Regional Import And Export Trucking Co , Inc , Regional Distribution & Warehousing Service, Inc , Newsport Transportation Co , Inc

206 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Regional Import and Export Trucking Co, Inc, Re gional Distribution & Warehousing Service, Inc, Newport Transportation Co, Inc and Fer- nando Sanches Truckdrivers Local Union No 807 a/w International Brotherhood of Teamsters, Chauffeurs, Ware housemen and Helpers of America, AFL-CIO and Fernando Sanches and Local No 819, a/w International Brotherhood of Teamsters, Chauf feurs, Warehousemen and Helpers of America, AFL-CIO, Party in Interest Cases 22-CA- 14582 and 22-CB-5544 December 30, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On February 29, 1988, Administrative Law Judge Robert T Snyder issued the attached deci sion Respondents Regional, Newport, and Truck Drivers Local Union No 807 each filed exceptions and a supporting brief, the Charging Party filed an answering brief, and the General Counsel filed a reply 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 briefs and has decided to affirm the judge's rulings, findings,' and ' Respondents Regional Newport and Truck Drivers Local Union No 807 have excepted to some of the judge s credibility findings 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 Prod ucts 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 find ings In sec II C par 1 of his decision the judge found that Newport coin menced operations on February 7 1987 Newport actually commenced operations on February 7 1986 In sec II C par 3 the judge also found that the motor vehicle lease agreement required Newport to insure the leased vehicles The agreement indicates however that Regional was ob ligated to provide the insurance In sec II F par 12 the judge found that on the morning of May 13 1986 employees Sanches and Marino were standing at the Regional gate waiting for the shop steward In fact employee Van Dyke was waiting at the gate with Marino In sec B 1 par 11 of the analysis and conclusions section the judge noted that Newport s supervisory staff transferred from Newport as the accounts transferred In fact the staff transferred to Newport from Regional These inadvertent errors do not affect the outcome of the case 2 The judge concluded that even assuming Newport was created for legitimate business purposes the layoff of represented Regional employ ees in favor of unrepresented employees was inherently destructive of im portant employee statutory rights Because we adopt the judge s finding that those Regional employees were laid off pursuant to the unlawfully motivated creation of the alter ego we find it unnecessary to rely on this alternative rationale In adopting the judge s conclusion that deferral to arbitration was inappropriate we find it unnecessary to rely on one of his reasons namely that it was uncertain whether the Master Freight agree ment was the underlying contract between Regional and Truck Drivers Local Union No 807 and if so whether the agreements arbitral provi lions encompassed the resolution of alter ego disputes conclusions2 and to adopt the recommended Order as modified 3 ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge as modified below and orders that Respond ent Regional Import and Export Trucking Co, Inc, Regional Distribution & Warehousing Serv ice, Inc, Newport Transportation Co, Inc, its offi cers, agents, successors, and assigns, and Respond ent Truck Drivers Local Union No 807 a/w Inter- national Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL- CIO, its officers, agents, and representatives shall take the action set forth in the Order as modified 1 Substitute the following for paragraph B,1 ` 1 Cease and desist from "(a) Failing and refusing to fairly represent em- ployees by arbitrarily and not in good faith refus- ing to accept and process their grievances "(b) In any other manner restraining or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act " 2 Substitute the attached Appendix C for that of the administrative law judge The judge recommended that Respondent Truck Drivers Local Union No 807 be held jointly and severally liable with the Respondent Em ployer to make whole the unlawfully discharged employees and the judge cited inter alia Pacific Coast Utilities Service 238 NLRB 599 fn 4 (1978) We note that the Boards decision in that case was enforced by the Ninth Circuit NLRB v Pacific Coast Utilities Service 638 F 2d 73 (9th Cir 1980) ( given the determination that discharge was wrongful it fol lows that the failure of the union to represent the employee was damag ing to him and a contributing factor to his loss of pay ) 3 We modify the judge s recommended Order against Local 807 to in elude broad cease and desist language and substitute a new notice to members to reflect the modification APPENDIX C NOTICE To MEMBERS POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice WE WILL NOT fail or refuse to fairly represent the employees named in Appendix A or any other employees by arbitrarily and not in good faith re- fusing to accept and process their grievances WE WILL NOT in any other manner restrain or coerce you in the exercise of the rights guaranteed you by Section 7 of the Act 292 NLRB No 33 REGIONAL IMPORT TRUCKING CO 207 WE WILL jointly and severally with Regional Import and Export Trucking Co, Inc, Regional Distribution & Warehousing Service, Inc, New port Transportation Co, Inc, make whole the em ployees named in Appendix A and all other em- ployees who were similarly situated for any loss of earnings they may have suffered as a result of their unlawful discharges, with interest TRUCK DRIVERS LOCAL UNION No 807 A/W INTERNATIONAL BROTHER- HOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO William F Grant Esq, for the General Counsel James J Dean Esq and James E McGrath III Esq (Putney Twombly Hall & Hirson Esqs), for the Re spondents Regional and Newport J Warren Mangan Esq (O Connor & Mangan P C), for the Respondent Union Martin Garfinkel Esq (Gladstein Reif & Meginniss Esqs), for the Charging Party DECISION STATEMENT OF THE CASE ROBERT T SNYDER, Administrative Law Judge These consolidated cases were heard by me on 12 and 13 No vember and 1 2, 4 and 11 December 1986 in Newark New Jersey The complaints, which were consolidated and amended by order which issued on 20 October 1986 allege that Regional Import and Export Trucking Co Inc and Regional Distribution & Warehousing Service, Inc (Regional I and E and Regional D and W) (collec tively Regional) first established Newport Transports tion Co, Inc (Newport), as its alter ego and then, as a direct consequence, Regional and Newport as a single employer (collectively Respondent), discharged 27 named employees because they joined or assisted Truck Drivers Local Union No 807 a/w International Broth erhood of Teamsters, Chauffeurs Warehousemen and Helpers of America AFL-CIO' (the Union or Local 807) and engaged in concerted activities for the purpose of collective bargaining and in order to discourage em ployees from engaging in such activities, in violation of Section 8(a)(1) and (3) of the Act In addition, the complaint also alleges that Newport granted recognition to Local 819, a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America AFL-CIO (Local 819), as ex elusive bargaining representative of its truckdrivers and warehouse employees and entered into a collective bar gaining agreement with Local 819 covering such em ployees at a time when Local 819 did not represent a majority of them The complaint also alleges, alternative ' Effective I November 1987 The International Brotherhood of Team sters Chauffeurs Warehousemen and Helpers of America affiliated with the AFL-CIO Accordingly the names of the Respondent Union and Party in Interest have been modified to show this affiliation ly that Newport then granted the same recognition and entered into a collective bargaining agreement with Local 807 covering the same unit of employees also at a time when Local 807 did not represent a majority of these employees Both recognitions and entry into collec tive bargaining agreements and the continued enforce ment of the Local 807 agreement are alleged as violative by Newport of Section 8(a)(1) and (2) of the Act Finally, the complaint alleges that Local 807, as the exclusive collective bargaining representative of Region al s local cartage truckdrivers, In lo operators and plat form employees, and party with it, to a collective bar gaining agreement covering said employees, refused be tween certain dates to accept and process a grievance concerning the creation of Newport and its resultant consequences including the discharge of the 27 named employees, in violation of Section 8(b)(1)(A) of the Act Regional and Newport in a common pleading,2 and Local 807, each filed an answer denying the commission of any of the unfair labor practices alleged Respondents Regional, Newport, and Local 807 also interposed an of firmative defense that the subject matter of the complaint is subject to binding arbitration warranting the deferral of further processing of the case until such time as arbi tration is held Respondents Regional and Newport with drew this defense during the hearing for reasons to be discussed infra 3 but reassert this defense in their brief Shortly after hearing opened Regional and Newport amended their answer to admit that Newport and Local 807 had entered into and maintained a collective bargain ing agreement covering Newport drivers and warehouse employees despite the fact that at the time Local 807 did not represent a majority of these employees and to fur ther admit that by such conduct Newport has rendered unlawful assistance and support to a labor organization in violation of Section 8(a)(1) and (2) of the Act Besides Regional and Newport, each of the other par ties was also represented by counsel at the hearing and all were provided full opportunity to introduce relevant evidence to examine and cross examine witnesses to make opening and closing statements, and to file briefs with me Local 819, alleged as party in interest, neither filed answer nor appeared or participated in the hearing Each of the parties have filed timely posthearing briefs4 which have been carefully considered 2 James J Dean Esq of the law firm of Putney Twombly Hall & Hirson after entering an appearance on behalf of Regional and Newport explained that in view of the possibility of a conflict of interest between the two alleged alter egos he had consulted both entities they acknowl edged their awareness of the issues in the case and both had consented to his firm representing both of them in this case 2 Local 807 in asserting its position with respect to deferral since the hearing opened has brought a proceeding to compel arbitration in the U S District Court for the Eastern District of New York (Case CV 86- 3987) naming both Regional and Newport as defendants which Re spondents Regional and Newport have opposed 4 By ruling dated 19 April 1987 issued subsequent to the close of hear ing and the extended time for filing briefs I rejected Local 807 s submis sion of a supplemental or reply brief in the form of a letter dated 10 April 1987 and returned the document to union counsel That ruling and union counsels letter of exception to me dated 23 April 1987 are received in evidence as ALJ Exhs I and 2 respectively 208 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD On the entire record 5 including my observation of the demeanor of the witnesses I make the following FINDINGS OF FACT I JURISDICTION AND LABOR ORGANIZATION STATUS At all material times, Regional, a corporation with an office and place of business at 55 Van Keuren Avenue Jersey City New Jersey (Respondents Jersey City facilt ty) has been engaged in the interstate and intrastate transportation of freight At all material times, since 7 February 1986, Newport, a corporation with an office and place of business at 1200 Newark Turnpike Kearny New Jersey (Respondents Kearny facility), has been en gaged in the interstate and intrastate transportation of freight During the past year, Regional in the course and conduct of its business operations performed services valued in excess of $50,000 in States other than the State of New Jersey During the past year, Newport, in the course and conduct of its business operations performed services valued in excess of $50,000 in States other than the State of New Jersey Respondent admitted these alle gations Accordingly I find that Regional and Newport are employers engaged in commerce within the meaning of Section 2(2) (6), and (7) of the Act Although pleading that it denied knowledge or infor matron sufficient to form the basis for a belief that Local 819 is and has been at all material times a labor organza tion under the Act, Local 807 adduced evidence and proferred an exhibit showing that Local 819 had entered a collective bargaining agreement with Newport in which it was recognized as sole collective bargaining agent for drivers, warehousemen and helpers and on whose behalf it had bargained and obtained contract pro visions with respect to rates of pay, wages hours of em ployment and other terms and conditions of employ ment Given this evidence and noting that Respondent concedes the status of both Local 819 and Local 807 I find that at all times material Locals 819 and 807 have been labor organizations within the meaning of Section 2(5) of the Act II THE ALLEGED UNFAIR LABOR PRACTICES A Background 1 History business and management of Regional Regional I & E was founded as a trucking company in or about 1965 primarily engaged in the local pickup and delivery of freight to and from piers in the greater New York metropolitan area and the consolidation of freight for export and import In this work it has been one of the pioneers in the utilization of containerized cargoes which it picks up strips consolidates and reloads for shipment by trailer Regional D & W was established as 5 Local 807 s posthearing motion to open the record to receive certain exhibits relating to its Federal proceeding to compel arbitration is grant ed The exhibit numbered R U Exh 29 and 29A attachments A-Q is received in evidence In ALI Exh 1 I provided a schedule for the filing of the formal court papers in the suit to compel arbitration and for re spouses to the Union s motion and noted my preliminary view that these documents were relevant and should be received a separate corporation in 1974 to perform warehousing and distribution services in the trucking business Where as Regional I & E engaged in freight consolidation work by means of a cross dock platform operation with a con tamer or trailer unloaded on one side of a dock and the freight then reloaded, at times with other freight on the other side, Regional D & W operated a receiving station and conveyor system where a different type of cargo was held for later reshipment Initially each corporation operated out of different fa cilities Regional I & E in Hoboken and Regional D & W in Secaucus New Jersey Then in 1978 or 1979 when Regional I & E went into export trucking on a large scale receiving less than trailer load (LTL) shipments from major carriers, which Regional would consolidate and deliver to the pier for export, the operations of Re gional I & E and Regional D & W were combined in one location at the Jersey City facility Thus, the con solidation warehousing distribution, container trucking, and export and import trucking work were all operated together but the companies continued to retain their sep arate corporate identities Since 1978, when Joseph Nastro, Patrick Nastro s father and major stockholder, passed away the stock holders and the percentage of their stock holdings of both Regional corporations have been Patrick Nastro 10 percent his sister 15 percent and his mother 75 percent At all times material Patrick Nastro (Nastro) has been president Patrick Nastro testified that his cousin, Timo thy Nastro, is also an officer of Regional, but no docu mentation was produced establishing his office Tim Nastro had administrative responsibilities over such mat tern as safety and insurance and his name appeared on letters in evidence as secretary and treasurer of Region D & W Nastro also testified without contradiction that he considered Andrew Ferrara, who was hired by Re gional in approximately June 1984 as vice president of Regional although he had no title Among other duties Ferrara handled labor relations for Regional particularly in negotiating collective bargaining agreements with Local 807 as exclusive agent for Regionals drivers plat form and warehouse employees in the summer of 1985 Other executives for Regional as of February 1986 were Kenneth Burrowes executive vice president who was primarily responsible for dealing with Regionals custom ers 6 John Heffer controller and James Elia terminal manager At the same period of time Regionals dis patchers were Anthony Ponzo and Greg Lenhardt and the dock supervisors were Orlando Cruz and Oswaldo Curcio Aside from Regional I & E and Regional D & W a third corporation closely held by the Nastro family Re gional Transportation was established in 1978 or 1979 to perform over the road long distance trucking since 1986 out of a yard maintained by Respondent in North Ar lington New Jersey This entity whose employees are not organized is not involved in the instant proceeding Certain employees assigned by Regional D & W to per form platform and driving services for Reisch Trucking 8 Burrowes died in July 1986 and was not replaced REGIONAL IMPORT TRUCKING CO Company, covered under a separate rider to general collective bargaining agreement with Local 807 are also not involved in this proceeding However, the facts of Regional's relationship with Reisch do enter into the analysis regarding a central issue in the case to be dis cussed, infra Regional also permanently assigns employ ees to work at Sun Chemical They are also represented by Local 807 under a separate contract and are not of fected by this proceeding 2 Collective bargaining history of Regional Local 807 has been exclusive collective bargaining rep resentative of Regional I & E s drivers helpers platform men, checkers, and warehousemen since the late 1960s Local 807 also became exclusive representative of Re gional D & W s drivers In lo operators, and platform men sometime in the 1970s after this company came into existence A contract introduced into evidence between Local 807 and Regional D & W and apparently entered into when the company was still located in Secaucus has a term running from 1 July 1979 to 30 June 1982 Earlier contracts entered into between Regional I & E and Local 807 apparently adopted the National Master Freight Agreement and New Jersey-New York area General Trucking Supplemental Agreement covering over the road and local cartage employees of private, common contract and local cartage carriers called Master Freight Agreement, with a rider added covering local conditions The rates paid the employees under the Regional I & E agreements were considerably higher for each job classification than those paid the employees performing the same jobs under the Regional D & W agreements When the operations of the two Respondent companies were consolidated at the one Jersey City facility in the late 1970s the separate contracts including separate se niority rosters, continued to prevail and apply until ap proximately 1981 At the same time in the late 1970s the Regional I & E seniority list was frozen in the sense that Regional stopped hiring any new employees on the Re gional I & E payroll and all new hiring was done under the Regional D & W payroll This duality in seniority and benefits led to considerable animosity on the part of the employees adversely affected, particularly because, according to Regional D & W employee Fernando Sanches whose testimony on this matter among others was not controverted there were no differences in work assignments between the employees on the two lists In or about 1981 the seniority lists were combined but under Respondents proposal agreed to by the Union, the more senior Regional I & E employees retained their higher rates of pay and only as a senior man was termi nated, died or retired, was a Regional D & W employee moved up to the higher rated list In separate Rider[s] to General Collective Bargaining Agreement entered into between Regional I & E and Regional D & W with Local 807 covering the period 1 July 1982 to 30 June 1985,7 an identical seniority provi 7 Unaccountably they each list Respondents address in Secaucus rather than the facility in Jersey City to which the joint operations had been transferred 209 sion appears providing that When a vacancy occurs for any reason in the Regional Import & Export Trucking Co, Inc list, the senior qualified Regional Distribution & Warehousing Service, Inc man will be used to fill the opening created These riders also show the continued disparity in wage rates with e g Regional I & E straight truckdrivers receiving $11 77 an hour effective 1 April 1982, and Regional D & W drivers starting at $8 80 per hour on 1 July 1982 and increasing to $9 80 by 4 July 1984 The 1982-1985 agreement between Regional D & W and Local 807 contains an arbitration article providing that any unresolved grievance concerning the application or interpretation of any provisions of the agreement shall, within 2 days after the request of either party, be submitted for final and binding arbitration to the joint local committee in accordance with the grievance proce dure set forth in the current Master Freight Agreement, except where a dispute concerns a matter of health and/or pension contributions, discharge, or voluntary or involuntary quit in which case the dispute shall be sub mitted to the New York City Trucking Authority With respect to any grievance arbitration provision in corporated in the earlier Regional I & E, Local 807 agreements the facts appearing of record are tenuous and inconclusive As earlier noted the 1982-1985 rider is headed, Rider to General Collective Bargaining Agree ment There is some indication but no definite proof that the general agreement was the Master Freight Agreement The only Master Freight Agreement in evi dence covers the period 1 April 1985 to 31 March 1988 It contains an article 7 entitled Local and Area Griev ance Machinery which provides that the provisions re lating to local, state, and area grievance machinery are set forth in the applicable supplements to the agreement The New Jersey-New York Area General Trucking Supplemental Agreement provides that where a dispute involving Local 807 concerns a matter of discharge the Employer and the Union shall submit the matter to final and binding arbitration through the