABOR PRACTICES A Background William Giametta Sr found M H in 1947 and has been its only stockholder It used independent sales represent atives to market the ladies handbags it manufactured These sales representatives had their own showrooms throughout the country where they took orders from de partment stores and specialy stores They forwarded these orders to M H to be filled In or about 1963 Local 29 International Leather Goods Plastics and Novelty Workers Union became the collective bargaining representative of M H s production and maintenance employees Local 29 and other locals of its International formed Joint Boards for the purpose of negotiating collective bargaining agreements with the National Industrial Council affiliated with the National Handbag Association There were at its peak about 35 employers including M H who authorized the National Industrial Council to bargain on their behalf with the Four Joint Boards The membership of the Council reached its zenith in the 1970s William Giametti s son (William H )joined M H as a full time employee in 1973 on his graduation from college His brother Kenneth joined M H when he graduated from college in 1975 William Sr s former son in law had been general man ager of M H until about 3 years ago M H s business began to decline about the same time At one point M H laid off some employees and subcontracted unit work The Union protested that M H could not under its con tract subcontract unit work while employees were on layoff That matter was resolved when M H recalled at least one laid off employee to work William Sr repeatedly had complained to the Union that the seniority provisions of M H s collective bargain ing agreement were unsatisfactory When the 1984 con tract was scheduled to expire William H took part in the renewal negotiations between the Four Joint Boards and the National Council The 1984 contract was ex tended to 24 April 1987 with some modifications of wage scales seniority rights sick leave and health and welfare contributions William Sr testified that by 1986 M H was losing money in its operations William H suggested to him then that M H could become profitable by importing handbags The collective bargaining agreement in force then however provided that M H could not have re course to importing while employees were on layoff William Sr did not adopt William H s suggestion William Sr testified further that he took just enough money from the business to live on and that he paid the boys (i e -William H and Kenneth) what they had coming to them because they had [their] families [to sup port] In 1986 he was receiving a weekly salary of $300 William H received $700 Kenneth $600 William Sr was then about 73 years of age and ill with a heart condition requiring the use of a pacemaker ill also with diabetes and he had sight in only one eye In June 1986 he was approached by a neighboring businessman who offered him $610 000 for the building that M H occupied and for which William Sr had taken title as an individ ual in 1976 for only $50 000 William Sr signed a binder on 6 June 1986 to sell it for the amount offered The closing took place 31 December 1986 In the month pre ceding that closing the events that gave rise to this case took place B Communications Between M H and the Union and Related Matters All dates hereafter are for 1986 unless noted otherwise On 15 September William Sr telephoned the Union s president Peter Donatelli and by letter the next day confirmed that he had told Donatelli in that telephone call that M H will be terminated on November 15th because of ongoing business losses and general retire ment In November his son William H telephoned Dona telli He said that he was thinking about continuing to run the business and that he had been told that he did not have to have a union Donatelli suggested to him that they sit down to discuss the matter Donatelli in formed William H that if he hired union people he had to work under a union agreement Their discussion ended with an understanding that they would meet on 3 December However William H canceled that meeting Donatelli testified that he then assumed that all activity at the Newburgh plant would cease as of 15 November C The M H Operations at the Newburgh Plant Patricia s Incorporation Patricia s Operations M H occupied a four story building It employed cut ters sewing machine operators latex machine operators sample makers packing and shipping employees and general workers in its manufacturing operations As noted above William Sr s ex son in law had been gener al manager of M H until about 1984 The General Coun sel contends that in 1986 William H was in overall charge of M H s operations albeit without formal desig nation In 1986 William H s duties included everything ac cording to his testimony He made work assignments and hired employees with review as he put it by his father Union representatives dealt with him in the absence of William Sr The evidence also discloses that William Sr was not familiar with the duties of several employees on M H s active payroll in November even though those employees possessed sufficient seniority to withstand being laid off In view of the frail physical condition of William Sr in 1986 as described above and the functions performed then by William H I find that the General Counsel has established prima facie that William H was then de facto general foreman of M H Cf Commercial Movers 240 NLRB 288 290 (1979) in which the Board held that the burden is on the party alleging supervisory status to prove that it in fact exists The conclusional testimony offered by M H and Patricia to offset this prima facie