Knappton Maritime Corp.

236 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Knappton Maritime Corporation and Inlandboat- men's Union of the Pacific, Marine Division, International Longshoremen's and Warehouse men's Union Case 19-CA-19090 December 30, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT AND HIGGINS On a charge filed by the Inlandboatmen's Union of the Pacific, Marine Division, International Longshoremen's and Warehousemen's Union (the Union) on April 28, 1987,1 the General Counsel of the National Labor Relations Board, by the Re gional Director for Region 19, issued a complaint on June 11, against the Respondent, Knappton Maritime Corporation, alleging that it violated Sec tion 8(a)(5) and (1) of the National Labor Relations Act 2 The Respondent filed a timely answer admit ting in part and denying in part the allegations of the complaint On April 14, 1988, the Respondent, the Union, and counsel for the General Counsel filed with the Board a stipulation for transfer and of facts, with attachments The parties agreed that the stipulation of facts with attachments constitutes the entire record in this case The parties waived a hearing and the issuance of a decision by an administrative law judge and stated their desire to submit the case directly to the Board for findings of fact, conclu- sions of law, and a decision and order On July 15, 1988, the Board issued an order granting the motion, approving the stipulation, and transferring the proceeding to the Board Thereafter, the Gen eral Counsel and the Respondent filed briefs The National Labor Relations Board has delegat ed its authority in this proceeding to a three member panel i All dates are 1987 unless otherwise noted 2 On July 28 the Union filed a second charge against the Respondent (Case 19-CA-19267) alleging that the Respondent had illegally subcon tracted unit work to two other companies Washington Marine Services and Sea Coast Towing who were alter egos of the Respondent On Sep tember 4 1987 the Regional Director after conducting an investigation dismissed the portion of Case 19-CA-19267 which dealt with the alter ego allegation finding no evidence of alter ego status with regard to either Washington Marine or Sea Coast Towing On September 9 the Union informed the Regional Director that it had previously withdrawn the alter ego allegation The Regional Director accepted the withdrawal and revoked the dismissal On September 16 the Regional Director issued an order consolidating cases and a consolidated complaint and notice of hearing for the present case and the remaining subcontracting allegation of Case 19-CA-19267 The Respondent filed an answer to the consolidated complaint On October 14 the Regional Director finding that there was no evidence of an unlawful subcontract issued an order severing case withdrawing complaint and notice of hearing and dismiss mg charge in Case 19-CA-19267 On May 2 1988 the Union refiled its alter ego allegation against Washington Marine (Case 19-CA-19782) The Regional Director also dismissed this charge for lack of evidence On the entire record in this proceeding, the Board makes the following FINDINGS OF FACT I JURISDICTION Knappton Maritime Corporation, a Washington corporation, has, at all times material, engaged in the business of providing tug and barge transporta- tion along the Pacific Coast and North America, with an office and place of business in Seattle, Washington During the 12 months preceding the issuance of the complaint, the Respondent had gross sales of goods and services valued in excess of $500,000 During the same period, the Respond- ent sold and shipped goods or provided services from its facilities within the State of Washington, to customers outside the State of Washington, or sold and shipped goods or provided services to customers within the State of Washington, which customers were themselves engaged in interstate commerce by other than indirect means, of a total value in excess of $50,000 Also, during the same period, the Respondent purchased and caused to be transferred and delivered to its facilities within the State of Washington goods and materials valued in excess of $50,000 directly from sources outside the State or from suppliers within the State which, in turn, obtained goods and materials from sources outside the State Accordingly, in agreement with the stipulation of the parties, we find that the Re- spondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act and that the Union is a labor organization within the meaning of Section 2(5) of the Act II THE ALLEGED UNFAIR LABOR PRACTICES A The Facts Since at least February 1, 1981, the Union has been the exclusive collective-bargaining representa- tive for the unit of the Respondent's Seattle em- ployees3 and has been recognized as such by the