Milk Marketing, Inc

MILK MARKETING Milk Marketing, Inc , and its Wholly Owned Sub- sidiaries Cedar Hill Farms Dairy, Inc, and French Bauer Dairy , Inc, Division of Glenwood Dairy, Inc and Milk and Ice Cream Drivers and Dairy Employees of Greater Cincinnati and Vicinity, Local 98, AFL-CIO Case 9-CA- 17270 December 22, 1988 DECISION AND ORDER BY MEMBERS JOHANSEN, CRACRAFT, AND HIGGINS On April 6, 1983, Administrative Law Judge Joel A Harmatz issued the attached decision The General Counsel, the Respondents, and the Charg- ing Party filed exceptions and supporting briefs and the General Counsel, the Respondents, and the Charging Party filed reply 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, and conclusions only to the extent consistent with this Decision and Order The complaint alleges that the Respondent vio- lated Section 8(a)(5) and (1) of the Act by failing to bargain in good faith over the effects on unit employees of Respondent Milk Marketing, Inc 's (MMI) sale of its assets, capital stock, and trade names when it divested itself of its Plum Street, Cincinnati, Ohio facility after having entered into a settlement agreement in Cases 9-CA-14532 and 9- CA-15168 The Respondents' decision to close the Plum Street facility-their only remaining plant in Cincinnati-was made during the summer of 1979 At that time MMI was bound to a collective-bar- gaining agreement with the Union by authorization to a multiemployer bargaining association, which agreement bound successors and provided that [i]n the event an entire business or any part thereof is sold or taken over by sale, transfer, assignment, the contract of sale or assignment shall stipulate such operation shall continue to be subject to the terms and conditions of this Agreement for the life thereof In the summer of 1979, MMI decided to close and sell the Plum Street facility, and in September H Meyer Dairy Company (Meyer) expressed an ' At the hearing the Respondents amended their answer to aver that the complaint is time barred because the conduct giving rise to the charge occurred beyond the normal 6 month period prescribed in Sec 10(b) of the Act As we are dismissing the complaint in this case we find it unnecessary to pass on the 10(b) defense 47 interest to purchase it Before the sales agreement was executed, MMI terminated its yogurt produc tion at the Plum Street plant and transferred its aerosol operation to another MMI plant, the Meyer decided to lay off 30-35 unit employees at Plum Street A contract of sale was executed on October 12, 1979, and, consistent with the requirements of the bargaining agreement's successor clause, the sales agreement bound Meyer to "all obligations to be performed by either of the sellers after the closing date under the [collective-bargaining agreement]" and to "all obligations of MMI under the Milk and Ice Cream Industry-Dairy Employees Union Pen sion Plan " To perfect the sale, MMI transferred assets, including the Plum Street facility, from its wholly owned subsidiary Glenwood Farms Dairy, Inc to Cedar Hills Farms Dairy, Inc, and Meyer purchased all capital stock in the latter subsidiary About 5 days after the sale, Meyer gave notice to 31 employees it intended to lay off November 5, 1979 Additional layoffs ensued Meyer discussed with the Union raised with Meyer its claims under the bargaining agreement's successor clause On October 27, 1979, MMI relinquished physical pos- session of the facility to Meyer Shortly thereafter, Meyer suspended Plum Street operations, and some MMI employees were transferred to other Meyer operations Deliberations between Meyer and the Union continued until June 20, 1980, when a settle ment agreement was entered into under which Meyer agreed to pay the Union the sum of $85,000, to establish a preferential hiring list for former MMI employees, and to extend limited seniority to those employees for possible rehire The Union also pursued claims against Respond- ent MMI, requesting negotiation of termination or vacation pay for former MMI Plum Street employ ees in early December 1979 After further commu- nications by the Union yielded little response from MMI over its bargaining request, it filed 8(a)(5) and (1) unfair labor practice charges in Case 9- CA-14532, on which complaint issued On the date of hearing, December 18, 1980, the parties entered into a non Board settlement under which Respond- ent MMI agreed to "bargain with the Union over the effects of divesting itself of all of its business operations previously conducted at Plum Street, Cincinnati, Ohio," as well as to bargain over the decision and effects of its decision to transfer aero- sol production to its other plant and effects of its decision to terminate yogurt operations Under the settlement, the Union agreed to withdraw the pending charges Following the settlement, negotiations over aero- sol and yogurt issues resumed, but at the Respond- 292 NLRB No 11 48 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ents' insistence bargaining over the divestiture was deferred pending resolution of those issues At a later meeting the Respondents questioned whether their obligations were affected by the indemnifica tion provisions of the contract of sale with Meyer and in correspondence insisted on Meyer represen tation at any discussions concerning the divestiture Ultimately, at a February 17, 1981 meeting attend ed by representatives of MMI, Meyer, and the Union, MMI Attorney Ted Osborne stated that he did not "give a doodly damn about bargaining over effects of this transfer It's our business, and I'm not going to negotiate over this ' There were subsequent meetings and correspondence between MMI and the Union, but MMI continued to refuse to discuss effects of the sale On August 10, 1981, the Union filed its charge in Case 9-CA-17270 The judge concluded that the Respondent had no obligation to bargain over effects of the Plum Street sale other than that created by the Decem ber 18, 1990 non Board settlement agreement The judge found that all decisions curtailing unit work were made by Meyer and not by the Respondents and that the Respondents had in fact taken affirma- tive action to assure that collective bargaining pro tections survived the sale and transfer of stock He further found that the pass through transactions by which MMI transferred assets from Glenwood Farms Dairy, Inc, to Cedar Hill Farms Dairy, Inc, and transferred all Cedar Hill stock to Meyer gave rise to no statutory bargaining obligation He found, however, that a breach of the non Board settlement agreement through which the Respond ents assumed obligations to bargain over effects of the sale the Respondents committed an independ ent violation of Section 8(a)(5) We do not agree with the judge s finding that in the circumstances of this case the mere breach of a non-Board settlement agreement constitutes an in dependent 8(a)(5) violation The Board has with Supreme Court approval2 disregarded settlement agreements "where subsequent events have demon strated that efforts at adjustment have failed to ac- complish their purpose, or where there has been a subsequent unfair labor practice " Although the Wallace principals arose in evaluating the effect of a breach of formal settlement agreement, they have been applied equally in the context of informal set tlements3 and non Board adjustments 4 2 Wallace Corp Y NLRB 323 U S 248 