showing is inadequate I thus find that in 1986 William H was responsible for and effectively in charge of M H s manufacturing operations Kenneth s duties included dealing with the sales representatives and pitching in wherever needed MID HUDSON LEATHER GOODS CO On 26 September William Sr executed a document that stated that M H would liquidate pursuant to section 337 of the Internal Revenue Code and would distribute its assets within 12 months On 21 October Patricia s certificate of incorporation was filed with the New York Department of State Wil ham H and Kenneth are president and vice president of Patricia and its only shareholders At the time of its in corporation they were on M H s payroll Incidentally M H marketed a handbag line under the tradename Pa tricia Handbag Also in October Kenneth notified M H s sales repre sentatives that M H was closing after it filled its orders for the fall season He also informed these sales repre sentatives that they were to write all spring orders for Patricia s account He and William H had samples of the sprang line made up and these were shipped to the sales representatives All materials and labor costs in connec lion therewith were paid by M H without reimburse ment The sales representatives began in October to send orders to Patricia Kenneth placed purchase orders for materials to be used to fill those orders with companies that had supplied M H Records of M H disclose that it employed 27 produc tion and maintenance employees in the last quarter of 1986 and that the last active workweek of any of those 27 ended on 8 November Patricia s records disclose that in the last quarter of 1986 it had 17 production and maintenance employees Twelve of these had been em ployed by M H earlier in that last quarter 2 of those 17 left Patricia s employ within a few days according to notations on Patricia s payroll William H testified that most of the former M H employees had answered an em ployment advertisement Patricia placed in a local news paper and that he hired 12 of those applicants On 22 November Patricia began to fill spring orders Patricia s records show that the first payroll period for its employ ees ended on 29 November I note incidentally that the telephone number on the exhibit relating to the ad placed by Patricia is the same as that used by M H as reflected in other exhibits The sewing machines latex machines and other equip ment used by Patricia s employees in manufacturing the spring line belonged to M H and were used without compensation Relative to M H s peak years Patricia was using a small part of M H s machinery At one time M H had 50 sewing machines used in good part to manufacture handbags on a contract basis for other manufacturers That type of work was rapidly phasing out By early 1986 M H had only about 10 sewing machines in operation Patricia late in Novem ber was using only a couple of these D The Proposed Sales Agreement Leases and Related Documents The General Counsel placed in evidence a letter dated 24 November which was addressed jointly to William Sr William H and Kenneth and which was sent by M H s attorneys With it were enclosed copies of a 13 page Proposed Purchase and Sale Agreement whereby Pa tricia would buy all of M H s assets for $105 000 plus 9 451 percent per annum interest payable in 4 yearly install ments The stated value of these assets was broken down into inventory on hand valued at $75 000 work in progress and machinery equipment (including a 1983 Plymouth station wagon) with a book value of $30 000 That Proposed Purchase and Sale Agreement was never signed by any of the Giamettas Nonetheless the General Counsels brief states that the asset transfer it envisioned actually took place In that regard the Gen eral Counsel placed in evidence a copy of M H s Federal tax return for 1986 which showed inter alia that it had distributed property worth $125 123 and had no invento ry at the end of the reporting period From those figures from various provisions in section 337 of the Internal Revenue Code and from computations made with the use of formulae set out in publications on business ac counting techniques the General Counsel contends that a $125 123 distribution contained in one of the schedules to the tax return confirms that the $105 000 sale of assets at 9 percent per annum interest contemplated in the pro posed purchase and sale agreement actually had taken place That argument is premised as much on surmise as it is on computations I thus find that the General Coun sel has failed to establish by a preponderance of the evi dence that the terms of the proposed purchase and sale agreement were actually carried out The proposed agreement did state that Patricia would carry on the business substantially as before William H testified that he did not sign the proposed agreement for two reasons neither of which related to the statement that Patricia would continue to operate the business un changed William H and Kenneth testified that they decided not to accept the proposed agreement because of the filing of the unfair labor practice charge in this case and because the amount sought was excessive The charge in this case was filed 26 January 1987 Patricia occupied the building in Newburgh in No vember and December without cost That building was sold on 31 December to Newburgh B E Realty Co as described further below Patricia has signed a 1 year lease of part of the first and second floors William Sr as an individual has rented part of the fourth floor for $574 88 a month to store what had been owned and used by M H Much detailed testimony was offered whether the handbag styles made by M