procedures of the New York City Trucking Arbitration Authority The supplemental agreement further provides that all disputes involving work preservation including operation, work or services subcontracted transferred, leased, diverted, assigned, or conveyed in full or in part (covered by art 32 sec 1 of the Master Freight Agreement) shall be deemed arbitrable before the joint local committees, sub ject to such appeals as are otherwise provided for All decisions of joint local committees on matters pertaining to interpretation of the agreement shall automatically be reviewed by the joint area committee If the joint area committee made up of an equal number of members and alternates from each side, but not less than three each is unable to agree or come to a decision, either party may request an appeal to the eastern conference joint area committee for a final and binding decision The facts show neither arbitration procedure outlined was utilized when a dispute was submitted to arbitration in 1984 or 1985 As explained by Nastro Local 807 brought on an arbitration proceeding in either 1984 or 1985 claiming that certain unit employees who were 210 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD about to retire were owed moneys representing salary in creases which they had agreed to forgo in a contract ne gotiated in 1972 because of a Regional I & E claim of adverse economic conditions By agreement the arbitra tion was submitted for decision under the procedures of the New York State Mediation Board The Union lost before the arbitrator and then was unsuccessful in having the award set aside in New York State Supreme Court 3 Ferrara s association with Regional Andrew Ferrara was hired by P Nastro in approxi mately June 1984 with responsibilities to oversee the Re gional operation With Burrowes having the responsibil ity for customer contact and dealing with the different accounts Ferrara was in charge of the day to day oper ations Once Ferrara was in charge, Nastro did not go to the facility every day By 1985 in Nastro s own words, Ferrara was working the company for me (Tr 583A ) By November 1985, Nastro ceased going to the facility at all and from that time until February 1986 Ferrara ran the Company 4 The 1985 collective bargaining negotiations As noted the Regional I & E and Regional D & W contracts with the Union expired on 30 June 1985 In the summer of 1985 a single renewal contract was negotiat ed to replace the prior separate agreements but at the same time retaining the separate higher rates of pay and seniority for Regional I & E employees with the proviso that on a vacancy among them the senior qualified Re gional D & W driver/warehouseman was to be advanced onto the Import seniority list Ferrara led off the negotiations for Regional It was Nastro s intent to seek relief from the Union for econom is troubles that were afflicting Regional Regionals con solidated 1984 U S Corporate Income Tax Return for its fiscal year ending 31 March 1985 shows a taxable income from all operations of only $9235 despite gross receipts exceeding $8 million for the same period Nastro testified to losses for fiscal year 1985 totaling $264 000 He also noted elsewhere that he was personally liable on approxi mately $400 000 in loans made to Regional I & E in 1985 or 1986 by Banco Popular According to Nastro he discussed with Ferrara cut tang down people and obtaining give backs from the em ployees Also starting in the spring of 1985 Burrowes as executive vice president, wrote certain Regional ac counts assessing 7 percent increases in rates they would be charged based in part on Regional insurance premium increases which were more than doubling payroll tax in creases and increases in the present union contract Ferrara reported back to Nastro he was not having success in obtaining union agreement to the employer proposals in negotiations Nastro then arranged a meet ing at his office in Jersey City attended by himself and Ferrara for Regional and Boris Kovocic (Bons) shop steward8 and Jack Lenihan business agent for Local 8 Boris had been steward for the senior men employed by Regional I & E Now that the lists were combined he was steward for Regional D & W employees as well but the less senior Regional D & W men continued 807 Nastro proposed certain reductions in benefits for the succeeding contract In response Boris and Lenihan outlined what they wanted in the way of increases Fernando Sanches testified that sometime in July 1985 Boris called a meeting of Regional employees He told them that the Company had presented a contract propos al including a 15 percent giveback (reduction in salary) and only 3 sick days 9 The proposal was rejected by every employee Boris came back with a second proposal calling for a wage freeze, 3 sick days and a contract term of 3 years The employees again turned it down Apparently after these rejections Nastro called a meeting of the employees It was held in the drivers room at the Jersey City facility late in the afternoon as the shifts were changing and drivers were coming in A majority of the Regional employees attended Nastro tes tified that he read numbers from the most recent profit and loss statement he read numbers regarding productiv ity, he read numbers to the men as far as claims and he read numbers as far as how the Company was running in the red He referred to how the insurance numbers hurt the Company because there were insurance increases and he told the men that he did not know how to con trol this anymore There was just no way to go He con tinued that if they insisted on their increases it is like put ting the Company out of business that the Company would have to take a strong look at each individual ac count Nothing was said by the men at the meeting but Nastro learned a short time afterward through either Ferrara or Boris that the men wanted their increases Sanches corroborated the tenor of this meeting which was held sometime in early August 1985 Sanches report ed Nastro saying at this meeting to assembled employees that the company was losing money for a long time and could not afford to pay any raise to his employees and he could not promise them any bright future if they forced him to give them a raise He said Do not listen to your union officials because they do not give you a job I do I give it to you and I can take it away from you These remarks attributed to Nastro and consistent with Nastro s own testimony, and not contradicted are credited Following this meeting Boris reported back to the men that the best he could negotiate was a 50 cent raise across the board in each of 3 years for those on both se niority rosters The employees agreed and a single memorandum ageement was entered between Regional' and Local 807 for a 3 year term, running from 1 July 1985 to 30 June 1988 It was signed by Burrowes for Re gional and Lenihan and President Joseph Mangan for Local 807 whose signature is dated January 28 1986 The memorandum itself and the other signatures are un dated In all likelihood it was executed sometime in late August or early September 1985 For the first time the parties entered into a single successor agreement cover to rely on Nelson Morales as their steward although since the physical merger and combining of the lists Nastro did not acknowledge his status s The 1982 agreements had provided for no paid sick days The final agreement for 1985-1988 contains 6 It is clear that the Union sought at least that many REGIONAL IMPORT TRUCKING CO ing all Regional unit employees which carried forward, except as modified by a memorandum of agreement con taming eight substantive paragraphs, the terms and con ditions of employment contained in the Regional I & E Local 807 agreement that expired on June 30, 1985 10 In a preamble to the memorandum Regional I & E and Regional D & W expressly recognized that they consti tute a single employer for purposes of daily operation and control of their truckdrivers and warehouse person nel Aside from the 50 cent an hour increases in each of the 3 years of the agreement, the memorandum provided for contributions into the Local 807 Labor Management Pension and Health Funds, with pension contributions at a much higher rate per hour for employees on the Re gional I & E payroll, 6 paid sick days each contract year, and a continuation of the provision moving Regional D & W employees up to the Regional I & E seniority list as vacancies occur B The Events Leading to the Creation of Newport According to Nastro, as a result of the negotiation process, which resulted in increases for the employees, shortly afterward he called a meeting with his executives at Regional These included Ken Burrowes , Tim Nastro, Andy Ferrara, and John Heffer Nastro told them to start going over each account to determine which ones were in arrears on payment and how much and which were good payers and to prepare letters seeking in creases in rates to compensate for the employees' in creases under the new agreement Burrowes , in particu lar was instructed to evaluate each account for profit ability As earlier noted Burrowes was deceased by the time of trial Nonetheless, none of the letters that Regional in troduced into evidence as corroborating its communica tions with accounts informing them of increases in rates relate to the period after Regional entered the 1985 union agreement They all are dated 22 March to 30 April 1985 except for one dated as late as 31 July 1985 but relating to increases made effective 1 May 1985 and another dated 5 August 1985 relating to a meeting with the account held on 2 August Nastro continued that as a result of this meeting and review of accounts he lost some accounts and started giving some accounts up 11 It was at this time probably late August or early September 1985 that according to Nastro Ferrara first expressed interest in taking over ac counts from Regional Nastro testified We started giving some accounts up and this is when Andy came to 10 One of the matters left unresolved by the hearing concerns this expi ration date As earlier noted the predecessor Regional I & E Rider to General Collective Bargaining Agreement contained a 30 June 1985 ter urination However the Master Freight Agreement which was claimed by the Union as its basic or general underlying agreement had as earlier noted an apparent termination date of 31 March 1985 because the Master Freight Agreement in evidence ran from 1 April 1985 to 31 March 1988 ii Nastro specified that Regional lost two accounts F W Woolworth and Allied Stores At least one of them Allied Stores was probably lost earlier in the spring of 1985 when Regional informed them about in creases in rates A third account Avon Products commenced doing their own consolidation of freight at their own facility in Totowa New Jersey sometime in 1984 but Regional continued to perform their local trucking services 211 me and said you are going to give up these accounts, why not give them to me (Tr 577A ) Ferrara testified that when the meeting broke up he asked for a separate meeting with Nastro and asked if he could buy some of the accounts Nastro was going to give up so he could start his own business Nastro s reaction was to investigate whether he could give up Regionals lease for the Jersey City facility and to weigh Ferrara s proposal in light of the unprofitability of Regionals operation with the same customers As Nastro put it, I also had to take a look at Andy's pro posal and say hey you are working the company for me, but you are not making any money how are you going to be able to do that on your own-but that is how the discussion started (Tr 584A) Ferrara s response, as also recounted by Nastro, was to say he was going to get a contract he could live with (Tr 589A ) Ferrara testified that after their initial discussion, a few days later Nastro told him they could work something out on certain accounts Ferrara said he did not have much money He would like to lease some equipment from him and Nastro said that could also be worked out Ferrara said he would need some desks, typewriters, and office equipment and again Nastro agreed to work some thing out Ferrara did not recall discussing the terms under which he would obtain trucks from Nastro but claimed that at some point in time they agreed on a price after going back and forth for awhile Nastro said he at tempted to bind Ferrara as much as possible to use Re gional equipment He recalled reaching agreement on a price of about $70 a truck, based closely on what he, Nastro pays to rent trucks from Ryder On trailers Nastro also said he agreed to rent them to Ferrara for somewhere around $8 or $10 a day Nastro also said he agreed to supply mechanics to maintain the Regional equipment Ferrara was to use On both the decisions to lease rather than to sell and to supply his own mechanics Nastro expressed his judgment that he was protecting his interests and making a sound business decision in the event Ferrara failed in his venture Ferrara testified that his costs of rental of equipment would also include the cost of their maintenance He also said after discussions about the nature of a fee arrange ment for Regional providing him with customers they fi nally reached a tentative decision that he would pay Re gional 5 percent of the gross revenues from the accounts he took from Regional excluding such charges as loading charges at the pier After two or three negotiating sessions according to Ferrara he met with the law firm of Dickson & Creighton with offices in Hoboken New Jersey on Nastro's referral to draw up agreements As early as 6 September 1985, Ferrara had executed a Certificate of Incorporation for Newport Transportation Co Inc The document lists Donald R Creighton of the firm as the corporations initial registered agent and as witness to Ferrara s signing Ferrara had no lawyer of his own and this firm had represented the Nastro family interests and businesses for many years Ferrara has neither been billed nor paid for any of the legal services provided to Newport by this law firm which involved not only its 212 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD preparation of documents executed between Regional and Newport but also a separate lease for premises en tered into by Newport which it prepared or reviewed Neither could Ferrara recall whether Newport had paid Nastro s accountant Herb Braverman whose services Newport also used At all times material Ferrara has been the incorporator sole stockholder and director of Newport as well as its president C The Agreements Between Regional and Newport Two agreements dated and executed 27 January 1986 were drawn up by Dickson & Creighton and Newport commenced operations within 2 weeks thereafter on 7 February 1987 One agreement a motor vehicle lease be tween Regional I & E and Newport set forth terms under which Newport agreed to lease from Regional I & E 2 cars 15 tractors and 10 trailers described by make year, serial number and plate in an annexed schedule In fact this schedule was not followed Nastro explained that on any given day Newport had available to it any of Regionals 60 or more trailers and 30 tractors in addition to a straight truck not listed in the schedule Newport s use of such equipment varied as its needs to service cus tomers varied over time According to Nastro the sched ule in part merely reflected the tractors that Ferrara pre ferred at the time the agreement was drawn Of the two cars listed in the original schedule one a Ford LTD was actually retained by Nastro for his own use in Flort da where he since spends much of his time and two other cars a 1981 Mercedes and 1983 Ford finally appear in a letter dated 23 May 1986 from Nastro to Fer rara referring to the three vehicles we are leasing to you for which rental charges will be as follows and listing monthly charge varying between $150 and $450 per month none of which Nastro was able to testify of firmatively he ever received Although a servicing section requires Newport to repair and maintain the vehicles at its own cost and ex pense, in fact and in contravention to both Ferrara s tes timony and the language of the agreement Regional has always serviced the leased vehicles by assigning a super visor and three mechanics to Newport s terminal This decision to do so was made by Nastro even prior to Newport starting operations Although reference is made to a fixed rental charge plus a mileage charge with a schedule annexed the agreement lacks any such schedule No rental fees have ever been fixed in writing billed or paid A required mileage record for each vehicle to be furnished weekly to Regional to aid in determining mileage charges was also never adopted and no mileage records have ever been forwarded or reviewed Another section calling for Regional to invoice Newport monthly for all charges has also been ignored and Newport has never been billed for the use of the mechanics or vehicles While the agree ment requires Newport to insure the leased vehicles Re gional carries the insurance for all equipment and is thus at risk under its policy for any accident involving a Newport driver Finally Regional may reclaim any vehi Iles or require Newport to purchase the same on any de fault of required payments or other covenants or condi tions required of Newport continuing for 5 days after written notice of default but the purchase price is based on the value of the vehicles and the required schedule of values is also missing Nastro failed to adequately explain any of these discrepancies and exhibited a general lack of familiarity with the agreement A separate agreement executed on and bearing the same date 27 January 1986 provides for the sale by Re gional I & E to Newport of certain accounts In it Re gional agrees to sell to Newport certain accounts, ship pers and consignees listed on an attached schedule and starting 1 February 1986 Newport agrees to provide the necessary personnel trucks trailers and other equipment to properly service them in the same manner previously performed by Regional For 10 years, Newport agrees to pay Regional an amount equal to 5 percent of the gross revenues billed by Newport for the services it performs payments of such commissions to be made on a monthly basis on or before the 20th day of the month following billing Nastro claimed he originally sought a lifetime ob ligation but finally agreed to the 10 year period Region al may inspect Newport s books and records pertaining to the transferred accounts The parties recognize Re gional is not assigning any part of the good will of its business and Newport agrees to indemnify Regional from any claim against it arising from any transaction with its customers after 1 February Paragraph 9 requires New port to reassign the transferred accounts without any ob ligation by Regional on its written demand in the event that Newport in the opinion of Regional fails to prop erly and adequately service said accounts in the same manner as presently serviced by Regional or in the event Newport no longer desires to service said accounts Nastro agreed that this language provides Regional with the power to discontinue Newport s servicing of the assigned accounts anytime it chooses and to get these accounts back Nastro did question his power to control the accounts but that power was apparently manifested when the accounts enumerated in schedule A and others since agreed to Newport s providing their transportation services instead of Regional 11 The schedule annexed lists 11 accounts transferred among them Toys R Us Channel Home Center Nestles and Chock Full of Nuts Newport did not service all of them and began in business by servicing only a few adding customers from this group as it continued in busi ness Subsequently Newport started servicing other Re gional accounts, including Clipper Express I S A FSI Carolina Holmes Transportation and Foster Medical a subsidiary of Avon As a result the only accounts that Regional retained were Avon Products North American Phillips, and General Electric Although the agreement requires the commissions to be paid on the basis of gross revenues both Nastro and Ferrara testified that invoices would govern such pay ments Most significantly Regional never billed Newport monthly and Newport has never paid any moneys to Re gional for the sale of the accounts In an exchange of 12 Whether the transferred acounts in reality continued to be serviced by Regional in another guise and not an independent purchaser for value constitutes one of the central issues in the case REGIONAL IMPORT TRUCKING CO 213 letters dated 2 and 7 September 1986 respectively after the filing of the initial charges in this proceeding against Regional and Newport on 13 August 1986 placing the Respondents on actual notice of all the allegations of vio lation now being litigated Nastro first informed Ferrara of his intention to have Newport comply with payments under both agreements and that his willingness to forgo such payments for 6 months in order to permit Newport to successfully operate during its initial stages is not to be viewed as a waiver of such obligations Ferrara re plied by confirming this arrangement suggesting as well that they finalize the financial arrangements concerning office furniture, computer equipment computer pro graming, the lease or sale of three automobiles, possible reimbursement to Newport for space occupied by the Regional mechanics and clerical support for Regional payroll Ultimately Ferrara balked at permitting an audit of Newport s books and records which Nastro later sought to have made by their common and Nastro s longstand tng accountant, and the matter remains unresolved no audit, no billing no payments There is little basis for be lieving that the principals consciously arranged a hiatus in enforcement of the leasing and commission agreement when entered but much reason to find that the language of the September letters was concocted after the fact to aid their defense The agreements themselves contain no hint of a delay in compliance In any event, 6 months was up 7 July not 2 September 1986 D The Transfer of Accounts Equipment and Staff from Regional the Blurring of Separate Operations and the Layoffs of Regional Drivers and Platform Employees In February 1986, Newport opened its business from a part of a truck terminal it had subleased located at 1200 Newark Turnpike in Kearny, New Jersey Lessor was ABF Freight System Inc as tenant at the location and lessee was James G Nicholas-Newport Transportation Co Inc Nicholas executed this sublease solely as a guar antor of the payment of the monthly rental required Under the guaranty on failure of Newport to reimburse Nicholas within 15 days of any payment Nicholas made on notice of Newport s nonpayment of rent Newport agreed to immediately vacate