254 (1944) 3 See e g NLRB Y Arrow Specialities 437 F 2d 522 526 (8th Cir 1971) NLRB v Southeastern Stages 423 F 2d 878 880 (5th Cir 1979) Bangor Plastics 392 F 2d 772 775-776 (6th Cir 1967) Lincoln Bearing Co v NLRB 311 F 2d 48 50 (6th Cir 1962) Gulf States Manufacturers 598 F 2d 896 (5th Cir 1979) 4 Norris Concrete Materials 282 NLRB 289 (1986) At the same time, the Board, in some circum- stances, has found violations based on recognition granted as part of a settlement agreement Thus, when an employer has recognized the union pursu- ant to the terms of a settlement the Board has found that the employer acted unlawfully when it thereafter refused to bargain 5 The Board has also required an employer to continue recognition for a reasonable period when recognition has been with drawn and is then reinstated pursuant to the terms of a settlement agreement 6 In both situations the Board s position correctly gave effect to a basic purpose of the Act, i e , requiring that bargaining relationships once established, or reestablished, must be given an opportunity to work In the instant case the judge finds that [I]nterests created by the Act are served by the universally accepted proposition that settlements occupy a preferred status in the eye of the law" and that ` without finality, settlements not only in crease the vulnerability of the administration proc ess but lose attractiveness as an alternative to litiga tion " Thus he finds that the Respondents' repudi ation of the settlement stands as a threat to settle ment agreements and is tantamount to a fundamen- tal rejection of the principles of collective bargain mg within the reach of Section 8(a)(5) and (1) In our view, the judge has overstated the threat to the settlement and collective-bargaining process in the Respondents' failure to honor the settlement in the somewhat unique circumstances here By its terms the settlement stated that the Respondent would bargain about the effects on bargaining unit employees of its divestiture of the Plum Street op erations The Respondents admittedly failed to do so, urging that they had no obligation to bargain with the Union about this matter Because the judge found and because we find, infra the Re spondents had no obligation to bargain over the ef- fects other than what might be incumbent on it by terms of the settlement, we do not perceive any 5 In Poole Foundry & Machine Co 95 NLRB 34 (1951) enfd 192 F 2d 740 (4th Cir 1951) the Board stated that after the Board finds that an employer has failed in his statutory duty to bargain with a union and orders the employer to bargain such an order must be carried out for a reasonable time thereafter without regard to whether or not there are fluctuations in the majority status of the union during that period (95 NLRB at 36) The Board s recognition bar principles support this re quirement of affording the parties a reasonable time to bargain and exe cute a contract whether such bargaining status is premised on a simple offer voluntarily to recognize the majority representative a Board order certification or as in that case settlement of a charge See Keller Plastics Eastern Inc 157 NLRB 583 We note that in Poole the Board specifical ly found that the certified union continued to be the majority representa tive of the respondents employees at the time of execution of the settle ment agreement (95 NLRB at 36 fn 4 and accompanying text) and that its agreement was merely an acknowledgment of a statutory duty to bar gain rather than a contractual obligation derived only from the settlement itself 6 Shangn La Health Care Center 288 NLRB 334 (1988) MILK MARKETING purpose of the Act that requires the Board to insist that a settlement agreement of this nature be hon- ored The Respondents have not rejected the prin ciple of collective bargaining Nor have they in any general way rejected bargaining with the col lective bargaining representative of the employees Although they have refused bargaining, the Re- spondents have done so over a subject about which they either had no obligation or had satisfied their obligation Further because the rejection comes at what is, in view of the divestiture, the end of the Respondents' relationship with the Union concern ing this unit of employees, and after they have taken affirmative action to assure that the con tract's collective-bargaining protections survived the sale, it cannot be said that enforcement of this settlement would serve the purpose of assuring that collective bargaining once lawfully established should be given a chance to work The views urged by the judge with respect to unhonored set tlement agreements would arguably apply to ally settlement agreements Yet, the normal practice of the Board had been to set aside settlements and liti gate the unfair labor practices that were the subject of the settlement In our view that practice has served the Agency, the parties, and the settlement process well We are unable to perceive any other fundamen tal purpose of the Act that would require that we find a violation here based on the failure to honor the settlement agreement Rather, we believe that the better course here is to disregard the settlement agreement and to resolve the matter based on whether the Respondents have an obligation to bargain about the divestiture of the Plum Street op eration Here, a subsequent unfair labor practice charge against MMI based on alleged failure to bargain over effects of the same management decision was litigated, and the charge was found by the judge to be nonmeritorious We agree with the judge's find ing that all decision to displace unit employees were made and carried out by Meyer, which met its obligations under the indemnification provisions of the agreement of sale to bargain over the layoff of unit employees We also agree with the judge that the Respondents took no action independently prior to the sale having a detrimental impact on unit employees, including transfers of all outstand ing stock,7 and that the Respondent had no bar gaining obligation with respect to the effects of the divestiture Accordingly, we find, on our review of the merits of the charge in Case 9-CA-17270, that the complaint should be dismissed 49 ORDER The complaint is dismissed MEMBER CRACRAFT, dissenting Unlike my colleagues, I am not persuaded that this case can be fairly distinguished from Poole Foundry & Machine Co v NLRB, 192 F 2d 740 (4th Cir 1951), cert denied 342 US 954 (1952), relied on by the judge 1 I would therefore adopt the judge's finding that the Respondents violated Section 8(a)(5) when they repudiated the bargain ing obligation they voluntarily assumed in the set tlement agreement However, I find it unnecessary to rely on the judge's conclusion that the Respond ents' presettlement conduct did not violate the Act, including his finding that the complaint is not barred by Section 10(b) insofar as it alleges the Re spondents' presettlement conduct to be unlawful As set forth in footnote 1, supra, under Poole, it is the Respondents' refusal to comply with the settle- ment agreement that constitutes the unfair labor practice Because I would find an 8(a)(5) violation on the authority of Poole, I need not, and do not, pass on the legality of the Respondents' presettle ment conduct i Here the settlement provided inter alia as follows The Employer agrees to bargain with the Union over