H were the same as those of Patricia The General Counsel and the Union endeav ored to show both used the same style numbers for the same types of handbags Patricia sought to establish that M H s handbags had a momma look whereas Patri cia s have a more stylish modern design The defini tive answer I find was given in William Sr s testimony when he related that in the handbag industry all the manufacturers made the same type handbags more or less and that the styles are set for the most part by the sales representatives who have showrooms As noted earlier William Sr sold the building in New burgh The closing took place on 31 December Patricia had paid no rent for the use of the building in November and December It has signed a lease for 1988 with the 452 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD new owner Newburgh B E Realty Co for the first and second floors William Sr as an individual has rented part of the fourth floor from the new owner He pays a monthly rent of $574 88 for space on the fourth floor where the sewing machines and other machinery not being used by Patricia are stored His testimony that that machinery has little practical value is given no weight as it seems unlikely that he would assume an annual cost of close to $7000 solely because of a sentimental attachment to that machinery Corresponding and more significantly I find that the M H machinery used by Patricia is not an insig nificant contribution by M H to Patricia s operations In February 1987 Patricia began importing handbags to supplement or in lieu of its own production William H testified that Patricia unlike M H does no work for other manufacturers The following testimony was offered about the capital used to finance Patricia s operations Kenneth Giametta testified that the stock of Patricia was initially capitalized by a $5000 contribution made by William H by another contribution of $15 000 and that Patricia secured some loans beginning in January 1987 Apparently to corrobo rate that testimony Patricia s counsel placed in evidence a statement of a brokerage account held by William H and his wife this showed that a $5000 check was written on that account on 25 November 1986 having Patricia as payee and that that check cleared on 28 November On 19 February 1987 a $10 000 check was drawn on that ac count and paid to Patricia A balance sheet prepared by Patricia s accountants for the period 14 November to 31 December lists officers loans of $12 313 as one of its li abilities There is nothing in the record before me that reconciles that figure with the figures given by Kenneth or with those contained in the other exhibits referred to above Various documents pertaining to bank loans to Patricia were received in evidence One of these was a projection of Patricia s business that was used in connection with a loan application The estimates contained in that projec tion were based on M H s experience Patricia placed in evidence a letter dated 9 December from Key Bank of Southeastern New York NA which notified Patricia that it had approved a $50 000 line of credit with any borrowing thereon to take place on the signing of notes to be guaranteed by Wiliam H and Ken neth The first note was dated 23 December for $6810 with a computer listed as collateral That loan is report ed at note 2 of the balance sheet prepared by Patricia s accountant discussed above On 16 January 1987 a $50 000 short term note was ap proved with inventory as collateral That note was rolled over on 20 February 1987 when a $33 500 note was ap proved and again on 16 April 1987 when a note of $48 500 was approved Later rollover notes were also placed in evidence Patricia s balance sheet prepared by its accountants shows that as of 31 December 1986 it had accounts re ceivable of $101 165 83 E Analysis In Advance Electric 268 NLRB 1001 (1984) the Board set out the following The legal principles to be applied in determining whether two factually separate employe[r]s are in fact alter egos are well settled Although each case must turn on its own facts we generally have found alter ego status when two enterprises have substan tially identical management business purpose op eration equipment customers and supervisors as well as ownership Also in Advance Electric the Board observed that the factors which must be considered in determining whether an alter ego status is present in a given case in clude whether the purpose behinds [sic] the creation of the alleged alter ego was legitimate or whether instead its purpose was to evade responsibilities under the Act The foregoing principles were recently cited by the Board with approval See Hydrologistics Inc 287 NLRB 602 (1987) The General Counsel and the Union contend in sub stance that M H s name was changed to Patricia so that it could evade its bargaining responsibilities to the Union including its obligations to continue to pay the contrac tual wage rates and benefits to its employees and to con tinue to be barred from subcontracting unit work where unit employees are on layoff M H and Patricia assert that the two corporations have clearly separate identities manifested by different ownership management business purposes and operations The format used by the Board in Advance Electric supra in analyzing the merits of these respective conten tions is useful and I shall apply it to the facts before me In late 1986 both M H and Patricia made ladies hand bags in the same building using the same equipment M H had completed the fall line of merchandise Patricia was then using M H s telephone to solicit orders for the spring season and to notify the sales representatives to use