the premises and Nicholas then acquired sole right of possession for the balance of the term The sublease ran for 7 months from 1 February to 31 August 1986 Nicholas with his son was the owner of the facility at Van Keuren Avenue in Jersey City which Regional had leased in January 1983 for a term of 10 years at a rental of $238,500 per year for a rental over the term of $2 385 000 and which rental space was expanded by ap proximately 18,000 square feet with an additional month ly charge of $3000 by September of that year By Octo ber 1985 Burrowes on behalf of Regional had com menced discussions with Nicholas to seek relief from its Jersey City lease and by December was arranging to vacate the facility by the end of February or March 1986 In 1984 Regional had also leased a separate lot in Jersey City from Nicholas at a monthly rent of $1500 for storage of Regional trailers Thus, Nicholas had a sub stantial business relationship and dealings with Regional by the time Ferrara sought a terminal for Newport There is no question but that Ferrara s ability to obtain a guarantor of the stature of Nicholas on his initial entry into business for himself with few accounts and no credit history was aided in no small measure by Regional and Nastro s leaseholds Nastro s tacit role in Ferrara s entry into the trucking business is acknowledged by him when he sought to explain the elaspe of time between the summer of 1985, when Ferrara incorporated Newport, and the end of January 1986, when Regional sold its ac counts and leased its equipment to Newport Nastro ex plained, As I recall it took time to get a facility to get a company set up where I was satisfied with it and it took me time to gain the confidence in what was going to happen Subsequently, in June and July 1986, Newport entered into a direct lease with the landlord at the Kearny loca tion for the previously subleased space as well as addi tional space at the same location Part of the complete package of lease agreements was a guarantee to the land lord of the lease payments executed by Timothy Nastro, secretary on behalf of Regional I & E Newport also leased additional space for storage of trucks and trailers on 1 August 1986 for a 6 month term consisting of a por tion of a vacant lot at 44 Porete Avenue North Arling ton New Jersey Fifteen days later Regional I & E leased a portion of downstairs office space across the street at 43 Porete Avenue on a month to month basis Testimony established that in actuality Regional retained a trailer on the 44 Porete Avenue lot for use as its office on space which Ferrara could not deny may be leased by Newport and stored trailers and tractors there in space undistinguishable from that used by Newport According to Ferrara Regional and Newport equipment on the site are separated by about 15 feet other businesses store ve hicles and equipment there as well Ferrara also said he knew Regional used this space when he arranged his own lease In connection with the Kearny June 1986 lease, New port obligated itself to provide an irrevocable letter of credit in favor of the landlord for $40 000 to be available on a default in rent payments Ferrara testified he ar ranged the letter of credit from Banco Popular dated 12 September 1986 effective for 1 year and signed by two bank officials Ferrara at first could not recall with which bank officer he dealt reciting that normally John Helfer (Regional s and then Newport s comptroller) deals with the bank There is strong evidence that Nastro and Regional retained a firm relationship with Banco Popular Nastro borrowed $400 000 from this bank in part to buy used equipment at least some of which is being operated by Newport, becoming individually liable on the loan, in either 1984 or 1985 And Regional had regular business dealings there over the years Thus, again, just as in the case of Newport s lease the infer ence is strong that Regional played a determinative or, at least, substantial role in Ferrara s ability to arrange this letter of credit as well as a series of unsecured notes which Ferrara claimed he arranged to capitalize his ven ture Indeed, Ferrara initially testified that Nastro per 214 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD sonally guaranteed the series of notes, originally taken out in early 1986 but which were later replaced by a se cured note of $100 000 in July 1986 both at a very favor able rate of interest of prime plus one half percent 13 Nastro later took the stand specifically to deny his guar antee yet Nastro acknowledged referring Ferrara to the bank, his extensive dealings there are a matter of record and neither Respondent saw fit to produce all the docu ments relating to the loans including the bank s file deal ing with them Because the matter was deemed by Re gional counsel of sufficient import for Nastro to retake the stand solely for the purpose of denying a role in guaranting Ferrara s loans, I conclude that if it wished any inference of Nastro s connection to the loan to be dispelled those records should have been forthcoming It appears incredible and substantially unbelievable that the bank would have granted Ferrara the irrevocable line of credit and the series of unsecured notes and, ultimately the secured notes, all at an extremely favorable rate of interest without requiring, as Ferrara would have the Board believe, any written application, personal collater al, or detailed information about the nature, extent, and accounts of Newport s business, or without Ferrara con suiting, as he also claimed, an attorney, accountant, or other professional Both Ferrara s and Nastro s denials of Nastro s participation in Newport securing these loans and line of credit from Regionals bank is not credited Just as soon as Newport opened for business Regional cut back severely on its operations Effective 1 February 1986, Regional and Nicholas mutually terminated their tenant landlord relationship at the Jersey City facility and a sublease of smaller space by Regional at the same terminal continued thereafter until 15 October 1986, when Regional quit the Jersey City facility for good Nastro testified however, that Regional gave up its dock facility in Jersey City months earlier effective 1 July 1986 Newport began business slowly with few accounts and equipment all of which however were supplied by Re gional In addition to trailers and tractors it included office equipment These were desks chairs, cabinets photocopier and typewriters Ferrara in his 7 September 1986 letter also acknowledges receiving computer equip ment and programming from Regional ' a That security interest described in the note as all personal property of debtor including machinery equipment furniture inventory goods and accounts receivables now owned or hereafter acquired may have been rendered worthless in view of Ferrara s much more recent execu uon of a security agreement dated 31 October 1986 in which the same assets of Newport are pledged to secure payment by Newport of its obli gations owed Regional I & E This belated agreement was executed on the eve of trial and so may be disregarded as providing any evidence of an arm s length business transaction between independent entities at all times material to the allegations in the complaint Put another way it was the nature of the relationship when Newport started in business and em ployees rights were affected thereafter that is crucial to a decision on the alter ego issue not steps taken after the companies are charged with major violations of the Act Ferrara s execution of the lien agreement however does illustrate his willingness to accede to Nastro s wishes even where Newport s interests should be adverse Thus Ferrara testified he signed the instrument without reading it or consulting an attorney after Nastro asked him to do so because as Ferrara explained he had no choice An independent witness with no apparent reason to fabricate explained how customers were transferred to Newport William Marsh, traffic manager for Channel Home Center testified that because Regional had per formed its local pier work starting in 1982, Burrowes had been his chief contact In February 1986, Burrowes called him to say Newport was going to do the pier work out of a new terminal location in Kearny The service, the rates, and the management supervisor sup port would be the same Although Marsh could not state that Newport was specifically identified to him as a sub sidiary of Regional he noted that this was his under standing of their relationship from the conversation Since that time he has been dealing basically with the same principals, the same services the same everything Since Newport started to perform the work he has dealt with the same people, Burrowes until his death around August 1986 Ferrara as liaison if Burrowes was out of town, and on a day to day basis with the dispatcher and the supervisors Jim Elia and Tony Ponzo Marsh later noted that when he needed a quick answer on a business matter and no one else was available at Newport he might call Tim Nastro because he knew him from other times Starting in February 1986, he reached Burrowes and Tim Nastro at a different telephone number, in all likelihood that of Regional The managerial and supervisory hierarchy of Regional by and large transferred over in the spring and into the summer of 1986 to Newport s payroll and facility in Kearny Ferrara, Regional s de facto vice president and Newport s president of course moved immediately on Newport s entry into the trucking operations Anthony Ponzo, one Regional dispatcher moved to Newport in the same job in April, Gregory Lenhardt, the other Re gional dispatcher became a Newport dock supervisor in July The two Regional dock supervisors Cruz and Curcio moved to Newport in the same jobs in May and June, respectively Ferrara also hired Boris the Local 807 shop steward employed by Regional in June 1986 as a supervisor Ferrara explained that although Boris may not have had the brains or intelligence to perform in that capacity he did have the experience to cut down on claims resulting from damages or thefts from ship ments-a problem that existed at Regional Boris has since left Newport s employ James Elia Regional s ter minal manager transferred in May or June to become Newport s head dispatcher and manager John Heffer, regional controller transferred to the same position with Newport in July Burrowes Regional executive vice president who, according to Nastro, was moving toward a possible retirement or commission arrangement on ac counts he produced in the future for Regional and/or Newport passed away in the summer of 1986 and was never replaced Nastro himself ceased being involved in Regional s day to day activities sometime in 1985 Thus Regional retained only Tim Nastro and dispatchers Gerard Ella (James Elias brother) and Robert Shapiro among its active managerial and supervisory hierarchy at its own location on Porete Avenue 6 months after New port started up Even Tim Nastro began spending part of his time at Newport s facility in Kearny to arrange for REGIONAL IMPORT TRUCKING CO the preparation of Regionals payroll by Newport Glen cal employees and to consult with Vincent Lucci, the Regional mechanics supervisor located there Nastro di rectly confirmed that his cousin Tim works in Kearny and Porete Avenue, North Arlington Every clerical worker employed by Regional as of February 1986 was eventually hired by Ferrara and moved to the Kearny office These included Helen Mus carella, who had been an executive secretary for Nastro and Ferrara amoung others She began to work at New port on 18 October 1986, although in November she was still on Regionals payroll The lame explanation for this offered by John Heifer was that when we finish our va cations and everything to be paid from the Regional pay roll she will become eligible for the Newport payroll At Newport she works as Ferrara s secretary The others who transferred were Julia Saychuk, billing clerk, trans ferred week ending 14 June, Pauline Petrich transferred 12 July, Lorraine Zupicich, bookkeeper, transferred 5 July, Rose Ann Wassong, clerk, transferred 5 July, Robert Smith, computers and billing, transferred 12 July, Betty Juiystic, nee Brennan, transferred 5 July, and An tonio Santoro, transferred 14 July Three of them, Juiystic, Petrick, and Santoro were ter minated after September 1986 The office complement at the time of hearing were the five (Muscarella, Saychuk Zupicich, Wassong and Smith) plus Joan Rock, hired as a receptionist on 8 March All the executives, supervisors, and clerical employees were hired by Ferrara at the same rates of pay they had been receiving while on Regionals payroll Bons re ceived an increase when he became a salaried supervisor at Newport Recently, Ferrara provided all supervisors and clerical employees with an increase As noted earlier, in addition to accounts listed in the buy/sell agreement, Newport gradually took over other Regional accounts not specified in the agreement On all these accounts Ferrara testified he would be obligated to pay the 5 percent commission 14 As his operations devel oped, he acquired some customers that had not been serviced by Regional One a firm called Williams System became a customer in March or April 1986, and at the time of hearing accounted for 10 percent of New port s business By July 1986 when Regional gave up its dock lease, Ferrara conceded that 70 percent of New port s business was made up of accounts that had former ly been serviced by Regional This 70 percent did not in elude one good sized Newport account Clipper Express, which admittedly had previously been a Regional ac count but one which Ferrara protested he had procured while he was an executive for Regional It was Ferrara s contention that he was not obligated to pay a commis lion to Regional for this account Any disagreement be tween Nastro and Ferrara on commissions due from this account remained to be resolved pending the outcome of this proceeding In any event, despite Ferrara s protes tations to the contrary Clipper Express had been a Re 14 Ferrara finally took the position that he would await the outcome of this proceeding before agreeing to an audit of his books to fix his mile age sales or invoices or to pay any moneys to Regional under the agree ments 215 gional account that Ferrara took over without objection from Regional after Newport went into business Aside from the apparent lack of bona fides of the leas ing and buy/sell agreements entered between the two, a number of facts have already been elicited bearing on the clouding of any real differences between Regional and Newport as separate business entities Regional stored vehicles at Newport s Porete Avenue facility without distinction and without evidence of any rent being paid for such use Tim Nastro, on Regionals payroll, spent a good portion of his time at Newport s Kearny facility Helen Muscarella was still being paid from Regional s payroll more than a month after transferring to work as Ferrara s secretary at Newport A regular customer of Regional after switching to Newport continued to be serviced by and have business dealings with the same people, whether on Regional s or Newport s payroll, and under such circumstances that he could draw no distinc tion between the two Regional serviced its own equip ment with its own mechanics at Newport s facility with out any billing or payment Other instances of such common or overlapping con duct involving Regional and Newport abound Ferrara testified that Newport on occasion would consolidate trailer loads in Kearny and then drive the trailer to Porete Avenue where it would later be taken away by Regional drivers to its final destination Nastro was not ultimately able to dispute this relationship Controller Heffer, when asked about the nature of Muscrallea s work after she began reporting to Kearny, replied that we perform the services for Regional so everybody" (all office staff) does part of the work Prior to July 1986 Regional had performed Newport's payroll and billing Starting in July, according to Heffer Regional s entire clerical function was transferred to Newport The Regional clerical staff had moved over by this time and the equipment, including the Regional computer and other equipment was now at Kearny as well Although now paid from Newport s payroll these clerical employ ees continued the same work they had done before-the billing and payroll for both companies To the close of hearing, Newport had not billed Regional for any of the Regional office work it regularly performed and indeed, there was no evidence that any attempt had been made to break down for accounting or billing purposes New port s time and material in performing this service 15 Detailed testimony was elicited about certain Regional accounts later transferred to Newport and about Region al s continued billing of one account it retained which also bear on the absence of any arm s length business re lationship between the two 11 Late in the hearing testimony was elicited by Newport from Con troller Heller about the proportion of time each clerical employee spent on Regional or Newport accounts and payroll on a daily basis All but the receptionist divide their time apparently the majority on Newport work and Heller himself spends 3 days on Newport work both accounts transferred from Regional and new ones and 2 days on existing Regional accounts although his pay is now received in full from Newport None of this testimony undercuts the conclusion that Regional has ever been billed nor has an audit ever been prepared by Newport consistent with the breakdown provided by Heifer on the record 216 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD By agreement made on 1 January 1985 Regional agreed to service certain accounts of ERA Trucking Co Inc which was being dissolved and, in return to pay Louis Schiff ERA's sole stockholder a commission of 5 5 percent on all billings received from the ERA ac counts listed on an attached schedule Although similar to the buy/sell agreement reflecting transfer of accounts from Regional to Newport in practice under the Re gional-ERA agreement Regional maintained detailed records of the amounts billed and paid Schiff on a monthly basis No such records were maintained by Newport under its agreement with Regional despite the specific provision also requiring commissions to be paid on a monthly basis One of the accounts Regional took over under the ERA agreement was Chock Full of Nuts This account among others was later transferred to Newport While it serviced this account, and to date since its transfer to Newport Regional has permanently assigned and paid two of is own clerical employees to work at the custom er s location Regional has not billed Newport for this service and Newport has billed and been paid for all trucking services performed by Chock Full of Nuts, pre sumably including the support service performed by the two Regional employees In any event these services, which have aided Newport in the work it perform for this account, have never been acknowledged by Ferrara as an obligation owing to Regional At least one other ERA account Cofinco was also transferred to Newport Yet on both accounts Regional is continuing to pay Schiff 5 5 percent of billings month ly while receiving nothing from Newport Even if New port were paying commission on these two accounts Re gional would be out of pocket 5 percent and in no event generating any net income from their transfer to Newport for servicing Nastro testified that before corn puting Schiff's commission the monthly billings of the two accounts are reduced by the amount of Regional s commission from Newport The Regional records in evi dence however contradict this assertion and show no reduction of Schiff's commissions to reflect the amounts owed by Newport to Regional Nastro s reaction to these facts was one of apparent surprise yet Nastro had to ac knowledge that he never discussed with Schiff nor set forth in a writing with Schiff any change in Regional s obligation to pay the 5 5 percent commission under the ERA agreement to reflect that the billings on the ac counts would be affected by a second assignment to a third party Newport The consequence of course is as Nastro conceded he (Regional) was losing five percent on everything I do for Lou Schiff (Tr 900 ) According to Heifer a certain payroll designation on the records of Regional into October 1986, department 12, represented payroll checks for Regional office per sonnel as well as the billing of a Regional account, Reisch Trucking Company, for the service Regional per forms of preparing Reisch s employee payroll for a fee of 10 percent Heffer explained that the employees involved were not hired by Regional or Newport supervisors but by employees of Reisch and that Regional had no con nection with these employees other than preparation of the payroll Nastro contradicted Heffer s characterization of Regionals relationship with Reisch He produced a Rider To General Collective Bargaining Agreement listing Regional D & W f/ac (for the account of) Reisch Trucking Company at a South Kearny location and signed by Lenihan and President Mangan of Local 807 and describing wages and other benefits of drivers hi lo operators and platform men for the period 1 July 1985 to 30 June 1988 Nastro maintained 20 employees work there They are not involved in this proceeding It re mained unclear to what basic or underlying agreement this document is a rider The rider lists wages and other benefits but no other terms or conditions of employment It was Nastro s claim that under his understanding with Reisch, Regional receives 10 percent over payroll for performing services for Reisch Later Nastro conceded that under a longstanding relationship with Reisch Re gional only supplies labor to Reisch and the employees who work at the South Kearny location are dispatched and supervised by Reisch employees and drive Reisch tractors and pull Reisch trailers It would thus appear that in fact the work force is employed by Reisch and Heffer s understanding as the controller dealing day to day with the subject, is the more likely set of facts 16 Significantly since July 1986, Newport clerical employ ees have prepared the Reisch payroll , but the 10 percent commission is paid to Regional and not shared by New port As Newport took over servicing Regional accounts its work force expanded and Regionals decreased in size In addition Newport s payroll shows a high degree of turn over Regionals work force, particularly the Regional D & W work force was reduced gradually between Febru ary and June but was severely reduced in late June 1986 The Regional I & E guards were all removed during February 1986 Its clericals were transferred to