the effects of divesting itself of all of its business operations previously conducted at Plum Street Cincin nati Ohio On its face the settlement agreement pertained to a mandato ry subject of bargaining of great concern to the Union and the employees it represents First National Maintenance Corp v NLRB 452 U S 666 681-682 ( 1981) As the judge recognized under the Poole doctrine the settlement agreement itself forms the basis for the bargaining obligation and a respondent cannot successfully defend on the ground that the un derlymg charge which gave rise to the settlement agreement was with out merit Poole supra 192 F 2d at 743 ( [w]hile not an admission of past liability a settlement agreement does constitute a basis for future liabil ity ) W B Johnston Grain Co v NLRB 365 F 2d 582 587 (10th Cir 1966) ( a party who enters into a valid compromise agreement for the settlement of litigation may not thereafter escape its obligation to carry out the settlement agreement on the ground that the claim asserted against it which was settled by the agreement was groundless ) quoted with approval in Mammoth of California v NLRB 673 F 2d 1091 (9th Cir 1982) Ted Mansours Market 199 NLRB 218 222 (1972) ( second thoughts as to the wisdom of the assumptions on which a settlement is based are not a sufficient reason to ignore it ) Although Poole involved a Board settlement the doctrine has been ex tended to non Board settlements such as the one involved here E g Straus Communications v NLRB 625 F 2d 458 (2d Cir 1980) NLRB v All Brand Printing Corp 594 F 2d 926 (2d Cir 1979) Shangri La Health Care Center 288 NLRB 334 (1988) Van Ben Industries 285 NLRB 77 (1987) VIP Limousine 276 NLRB 871 (1985) Lynne D Schmidt Esq and Earl Ledford Esq for the General Counsel Ronald L Coleman Esq and Richard T Prasse Esq, of Cleveland Ohio and Richard H Fehler of Cincinnati Ohio for the Respondents 7 See Hendricks Miller Typographic Co 240 NLRB 1082 1083 in 4 (1979) 50 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD DECISION STATEMENT OF THE CASE JOEL A HARMATZ, Administrative Law Judge This proceeding was heard by me in Cincinnati, Ohio on Oc tober 4 and 5, 1982, on an initial unfair labor practice charge filed on August 10 1981 and a complaint which issued on September 21, 1981, alleging that Respondents violated Section 8(a)(5) and (1) of the Act by refusing to bargain about the effects of its decision to sell and divest itself of its Plum Street facility after having entered a set tlement agreement in Cases 9-CA-14532 and 9-CA- 15168 in which Respondents agreed to engage in such bargaining In its duly filed answer, Respondents denied that any unfair labor practices were committed and by amendment at the hearing alleged affirmatively that the complaint is time barred by Section 10(b) of the Act Following close of the hearing briefs were filed on behalf of the General Counsel, the Charging Party, and the Respondents On the entire record in this proceeding, including con sideration of the posthearing briefs, and my opportunity to directly observe the witnesses and their demeanor while testifying, I make the following FINDINGS OF FACT I JURISDICTION Milk Marketing, Inc (MMI), operating through its French Bauer Cedar Hill Division' of Glenwood Farms Dairy Inc an Ohio corporation, referred to collectively as Respondents was engaged at times prior to October 27 1979 in the processing and distribution wholesale milk and related dairy products from a plant located on Plum Street, Cincinnati Ohio In the course of these op erations, during the 12 month period preceding Novem ber 15 1979 Respondents sold products valued in excess of $50,000 to customers located outside the State of Ohio On the entire record in this proceeding it is concluded that, as the complaint alleges Respondents are and have been at all times material an employer engaged in com merce within the meaning of Section 2(2), (6) and (7) of the Act II THE LABOR ORGANIZATION INVOLVED The complaint alleges, the Respondents admitted at the hearing, and I find that Milk and Ice Cream Drivers and Dairy Employees of Greater Cincinnati and Vicmi ty Local 98 AFL-CIO (the Union) is, and has been at all times material a labor organization within the mean mg of Section 2(5) of the Act 2 ' Prior to October 27 1979 MMI owned all issued and outstanding common capital stock of Cedar Hill Farms Dairy Inc 2 As the Charging Party observes Respondents for inexplicable rea sons denied initially knowledge of whether the Union was a labor orga nization As shall be seen this proceeding is derived from a prior collec tive bargaining relationship involving Respondents and the Charging Party Pursuant to its agreement with the Union Respondents in effect ing the contract of sale under scrutiny here to H Meyer Dairy Company in October 1979 incorporated convenants binding the latter to bargain collectively and to adopt the existing contract with the Union for the bal III THE ALLEGED UNFAIR LABOR PRACTICE A Preliminary Statement The primary issue is whether in the circumstances it can be concluded that Respondents violated Section 8(a)(5) and (1) by failing, in breach of a non Board settle ment agreement, to bargain in good faith concerning the effects of a sale of its production facility located on Plum Street in Cincinnati, Ohio The facts show that prior to October 26 1979, Re spondents Plum Street work force was represented by the Union as part of a multiemployer bargaining unit, and covered by a collective bargaining agreement not scheduled to expire until September 21 1980 3 Article 16 of the agreement, in material part, provided as follows This Agreement shall be binding upon the parties hereto their successors administrators, executors, and assigns In the event an entire business or any part thereof is sold or taken over by sale, transfer, assignment, and contract of sale or assignment shall stipulate such operation shall continue to be subject to the terms and conditions of this Agreement for the life thereof [Emphasis added ] During the summer of 1979, in the face of continuing losses, Respondents decided that the Plum Street facility would have to be closed or sold In September 1979, H Meyer Dairy Company (Meyer) expressed an interest in acquisition of the plant Later, an oral understanding to that effect became manifest which was memorialized in a fully executed agreement dated October 12 1979' Consistent with the requirements of article 16 of Re spondents collective bargaining agreement with the Union the contract of sale executed on October 12, 1979, with Meyer, bound the latter to the following ante of its term See R Exh 13 Following the sale unfair labor practice charges alleging a refusal to bargain were filed by the Charging Party against Respondents on April 4 1980 Those charges were withdrawn pursuant to a non Board settlement dated December 18 1980 in which Respondents agreed to bargain with Charging Party as to the effects of divesting itself of all of its business operations previously conducted at Plum Street See J Exh 3 New charges based on related subject matter were filed by the same Charging Party in connection with a like refusal to bargain on August 10 1981 and a complaint issued thereon on September 21 1981 The routine allegation in that complaint that the Charging Party was a labor organization was denied in Respondents answer dated September 