Patricia s name not M H s when placing those orders Some likely all of the suppliers to Patricia were the same as M H s Patricia notes that it unlike M H did no contract work for other manufacturers The fact is that M H itself was getting less and less of this work and Patricia never stated that it would turn down any con tract work offered it Patricia also notes that it unlike M H now imports handbags That contention assumes the very point it seeks to prove that Patricia is not M H s alter ego If Patricia is the alter ego it would be barred from importing as M H was I find that the two enterprises had a substantially identical business purpose and mode of operations The evidence before me establishes unequivocally that M H and Patricia shared a substantially identical custom er base They both use the same independent sales repre sentatives to service retail accounts In substance the customers of M H and Patricia were these independent sales representatives The equipment used by Patricia was not only owned by M H but used by Patricia without cost M H and Pa MID HUDSON LEATHER GOODS CO 453 tricia indicated that this could nonetheless be an arm s length transaction based on the testimony of William Sr and William H that the machinery used by Patricia had no practical value and was better off being used rather than rusting away unused I have already rejected this testimony Moreover it does not appear that William Sr has offered Patricia s competitors the use of the stored machinery without cost to keep it from rusting away I find that this portion of the test for establishing alter ego status has been met Respecting the matters of common management and supervision I have found that William H had been since 1984 in control of M H s operations His own testi mony discloses that his duties with Patricia have been es sentially unchanged from those he performed for M H Kenneth as vice president of Patricia performs substan tially the same functions as he did for M H Although William H testified that he cleared hiring and other de cisions with his father while at M H the physical disabil ities suffered by William Sr particularly in 1986 virtual ly dictate a finding that William H controlled M H s op erations and that he also kept his father informed of his actions I therefore find that M H and Patricia shared substantially identical management and that the supervi sors of the employees of both enterprises were also the same The stock ownership of M H and that of Patricia were in members of the same family In such circumstances the courts and the Board have held ownership to be sub stantially identical Crawford Door Sales Co 226 NLRB 1144 (1976) Advanced Electric supra In the instant case the holding that ownership of M H and Patricia is sub stantially identical is enhanced by other factors pertain ing to actual rather than titular ownership including those noted above where arm s length dealings were no ticeably absent The question remains whether M H continued in the guise of Patricia for the purpose of evading responsibil ities under the Act The evidence that it did is compel ling About the same time that Patricia was incorporated William H indicated that he could operate non union No sooner did Patricia take over the payroll than it re duced the contractual wage rates of the unit employees and eliminated key fringe benefits provided for in the union contract Soon thereafter William H put into effect his long stated intention to import handbags not withstanding the contractual prohibition in the face of employees on layoff William H s summary unexplained cancellation of a meeting set for 3 December with Dona telli underscores the evasive purpose of Patricia s exist ence I find that the true purpose behind the formation of Patricia was to evade M H s responsibilities under the Act to continue to honor the terms and conditions of its collective bargaining agreement with the Union To rebut the evidence cited above M H and Patricia have presented little that can be accorded weight In sum the General Counsel has presented a strong puma facie showing of alter ego status that has not been rebut ted I therefore find that on and since 14 November Patn cia has been the alter ego of M H and I shall refer to them hereafter as M H/Patncia The termination of employment of the employees at the end of the 8 November pay period was in further ance of the purpose of evading responsibilities under the Act and thus I find that M H/Patncia has discharged these employees to discourage support for the Union and to provide it with a pretext on which it withdrew recog nition from the Union as their exclusive representative By these acts I find that M H/Patncia has engaged in unfair labor practices proscribed by Section 8(a)(1) (3) and (5) of the Act See Los Angeles Marine Hardware Co 235 NLRB 720 (1975) and cases cited at 736 The unilat eral reduction in wages and benefits and the unilateral in stallation of importing handbags separately are unfair labor practices violative of Section 8(a)(1) and (5) of the Act See Volk & Huxley 280 NLRB 219 (1986) F Procedural Issues M H contends that it never was properly or timely served with the underlying unfair labor practice charge in this case and it asks dismissal of the complaint regard ing it The Board has considered and rejected the same contentions where an employer raising them has been found to be the alter ego of one properly and timely served See Sturdevant Roofing Co 238 NLRB 186 188 (1978) M H also contends that the complaint should be dis missed as the Union has not exhausted its administrative remedies This contention is in essence a motion