Newport as earlier noted beginning in June while its supervisors and managers were transferred in the period May to July Regional I & E platform employees were all re moved from the payroll between July and September 1986 The facts regarding the termination of Regional platform employees and drivers , particularly at the end of June 1986 will be discussed infra as the testimony of the employees who testified for the General Counsel is reviewed E The Complaints of Unit Employees to Local 807 and the Union s Inaction Neither Nastro nor any other executive of Regional, to Nastro s knowledge notified the Union of its transfer of accounts to Newport or that its chief operating officer Ferrara was the recipient of vehicles, accounts equip ment, and would eventually be receiving the aid of its clerical managerial and supervisory staff in operating the same or a similar business at another location The employees soon become aware of these developments and let their Union know in no uncertain terms of the 16 There is no dispute that Regional does maintain a complement of its own employees at the facility of Sun Chemical who perform Sun Chemi cal transportation services and are governed by a separate collective bar gaining agreement with Local 807 not germane to this proceeding REGIONAL IMPORT TRUCKING CO basic facts and what protection they expected from their bargaining agent Fernando Sanches an employee on the Regional D & W seniority list and payroll, testified that sometime in early February 1986, he met an employee he knew as Joe who had been laid off from Regional at a bank where he, Sanches, was cashing his check Sanches learned during this conversation that Joe was hired by Newport the day after his layoff by Regional 17 Sanches also learned that Newport was doing transportation work on an account previously serviced by Regional D & W As a result of this conversation and others with fellow employees Sanches went by the Newport Kearny facility at least twice, and saw Regional tractors and trailers now containing Newport signs on the second oc casion at a much later date noticing about 14 or 15 of Regionals tractors, about one half of Regionals fleet now operating for Newport By letter dated 5 February 1986, postmarked 10 Feb ruary 1986 and received on or about that date by Local 807, addressed to Regional Grievance Committee Local 807, and signed Members of Regional Import and Export Regional Distribution Services, unit employees expressed their concern about the transfer of their work as they had recently learned about it, as follows ATTN JACK LANIHAM/MIKE GREELY/JOE MANGAN BE ADVISED THAT INFORMATION THAT HAS COME TO OUR ATTENTION CONCERNING THE FUTURE OF EMPLOYEES OF BOTH REGIONAL IMPORT AND RE GIONAL DISTRIBUTION SERVICE WE SUBMIT THIS LETTER, OUR SOURCE INFORMED US THAT NO LATER THAN JUNE 1986 OF PERHAPS SOONER REGIONAL WILL ASSUME A NEW IDENTITY AND LOCATION ACCORDING TO OUR SOURCES THE NEW NAME SUPPOSEDLY WILL BE NEWPORT DISTRIBUTION CO LOCATED AT THE NOW VACANT ABF TERMINAL IN HACKENSACK AVENUE SOUTH KEARNY WE BELIEVE THAT THIS PROCESS IS NOW IN MOTION AND THAT THE PRINCIPLE MANAGEMENT WILL BE ANDY FER RARO WE REQUEST IMMEDIATE ATTENTION TO THIS MATTER AS IT WILL EFFECT BOTH OUR EMPLOYEES AND UNION MEMBERSHIP WE ARE ALSO PREPARED TO SEEK OUTSIDE AND GOVERNMENT INTERFER ENCE NOT SHORT OF LEGAL ACTION TO AVOID THIS DISTURBING DEVELOPMENT WE THE MEMBERS WILL TAKE ACTION WITH THE BACKING OF OUR UNION AND ALL LEGAL MEASURES AT OUR DISPOSAL TO CORRECT THIS SITUATION Local 807 President Joseph Mangan acknowledged re ceiving this letter and routing it to Business Agents Leni han and Mike Grilli and his son and Union counsel Warren Mangan Another Regional employee driver Joseph Marino testified that in February 1986, he mailed by regular mail to Local 807 at its Long Island City address a two page letter unsigned, raising employee concern about the Re gional-Newport relationship and its adverse impact on " Ferrara acknowledged that a Joseph Kearny a guard at Regional was hired by Newport as a platform employee 217 Regional employees Marino testified that the letter rep resented the sentiments of everyone at Regional The first page reads as follows International Brotherhood of Teamsters Local 807 February 24, 1986 Gentlemen You have been notified and made aware of the actions of Regional Import & Export Trucking Co and their attempts to break their contract with your union 807 Eventhough the way that they are going about breaking the contract seems to be totally ille gal your local has failed to act in anyway This letter is to explain to you once again what s been going on at Regional Number (1) Regional has started a new company by the name of Newport Transportation Co they are located at 1200 Newark Tpk Kearny N J Tel 201-991-8400 Number (2) They are going under the pretense that Mr Farraro is the sole owner of the company and that it has nothing to do with Regional other than Regional just happened to give Mr Ferraro most of its accounts and sell him all of the trucks that he uses and all the other equipment he has so that he could start a company of his own and be a competitor of Regional (PURE FICTION) Mr Nastro owns both Regional and Newport and Mr Ferraro is just his front (FACT) Number (3) They brought in a new Union other than 807 before even hiring any workers Number (4) Little by little Regionals Equipment is being taken over by Newport and before long most if not all of Regionals Equipment will be under Newport name until Regional no longer exists Its all very obvious what is taking place Mr Nastro could build up Newport Trans in place of Regional and pay the Newport workers 6 to 8 do] lars an hr plus less union benefits-so why keep Regional at all or your local Joseph Mangan denied ever receiving this letter or having any knowledge about it prior to the hearing Marino testified that after he had succeeded Boris as shop steward by Regional unit employees at a meeting held on 15 July 1986 at the union offices, attended by Nastro Union Business Agent Mike Grilli, Secretary Treasurer John Hohmann, and himself at which he in formed the union representatives he was going to get a lawyer when it appeared that the Union was not pressing Nastro to remedy the problems primarily the layoffs re suiting from the transfer of work and had not even men tioned their identity as employers, he referred to his ear her letter and received a reply implicitly acknowledging its receipt by the Union The meeting became heated and Marino mentioned to Hohmann that the Union had his letter for over 6 months and nothing was done Hoh mann said that things take time or something like that 218 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD I credit Manno on this exchange, and note that Grilli was not called as a witness by Local 807 and that Hoh mann during his examination did not deal with Manno s testimony about his reference to the February letter or his attribution to Hohmann of the response about things taking time Further, I will apply here the presumption of regularity in the receipt of regular mail and find that Mangan s bare denial is insufficient to overcome this pre sumption Hohmann s response provides other evidence that the Union had received the 24 February letter It is also self evident that having admitted its receipt of the 5 February 1986 letter from a group of members employed by Regional the Union was placed very early on actual notice of the ramifications of the Regional-Newport rela tionship and its effect on the contract and statutory rights of its members theretofore employed by Regional Another Regional employee, Charles Edward Lamp kin, a driver for Regional, who had from time to time on a regular basis picked up loads of merchandise at Port Newark on behalf of customers Channel Home Center and Mikasa, started to see at the port the trucks he and other drivers used to drive now designated as Newport and being driven by other drivers In late February 1986 Lampkin and others raised their concern with Shop Steward Boris and Nelson Morales At the end of Febru ary, Union Agent Lenihan came over to the Jersey City facility When informed of the Newport problems he told the men that they were going to check out and see if that was the same company because a lot of Regional drivers with lesser seniority than Lampkin, who started in June 1981 were losing their jobs, were being laid off As time went on and Lampkin saw more of the Re gional trailers and tractors going over to Newport and finally office personnel, he continued almost on a daily basis to question the shop stewards with no positive re sults They responded that the Union was going to go over to Newport and subpoena Ferrara s records but they, the stewards could not find out anything or ease the employees fears By March 1986, Lampkin himself was laid off The records show he last worked for Re gional D & W in the week ending 1 March 1986 He had asked Terminal Manager Jim Elia when he would be reached for lay off and finally was told there was no more work for him When Lampkin asked why Elia told him the Company was giving up certain accounts that they were not making money with and that would mean some of the drivers were going to lose their jobs Elia never testified I credit Lampkin Two to three months later Elia was head dispatcher and manager for the lost accounts, among others at Newport The unit work was assigned on a daily shape system, with those with higher seniority and indeed most em ployees in the past, working on a daily basis with only short periods of limited or no work for lower seniority workers Lampkin continued reporting to the facility for a few days and then a week or two later and still there was no work He starting calling in on and off for a few weeks after that and kept receiving the same reply from Elia there just am t no work Lampkin was never re called by Regional During all this time and into June 1986, the Union took no action to grieve or otherwise assert the rights of the Regional employees to the retention of their jobs in the face of the transfer of their work to Ferrara under all the surrounding circumstances evidencing a less than arm s length transaction and an attempt by Regional to avoid the full consequence of its 1985 bargain with it In fact, Local 807 took advantage of the creation of Newport to obtain a completely new collective bargain ing agreement from Newport with terms far inferior to those previously enjoyed by its Regional group of em ployees but guaranteeing to it dues remission under a checkoff clause from a separate group of employees on Newport s payroll It did this without raising any ques tion as to the effect of its action on its Regional members to whom it owed a continuing obligation to investigate and pursue their claim of a sham business transaction be tween Regional and Newport depriving them of their rights of employment and related benefits How this new relationship came about as related by Mangan and Ferra ra now follows F Newport s Relationships and Agreements with Locals 819 and 807 and Regional Employee Complaints to the Union Continue to be Made Without Response Mangan testified that in the latter part of 1985, Ferrara came into his office and said he was going into business and that he was going in for container work-according to Mangan this was work off the piers and the railroads that is primarily done by gypsys or owner/operators today and not normally represented by a collective bar gaining agreement Mangan told Ferrara it would create a problem if he got involved with Regional Ferrara said he was going after under the hat work he would like an agreement competitive with that type of work like work performed by owner drivers and he was not touching any of Regionals work that there would be more than enough work for Regional to keep all the men employed He told Mangan he would let him know when he went into business and get back to him Ac cording to Mangan he never got back to him Sometime later, probably on 3 March 1986, Mangan testified he learned from Shop Steward Boris who hap pened to be at the Local s office that Ferrara had signed an agreement with some local union another Teamsters local However Hohmann testified that at the end of February he learned from a friend in another local that Andy Ferrara was shopping around for a local In all likelihood this information triggered Mangan s inquiry Mangan started checking and after one false lead called Joe Scalza, president of Teamsters Local 819 Scalza told him he had a contract and cards signed Mangan said he would write to the Teamsters Joint Council and claim jurisdiction By letter dated 3 March 1986 Mangan wrote to Scalza informing him that unless jurisdiction over the Newport employees and their terms and condition of em ployment was not immediately transferred Local 807 would commence a jurisdictional dispute against Local 819 On 13 March 1986, Scalza informed Mangan by telephone that the shop was turned over to Local 807 Ferrara corroborated his dealings with both Unions He had approached Scalza whom he knew from past REGIONAL IMPORT TRUCKING CO dealings seeking wages and fringes he could afford and Scalza shortly after agreed to the terms Ferrara had ap proached Local 819, and the agreement bore an effective date prior to Newport commencing business or hiring any work force Although Ferrara could not recall sign ing an agreement with Local 819 he authenticated his signature on the agreement admitted in evidence It clearly violated the proscriptions contained in Section 8(a)(2) prohibiting recognizing or negotiating with a mi nority union and Newport, on the record, has admitted its violation for having done so As related by Mangan, Boris went to Local 807 head quarters on or about 3 March 1986 On that occasion he raised a number of problems regarding the Regional bar gaining unit with Union Agent Grilli In addition to complaining to Grilli, as overheard by Mangan about Newsport bringing in another union, Mangan now added for the first time on cross examination that Boris also claimed that Newport was taking work away from Re gional and was using Regional's trucks Mangan admitted that he was already aware of this complaint from the employee committees 5 February letter, copies of which he had forwarded to Lenihan, Grilli and counsel Warren Mangan Yet, Mangan s only (and immediate) reaction to this information was to assert a jurisdictional claim to the Newport job through the Teamsters Joint Council be cause Local 807 had the charter for general trucking in the New York metropolitan area Even after obtaining Scalza s agreement to turn the job over to him, Mangan took no steps to secure the jobs of the bargaining unit members who had been employed at Regional In re sponse to the General Counsels questioning in this area Mangan was extremely evasive and contradictory After belatedly acknowledging Boris complaint about taking away their work he now denied that Boris claimed Newport was performing work for former Regional cus tomers and then would not answer a direct question whether he knew if Newport was using Regional equip ment, then replied when pressed to answer that he would not know because he had no physical contact with Newport and Regional, and then still would not answer directly when asked if he had received such in formation from the men Finally Mangan responded that in the conversation with Boris they could have dis cussed the trucks, but nothing about the customers The other problem Boris raised had to do with a claim that certain Regional employees who had moved up to the higher rate were not receiving it nor the higher pen lion contribution When Mangan took Boris to the pen Sion fund office to investigate he noticed that the record appeared to show an underreporting of hours resulting in less than proper contributions being made to the fund by Regional Whether this underreporting was due to fewer actual hours worked by Regional employees arising from the transfer of accounts and equipment to Newport was never determined It is significant, however that al though the fund records Mangan examined showed some layoffs by Regional and probably showed less work being performed by Regional still Mangan did not use this information to pursue a further investigation or grievance against Regional arising from its transfer to Newport This discovery led to audits of Regional s 219 records by the fund administrator and an ultimate settle ment of the delinquency with Regional According to Mangan, Boris complaint about three employees receiv ing improper rates was not followed up in the absence of any identification of them by Boris then or any time thereafter Shortly after 13 March 1986, Ferrara came to Man gan s office with a copy of the collective bargaining agreement he had entered with Local 819, containing both his and Scalza s signatures on the last page That agreement had a term running from 1 February 1986 to 31 January 1990 It contained a starting rate for drivers of $7 50 per hour and for warehousemen of $6 per hour, at the time more than $5 an hour less than the rate for Regional I & E drivers and approximately $3 an hour less than the rate for Regional D & W drivers The war ehousemen s rate was lower than the Regional rates by comparable amounts Rates of both groups increased by 25 cents per hour per year on the successive anniversary dates Mangan realized the benefits package stunk but testified he assumed it was binding and that he was stuck with the agreement Nonetheless, on determining that the agreement had no health benefits,18 but did have pension contributions, Mangan checked with the Union s health fund assistant administrator and came up with a proposal to convert the pension fund contributions into contribu tions to the Union s self insured health fund at the rate of 80 cents per hour in order to purchase some health care for the employees Further, despite Mangan s assertion that no other modifications were made, the agreement which Mangan had retyped signed, and forwarded to Ferrara by letter dated 16 April 1986 was further revised in many other significant respects Indeed a comparison of the Local 819 with the Local 807 agreement shows them to be very dissimilar in form and substance aside from the addition of the health fund article One signifi cant area however, in which there was no change, was with respect to wages where the much lower Local 819 rates prevailed 19 Ferrara recalled a telephone call from Hohmann or Mangan in late February or March complaining he had gone into business doing general trucking under Local 807 s jurisdiction and the Union would seek Local 819 s replacement through the joint council Ferrara said he did not care which union it was as long as he could get the same agreement he could live by Ferrara then ac knowledged that the only economic change that did not affect his ability to pay made by Local 807 was in the area of health benefits At his meeting with Ferrara in April Mangan testified he did not ask how many employees he had nor did he ask what customers he was servicing He did not do so because he didn t get a chance an explanation that defies logical analysis At this time, Mangan had an early 18 In fact the Local 819 agreement did contain a welfare fund prove sion under which Newport was to pay $50 per month per person into the Local 819 welfare fund for the purchase of group insurance and other benefits 19 They were 50 cents an hour higher for drivers than the written pro visions in the Local 819 agreement (starting at $8 per hour) but were consistent with the rates Ferrara testified he agreed to pay his drivers when he entered the Local 819 agreement 220 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD February letter accusing Newport of operating in the guise of Regional and other complaints particularly Boris, of Regional work being taken by Newport with Regional vehicles It strains credulity beyond the break ing point for Mangan s denials to be believed He had in his office the individual who was taking the work of his men and yet Mangan would have the record show he did not inquire of him to determine the facts to sustain the substantial complaints already made over months by the unit employees He was only reviewing an agreement that would permit the Union to succeed as bargaining agent under terms far inferior to the ones then in effect for the Regional workers Mangan s testimony at this point in the record reveals his distinct unease with the line of the General Counsel s examination and the argu mentative and hostile nature of his responses Although not prepared to investigate the matter per sonally face to face, when he arranged to meet the chief culprit in his office Mangan instead assigned Grilli to visit Newport to obtain authorization cards after he had signed the new Newport agreement and forwarded it to Ferrara By this time or earlier, Grilli had succeeded Lenihan as business agent at Regional, Lenihan having retired According to Mangan Grilli was at the Newport facility until he got the cards signed Whether Grilli made any other inquiries or followed up on an earlier as signment by Mangan to investigate the employees com plaints regarding Newport was information not made available on the record by the Union because it did not call Grille as a witness Surely Grilli would have noticed some trailers with Regional markings in Newport s yard I can only infer from its failure to do so that Grilli s tes timony would not have aided the union defense to the complaint allegation of its failure to accept and process a grievance concerning the creation of Newport and its adverse consequences to Regional employees Mangan did claim that after he received the 5 Febru ary letter he assigned Grilli to check it out and that Grilli reported back that the men would not talk to him When Mangan was than asked when Grilli had gone to the job he at first did not reply and then responded you will have to ask Grille In light of all the circumstances presented by the record including my discrediting of Mangan as a reliable witness particularly on matters in volving the Regional-Newport transaction the absence of any testimony by Grilli himself and the corroborative testimony of the various employee witnesses demonstrat ing a consistent and continuous effort to involve the Union on their behalf I do not credit Mangan s charac terization of the negative employee response to Grilli s visit to the Jersey City facility,20 if indeed Grilli made one or sought information from employees on his visit There is testimony about a later May visit to Region al s facility made by Gnlh which establishes that on this occasion Grilli was made aware of the workers claims regarding Newport s relationship to Regional Sometime in May 1986 