30 1981 on grounds that Respondents has no knowledge as to the truth or falsity of the allegations contained in para graph 3 Although the background outlined above creates consider able doubt one can only assume that this pleading was framed on behalf of Respondents in a spirit of candor and represented and honestly held response to the allegation in question 3 MMI operating through Glenwood Dairy Inc was a member of Greater Cincinnati Milk and Ice Cream Dealers Association As such I find that it was bound to the above described collective bargaining agree ment See J Exh 2 " See R Exh 3 To perfect the sale MMI transferred certain assets including the Plum Street plant from Glenwood Farms Dairy Inc to Cedar Hills Farm Dairy and by virtue of the sales arrangement Meyer purchased all capital stock of Cedar Hills Farm Diary Inc from MMI The pass through arrangement is noted for purposes of background but otherwise is of little substantive import in connection with resolution of the issues presented here Cf Hendricks Miller Typographic Co 240 NLRB 1082 (1979) MILK MARKETING (f) All obligations to be performed by either of the sellers after the closing date under the Articles of Agreement between the Milk and Ice Cream Drivers and Dairy Employees Union and the Greater Cincinnati Milk and Ice Cream Dealers As sociation (September 18 1977-September 21 1980) dated September 19, 1977 The parties stipulate that the operations subject to such Articles of Agree ment shall be subject to its terms and conditions for the life thereof (h) All obligations of MMI under the Milk and Ice Cream Industry Dairy Employees Union Pen sion Plan s Respondents physically relinquished possession to Meyer of the Plum Street operation, as contemplated by the contract of sale, on October 27, 1979 The instant controversy is confined to the Respondents obligation to bargain concerning job eliminations or other curtailment of unit work in connection with the sale of that facility In this regard, it is noted that as of October 26 1979 there were approximately 200 unit employees on payroll status at that facility Furthermore, prior to the sale, Re spondents eliminated a segment of the operations con ducted at the plant by terminating yogurt production and transferring its aerosol operation to another plant in Dayton Ohio, thereby causing a reduction in unit work There is no allegation in this proceeding that Respond ents violated the Act in connection with the latter At the same time however beyond its action in con nection with yogurt and aerosol, there is no evidence that Respondents, after consummation of the sale to Meyer, were directly involved in any immediate decision to eliminate jobs at Plum Street All such decisions were made by Meyer and there is no evidence that, on an ad vanced basis Respondents were consulted informed, or otherwise made privy to Meyer s intentions in that regard Thus prior to the closing date of the sale Meyer elected to lay off 30-35 unit employees This group was notified by Meyer in writing on or about October 17 1979, that they would be laid off' t the close of the workweek ending October 27 1979 6 Later on October 26, 1979, some 31 unit employees were notified by Meyer that they would be laid off on November 3 1979 Beyond that the record is ambiguous regarding termina tions of former employees of Respondents It does appear that at the end of November 1979 Meyer sus pended processing operations at Plum Street However an indeterminate number of former employees of Re spondents were transferred by Meyer to its other oper ations In consequence of the sale the Union first filed unfair labor practice charges against Respondents on April 4, 1980 in Case 9-CA-14532 Prior to that it had been en gaged in consultation with both Meyer and Respondents concerning the sale From all appearances, actual negoti ations were waged separately Thus representatives of the Union first met with Meyer on October 17 1979 The meeting was called by 5 See R Exh 13 pp 5-6 'See e g R Exh 5 51 the latter s chief executive David Meyer who sought to elicit union approval of his desire to lay off employees in derogation of seniority There were several followup meetings along this line with Bernard Fox, an attorney acting throughout as the Union s principal spokesman In the course of the meeting the Union persisted in its op position to the concession sought by Meyer and coun tered with its own demand that Meyer dovetail senior ity of Plum Street employees with that of Meyer s estab lished work force' In addition, the Union charged Meyer with laying off through a process of picking and choosing rather than by adherence to the contractual seniority guarantees However there is no evidence that this was the case 6 In any event in the course of the meetings with Meyer, Fox informed Meyer, Well, if you re going to cut these people off, you ve got to pay something Meyer indicated that he would think about vacation pay Ultimately by agreement dated June 4 1980 the outstanding issues between Meyer and the Union were resolved 9 The agreement with the Union included the following as its initial two paragraphs I There have been a series of disputes between Cedar Hill, Meyer and the Union concerning a transaction wherein Meyer purchased the common stock of Cedar Hill, which sale was consummated on October 27, 1979 and certain action taken by Cedar Hill and Meyer pursuant to said purchase II The parties hereto are desirous of settling said disputes and by this agreement , do hereby settle said disputes By the terms thereof, Meyer agreed to pay the sum of $85,000 to the Union, to establish a preferential hiring list for former MMI employees and to preserve on a limited basis seniority of those employees in the event of rehire In contrast with Meyer the efforts to obtain relief from the Respondents proved a total failure Although the sale was initially publicized in local newspapers on October 5 and 6 1979 the Union claims that it did not acquire knowledge of the sale until October 17 1979 Apparently the first formal communication between the Union and any representative of MMI, concerning of fects bargaining came in late November or early De cember 1979 when Attorney Fox telephoned Ted Os borne, the attorney representing MMI In that conversa Although Fox at the instant hearing opined that Meyer failed to ac knowledge its obligation to recognize Local 98 as the exclusive repre sentative of the covered employees Fox subsequently clarified his posi tion in that respect so as to disclose that while recognition was con ferred Meyer did not fully meet his obligations under the contract by failing to allow employees to follow the production on the basis of se mority 6I am not convinced that Meyer actually took such a course Al though I do believe that he refused to allow former MMI employees to exercise length of service with MMI as against those historically em ployed by Meyer it is considered unlikely that the Union would have settled as it did had Meyer effected the layoffs of former MMI employ ees out of seniority order See ALJ Exh I Liability under the contract for any such transgression would be easily established and the relief avail able would have been more exhaustive than that provided under the Act or under the terms of the settlement ultimately executed between the Union and Meyer B See ALJ Exh 1 52 