to defer these proceedings to the arbitral process and is denied for the same reasons set forth in Los Angeles Marine Hardware supra G Alternative Finding Were Patricia not the alter ego of M H I would find that it is the successor to M H as the employee comple ment was substantially unchanged and as the Union was their majority representative See NLRB v William Burns Security Services 406 U S 272 (1972) See also P & M Cedar Products 284 NLRB 652 (1987) Patricia s fail ure to honor the Union s bargaining request was viola tive of Section 8(a)(1) and (5) of the Act as was its sub sequent unilateral changes that as disclosed by the evi dence before me were aimed directly at reducing labor costs and thus denigrated the bargaining process Cf Otis Elevator Co 269 NLRB 891 (1984) CONCLUSIONS OF LAW 1 Respondent Mid Hudson Leather Goods Co Inc and Respondent Patricia Handbag of New York Inc are employers engaged in commerce within the meaning of Section 2(2) (6) and (7) of the Act 2 Four Joint Boards of International Goods Plastics and Novelty Workers Union is a labor organization as defined in Section 2(5) of the Act 3 Respondent Patricia Handbag of New York Inc is for the purpose of this proceeding the alter ego of Re spondent Mid Hudson Leather Goods Co Inc Both are referred to as M H/Patricia 454 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 4 All production and maintenance employees includ ing sewing machine operators latex machine operators cutters packers sample material and shipping and re ceiving employees but excluding office clerical employ ees professional employees guards and supervisors as defined in the Act who are employed by M H/Patricia and by other employer members of the National Industri al Council affiliated with the National Handbag Associa tion constitute a unit appropriate for collective bargain ing within the meaning of Section 9(b) of the Act 5 At all times material the Union has been the exclu sive collective bargaining representative within the meaning of Section 9(a) of the Act of the employees in the appropriate unit described above in paragraph 4 6 By failing and refusing to continue to recognize and bargain with the Union as the exclusive representative of its employees in the appropriate unit described above by failing to honor the collective bargaining agreement re garding such employees by failing to apply to such em ployees the terms and conditions of the agreement be tween the Union and the Council and by importing handbags without notice to or bargaining collectively with the Union M H/Patricia has engaged in unfair labor practices as defined in Section 8(a)(1) and (5) of the Act 7 By having discriminated against its employees by terminating their employment and by reducing their wages and benefits in order to evade its bargaining obli gations to the Union M H/Patncia has engaged in unfair labor practices as defined in Section 8(a)(1) and (3) of the Act 8 These unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act THE REMEDY Having found that M H/Patricia has violated Section 8(a)(1) (3) and (5) of the Act I find it necessary to order it to cease and desist therefrom and to take certain affirmative action designed to effectuate the policies of the Act Respondent M H/Patricia having unlawfully failed and refused to continue to recognize the Union shall be ordered to recognize and bargain collectively with the Union as the exclusive representative of its production and maintenance employees in the unit found appropriate above and to give effect to the hours rates of pay and other terms and conditions of their employment as have been agreed on by the Union and its National Industrial Council M H/Patricia shall offer all employees it unlawfully terminated from its employ about 8 November 1986 im mediate and full reinstatement to their former jobs or if they no longer exist to substantially equivalent jobs without prejudice to seniority and other rights and privi leges dismissing if necessary any employees hired in their stead M H/Patricia shall make these employees whole for any loss of earnings they suffered by reason of the discrimination against them by payment to them of the wages and benefits they would have received absent their unlawful termination of employment and absent the discriminatory reduction in the wages and benefits of any of those employees on their later reemployment M H/Patricia shall also make whole all employees who lost earnings as a consequence of its unlawful importing in the same manner as those who had been unlawfully ter minated from its employ Backpay shall be computed in accordance with the method prescribed in F W Wool worth Co 90 NLRB 289 (1950) with interest as comput ed in New Horizons for the Retarded 283 NLRB 1173 (1987) 1 Respondent shall in the same manner also make whole all employees who would have been employed but for the fact that it had unlawfully imported handbags and shall recall to its employ under these same terms any employees entitled to be recalled but who have not been because of such unlawful importing On these findings of fact and conclusions of law and on the entire record I issue the following recommend ed2 ORDER The Respondent Mid Hudson Leather Goods Co Inc and its alter ego Respondent Patricia Handbag of New York Inc Newburgh New York its officers agents successors and assigns shall 1 Cease and desist from (a) Failing or refusing to continue to recognize Four Joint Boards of International Leather Goods Plastics and Novelty Workers Union as the exclusive representa tive of its employees in the unit found appropriate in paragraph 4 of the conclusions of law