Boris called the Regional employees to 20 For the same reasons I do not credit the same negative implication ansing from Hohmann s testimony that on Marino s 18 June visit to the Union Marino replied with a shrug when asked if he ever talked to Grilli when he had seen him at the Newport facility gether and told them the Company could not afford to pay the wage increase of 50 cents per hour due all em ployees on the upcoming 1 July and in order for the Company to surviN a was asking all of them for a give back The employees all objected and Boris said we expect Regional to comply-to fulfill its obligations the remaining 2 years on our contract On 12 May, Sanches along with other drivers on Regional D & W list were laid off He and three other drivers laid off went to Local 807 to see Mangan They complained to him that their work had been taken away to Newport that five of them had been laid off but there should be enough work because Newport was doing their work that their ac counts had been switched over to Newport, their equip ment had been switched over to Newport and nobody was doing anything about it According to Sanches testa mony, which I credit Mangan said I don t know what you re telling me is totally strange to me I know nothing what s going on Nobody told me anything I find that these responses were designed to shield Mangan s true knowledge of the employee claims made previously in writing and orally Mangan did not promise anything except sending the Union s business agents their dele gates When Sanches asked if Local 807 was at Newport, Mangan said yes, Local 807 was the representative there The next morning Grille arrived at the Jersey City fa cility at 6 30 a m He told Sanches and Marino that he had spoken to Boris the day before and they had ar ranged to meet there Sanches and Marino repeated their complaints to Grilli about switching of their work and trucks to Newport Then at 7 40 a m while they were standing at the Regional gate Boris came up apologized for being late and asked if they could all go for a cup of coffee Boris was scheduled to start work at 7 a in Sanches and Marino declined the invitation and Boris and Grilli went off together Sometime later between this date and mid June when Boris left Regionals employ to go to work for Newport as a supervisor Sanches engaged Boris in a conversation about the employees problems Sanches said You know our workers have been laid off, were being laid off systematically and the Union is not doing anything and nobody is doing anything and they re getting away with everything they feel like Boris replied Listen I think I ve been doing the best I can and you know they all pee in the same pot Marino who also pursued the employ ees concerns about Newport with Boris on a regular basis, received the reply that he was getting no response from the Union and was eventually informed by Boris in the spring that it was a lost cause All of these statements attributed to Boris who was not called as a witness by the Union as its shop steward, are credited Union Counsel Warren Mangan testified that he met Boris on a visit to Local 807 s office This was probably the 3 March date previously discussed When Boris com plained to W Mangan that Regionals trucks were being used at Newport, he told Boris to find out if there was any lease agreement and to whom the trucks were regis tered and to keep him informed but that alter ego and single employer cases are tough Warren Mangan con ceded he did not question Boris about Newport s cus REGIONAL IMPORT TRUCKING CO tomers or work force, including its supervision and man agement Neither did he request any union officer or business agent to follow up on Boris disclosure and ex pression of concern about the future at Regional G The Final Regional Layoffs Regional Meets with Local 807 Continued Union Inaction and the Regional-Newport Relationship Continues On 18 June 1986, employee Marino testified he went to Local 807 to complain again about the Regional ac counts and equipment being taken over by Newport In May Marino had seen five Regional tractors operating out of the Newport Kearny facility and he complained about these transfers, among others Marino said his complaint in June was more or less a repeat of the claims he had made in his 24 February letter to the Union On this occasion he saw Joe Mangan , John Hohmann and Mike Grille Marino derived the impression from the lack of surprise of the union representatives that they were aware of the problem They said they were looking into it Also on 18 June Marino reported that Boris had left Regional and gone to work for Newport and Grilli ap pointed him shop steward Afterward Marino returned from union headquarters and either that day or the next informed Jim Elia of his appointment after the men voted him in as steward and signed in writing to that effect Marino testified that a meeting was called by the Union for the following week It was held on 25 June at union headquarters In attendance were Nastro, Ferrara Joe and Warren Mangan Grilli, Hohmann, and Marino Marino recalled Warren Mangan telling Nastro that any time in the future anyone could bring this matter up make it public and in that event the Union would have to go ahead in full force and do whatever had to be done Under cross examination by Union Counsel Mangan , Marino emphasized this position taken by Counsel Mangan After agreeing that W Mangan had said that the appearance was that Pat Nastro controlled both Regional and Newport the thing that he recalled most vividly was that when W Mangan then told both Nastro and Ferrara that they should straighten this out before the matter had to go to arbitration the court, or the Labor Board he also noted that if the question is raised by anyone he W Mangan would get on it and pursue it Ferrara when questioned on this meeting also believed that Warren made some type of statement that if any individual employee went to the Labor Board the Union would have to proceed against Regional and Newport full force Neither Hohmann who testified about this and subsequent meetings held with Nastro into July nor Warren Mangan himself who limited his own direct testimony to union grievance arbitration efforts commencing in September 1986 disputed these state ments attributed to union counsel and they are credited According to Marino, in response Nastro said he under stood and would honor whatever resulted or became of these union efforts Hohmann reported that the 25 June meeting was ar ranged by Grille at Mangan s behest who wanted Nastro and Ferrara to attend But Nastro did not appear Ac cording to Hohmann a discussion took place with Ferra 221 ra about Newport being part of Regional Also the Local 819 contract was brought up-that Regional was trying to run away from the Union and go to Local 819 for a cheaper contract The Union pressed the point that New port was the same company as Regional and was just set up as a division When the union representatives asked Ferrara where Nastro was, Ferrara telephoned Nastro from the union office and another meeting was arranged for 27 June with both to be present Although Marino placed Nastro at the 25 June meet ing and his own brief notes made later the same day list Nastro among the participants, it is likely he was not present This would help explain the early scheduling of the next meeting 2 days later Between June 25 and 27 other facts came into play By Friday 27 June, Regional had laid off almost all of its warehouse employees Three last worked the week ending 21 June six more finished up the week ending 28 June one continued after 28 June for only a portion of the next 2 weeks and one continued to 20 September These actions were consistent with Regionals giving up its dock space at the Jersey City facility as of 1 July Thus, the 27 June meeting dealt with this matter among others Hohmann testified that at this meeting Nastro re ported his lease was up the beginning of the next month Nastro said that a few of his employees came to him be tween Wednesday and Friday to try to work things out Being his lease was up and the men had approached him he would look for a new lease or try to find another platform If he could not stay at the facility Nastro said the work Regional was then performing would go to trucking companies that had a national freight agreement if he could control the work and if he could get a plat form he would bring the work back At the 27 June meeting according to Hohmann Marino reported that the men were notified that day there would be no more work but Nastro wanted some people to shape on Monday 30 June in case he did have a new platform for them On the subject of the New port-Regional connection Nastro said he had nothing to do with Newport and Ferrara said he had nothing to do with Regional Hohmann described these mutual dis avowals as a comedy act where one was saying they would buy the other out and it was back and forth this way Nastro promised no existing Regional work would be transferred to Newport Nastro said as the men had now expressed interest in saving their jobs he was willing to sit down and try to negotiate These would be midterm negotiations during the term of the existing 1985-1986 agreement Both Nastro and Ferrara said they would keep their future op erations apart When each said he was interested in buying the other out, the union representatives stated they wanted whoever did so to live up to the contract with the better terms that with Regional July 7, after the holiday was set for a negotiation meeting Marino placed the second meeting between the parties on 2 July Present were Nastro Ferrara Joseph and Warren Mangan, Hohmann Grilli and himself He re called Nastro being told to find another warehouse and call back some of the platform men Nastro said he 222 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD needed time but would work on it To this extent Marino corroborates Hohmann s more extensive testimony about a 27 June meeting at which both Nastro and Ferrara ap peared Both Marino and Hohmann agree on a 7 July meeting attended by Nastro Hohmann, Grilli, Sanches, and Marino By 30 June, the eight or nine remaining Region al D & W drivers had been laid off, including Sanches Sanches testified credibly that on Friday 27 June, when the men were told they were laid off but to report back on Monday, 30 June Marino told him that Nastro prom iced he would be there Monday morning On 30 June Nastro did not show up, but his nephew Tim Nastro told the men that the Company had lost a lot of work a lot of accounts, and could no longer keep them He said 111 keep some but not all of you He said We have been losing money since 1980 and we can no longer stay in operation in business When someone asked if they should report for unemployment, Tim Nastro said, Yes, there is no more work for you, look someplace else Sanches reported that more than 20 employees were not sent out that day Sanches and nine other drivers then went to union headquarters They met with Joseph Mangan and Mike Grilli Sanches said, We ve been laid off, most of us Only ten people are at work today and they suggest to us to look someplace else for work What do you think we can dog Mangan said Not much I don t think much because lately a lot of companies have been doing this and they ve been getting away with it-going out of business to get rid of responsibility to contract Sanches understood Mangan to mean companies evading respon sibility by opening up in a different place because Mangan then told an anecdote about a company some where in the midwest that just moved from one side of the street to the other and got away with it There was nothing the employees could do to avoid the layoffs Sanches then asked Mangan how long Local 807 had represented the employees at Newport Mangan at first wanted to refer to his records but then when asked for an approximation said it was 1 1/2 or 2 months When Sanches then asked why only last week was Grilli sent out with union cards to be signed so the personnel could join the Union Mangan did not reply but Grilli ac knowledged bringing out 14 cards himself The meeting then broke up, but before he left Grilli invited Sanches to attend the next meeting with Nastro and Marino on 7 July When the 7 July meeting started, Nastro objected to Sanches being present Hohmann defended his presence and he remained Nastro proposed a $5 per hour cut in wages Hohmann rejected this out of hand and suggested Nastro come back with a proposal regarding sick days vacations, holidays and other benefits so as not to take all the money off them Nastro agreed to set up another meeting When Hohmann asked if Nastro had found a platform yet, he said no According to Marino the issue was not pressed Hohmann did not disagree A 15 July meeting was held attended by Nastro, Grilli Marino and Hohmann Nastro was now seeking a wage reduction of $1 50 an hour, with holiday and vacation gi vebacks as well Hohmann started to do some figuring trying to determine the value of a week s vacation and holidays when Marino got upset and exclaimed Well you are on their payroll, no sense sitting here Hoh mann told Marino you can go where you want to and Marino left Nastro said he was not going to sit down in a meeting where it was obvious they could get nowhere The meeting then broke up The following day Marino telephoned Hohmann to apologize but added they con tacted the lawyer Hohmann said Fine anything we can do to help you we will, have your lawyer contact O Connor & Mangan and we will go from there but once the lawyers are involved I step out of the picture Marino said he would be in touch This was the last meeting held between the parties Marino recalled that it was at the fourth meeting, held on 15 July, that things got heated and he told Hohmann that the Union had his letter for over 6 months and noth ing was done Marino got upset when he saw that Union Representative Hohmann was saying we can do things to make up these cuts-in essence seeking to accommodate to Nastro s demands Marino pointedly noted that while this discussion was going on, there was no mention of Newport and Regional being one or combining to be one Marino told the Union he was going to get a lawyer The meeting lasted 15 minutes before it broke up No further meetings were held and the first charge was filed on 1 August 1986 by Sanches against Regional and Newport which contained all the basic allegations ultimately set forth in the amended complaint against the Respondent employer but without listing the names of the terminated employees The charge against the Union followed on 13 August Hohmann claimed during his cross examination by Charging Party counsel that the Regional-Newport con duct of continuing the same entity at a different loca tion-an alleged alter ego arrangement as existed here- would violate the Master Freight Agreement and that the Union could pursue a successful grievance to arbitra tion The Master Freight Agreement in evidence cover ing the relevant period 1 April 1985 to 31 March 1988 contains an article 32 Subcontracting, prohibiting in section 1 any diversion of work in full or in part to any other business person or nonunit employees unless spe cifically provided and permitted in the agreement Under section 2, a diversion in violation of section 1 is pre sumed to have taken place when work presently and reg ularly performed by employees of the signatory employ er has been lost and is being performed in the same manner by an entity owned and/or controlled by the sig natory employer The burden of overcoming the pre sumption in the grievance procedure is on the employer Section 3 permits subcontracting only when all an em ployer s regular employees are working Furthermore no present road work or runs established during the life of the agreement may be farmed out Under article 1 section 3 the Agreement and Supplemental Agree ments thereto shall be binding on assigns but these obli gations shall not apply in the event of the sale lease, or transfer of a portion of the rights comprising less than all the signator employers rights to a nonsignator company unless the purpose is to evade the agreement REGIONAL IMPORT TRUCKING CO Assuming the Master Freight Agreement to underlay the parties 1985 Memorandum Agreement , these provi sions would surely appear to be applicable to a union grievance charging Regional with establishing an alter ego relationship with Newport Hohmann noted also that in the summer of 1986 the Union was dealing with an effort to save the jobs of the membership at Regional by agreeing to negotiate conces sions midterm as then sought by Nastro Hohmann was aware at the time that both platform employees and driv ers were being laid off because Regional had closed its platform Although the Union was also aware in the period 18 June to 15 July that accounts had been trans ferred leading to these layoffs , since Nastro had taken the position the only way he would go back into the platform business was if he had some concessions, the Union was prepared to go along with that process The Union s thinking then was to negotiate concessions to get some jobs back Significantly , Hohmann did not suggest that the Union then had any plan to grieve and seek the retransfer of accounts and equipment from Newport and the restoration of Regional at least for the term of the current agreement H The Board Proceeding Local 807 s Belated Pursuit of the Dispute with Regional and the Employer's Responses After the charge was filed against Local 807 under Section 8(b)(1)(A) and (2)21 claiming a breach of its duty of fair representation owed the Regional unit employees as well as collusion with Regional resulting in the dis criminatory termination of these employees the Union by letter dated 2 September 1986, filed a demand for ar bitration against Regional claiming contract breach arts ing from loss of work and transfer of unit work to New port as its alter ego with the New York State Board of Mediation (State Board) copies to Regional Sanches, Charging Party counsel Region 22 of the NLRB and union counsel On 4 September W Mangan received a telephone call from Charging Party counsel Martin Gar finkel, regarding processing the grievance Mangan re plied he had a concern with respect to the arbitration provision applicable to the parties memorandum agree ment In his opinion, the memorandum incorporated the current Master Freight Agreement but the forum for submitting this dispute was not spelled out with clarity He was attempting to work out this problem while he sought an arbitration at the State Board Garfinkel said he wanted to participate in the selection of an arbitrator, the arbitration itself and any settlement discussion Warren Mangan and Garfinkel ultimately agreed on the extent of Garfinkel s participation They and Regional Counsel James Dean agreed on an arbitrator, Robert Light to hear the dispute Meanwhile, Regional Counsel Dean at first telegramed the Regional Director on 12 September 1986, the day the original complaint issued, urging deferral to the arbitration provision but later re 21 Complaint issued only on the 8(b)(1)(A) charge alleging a failure to pursue the grievance between the finite dates of 24 February and 21 Sep tember 1986 No union collusion or conspiracy was alleged as a violation in this case 223 frained from executing a supplement to the memorandum referring all disputes arising between Local 807 and Re gional to the State Board for final and binding arbitration which W Mangan had forwarded to him on 23 Septem ber and informed W Mangan his client was not prepared to go to arbitration Nonetheless, on the first day of hearing, 11 November 1986, Dean , on behalf of Region al did stipulate that the Master Freight Agreement was the basic agreement of the parties and that the State Board was the appropriate forum for the dispute During this period of time, the Regional employees still working, with Marino as their spokesman voted to approve a settlement they had worked out with Nastro which they believed would result in Regionals continu ing a platform operation and restoration of platform and driver jobs Concessions were now agreed to by these employees 22 By letter dated 3 October 1986, W Mangan informed Dean that a letter forwarded to Grille by Tim Nastro containing these agreed on modifi cations in the terms of the current agreement could not be approved by the Union without the participation of all unit employees, including those on layoff, in a secret ballot vote Nothing further transpired on this matter Finally, by letter dated 25 November 1986, Dean in formed the State Board that the employees do not agree to the processing of the dispute to arbitration at this time The reason spelled out was the pendency of the unfair labor practice complaint against the Employer and the Union Dean concluded any arbitration proceeding must legally await the results of the trial This letter fol lowed the first 2 days of hearing At the hearing after withdrawing Respondents affirm ative defense of deferral, Dean amplified that position to note that so long as the General Counsel was claiming taint and/or conflict of interest on the part of the Union in representing the Regional employees it would not be appropriate for it to voluntarily participate in an arbitra tion whose results could be attacked on that basis With a substantial risk that the arbitration proceeding would thus not resolve the dispute because of the clouded status of the Union which could ultimately be determined to be an improper representative of the employees he did not wish to expose his clients Regional and Newport, to contemporaneous proceedings dealing with the same issue until the Board had ruled on the issues In the Union s proceeding in Federal district court to compel arbitration the same counsel on behalf of Regional has rigorously opposed the Union s Motion for Summary Judgment23 and on behalf of Newport has filed Cross Motion to Dismiss and/or for Summary Judgment be cause Newport is not a party to the Regional labor agreement and, therefore cannot be compelled to arbi trate thereunder 22 These included extending the current agreement 5 years from I July 1986 reducing paid sick days by 3 and foregoing the two 50-cent an hour wage increase due 1 July 1986 and 1987 23 The thrust of Regional s argument in the court papers is that so long as the General Counsel is questioning whether Local 807 will adequately and fairly represent the grievants in arbitration it would be inappropriate as a matter of law for the Board to defer until it has determined that issue 224 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD In its brief, Respondent Regional now argues assuming arguendo that a violation of Section 8(b)(1)(A) has been proven because of