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Lion according to Fox he averred to the long service of employees at the Plum Street facility and demanded that MMI sit down and discuss the possibility of compensat ing them through termination or vacation pay When Os borne indicated that it was now Meyer s operation Fox argued that inasmuch as MMI had lost money at Plum Street, Meyer would not continue that operation in which case, the former employees of MMI would be out Osborne agreed to meet with Fox but indicated that he did not wish to talk to any other union people On December 20 1979, Osborne and Fox met face to face Fox reiterated the Union s position, and attempted to justify severance pay on the basis of past practice by reference to other closedowns where employers respond ed in such fashion Fox also averred that the claim for termination pay was supported by certain court deci sions as well as awards of arbitrators The meeting ended with Osborne directing Fox to put the Union s position in writing Pursuant to this request on January 14, 1980 Fox wrote Osborne in an attempt to justify the entitlement of former MMI employees to severance pay No response was immediately forthcoming and when Fox telephoned Osborne in early February 1980 the latter explained that he had not responded to the Union s letter because he had been ill and confined to a hospital Osborne advised that he was to return to work shortly and would contact Fox when he returned When Os borne again did not respond, on April 4, 1980 the Union filed an unfair labor practice charge Later a complaint issued on that charge, and a hearing was set for July but at urging of Respondents, was postponed to Decem ber 18 1980 10 On this later date litigation was averted because the parties entered a non Board settlement which in material part included the following The Union will withdraw its charges now pend ing before the National Labor Relations Board, Region 9 being numbered on the dockets of the Board, Cases Nos 9-CA-14532 and 9-CA-15168 The Employer agrees to bargain with the Union over the effects of divesting itself of all of its bust ness operations previously conducted at Plum Street Cincinnati Ohio Thereafter the parties met on January 7 1981 At that time Osborne insisted that discussions first dispose of the aerosol and yogurt issues matters that were also cov ered by the settlement agreement The Union submitted and the parties again met on January 19 1981 with aero sol and yogurt being the sole issues considered Later on February 9, 16 and 17 the parties again met At the meeting of February 9 Osborne raised a question of whether the mdemmification provisions in both its con tract of sale with Meyer and in the Unions settlement with Meyer influenced Respondents obligation to bar gain regarding the effects of the sale By letter dated February 12, 1981, the Union through Fox, expressed its position regarding the matter of mdemmification (See G C Exh 3) At the meeting of February 16 Osborne 10SeeGC Exh 2 expressed his disagreement with the Union s analysis and indicated that Meyer had an obligation to indentify MMI and that he would not discuss the matter unless a repre sentative of Meyer were present Because of this dis agreement, Fox contacted Meyer s attorney, John Brook ing, and a meeting was set up for February 17 at the lat ter s office At the meeting when Fox charged that MMI had a statutory duty to bargain about the effects of the transfer and that Meyer has nothing to do with that duty Osborne responded I don t give a doodly damn about bargaining over the effects of this transfer It s our own inter nal matter We transferred the assets to one of out subsidiary corporations This is none of the Union s business It s our business and I in not going to ne gotiate over this When Fox observed that Osborne had executed a settle ment agreement on behalf of the Respondents and that they were reneging with respect to the obligation adopt ed therein Osborne just refused to talk about it t t The parties met again in May 10, 1981 At this June ture Osborne again requested that the Union put its post tion in writing Fox did so by letter dated May 14 1981 In that letter Fox charged that Respondents, though willing to discuss aerosol and yogurt had taken the post Lion that the Plum Street sale was strictly a private matter internal to the organization and that [Osborne] had no authority to bargain with the Union in the matter 12 Osborne responded by letter dated May 19 1981 which recited as follows I have your letter of May 14 1981, relative to the matter above listed " The above is based on the credited testimony of Fox which was in essential respects confirmed by testimony of John Brooking the attorney representing Meyer In this latter respect it is noted that shortly after the meeting of February 17 Fox dictated a summary of what had transpired at the meeting and forwarded it to Brooking Brooking acknowledged the accuracy of Fox s summary by returning a note stating you either have a hell of a memory or a great tape recorder (See G C Exh 6 ) Brooking testified that at the close of the meeting he met privately with Osborne His account of what transpired was taken by me as a somewhat faint attempt to mitigate the obvious import of Osborne s previous con duct which on its face was unimpeachable Thus although Brooking claimed that he did not remember exactly what Osborne said on the oc casion in question he indicated that Osborne in reference to bargaining used words to the effect that he d get on it he just didn t want the Union pushing him around but he would do something However Brooking when pressed later agreed that Osborne probably said nothing specific revealing a willingness to bargain concerning the dislocated work force at Plum Street As for Osborne himself he admittedly maintained the position throughout that MMI had no obligation to bargain with re garding job dislocation at the Plum Street facility since all terminations were decided upon and implemented by Meyer I am convinced that he maintained and acted upon this position in his dealings with the Union See e g R Exh 3 In contrast with the testimony of Fox his denial that he refused to bargain regarding the effects of the sale is not substantiated by a single objective fact indeed although Osborne claims to have re quested a list of names of employees adversely affected by the sale of the stock beyond that there is nothing to counter the evidence that Re spondents did anything other than put the Union off and then declare that it would not honor the obligation defined in the settlement agree ment 12 See G C Exh 4 MILK MARKETING 53 You have indeed, written three or four times about this matter and each time you make the issue more obscure and the proposed settlement or liabil ity gets larger I cannot agree that we employed 15 6 persons per week in yogurt or 4 05 in aerosol and certainly I see no liability for 81 weeks and if I did, 81 weeks at $300 00 is not $526 000 00 If information given me is correct and I do be lieve it is as reliable as yours, there were seven or eight persons, call it eight in total Now how many weeks are we talking about? Thirty days? Is that not $103,200 009 A far cry from $526 000 00 stated in your most recent letter One of the problems is that every time I see or hear from you your numbers become more and more excessive Further while we did