section above (b) Terminating the employment of its employees in order to evade its responsibilities under the Act (c) Failing or refusing to pay its employees the wage rates or to honor the other terms and conditions as agreed on by the Union and the National Industrial Council for the employees in the unit as found appropri ate (d) Importing handbags without notice to and without bargaining collectively thereon with the Union (e) Reducing wage rates and eliminating fringe benefits of its employees in order to evade its responsibilities under the Act (f) In any other manner interfering with restraining or coercing employees in the exercise of the rights guar anteed them by Section 7 of the Act 2 Take the following affirmative action necessary to effectuate the policies of the Act (a) Offer all employees who were unlawfully terminat ed from employment on or about 8 November 1986 im mediate and full reinstatement to their former positions or if these jobs no longer exist to substantially equiva lent positions without prejudice to seniority or other rights and privileges dismissing if necessary any employ ees employed in their stead and make these employees i Under New Horizons interest is 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 accrued before I January 1987 (the effective date of the amendment) shall be computed as in Florida Steel Corp 231 NLRB 651 (1977) 2 If no exceptions are filed as provided by Sec 102 46 of the Board s Rules and Regulations the findings conclusions and recommended Order shall as provided in Sec 102 48 of the Rules be adopted by the Board and all objections to them shall be deemed waived for all pur poses MID HUDSON LEATHER GOODS CO whole for any loss of earnings they suffered by reason of their having been unlawfully terminated from the em ployment by compensating them in the manner provided for in the remedy section of this decision (b) Make whole all employees who suffered lost earn ings as a result of unlawful importing by compensating them in the manner provided for in the remedy section of this decision (c) On request bargain in good faith with the Union as the exclusive bargaining representative of its employees in the appropnte unit described above as paragraph 4 of the conclusions of law section of this decision (d) Give effect retroactively to 8 November 1986 to the hours wages and other terms and conditions of em ployment agreed on between the Union and the National Industrial Council respecting the employees in the unit found appropriate herein (e) Preserve and on request make available to the Board or its agents for examination and copying all pay roll records social security payment records timecards personnel records and reports and all other records nec essary to analyze the amount of backpay due under the terms of this Order (f) Post at its Newburgh New York facility copies of the attached notice marked Appendix 3 Copies of the notice on forms provided by the Regional Director for Region 2 after being signed by the Respondents author ized representative shall be posted by the Respondent immediately upon receipt and maintained for 60 consecu tive days in conspicuous places including all places where notices to employees are customarily posted Rea sonable steps shall be taken by the Respondent to ensure that the notices are not altered defaced or covered by any other material (e) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re spondent has taken to comply j 3 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 APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government 455 The National Labor Relations Board has found that we violated the National Labor Relations Act and has or dered us to post and abide by this notice WE WILL NOT fail or refuse to continue to recognize Four Joint Boards International Leather Goods Plastics and Novelty Workers Union as the exclusive representa tive of our employees WE WILL NOT terminate the employment of any of our employees in order to evade our responsibilities under the National Labor Relations Act to continue to recog nize the Union and to honor our contract with it WE WILL NOT fail to pay our employees the wages and benefits due them as agreed on between its Union and the National Industrial Council WE WILL NOT import handbags without notifying and bargaining collectively with the Union WE WILL NOT reduce wage rates or eliminate fringe benefits of our employees in order to evade our responsi bilities under the Act WE WILL NOT in any other manner interfere with re strain or coerce you in the exercise of the rights guaran teed you by Section 7 of the Act WE WILL offer to all employees unlawfully terminated from our employ on or about 8 November 1986 immedi ate and full reinstatement to their former jobs or if these no longer exists to substantially equivalent jobs and WE WILL make these employees whole for any net loss earn ings they suffered with interest as a result of our having unlawfully terminated their employment WE WILL make whole with interest all employees whose wages and benefits were reduced by us to evade our responsibilities to the Union under the Act WE WILL make whole all employees for any net loss of earnings they suffered with interest as a result of our having unlawfully imported handbags WE WILL on request bargain in good faith with the Union WE WILL put into effect the hours rates of pay and other terms and conditions of employment of our em ployees whom the Union requests as have been set by agreement between the Union and the National Industri al Council MID HUDSON LEATHER GOODS CO INC AND ITS ALTER EGO PATRICIA HANDBAG OF NEW YORK INC I