the Union s delay in processing the grievance which it rejects as a legal conclusion that delay does not render the Union incapable of now proc essing the grievance and deferral would be appropriate However, the brief does acknowledge that it has asserted in the court action and before me that arbitration is map propriate until the allegations of taint are resolved On 4 November 1986 Sanches received a mailgram from Tim Nastro of Regional offering an immediate and unconditional offer of reinstatement to your former pose tion at Regional Distribution and Warehousing Services at the wage rate of 10 30 per hour Nastro testified that Regional made this offer to the Charging Party after complaint issued and a week before hearing opened on advice of counsel and to limit liability Sanches tele phoned and arranged to report the following Monday That day he shaped but there was no work available Sanches shaped 3 of the remaining 4 workdays that week and was assigned to work only 1 day Since that time except for days spent at the hearing and one other day, Sanches shaped regularly and was only sent out to work on 4 days Thus the evidence shows that Sanches was not restored to his prior position on which he had worked on a regular basis On the same day 4 November 1986, Newport sent mailgrams to 10 former Regional drivers and platform employees, named specifically in the complaint as discri minatees, offering them immediate employment in their job category with Newport at the Kearny facility Al though signed by Ferrara for Newport each mailgram bore a return address showing Regional Import and Export Trucking Helen 44 Porete Ave North Arlington NJ 07032 Thus contrary to Newport s claim Helen Muscarella appears to have still been physically located in November 1986 at Regionals office location after its move although acting as Ferrara s secretary since mid October Ferrara disclaimed these were offers of rein statements, consistent with his position that his operation was independent of Regionals He also claims that he was not advised to take this step by Nastro Yet, how would Ferrara have learned the identity of these ex Re gional employees and their availability for employment if not through consultation with the Nastros or their counsel? I find the Newport mailgrams were part of a continuing scheme first hatched when Nastro agreed to finance" Ferrara s entry into business The record contains no evidence about the employees responses, if any, to these offers In any event, assuming a conclusion that Newport is Regionals alter ego and that these employees among others were discriminatees under the Act, it is clear that even if it is later claimed that these offers should be deemed offers of reinstate ment the significantly lower wages and benefits being paid by Newport to its employees would preclude them from being found to be offers of equivalent employment Indeed the conditioning of employment on the employ ees working under noncontract terms for Newport is itself a violation of Section 8(a)(3), although not alleged in the complaint Analysis and Conclusions A The issues presented in this case are as follows I Is Newport an independent business entity or an alter ego of Regional created to avoid Regionals obliga tions under its union contract and the Act and were the terminations of Regional employees resulting therefrom discriminatory actions in violation of the Act9 2 Even if a specific antiunion motive is lacking for Regional s conduct vis a vis its employees was its course of conduct nonetheless inherently destructive of employ ee statutory rights 3 Did Newport recognize and contract with Local 819 as a minority union and, if Newport is not an alter ego of Regional, did it likewise recognize and enter a bargaining agreement with Local 807 as a minority union'? 4 Did the Union refuse to accept and process a griev ance concerning the creation of Newport and the result ant discharge of Regional employees, and thereby fail to properly represent unit employees in violation of its obli gation under the Act9 5 If the Union is found to have violated the statutory duty it owed the Regional employees should the remedy against it include a make whole provision, and may Re gional and/or the Union, as the General Counsel con tends be required to make whole the Newport employ ees'9 6 Regardless of the answer to question 4 is it appro priate to defer this dispute to grievance arbitration) B Regional s termination of employees was made in violation of the Act 1 Regionals motivation and creation of Newport as its alter ego The Board has recently had occasion to reiterate the standard it will apply in determining whether it will find alter ego status In Electrical Workers IBEW Local 3 (Te lecom Plus) 286 NLRB 235-236 (1987) the Board stated as follows The Board will find alter ego status when two em ployers have substantially identical ownership management business purpose nature of operations equipment customers and supervision The Board also considers whether the purpose behind the cre ation of the alleged alter ego was legitimate or whether, instead, its purpose was to evade responsi bilities under the Act 3 Indeed in many cases when an alter ego relationship is found the alter ego is a newly created nonunion company 4 'Advance Electric 268 NLRB 1001 (1984) quoting Fugary Continental Corp 265 NLRB 1301 (1982) enfd 725 F 2d 416 (D C Cir 1984) 4 See Continental Radiator Corp 283 NLRB 234 (1987) Samuel Kosoff& Sons 269 NLRB 424 (1984) Each case must turn on its own facts Advance Electric 268 NLRB 1001 1002 (1984) No one factor is determi native of alter ego status Continental Radiator Corp 283 NLRB 234 (1987) All factors need not be present an alter ego relationship may be found to exist even though REGIONAL IMPORT TRUCKING CO 225 no evidence of actual common ownership is present Woodhne Motor Freight 278 NLRB 1141 (1986), All Kind Quilting, 266 NLRB 1186 fn 4 (1983) American Pacific Concrete Pipe Co 262 NLRB 1223 1226 (1982) What is crucial in finding such a relationship is a finding that one company exercised a degree of control over the other so as to obliterate any separation between them American Pacific supra at 1226 The crucial element in a decision to apply the alter ego doctrine however is a finding that the older company continued to maintain a substantial degree of control over the business claimed to have been sold to the new entity NLRB v Scott Printing Corp 612 F 2d 783, 786 (3d Cir 1979) As to the illegitimacy of the purpose behind the cre ation of the alleged alter ego, where there is present sub stantial evidence that the second company was formed for the purpose of eliminating the high cost of dealing with the Union, J M Tanaka Construction v NLRB, 675 F 2d 1029, 1035 (9th Cir 1982), or to evade the first company s responsibility under the Act to honor its col lective bargaining agreement with the Union, Advance Electric cited supra at 1004, or to crush the successful organizing efforts of its employees Fugazy Continental Corp, 265 NLRB 1301, 1303 (1982), enfd 725 F 2d 1416 (D C Cir 1983) that purpose is independently signifi cant in finding an alter ego Finally, single employer status-cutting through the ostensible independence of the other business-ultimately depends on all the circumstances of the case and is characterized as an absence of an ` arm s length relation ship found among unintegrated companies Operating Engineers Local 627 v NLRB, 518 F 2d 1040, 1045-1046 (1975), affd on this issue sub nom quoted and cited with authority in NLRB v Transportation Consultants, 607 F 2d 290 295 (9th Cir 1979) Although Regional and Newport lack common owner ship all the circumstances surrounding Newport s entry into business show less than an arm s length relationship between the two in its creation and continued operation such that Regional in essence exercises effective and sub stantial control over Newport Nastro did not seek a purchaser or lessee with expert ence in running his own company Instead he dealt with his own assistant who lacked the financial resources ex perience or business judgment one would expect an en trepreneur to possess in the highly competitive area of the trucking industry involving import export work and less then full loads in which Regional operated Nastro s close scrutiny of Newport s lease arrangement the inclu sion of Regionals long time lessor as cosubtenant with Newport and guarantor of Newport s rental payments on Newport s taking business space his newphew Tim s guarantee of Newport s subsequent lease and his involve ment in helping Ferrara secure the series of unsecured notes and the substitute secured note at extremely favor able terms from his own banker, Nastro s denial of the latter participation to the contrary notwithstanding, have been earlier described at length Both the terms of the vehicular lease and buy/sell agreements with Regional vary significantly from the parties actual practices under them tending to support the conclusion that they were drawn rather hastily with out full consideration of Newport s true subordinate role and to provide a cover that Newport was formed pursu ant to normal business dealings Although Newport was incorporated as early as September 1985 these agree ments were not executed until the end of January 1986 within 2 weeks of Newport s commencement of oper ations This delay was never explained, although Nastro may have indirectly provided one reason, that he had to satisfy himself about Newport s facility and business setup, considerations that would not normally accompa ny a true transfer of accounts for value Newport s incor poration follows almost immediately the execution by Regional of the 1 July 1985 3 year successor agreement with Local 807 lending weight to the view regarding the purpose of the transfer of accounts, that Nastro had determined to void the consequences of the deal he had reluctantly struck with the Union by ridding himself of the accounts and the employees whose contract terms and benefits were an anathema to him Other evidence leading to this conclusion will be examined shortly The late entry of the agreements probably also reflects the fact that Nastro finally realized that he needed some for mality to the arrangement for appearance sake Be that as it may, the other circumstances surrounding their entry are also suspect Ferrara met only two or three times and agreed on terms with Nastro They used the same lawyer, Nastro s whose services on these documents as well as Newport s lease and other papers to the benefit of Ferrara have been accepted without charge Contrary to the lease agreement Regional has been both substantially and fi nancially responsible for the maintenance of the vehicles and the attachment listing those vehicles leased has never been followed with Ferrara having unlimited choice of Regional trailers and tractors without charge Indeed the agreement lacked any fee arrangement, the parties have not followed any of the precedural provisions for fixing costs to reimburse Regional for vehicle use and Regional continues to be responsible for insurance premi ums and ratings Under the lease agreement Regional may reclaim the vehicles on written notice of default and under the buy/sell agreement Regional may require re transfer of the accounts whenever in its sole opinion, Newport fails to properly and adequately service the ac counts As additional accounts were transferred no docu ments were prepared noting any new obligations on the part of Newport and an apparent dispute involving whether a significant Regional account Clipper Express later serviced by Newport was covered by the agree ment has never been resolved Although the buy/sell agreement does contain a 10 year, fixed commission obligation, Regional has never billed Newport, nor until well after 6 months from its of fective date and the filing of the charges and issuance of complaint did Regional make any attempt to audit New port s books through its long time accountant also em ployed by Newport Although technically Regional and Newport are not commonly managed there are many factors that demon strate that management of the two companies overlap and that the identical supervisory hierarchy and manage 226 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ment of Regional now continues in place in the substan tially similar business, at a new location and under condi tions, including contacts with accounts, continuation of the same accounts, and physical integration of equip ment, from all of which the conclusion is self evident that Newport constitutes the continuation of Regional in a disguised form All Regional management eventually moved full time to Newport s facility and payroll, with the exception of Burrowes who died and Tim Nastro who nonetheless spends considerable time at the Newport location in volved with maintenance, billing, and account matters because the maintenance of Regional's vehicles and all Regional billings and payroll functions are performed at Newport Newport s supervisory staff all transferred from Newport as the accounts transferred, its work grew as Regionals declined, and more platform employees and drivers were hired or replaced Managers supervisors, and office employees all received the same compensation on their transfer from one payroll to the other The evidence shows that no breakdown is regularly made by their common controller of the proportion of time that the same clerical staff, previously on Regional s payroll but now on Newport s, spend on Regional or Newport accounts All billing of both Regional and Newport accounts and all payrolls for both Regional and Newport employees are performed by this same clerical staff and controller without invoices to Regional or pay ment by Regional for these services With respect to the 10 percent commission on preparation of Reisch payroll, these sums continue to go to Regional even though the work is performed by Newport clericals Regional has also never billed Newport for the clerical services per formed by its two employees permanently assigned to Chock Full of Nuts, although this account was trans ferred to Newport Regional continues to bear the com mission costs for the two accounts Chock Full of Nuts and Cofinco, originally transferred to it by Lou Schiff without any offset to reflect the commission due from, but never paid by, Newport Aside from the overlapping managerial clerical and bookkeeping functions of the two corporations, other common or overlapping business elements include Helen Muscarella s functioning for Newport but paid by Re gional as recently as November 1986 the apparent cre ation of the impression with at least one major customer of Regional that Newport was a subsidiary and that the change in the location of the dock for the performance of their work would not change any other indicia of their dealings and relationship 24 the intermingling of Regional and Newport vehicles at 44 Porete Avenue, North Arlington, and Regionals use of an office trailer on Newport leased premises there and the use by New port of any of Regional tractors and trailers still contain mg Regional identification on an as needed basis The complete reliance by Newport on Regional vehi Iles office equipment, and accounts when starting in business without any payment for their use, is also a sig 24 This concealment of the nature of the transaction with Newport in its dealings with a significant account was a factor in finding an alter ego relationship in McAllister Bros 278 NLRB 601 (1986) nificant element of the substantial identity of the two companies As late as the summer of 1986 Regionals cus tomers constituted 70 percent of Newport s business, and if Clipper Express is added as a former Regional account now serviced by Newport that percentage increases well beyond that figure Thus, Regional and Newport share a substantially identical customer base sufficient to satisfy this element of the Board s alter ego standard See Conti nental Radiator Corp, supra, Advance Electric, supra at 1002-1003 Both companies operate in the same business, trans porting deliveries locally to and from the piers and rail heads and stripping and consolidating less then full loads on behalf of various accounts including other shippers Although Respondent argues that Regional did not per form warehousing functions Nastro s description of the nature of the distinction between Regional I & E and Regional D & W work, including the use by Regional D & W of a receiving station and conveyor system with freight held for later reshipment, contradicts that asser tion The fact that Ferrara took over completely Region al s managerial and supervisory hierarchy and office staff shows not only that Newport was simply operating Re gional s business without certain costs previously in curred-most importantly, a new, much lower paid work force-but that Ferrara also understood that in the kind of transportation operation run by Regional in which he was relatively inexperienced (with no experience in han dling LTLs') he needed all the help he could get in continuing to service the same customers in the same market As to the purpose behind the creation of Newport I have no difficulty in concluding that Nastro s purpose was to evade Regionals contract responsibilities and that Ferrara s interest in becoming an entrepreneur even under a less than independent arrangement suited Nas tro s interests admirably Nastro s complaints about the contract terms began in the spring of 1985 Because of the employees militancy and uniform refusal to relent, Nastro felt compelled to enter the successor agreement without achieving his goal of substantial givebacks Some layoffs were begun as Nastro released some accounts and transferred others to Ferrara When again in the spring of 1986 the men re fused to make any midterm concessions Nastro became resigned to not obtaining reductions in labor costs volun tartly but to achieving his end by another means-rid ding Regional of almost all its accounts and employees but retaining substantial control over and financial inter est in the continuation of his business by an associate willing to operate in such a fashion A number of times on the record Nastro expressed his frustration and dis gust with the actions of the Regional employees in not agreeing to givebacks, taking him to arbitration and now involving him in this extensive litigation He also frankly acknowledged that with a different labor contract Ferra ra could make a go of the business Regionals retention of the Reisch and Sun Chemical contracts, the former under a cost plus arrangement and where he received a union agreement to a freeze in bene fits and the latter with a lucrative arrangement with Sun REGIONAL IMPORT TRUCKING CO 227 Chemical, do not prove the absence of animus as argued by Respondent, but rather tend to show only that where it was to Regionals advantage Nastro was not adverse to continuing employees on its payroll and a direct Local 807 relationship In fact, Nastro noted he could have at tempted to transfer the Reisch account to Newport if the employees there had not agreed to a wage freeze Regional retained the right to reclaim all of its vehi Iles on Newport s breach of payments or other cov enants or conditions, such as failure to maintain and repair or failure to furnish a weekly mileage reading Al though the amount of the rental fee was omitted, appar ently the parties discussed a daily rate for tractors and trailers and Regional would surely be entitled to a rea sonable amount for their use under an implied contract Regional also retained the power, unilaterally, to discon tinue Newport s servicing of the transferred accounts if, in its opinion, Newport failed to adequately service them Just as Nastro, through Burrowes and others, was able to convince accounts to look to Ferrara, he would no doubt reclaim them as his own were he to decide to do so Given this authority, Newport s ability to contin ue the arrangement as it developed in practice was tenu ous and illusory Nastro also exercised certain control through longtime trusted subordinates now employed by Ferrara, who, through their loyalty to him would undoubtedly aid him in any attempt to reassert Regional control over vehicles, equipment, or accounts It was only Ferrara s personal objection that prevented Braverman, Nastro s longtime accountant, but also now Ferrara s, from obtaining cer tam information adverse to Newport s interests in sup port of possible claims under the agreements Nastro claimed that he wanted to get out of the truck ing business and retire and further, that his arrangement with Nastro provided a highly lucrative return of ap proximately $300 000 in commissions for doing noth ing (Tr 558-580) Both motives are highly suspect Nastro is only 45 years old Furthermore, he still retains collective bargaining agreements with Local 807 cover ing the Reisch Trucking Co and the employees assigned to Sun Chemical Corp, both running to at least mid 1988 He also continues operating Regional Transporta tion Co and retains Avon, N A Phillips and GE ac counts for servicing by Regional I & E So although Nastro spends considerable time in Florida, he and his family continue to receive the benefits of Regionals on going business Nastro s decision to give up its 10 year lease in Jersey City effective 1 February 1986 just as Newport started up and later its dock space there as of July were also voluntary acts and not required as Nastro sought to portray to the Union in his discussions in the summer of 1986 His later termination of the sublease in smaller space there was also initiated by him as Region al s need for terminal and yard space dwindled As to making a large profit on his deal with Ferrara, that is also highly problematical Even were Nastro to collect the 5 percent commission with all the difficulties that now entails Nastro's other obligations including the $400,000 personal loan the ongoing 5 1/2 percent com missions due Lou Schiff and the increased costs of insur ance25 far exceed the moneys due under the Newport buy/sell agreement Aside from these facts which contradict Nastro s stated motives, Nastro was not a credible witness I have already discredited his denial that he influenced Ferrara s procurement of working captial Nastro was also not forthcoming when pressed to explain the variances be tween the parties practices under the lease and buy/sell agreements and their written terms His feigned expres sions of surprise when confronted with the absence of any monitoring of Newport s compliance with the terms of the agreements also were not genuine Nastro himself finally could not avoid the conclusion that Ferrara s suc cess depended on one factor-its ability to operate free of legitimate Local 807 