terminate yogurt we did not terminate aerosol and we did not terminate the Plum Street operation We were obligated to move one and we had no knowledge of an early shut down of the other it was a plain ordi nary sale of capital stock We can get together and we might resolve the matter, but not at $526,000 00 1 will try to come up with an amount When examined against the Fox letter of May 10, Os borne s response does not deny but tends to confirm the charge made by the Union as to MMI s posture with re spect to bargaining over the sale 13 The parties next met on July 9 At that time, they were still trying to reach an accomodation with respect to yogurt and aerosol However according to the cred ited testimony of Fox Osborne still refused to talk about the effects of the sale There were no further exchanges prior to August 10 1981, when the instant unfair labor practice charge was filed B Concluding Analysis Central to the inquiry about whether Respondents en gaged in an unlawful refusal to bargain is the settlement agreement of December 18 1980 Had Respondents not joined that disposition it is apparent from the record de veloped that no duty to bargain would have inured with respect to the Plum Street sale For firmly embedded in precedent is the requirement that such an obligation be recognized only with respect to management decisions having a detrimental impact on unit employees See e g American Oil Co 151 NLRB 421-422 (1965) East Gate IGA Food Liner 236 NLRB 1305 1314 (1978), Winn Dixie Stores 224 NLRB 1418, 1432-1433 (1976) Thus the circumstances surrounding the sale and trans fer of stock included a number of factors that interact to demonstrate that Respondents not only failed to take the immediate action curtailing work in the unit, but took of firmative steps to assure that the protection through the process of collective bargaining would be available to employees affected after acquisition of the Plum Street i s See R Exh 3 It is noted that the reference to the claim for $526 000 on behalf of the affected employees related solely to termination of yogurt and transfer of aerosol plant by the new purchaser Firstly, it is noted that the terms of sale implemented provisions of the existing col lective bargaining agreement which not only conferred a duty to recognize on the purchaser but expressly bound the latter to the unexpired collective bargaining agree ment 14 Although some question was raised regarding its quality recognition was conferred by Meyer and indeed it was Meyer, as distinguished from Respondents, who made all the decisions curtailing unit work of the employ ees The Union appears to have pursued Meyer vigorous ly in connection with the adversities imposed on unit em ployees by his decision, and successfully negotiated an agreement that cushioned the impact of Meyer s decision to curtail and then terminate production at the Plum Street facility 15 The totality of these circumstances, par ticularly the fact that resulting layoffs were not affected by Respondents plainly indicate that absent the settle ment agreement Respondents could not have been held to a duty to bargain with respect to the effects of the transfer and sale of assets 16 However, as the General Counsel observes here, Re spondents participation in the settlement agreement of December 18 1980, presents the question in an entirely different posture That agreement was apparently of the courthouse steps variety entered as it was on the very day that a Board hearing was scheduled At the time, governmental resources were committed and all parties were prepared to litigate the question of whether or not a Board remedy should intercede to assure that a man agement decision be affected under conditions conform 14 The aforementioned terms of the collective bargaining agreement might not independently excuse the duty to bargain in view of the strict waiver test traditionally applied by the Board See e g Borg Warner Corp 245 NLRB 513 (1979) affd 663 F 2d 666 (6th Cir 1981) Rockwell International Corp 260 NLRB 1364 (1982) Nonetheless they amply demonstrate that during underlying negotiations the parties were alert to the possibility of sale and that the bargaining process was invoked by the Union successfully to regulate that possibility See e g Alliance Mfg Corp 203 NLRB 437 439 (1973) At the very least however Respond ents compliance further mitigated adverse impact by preserving the bar gaining relationship and protecting established employment terms in that Meyer became bound on both counts 15 While I do not regard this observation as determinative on the facts of this case if a duty to bargain were recognized the Union would have an artificial advantage over what would have been the case had Respond ents simply closed the plant without selling it For such a duty would countenance the Union s opportunity to seek satisfaction from a second employer not involved in the decisions to affect layoffs 16 Also complicating the General Counsel s position in this respect is Board policy relative to transfers of all outstanding stock According to the Board such a sales transaction fails to produce a substitution of one employer for the other for the stock transfer involves no break or hiatus between two legal entities but is rather the continuing existence of a legal entity albeit under new ownership Hendricks Miller Typo graphic Co 240 NLRB 1082 1083 fn 4 NLRB v Burns Security Services 406 U S 272 291 (1972) This view rests on an assumption that obliga tions regarding a union in such circumstances constitute a lien on the corporation It is a concept that by logical extension suggests that the vendors rehnguish any and all responsibility for collective bargaining by a bona fide sale of all outstanding capital stock of a corporation that is itself bound by such obligations In other words the Board will decline to look beyond the corporate veil in treating statutory obligations as fixed upon the continuing corporate entity Thus under such a formula tion the obligation to bargain in good faith remains where it always had been and it is not imposed on the principals whose decision it is to sell and to acquire the stock Consistent therewith the obligation on and after October 27 1979 would have rested with Cedar Hill Farms Diary Inc rather than with MMI its subsidiaries or any operating of its divisions 54 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD mg to statutory principles of good faith collective bar gaining On that date however, Respondents agreed with the Union to remedy the allegation concerning the sale by doing precisely what it would have been ordered to do had the complaint been substantiated As expressed on the face thereof, the Union withdrew its outstanding unfair labor practice charges as quid pro quo for the Re spondents assumption of a bargaining obligation which was defined clearly and unmistakably in the settlement agreement 17 In the circumstances, I find merit in the General Con sel s contention that the mere breach of the settlement agreement constitutes an independent violation of Sec tion 8(a)(5) of the Act 18 The conduct of Respondents representatives following its willful participation in the adjustment of the coin plaint would hardly prove flattering to men of good faith The breach was as clear as the definition in the set- tlement agreement of the obligation incurred After being