negotiated wage rates and fringe benefits Neither was Ferrara a credible witness The opportu nity to operate his own business was provided at the cost of dependency which Ferrara was unwilling to recog nize Ferrara claimed that he was able to avoid the large managerial expenses previously incurred by Regional Yet Nastro s salary was allocated to Regional Transpor tation, not Regional I & E or D & W Furthermore, any efficiencies in operation were not due to any new mana genal or supervisory efforts because all such positions were filled by former Regional personnel Ferrara, at times, was admonished for being too glib by his own counsel (Tr 988) at other times he could not recall the particulars of his dealings in obtaining capital to operate I have previously discredited his ultimate denial that Nastro assisted him in obtaining financing and that he was not carefully scrutinized by the Banco Popular in seeking financing Ferrara also did not know if the Re gional office trailer occupied Newport lease space even though no Regional lease was produced for the location and Newport vehicles regularly park in the lot at North Arlington, a facility under his direction and control Fer rara's lack of memory about the circumstances of his signing of the Local 819 agreement is particularly sus pect When finally confronted with his signature on the document he could recall nothing of the events leading to his signing although he had sought out Scalza and provided a writing of the terms he could accept Al though Ferrara kept insisting he wanted to protect his company yet without legal or other advice he readily signed a security agreement with Regional giving Nastro the right to put him out of business Such conduct illus trates the degree to which Ferrara despite his protesta tions to the contrary was beholden to Nastro for all as pects of his business Just as did Nastro Ferrara was compelled to admit that the substantially lower wage rates paid to his plat form employees and drivers was key to his ability to function competitively in the export import consolidation trucking business He testified he could not afford to pay his employees much more then they were receiving 25 Regional s 1985 Federal tax return show costs of $453 917 for insur ante and safety and $173 455 for repair and maintenance Nearly all the tractors and trailers are owned by Regional I & E and D & W and not by Regional Transportation Regionals obligations for insurance and maintenance continue under the Newport agreement 228 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD under the Local 819/Local 807 contract rates and he also agreed that even if he had been paying Regional the commission for his accounts and fees for leasing the ve hicles he still would be making a substantial profit Based on all the foregoing factors and the facts as pre viously summarized in an earlier section of this decision I conclude that Newport is the alter ego of Regional 2 The consequences flowing from Regional s discharge of employees as a direct result of Newport s creation Because as there is also substantial evidence that New port was created for the purpose of eliminating the high costs of the 1985-1988 Regional Local 807 agreement I also conclude that Respondents discharge of the bulk of its platform employees and drivers in the period Febru ary to July 1986 were discriminatory actions violative of the Act These terminations were made at a time when and because Regional was transferring its accounts for continued servicing by its alter ego, Newport in order to avoid continuing these employees on Regionals pay roll and in order to avoid providing them with the bene fits due them under the Regional/Local 807 agreement, in particular, the 50 cent an hour increases due the Re gional unit employees as of 1 July 1986 See J M Tanaka Construction v NLRB 675 F 2d 1029 1035 (9th Cir 1982) Their discharges just as found by the Board in Fugazy Continental Corp 265 NLRB 1301 1303 (1982), enfd 725 F 2d 1416 (D C Cir 1984) in analo gous circumstances were implemented pursuant to the sham transaction with Newport and were designed to re taliate against them for their union activities and violate Section 8(a)(3) and (1) of the Act Regional and Newport s failure and refusal to retain these employees on Regional s payroll at Jersey City or to offer them the opportunity to continue their positions at the Kearny facility under the terms of the existing agreement was violative of the obligation owed to them under the Act not to discriminate against them because of their adherence to and support of Local 807 Clearly no offers were made to these employees to continue their jobs at Kearny because having unanimously rejected any giveback of their July 1986 contractual wage increase and having complained from the outset of the effect of the illegal scheme on their jobs they would have reject ed such unlawful conditions See Advance Electric supra at 1004 Regional argues in its brief that the absence of any al legation of a refusal to bargain under Section 8(a)(5) of the Act requires a specific finding that the terminations were motivated by antiunion animus as required by Wright Line, 251 NLRB 1083 (1980) enfd 662 F 2d 899 (1st Cir 1981), cert denied 455 US 989 (1982) As I have already demonstrated the intent to nullify the bene fits provided the employees under their collective bar gaining agreement by removing their jobs from the unit pursuant to a fictitious scheme is more than sufficient to support both a finding of alter ego status and discrimina tory motive under the Act Respondents attempt to jus tify the layoffs must rely on the transfer of accounts to its subordinate enterprise and thus must fail because the transfer was the heart of the illegal scheme to deprive the employees of their jobs and benefits 26 The fact that Regional is continuing in business on a reduced basis also does not detract as Regional implies from the finding I have made A company need not cease all its operations in order to establish that a sham transfer of certain of its assets was made in order to defeat rights of employees under the Act See American Pacific Concrete Pipe Co, 262 NLRB 1223 ( 1982) in which, the Board, under similar factual circumstances, found the Respondents transfer of its trucks under a 1 year lease to a company which it completely dominated in order to avoid bargaining with the Union representing its drivers while it continued in business otherwise as construction products supplier constituted an alter ego arrangement, the consequences of which resulted in Re spondent violating Section 8(a)(1) (2) (3) and (5) of the Act Here Regional gave up by transferring accounts vehicles, and other equipment a major portion of its business operation involving the warehousing and con solidation of freight the consequence being that all its D & W unit employees and some I & E unit employees were let go in favor of its subordinates hiring of unrepre sented employees and low wage operation while it still retained substantial financial and operational control over the subordinate Regional in its brief also relies heavily on the many factual parallels with Oklahoma City Eastern Express, 281 NLRB 927 (1986), in which the Board refused to find an alter ego relationship, adopted the recommended order of the adminstrative law judge and dismissed the com plaint Such reliance is misplaced Unlike the situation in the case at bar the former employer in Oklahoma City provided notice to the union of its intention to close, the new company hired some of the former company s unit employees there is lack of substantial identity of the nature of their operations less than 30 percent of the former company s top customers were serviced by the new company the two companies lacked substantial identity in management personnel and the new company has paid what appear to have been fair and reasonable charges for leasing a portion of a single terminal out of eight previously operated by the former company utility and other charges and for renting a small percentage of its former rolling stock some of which payments predated the start of litigation There is no indication that the new company was developed to avoid the former company s union contract and, finally, the former company s principal owner and major stockholder exer cises no control nor derives any benefits from the oper ation of the new company These facts illustrate that 26 Regional also comments that the absence of an 8(a)(5) allegation was not an oversight but rather recognized the discussions that took place in June and July 1986 1 do not agree It is far more likely that there is no refusal to bargain alleged because the charges were filed by an individual discriminatee there is a serious question whether the Union demanded real bargaining about the transfers at that time because as the General Counsel is seeking relief against the Union in the form of a finding of a failure to properly represent the employees for a period of time including the summer of 1986 because of a refusal to pursue a contractual claim it would be inconsistent to claim on the Union s behalf a refusal to bargain about the same subject matter REGIONAL IMPORT TRUCKING CO 229 each case raising the alter ego issue must be decided on its own facts based on the totality of evidence Aside from the theory of violation arising from the finding that Respondent was motivated by antiunion animus in its creation of Newport, I also conclude that Respondents discrimination against its union represented employees who were laid off in favor of unrepresented workers while all other employees were retained at their prior salaries was inherently destructive of important em ployee rights and, thus even absent proof of antiunion motivation and assuming arguendo the validity of Nas tro s and Ferrara s business purposes in creating Newport and transferring the assets to it, was violative of Section 8(a)(3) and (1) of the Act See Wintz Motor Freight, 265 NLRB 922 928 (1982), Borg Warner Corp 245 NLRB 513, 519 (1979), enfd 663 F 2d 666, 668 (6th Cir 1981) cert denied 457 U S 1105 (1981) C Newport s Recognition of Local 819 as a Minority Union in Violation of the Act its Similar Conduct in Relations to Local 807 As earlier noted, the collective bargaining agreement in evidence between Newport and Local 819 executed by Scalza and Ferrara was made effective before New port s startup in business The term ran from 1 February 1986 to 31 January 1990 Such a prehire agreement in which Local 819 was recognized as sole collective bar gaining agent for all Newport s drivers warehousemen and helpers constitutes the rendering of assistance by Newport to Local 819 in violation of Section 8(a)(2) and (1) of the Act During the hearing, Newport amended its answer to admit this violation Aside from the foregoing, and as a consequence of my finding that Newport was Regional's alter ego the Respondents bargaining agent in law continued to be Local 807 Thus, no other union, including Local 819, could legitimately represent New ports employees at a time when by virtue of Section 9(a) of the Act Local 807 continued to be the exclusive bargaining representative of the single employer Region al and Newport Newport s grant of recognition to 819 and enforcement of its agreement with that Union vio lates the proscriptions contained in Section 8(a)(2) for this reason as well It is also clear that were I to have dismissed the Gen eral Counsel s alter ego allegation Newport s recognition of Local 807 as exclusive representative of its drivers and platform men and execution and enforcement of a col lective bargaining agreement at a time when the Union had not obtained authorization cards from any of the em ployees and thus represented none of them, would have constituted an independent violation of Newport by Sec tion 8(a)(2) and (1) of the Act and an independent viola tion by Local 807 of Section 8(b)(1)(A) The alternative pleading alleging these violations and any resulting con clusion has been rendered moot by virtue of my earlier finding that Regional and Newport are one and that Local 807 had not ceased representing Respondents em ployees for purposes of collective bargaining and indeed, was party to an enforceable agreement covering them running at least to 30 June 1988 D The Union Violated the Duty it Owed the Regional Employees to Represent Them Fairly Although the facts establishing Newport s recognition of Local 807 and entry of a new agreement may not form the basis for an independent finding of violation for the reason indicated, they are nonetheless germane on the issue involving the Union s alleged breach of its duty of fair representation They should be examined in a set ting which focuses on the Union s ignoring of a series of employee complaints about Regionals use of Newport to remove work and jobs from the existing bargaining unit Mangan personally was made aware of employee con cerns as early as February or thereabouts when he re ceived a letter in bold type from a group describing themselves as members of Regional warning that no later than June 1986 or perhaps sooner Regional will assume a new identity and location and that the new name will in clude Newport and be managed by Andy Ferrara A somewhat more precise and detailed complaint was for warded to Mangan toward the end of February Both mailings urged the Union to take action, failing which the writers would pursue their own relief At the same time Shop Steward Boris was receiving a daily litany of complaints and questions and periodically forwarding them to the Union The Union s short response was to ignore their mem bers grievances Both Union agents who were responsi ble for servicing the Regional employees were never called as witnesses even though Union Agent Lenihan told employee Lampkin in February he would investi gate and Union Agent Grills was dispatched to Regional on at least three separate occasions in February in April to procure authorization cards, and again in May on Sanches' and other employees complaints about their layoffs ,I can only infer from the Union s failure to call them that their testimony would not support the Union s defense Mangan later told Regional employees on their visit to the union office at the end of June when Region al laid off the bulk of its employees and closed its plat form operation that he could do nothing for them even though their jobs were at stake and the future looked grim Joseph Mangan not only denied the Union had any capacity to act on this occasion but more than a month earlier he deliberately misinformed Sanches and other employees when they had been laid off at a time when Newport was servicing their accounts with their trucks that he was totally unaware of the source of their predic ament Warren Mangan s superficial inquiry of Boris in early March was practically of the same order and did not lead, although it should have, to a focused investiga tion of the ties between the two employers It is also noteworthy that as late as 7 November 1986, less than a week before trial W Mangan signed an answer on behalf of Local 807 in which the Union denied knowledge or information sufficient to form the basis for a belief about the allegations contained in para graphs 4 and 5 of the complaint dealing with Newport s status as a disguised continuation and alter ego of Re gional Although Mangan knew about the scheme from at least February 1986 and received continued reports as it 230 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD was implemented over time and its full ramifications of loss of almost all the unit work at Regional finally took hold, his only positive reaction was to rigorously claim jurisdiction over Newport as an independent operation and then proceed to negotiate a sweetheart contract with Ferrara for the new work force Ferrara had hired Mangan s testimonial denial that he ever discussed in April with Ferrara the nature of his operation and its re lationship to Regional defies belief With a new contract under his belt now Mangan had placed the Union in the untenable position of knowingly representing a group of employeees whose interest in continued employment was adverse to the basic duty he had owed to the Regional unit employees for months of pursuing their rights to follow the work to Newport It is significant that the Union was placed in this conflict of interest through its own intentional conduct Clearly, apart from the information which the Regional employ ees provided and which Lenihan and Grilli must have made available to him as a result of their visits to New port, Local 807 was now, since April, administering a contract with access to a workplace at Kearny where evidence of the Regional/Newport deceit was readily at hand Yet, as Boris stated to the employees in expressing his frustration at failing to obtain union movement on the mens' problems, they pee in the same pot Clearly the union inertia was related to its own institutional con cerns, enhancing its longstanding relationship with cer tarn employers and its own finances Only when finally pressed by the mass layoffs of Re gional employees at the end of June did the Union ar range to meet Nastro and Ferrara Still, these confer ences achieved no concrete action by way of grievance lawsuit, self help or otherwise The Union in fact showed its hand through W Mangan s remarks that if the matter became a public dispute the Union would be compelled to take some action The Union permitted the two employer principals to play games at the employees expense with the end result that it ultimately limited its role to arranging midterm concessions for Regional while Newport s operation continued to expand and flourish No other action provides more concrete evi dence of the Union s ethical bind arising from the con flicting duty it now owed to Newport employees not to undermine their job security than its conduct at the 1 July meeting It was not until charges were filed against the Union that it first filed a demand for arbitration of the underly ing dispute That proceeding has now been pursued with rigor but it cannot serve to shield the Union from re sponsibility for its crass and blatant undermining of the rights of the unit employees for whom it acts as fiduci ary The complaint alleges a refusal to accept and process a grievance concerning the creation of Newport and the resultant discharges of named employees in violation of the Act That conduct violates Section 8(b)(1)(A) of the Act only if the Union s refusal breaches its duty of fair representation That duty requires that an exclusive bar gaining representative such as Local 807 serve the inter est of all unit employees fairly and in good faith and without hostile discrimination against any of them on the basis of unfair, arbitrary, irrelevant, or invidious distinc tion Vaca v Sipes 386 US 171 (1967), Miranda Fuel Co, 140 NLRB 181 (1962) The Supreme Court in Vaca v Sipes recognized that a union may not arbitrarily ignore a meritorious grievance or process it in a perfunctory fashion Id at 191 The ignoring of a grievance without explanation or with an explanation that is patently false warrants the conclusion that such inaction was arbitrary and met the Vaca v Sipes test Thus in Griffin v Workers, 469 F 2d 181, 183 (4th Cir 1972) the late Judge Sobeloff writing for the court described the union s duty not to be arbitrary as follows A Union may refuse to process a grievance or handle the grievance in a particular manner for a multitude of reasons, but it may not do so without reason, merely at the whim of someone exercising union authority This language and the standard it embodies was quoted with approval by the Board Teamsters Local 315 (Rhodes & Jamieson), 217 NLRB 616 at 617-618 (1975) The Board also noted in this case that [a]t least as to rights under an existing agreement the duty of fair rep resentation is more than an absence of bad faith or hos tile motivation Id at 617 The Board noted further that Judge Sobeloff's reasoning was equally applicable to the administration of a collective bargaining agreement out side the grievance precedure The Board also noted that duty although phrased in negative terms is to some extent an affirmative one because arbitrariness connotes the absence of some ingredient in the decision making process Here the Union not only refused to act or re spond to the Regional employees and then professed that any action would be futile it acted affirmatively to un dercut their interests It did so when confronted with Newport s union shopping By dealing from the top with one of the two principal actors in the scheme to de fraud, thereby obtaining recognition dues and inferior terms at their expense it knowingly deprived the Re gional employees of the unfettered obligation to repre sent solely their rights to continued employment I do not adopt the General Counsels conspiracy theory particularly because it has not been alleged or litigated It is enough to conclude as I do that the Union acted arbitrarily and in bad faith to the Regional employ ees and by its conduct toward them at least during the period alleged in the complaint it breached its duty of fair representation and thereby violated Section 8(b)(1)(A) of the Act In a case of this nature where the employer as well as the union have been charged and been found guilty of unfair labor practices related to a breach of the duty of fair representation by the union and the Board thus may impose an order against the employer to reinstate and make whole the affected employees the union will have joint and several liability imposed against it for any loss of earnings resulting from their discrimination Pacific Coast Utilities Services, 238 NLRB 599 fn 4 (1978) New port News Shipbuilding & Dry Dock Co, 236 NLRB 1470 (1978), King Soopers 222 NLRB 1011 (1976) REGIONAL IMPORT TRUCKING CO E The Proceeding Should Not be Deferred to the Grievance Arbitration Procedure There are a number of reasons why deferral to the parties dispute resolution procedures is not appropriate In United Technologies Corp 268 NLRB 557 (1984) the Board resurrected its Collyer doctrine first enunicated in Collyer Insultated Wire, 192 NLRB 837 (1971) over ruled General American Transportation Corp 228 NLRB 808 (1977) and agreed to defer cases alleging violations of Sections 8(a)(1) and (3) and 8(b)(1)(A) and (2) to give the parties our dispute resolution machinery a chance to succeed In doing so, however, it also agreed to be guided by the principles set forth in the dissent of Mem bers Penello and Walther in General American Transpor tation , supra at 817 Those principles embody the notion that deferral is only appropriate where there exists a rea sonable belief that arbitration procedures would resolve