put off for several weeks, the first expression as to Re spondents posture was generated on February 17, 1981, when Osborne contributed his opinion of MMI's obliga tion under the settlement agreement by stating I don't give a doodly damn about bargaining over the effects of this transfer ' Thereafter, Respondents position regard ing that obligation was no less defiant and its entire course of conduct fails to suggest any extenuating cir cumstances All that is shown is an outright renege In the meantime statutory interest have been prejudiced while irreparably abused Apart from the delays, this contemptuous breach has required the parties to again `climb the ladder by a second dedication of govern mental and private resources in order to assure that any breach of statutory obligations not go unremedied As shall be seen, the latitude granted the Board to en force the duty to bargain in good faith includes power to prevent an employer from acting with impunity in disre garding willfully assumed bargaining obligations in settle ment agreements This is so whether approval of the 17 Respondents notwithstanding deliberate repudiation of this aspect of the settlement challenge the instant complaint as time barred under Sec 10(b) of the Act In support it is argued that the complaint is not found ed on an unfair labor practice charge filed within 6 months of the initial refusal to bargain with which Respondents had been charged Firstly it is noted that as contended by the General Counsel and consistent with the complaint the unlawful conduct involved here derives from Re spondents repudiation of the settlement agreement commencing in Feb ruary 1981 That conduct was first specifically manifested by Attorney Osborne s conduct on February 17 1980 an event within the 10(b) period But even if the instant complaint were based on events dating back to 1979 there is no dispute as to the timeliness of the charge filed on April 4 1980 in that connection That charge was withdrawn in ex change for and solely in anticipation that Respondents would honor the obligation unambiguously defined in the December 18 1980 settlement agreement Respondents did not do so but now seek to penalize the Union on a technicality created by Respondents own impropriety See e g Don Burgess Construction Corp 227 NLRB 765 766 (1977) My re jection of such a defense in these circumstances necessitates no further comment 1s Disposition on this basis serves independently to neutralize as imma tenal Respondents various defenses based on events occurring prior to December 18 1980 including that based on a 10(b) waiver and the fact that the sale and transfer of corporate stock alone had no detrimental impact upon employees represented by the Charging Party Board is conferred actively or passively 19 In any event, beyond the Board, judicial doctrine has evolved to pro tect the adjudicatory process against duplicatous behav for on the part of litigants Thus in the interest of bar gaining litigation to an end, the doctrines of collateral es topple and res judicata preclude parties from both shift mg position and sandbagging under conditions calcu lated to afford the proverbial second bite out of the apple, to the detriment of others 20 Here, there was not a single factually based defense that did not exist prior to Respondents entry into the settlement agreement The entire controversy could have been litigated once and for all at that time In considering breaches of settlement agreements, there is evidence that the Board has gone farther than would be warranted under an ordinary estopple Before considering those cases, however, it is also relevant that the Board has found violations of Section 8(a)(5) where employers have breached agreements entered without its approval where an employer's breach amounted to a substantial renunciation of basic collective bargaining principles 21 If Respondents' repudiation of the instant settlement could not fairly be characterized as meeting the substantial renunciation' test more direct authority nonetheless supports a finding of independent illegality on these present Thus, as a matter of estab lished Board policy an employer who enters a settle ment agreement agreeing to recognize a labor organiza tion, yields all preexisting defenses and engages in an in dependant violation of Section 8(a)(5) by subsequently withdrawing recognition, prior to expiration of a reason able period of time See, e g Poole Foundry & Machine Co 95 NLRB 34 (1951), enfd 192 F 2d 740 (4th Cir 1951) Thus, in Poole Foundry & Machine Co supra, the em ployer entered a settlement agreement in which it as sumed the obligation to recognize and bargain with a union Thereafter some 3 months following execution of the agreement, 64 of the employers 66 employees peti tioned in quest of decertification Based thereon the em ployer withdrew recognition from the union The Board found that the employer violated Section 8(a)(5) and (1) based on the repudiation of the bargaining relationship established solely by the settlement agreement The Fourth Circuit Court of Appeals in enforcing the Board's order, adopted the view that mere violation of 19 To say that a non Board settlement is entered without the approba Lion of the Board is to ignore the fact that in the final analysis a Board agent must decide whether public rights protected by the Act will be served by dismissal of a complaint and/or a withdrawal of charges on such an agreement See e g NLRB Casehandling Manual Part I sec 10142 Cf NLRB Y Vantran Electrical Corp 580 F 2d 921 924 (7th Cir 1978) NLRB Y All Brand Printing Corp 594 F 2d 926 (2d Cir 1979) 20 The Board has applied the doctrine estopple to preclude employers from relitigating as defenses in a related 8(a)(5) proceeding factual mat tern that were conceded by stipulation in an underlying representation case See e g Caption Drilling Co 167 NLRB 144 145 fn 4 (1967) enfd 408 F 2d 676 (4th Cir 1969) Bogner of America 236 NLRB 822 fn 9 (1978) 21 See Oak Cliff Golman Baking Co 207 NLRB 1063 (1973) Sun Harbor Manor 228 NLRB 945 946 (1977) B N Beard Co 231 NLRB 191-192 (1977) (dissenting opinion of Members Penello and Walther) MILK MARKETING 55 the settlement agreement gave rise to an independent unfair labor practice stating as follows Experience has demonstrated the importance of the settlement agreement in the effective administra tion of the Act There is manifest force in the Board s assertion that the contention of Poole would seriously undermine the effectiveness of set tlement agreements as a satisfactory means of clos ing cases involving charges of unfair labor practices prohibited by the Act There would indeed be few of these agreements if Poole, after a solemn promise to bargain with the Union, could immediately escape this obligation by questioning whether the Union actually represents a majority of the employ ees in the bargaining unit While not an admission of past liability, the set tlement agreement does constitute a basis for future liability and the parties recognize a status thereby fixed Thus for example, a settlement agreement providing for reinstatement of employees fixes their eligibility to vote in a Board election and a settle ment providing for the establishment of a dominat ed union necessarily effects such right to appear on a ballot An entire structure of course, of future labor relationships may well