the dispute in a manner consistent with the criteria of Spielberg Mfg Co, 112 NLRB 1080 (1955) Thus, the Board would still refuse to defer where the interests of the union which might be expected to represent the em ployees filing the unfair labor practice charge are ad verse to those of the employee, or where the respond ent s conduct constitutes a rejection of the principles of collective bargaining And where after deferral, the re spondent has refused to proceed to arbitration the Board has rescinded the deferral and decided the case on the merits United Technologies Corp supra at 560 Each of these stated reasons for refusing to defer are present in this case Here, the Union s interests are ad verse to the Regional employees because of the conflict it faces in representing the Newport employees at the same time it seeks to replace them with the Regional unit workers A further aspect of this conflict is its alignment with the interest of Ferrara and Newport against that of the Regional work force arising from its active role in seeking a contract with Newport at a time when it owed an exclusive duty to the Regional unit members in pre serving their jobs at the expense of Newport and Region al Under these circumstances the interests of the ag grieved employees are in apparent conflict with the in terests of the parties to the contract See Plumbers Local 392 (Kaiser Engineers) 252 NLRB 417 fn 1 (1980) see also Fleet Carrier Corp 201 NLRB 227 (1973) Further more Respondent has demonstrated a rejection of the collective bargaining principle by creating Newport in order to avoid continued collective bargaining with Local 807 and by discharging a substantial group of its employees without notice to Local 807 of the transfer of work to its subordinate or the resulting layoffs of the em ployees and by continuing to maintain in July 1986 and thereafter that Newport was independent and it would not assign any accounts to Ferrara Respondent has con tinued to maintain this posture in the proceeding to compel arbitration by moving to dismiss on the basis of Newport s inclusion in the case asserting it is not a party to the contract Finally Respondent has never taken an unequivocal position that deferral is appropriate Its posi tion has repeatedly changed and, most recently it has opposed arbitration so long as the complaint proceeding remains unresolved and the General Counsel continues to assert Local 807's inability to fairly represent the 231 grievants Such equivocation hardly evinces an interest in resolving the dispute expeditiously under the parties own procedures See Western Exterminator Co 223 NLRB 1270, 1283 and cases cited at fn 28 (1976) As is evident from the foregoing the criteria used to determine whether deferral is appropriate are applied without regard to whether there is an 8(b)(1)(A) charge against the Union or whether there has been a finding of 8(b)(1)(A) conduct See, e g Anaconda Wire & Cable Co 201 NLRB 839 (1973), and Fleet Carrier Corp, supra In this case, the Union s conduct, which forms the basis for finding it in violation of Section 8(b)(1)(A) is germane to its capacity to fairly represent the grievants Deferral is inappropriate for other reasons as well Until early in the hearing there had been no agreement between the parties regarding the form or procedures for arbitrating the dispute Even after Regionals stipulation to the use of the New York State Mediation Board, some questions still remain regarding the scope of the submis sion agreement and whether all aspects of the dispute are encompassed by the arbitration agreement Regional s opposition to the inclusion of Newport as a party to the agreement illustrates that such problems remain unre solved The Charging Party asserts that the issues in this case are not suited for arbitration I have previously described and discussed the substantive provisions of the Master Freight Agreement which appear to be relevant and Re gional has referred to at least one other Yet, some ques tion does remain whether the current Master Freight Agreement is the agreement underlying the parties memorandum agreement So long as that matter has not been laid to rest there is not reasonable assurance that the full ramification of the dispute will be disposed of by the parties There is also some question whether even the substantive provisions cited may fully encompass a situa tion involving Regionals rejection of collective bargain ing through the devise of creating an alter ego See 0 Voorhees Painting Co, 275 NLRB 779 fn 2 (1985) Finally as the unfair labor practice proceeding alleges unlawful recognition and assistance on the part both Newport and Local 807 which are clearly interrelated with the alter ago allegation, to the extent these issues are not suitable for deferral under United Technologies the dispute cannot be resolved in full by arbitration and on that ground alone deferral is unwarranted See George Koch & Sons 199 NLRB 166, 168 (1972) I therefore conclude that under all these circum stances this consolidated proceeding is inappropriate for deferral to arbitration CONCLUSIONS OF LAW 1 The Respondents Regional Import and Export Trucking Co Inc, Regional Distribution & Warehous Ing Service Inc, and Newport Transportation Co Inc (Respondent Regional) are an employer engaged in com merce within the meaning of Section 2(2), (6) and (7) of the Act 2 The Respondent Truck Drivers Local Union No 807 and Local No 819, a/w International Brotherhood of Teamsters, Chauffeurs Warehousemen and Helpers of 232 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 20 America, AFL-CIO are labor organizations within the meaning of Section 2(5) of the Act 3 On or about 7 February 1986, Respondent Newport Transportation Co was established by Respondent Re gional Import and Export Trucking Co, Inc and Distri bution & Warehousing Service, Inc as a subordinate in strument and its disguised continuation 4 The Respondent Newport Transportation Co, Inc, for the purposes of this proceeding is the alter ego of Respondents Regional Import and Export Trucking Co Inc and Regional Distribution & Warehousing Service Inc 5 At all times material , Respondent Local 807 has been and is now, the exclusive collective bargaining rep resentative of all local cartage drivers In lo operators and platform employees employed by Respondents Re gional Import and Export Regional Distribution & War ehousing and Newport Transportation at its Jersey City Kearny and North Arlington facilities within the mean ing of Section 9(a) of the Act 6 At all times material Respondents Local 807 and Respondent Regional have maintained in effect a collec tive bargaining agreement covering wages hours and other terms and conditions of employment of the em ployees of Respondent Regional in the unit described in paragraph 5, above and containing inter alia a griev ance and arbitration procedure 7 By discriminatorily discharging its local cartage drivers, In lo operators and platform employees em ployed by Respondent Regional Import and Export and Regional Distribution & Warehousing at its Jersey City facility during the period February to July 1986 and thereafter failing and refusing to reinstate them in order to avoid its collective bargaining obligations Respondent Regional has engaged in, and is engaging in unfair labor practices within the meaning of Section 8(a)(3) and (1) of the Act 8 By granting recognition to Local 819 as the exclu sive bargaining representative of its drivers warehouse men and helpers employed at its Kearny New Jersey fa cility on or about 1 February 1986 and by entering into and maintaining and enforcing a collective bargaining agreement covering wages hours of employment and other terms and conditions of employment of the afore said employees during a period between February and April 1986 despite the fact that at the time Local 819 did not represent a majority of the aforesaid employees Respondent Newport Transportation gave assistance to Local 819 and has thereby engaged in and is engaging in, unfair labor practices within the meaning of Section 8(a)(1) and (2) of the Act 9 By refusing between February and September 1986 to accept and process a grievance concerning the cre ation of Respondent Newport Transportation and its re sultant consequences, including the discharge of the em ployees as described in paragraph 7 above which its employees in the unit described in paragraph 5 above attempted to file under the provisions of the agreement described in paragraph 6 above thereby arbitrarily ig noring the grievance in breach of its duty to represent the unit employees fairly and in good faith, Respondent Local 807 has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(b)(1)(A) of the Act 10 By virtue of the conclusions of law described in paragraphs 3 4, 5 and 6 above, Respondent Newport Transportation did not engage in any unfair labor prac tice within the meaning of Section 8(a)(1) and (2) and Respondent Local 807 did not engage in any unfair labor practice within the meaning of Section 8(b)(1)(A) by the conduct of Respondent Newport Transportation in having granted recognition to Respondent Local 807 as the exclusive bargaining representative of its drivers, warehousemen and helpers in April 1986 and by Re spondent Newport Transportation and Respondent Local 807 having entered into, and since said date having maintained and enforced a collective bargaining agree ment covering wages hours of employment, and other terms and conditions of employment of the said employ ees THE REMEDY Having found that Respondents have engaged in cer tam unfair labor practices I shall recommend that Re spondents be ordered to cease and desist therefrom and to take certain affirmative action designed to effectuate the purposes of the Act With respect to Respondent Regionals unlawful dis charge of employees in violation of Section 8(a)(3) and (1) of the Act the complaint alleges, and I conclude based on the record evidence that employees so dis charged are listed on Appendix A attached However, there appear names of other employees in the records of Respondent Regional who may have also been discrimin atorily discharged in the relevant period 27 When as here there is discrimination against a class of employees the General Counsel need not name each of them at the unfair labor practice hearing stage of the proceeding See Woodline Motor Freight cited supra, and cases cited at footnote 6 If necessary their identity may be resolved at the compliance stage I shall therefore include as discri minatees in addition to those named in Appendix A all other employees of Respondent Regional similarly situat ed Because as the discriminatees are entitled to reinstate ment to jobs which are now or may be held by New port employees hired since 7 February 1986 by the alter ego I shall include language making clear their priority to unit jobs of Respondent Regional ahead of the em ployees hired by the alter ego since its creation See, e g La Famosa Foods 282 NLRB 316 (1986) for the analo gous treatment of unfair labor practice strikers Accord ingly I shall recommend that Respondent Regional be ordered to offer the employees listed on Appendix A and all other employees who were similarly situated immedi ate and full reinstatement to their former jobs or, if those jobs no longer exist to substantially equivalent positions without prejudice to their seniority or other rights and privileges discharging if necessary any employees hired 21 These names include Nelson Morales a driver whose last week of work for Regional D & W ended 28 June 1986 and Weldon J Weaver a driver whose last week of work for Regional I & E ended 14 June 1986 REGIONAL IMPORT TRUCKING CO by Respondent Newport Transportation on and after 7 February 1986 I have also found that Respondent Local 807 violated Section 8(b)(1)(A) of the Act by refusing to accept and process a grievance concerning the creation of Respond ent Newport Transportation and the discharges resulting therefrom Because I have found that Respondent Re gional discharged the employees named in Appendix A and all other employees similarly situated in violation of Section 8(a)(3) and (1) of the Act and that Respondent Local 807 s failure to represent them fairly and in good faith was a contributing factor on their loss of pay result ing from their discharges, I shall recommend that Re spondent Regional and Local 807 jointly and severally, make the said employees whole for any loss of pay they may have suffered as a result of their unlawful dis charges, by payment of sums equal to what they normal ly would have earned from the dates of their discrimina tory discharges to the date Respondent Regional offers them reinstatement less their net earnings if any , during that period, with interest as computed in New Horizons for the Retarded, 283 NLRB 1173 (1987) 28 In his brief, the General Counsel seeks a joint and sev eral make whole remedies for the Newport employees who were victims of the unlawful contract arrangement Newport entered with Local 819 and then were subject to the low wage agreement between Newport and Local 807 I reject such a remedy The General Counsel does not allege these employees as discriminatees in the com plaint In contrast, he identifies, by name the many Re gional employees who were the victims of the Regional Newport alter ego scheme and alleges their discharges as violations of the Act The General Counsel never moved to amend the complaint to allege them as discriminatees or as proper recipients of a make whole remedy Thus Respondents were never placed on notice that this matter would be litigated If anything, at least for the period of time from April 1986 through the close of hearing that Local 807 has represented the Newport em ployees, because the General Cousnel has taken the con sistent position, and rightly so that the allegations of vio lation arising from the Newport Local 807 contract ar rangement were included in the complaint only as an al ternative to the alleged violations flowing from New port s creation as alter ego Respondents could reason ably conclude that any remedies related to that transac tion would fall if the violations alleged were dismissed because found to be inconsistent with the General Coun sel s main allegation that Newport and Regional were a single employer as has been now determined It is also problematical that the wages and benefits of the New port employees are any less than they would have been absent Local 819 and Local 807 involvement Further more, because Respondents under the remedy I recom mend shall be required to make whole the Regional em ployees for the same period encompassed by the New port employees employment, any additional remedy for 28 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) 233 the Newport employees would be punitive in nature be cause it may very well result in duplicative wage and benefit payments As this matter was not fairly or fully litigated, the General Counsels request for such a remedy is denied The General Counsel also requests that the order in dude a visitatorial clause authorizing the Board, for compliance purpose, to obtain discovery from the Re spondents under the Federal Rules of Civil Procedure under the supervision of the United States courts of ap peals enforcing the order I conclude that such a clause is not warranted under the circumstances of this case and I recommend that the Board deny this relief See Chero kee Marine 287 NLRB 1082 (1988) Continental Radiator Corp, 283 NLRB 234 fn 2 (1987) However, because Respondent Regional has engaged in unfair labor prac tices of a sufficiently egregious nature as to demonstrate a disregard for its employees fundamental statutory rights I shall recommend that the Board approve a broad form of order requiring it to cease and desist in any other manner infringing on the rights guaranteed to its employees 35 by Section 7 of the Act See American Pacific supra at 1227, see also Hickmott Foods 242 NLRB 1357 (1979) On these findings of fact and conclusions of law and on the entire record I issue the following recommend ed29 ORDER A The Respondent Regional Import and Export Trucking Co Inc Regional Distribution & Warehous mg Service, Inc, Newport Transportation Co, Inc, its officers successors and assigns shall 1 Cease and desist from (a) Discharging or otherwise discriminating against employees with respect to their hire or tenure of em ployment or any term or condition of employment in order to avoid its collective bargaining obligations and because of their union activities or other exercise of their rights under the National Labor Relations Act (b) Recognizing or contracting with Local 819 a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America AFL-CIO as the bargaining representative of its drivers warehouse men and helpers employed at its Kearny New Jersey fa cility for purposes of collective bargaining unless and until said labor organization has been certified by the National Labor Relations Board as the exclusive bargain ing representative of such employees (c) 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 the employees named in Appendix A and all other employees who were similarly situated immedi 29 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 put poses 234 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD ate and full reinstatement to their former positions or, if not available to substantially equivalent positions, with out prejudice to any seniority or other rights and privi leges previously enjoyed by them, dismissing, if neces sary, any persons hired by Respondent Newport Trans portation Co, Inc, on and after 7 February 1986, and jointly and severally with the Respondent Union, make them whole for any loss of earnings they may have suf fered as a result of their unlawful discharges in the manner set forth in the remedy section of this decision (b) 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 (c) Post at its facilities at Kearny and North Arlington New Jersey, copies of the attached notices marked Ap pendix B and Appendix C 30 Copies of the notice, on forms provided by the Regional Director for Region 22, after being signed by the Respondents authorized repre sentative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered defaced, or covered by any other maters al (d) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re spondent has taken to comply B Respondent Truck Drivers Local Union No 807, a/w International Brotherhood of Teamsters Chauffeurs, Warehousemen and Helpers of America, AFL-CIO, its officers, agents, and representatives, shall 1 Cease and desist from failing and refusing to fairly represent the employees described in paragraph 1, above or any other employees, by arbitrarily and not in good faith refusing to accept and process their grievances 2 Take the following affirmative action necessary to effectuate the policies of the Act (a) Jointly and severally with the Respondent Employ er make whole the employees named in Appendix A and all other employees who were similarly situated for any losses of earnings they may have suffered as a result of their unlawful discharges in the manner set forth in the remedy section of this decision (b) Post at its business office meeting halls, or other places where it customarily posts notices copies of the attached notice marked Appendix C 31 Copies of said notices on forms provided by the Regional Director Region 22 after being signed by Respondent Union s au thorized representative be posted by Respondent Union immediately upon receipt and maintained for 60 consecu tive days Additional copies of said Appendix C shall be signed by an authorized representative of Respondent Union and furnished to the said Regional Director for transmission to Respondent Employer for posting by Re spondent Employer in accordance with the Order direct ed to Respondent Employer above (c) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re spondent has taken to comply IT IS FURTHER ORDERED that the portions of the con solidated complaint alleging that Respondent Newport Transportation has violated Section 8(a)(1) and (2) of the Act by rendering unlawful assistance and support to Re spondent Local 807 and that Respondent Local 807 has violated Section 8(b)(1)(A) of the Act by receiving rec ognition as exclusive bargaining representative of Re spondent Newport Transportations drivers and ware house employees and entered into maintained, and en forced a collective bargaining agreement covering the said employees at a time when it did not represent a ma jority of them are dismissed APPENDIX A Terminated Employees J Berry M Litvmoff J Boville M Rasool T Brocktus M Riley R L Brown F Rizzo R Brown R J Rizzo S Cohen F Sanches J Contreras L Serafin V Cook D Squicciarino R DeMaise G Stone P Galileo S Van Dyke R Grady J Villaro W Gonzalez C Walker J Gorczyca W Warmbeier C Lampkin APPENDIX B NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government 30 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 31 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 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 discharge or otherwise discriminate against employees with respect to their hire or tenure of employment in order to avoid our collective bargaining obligations and because of their union activities or other exercise of their rights under the act REGIONAL IMPORT TRUCKING CO WE WILL NOT recognize or contract with Local 819, a/w International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO as the bargaining representative of our drivers, warehouse men, and helpers employed at our Kearny, New Jersey facility for purposes of collective bargaining, unless and until the said labor organization has been certified by the National Labor Relations Board as the exclusive bargain ing representative of such employees 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 NOT in any other manner interfere with, re strain, or coerce our employees in the exercise of their rights under Section 7 of the Act WE WILL offer the employees named in Appendix A and all other employees who were similarly situtated im 235 mediate and full reinstatement to their former positions, or, if not available to substantially equivalent positions, without prejudice to any seniority or other rights and privileges previously enjoyed by them dismissing, if nec essary, any persons hired by Respondent Newport Trans portation Co, Inc on and after 7 February 1986, and, jointly and severally with the Respondent Union, make them whole for any loss of earnings they may have suf fered by reason of their unalwful discharges, with inter est REGIONAL IMPORT AND EXPORT TRUCK ING CO INC REGIONAL DISTRIBUTION & WAREHOUSING SERVICE, INC NEWPORT TRANSPORTATION CO, INC