be bottomed upon the building effect of a status fixed by the terms of a settlement agreement If a settlement agreement is to have real force, it would seem that a reasonable time must be afforded in which a status fixed by the agreement is to operate Otherwise settlement agreements might indeed have little practical effect as an amicable and judicious means to expeditious disposal of disputes arising under the terms of the Act Thus it follows that Poole, after having sol emnly agreed to bargain with the Union, should not be permitted within three and one half months after the agreement, to refuse to bargain, even if, as here the Union clearly did not represent a majority of the employees 22 Consistent therewith the Tenth Circuit in W B John ston Grain Co v NLRB 365 F 2d 582 ( 10th Cir 1966) at 587 It is true that the settlement agreement was not an admission that the Company had been guilty of an unfair labor practice by refusing to bargain but a party who enters into a valid compromise agree ment for the settlement of litigation may not there after escape its obligation to carry out the settle ment agreement, on the ground that the claim as serted against it which was settled by the agree ment was groundless The damage wrought to the statutory formula protect ing the process of collective bargaining dictates a like result in this case Here, the breach did not derive from colorable interpretation of ambiguous terms but was to tally laking in any perceptible justification was of an ag gravated nature, and possessed all the characteristics of contumacy 23 In consequence, on October 4, 1982, the General Counsel and Charging Party were impelled to meet at a second Board hearing to enforce the precise obligation that Respondents agreed to fulfill almost 2 years earlier Section 8(a)(5) is broad enough to prevent such abuse Interest created by the Act are served by the universally accepted proposition that settlements occupy a preferred status in the eye of law And no question exists as to the important role they play in the Board s effort to further Congressional intent with respect to col lective bargaining In this area fundamental statutory considerations more often than not, will be furthered by private adjustments Thus voluntary accommodation of bargaining issues will often eliminate any threat of Indus trial strife, while proving far more conducive to stability and harmony than the exacerbating effects of prolonged litigation and a Board imposed remedy Yet without fi nality, settlements not only increase the vulnerability of the administrative process but loss attractiveness as an al ternative to litigation In this light it is concluded that Respondents brazen repudiation of the settlement stands as just such a threat As such it was tantamount to a fun damental rejection of the principles of collective bargain ing within the reach of Section 8(a)(5) and (1) to no less extent than the breach considered in Poole Foundry, supra and its progeny Accordingly, it is concluded that since February 17 1981, and at all times material Re spondents have failed and refused to bargain in good faith concerning the effects of its sale of the Plum Street facility upon represented employees CONCLUSIONS OF LAW 1 The Respondents are employers engaged in com merce within the meaning of Section 2(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 The following employees of Respondents constitute a unit appropriate for the purpose of collective bargain ing within the meaning of Section 9(b) of the Act All employees listed in the agreement between the Union and the Greater Cincinnati Milk and Ice Cream Dealers Association dated September 18, 1977 covering employees employed by Milk Mar keting Inc, operating through Glenwood Farms Dairy Inc 4 On December 18, 1980, Respondents and the Union entered into a non Board settlement in Cases 9-CA- 14532 and 9-CA-15168 in which Respondents agreed, inter alia to bargain with the Union over the effects of divesting itself of all of its business operations previously conducted at Plum Street Cincinnati Ohio 5 Respondents violated Section 8(a)(5) and (1) of the Act by at all times since February 17, 1981 refusing to bargain with the Union over the effects of the employees 22 192 F 2d at 743-744 See also Ted Mansours Market 199 NLRB 218 221-222 (1972) 23 Cf Federal Compress & Warehouse Co 166 NLRB 664 (1967) 56 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD in the above unit of divesting themselves of all their buss ness operations previously conducted at Plum Street, Cincinnati Ohio 6 The unfair labor practices of Respondents, described above, have an effect upon commerce within the mean ing of Section 2(6) and (7) of the Act THE REMEDY Having found that Respondents have engaged in cer tarn unfair labor practices I shall be recommend that they be ordered to cease and desist and to take certain affirmative action designed to effectuate the policies of the Act Having found that Respondents violated Section 8(a)(5) and (1) of the Act by refusing to bargain about the effects on employees of the sale of a segment of their business operations, provisions shall be recommended in consonance with the conventional remedial formula adopted by the Board regarding such violations Thus in addition to the traditional bargaining order I shall recom mend that employees be made whole at the rate of their normal wages when last employed from 5 days after the date of this Order until the occurrence of the earliest of the following conditions (1) The date Respondents bar gain to agreement with the Union on those subjects per taining to the effects of the sale (2) a bona fide impasse in bargaining (3) the failure of the Union to request bar gaining within 5 days after issuance of this Order or to commence negotiations within 5 days of Respondents notice of its desire to bargain with the Union, or (4) the subsequent failure of the Union to bargain in good faith However in no event shall the sum paid to any of these employees exceed the amount he or she would have earned as wages from on or about October 27, 1979 to the time then secured equivalent employment elsewhere or the date on which Respondents offered to bargain, whichever occurs sooner provided, further that in no event shall the sum due be less than these employees would have earned for a 2 week period at the rate of their normal wages when last in Respondents employ See, e g, Star Grocery Co 237 NLRB 70 (1978) Trans marine Navigation Corp, 170 NLRB 389 (1968) Merryweather Optical Co, 240 NLRB 1213 1216-1217 (1979) Interest on such sums shall be paid as prescribed in Florida Steel Corp, 231 NLRB 651 (1977) The claim by the Charging Party and the General Counsel that more comprehensive monetary relief is warranted dating back to execution of the settlement agreement is rejected as excessive and inappropriate In addition because clear cut controlling legal precedent is unavailable to support the theory of the violation found here, also deemed lacking in merit is the assertion by Charging Party that the conduct of Respondents warrant an order reimbursing the Board and Charging Party for litigation expenses A provision shall be included however requir ing Respondents to mail copies of the notice to all those employed in the bargaining unit at Plum Street on Octo ber 26, 1979 [Recommended Order omitted from publication ]