Respondent Recognition has been embodied in successive collective-bargaining agreements, the most recent of which was effective from February s The following unit of the Respondent s employees constitutes an ap propriate unit for the purpose of collective bargaining within the meaning of Sec 9(b) of the Act All employees employed by the Respondent out of its Seattle Wash ington facility who fall within the job classifications set out in the last collective bargaining agreement in effect between the parties which was effective by its terms for the period from February 1 1984 to January 31 1987 and which had been extended by the mutual agreement of the parties until August 6 1987 but excluding all office clerical employees guards and supervisors as defined in the Act 292 NLRB No 34 KNAPPTON MARITIME CORP 237 1, 1984, to January 31, 1987, and was extended by agreement until August 6, 1987 4 On or about February 28, the Respondent dis- continued the part of its business which involved the transportation of clean petroleum products by the leased barge Pacific and entered into a sales agreement with Washington Marine Services, Inc (WMSI) covering the goodwill and going concern value of the discontinued business Lee Freeman, an ex-manager of the Respondent who was respon sible for the discontinued work, became the prince pal manager for WMSI and hired some employees who had worked for the Respondent The sale occurred without the Respondent pro- viding the Union with an opportunity to negotiate and bargain, and without reaching an agreement 5 The Union, after being informed of the sale, did not accept the Respondent's verbal assertions that the work in question was being sold to a bona fide purchaser The Union's position was that the work was discontinued in violation of rule 9 of the col lective bargaining agreement by subcontracting it out or that WMSI was an illegal alter ego of the Respondent and that the work was still bargaining unit work being performed by WMSI in violation of Section 8(a)(5) and (1) of the Act 6 In March 1987, the parties began negotiations for a successor agreement On March 23, Respondent's manager, Bruce A Reed Jr,8 informed the Union that there would be no need for a Tankermen Supplement to the Master Agreement since the Respondent would no longer be performing work with the barge, Pacific The Pacific work amounted to approximately 80 percent of the work covered by the Tankermen Supplement Agreement The Union's representa 4 This agreement contained the following clause as rule 9 of the Master Agreement The Employer agrees that it will discuss with the Union and reach agreement on any plan for subcontracting towing work normally performed by its vessels provided however this rule shall not apply to a subcontract with an employer who entered into or is complying with a collective bargaining agreement with the Union 5 WMSI was not a party to the collective bargaining agreement nor did it comply with or enter into a collective bargaining agreement with the Union 6 Prior to September 1986 the Respondent had leased the tug Washing ton to Sea Coast Towing Inc (Sea Coast) a newly formed corporation which operated the tug on a nonunion basis On September 26 1986 an arbitrator ruled that the Respondent had violated the collective bargain mg agreement when it did not hire union members covered by the con tract to operate the tug and did not apply the terms of the contract to the employees operating the tug The arbitrator found that Sea Coast was a related entity controlled by the Respondent and a part of the Respond ent s corporate structure Following the arbitrators decision the Re spondent sold its interest in Sea Coast I This included both a new Master Agreement and accompanying sup plements The Tankermen Supplement covered the discontinued work in question 8 The parties stipulated that Reed Jr is an agent of the Respondent within the meaning of Sec 2(13) the Act and a supervisor within the meaning of Sec 2(l1) of the Act tive, James Eversol, then asked to see a copy of the sales agreement between the Respondent and WMSI concerning the discontinued work The Union requested the sales agreement in order to de termine if the Respondent had subcontracted the work in violation of rule 9 of the contract, if the work was transferred to an illegal alter ego in vio- lation of Section 8(a)(5) and (1) of the Act, if it should file a grievance under the existing contract, and what its position should be in the current nego tiations concerning the Respondent's positions of fecting the tankermen Reed, Jr refused Eversol's request, stating that the Respondent had no obliga Lion to provide a copy to the Union After some discussion both Reed, Jr and Union Field Repre- sentative Perryman agreed that there was still a need to have a Tankermen Supplement to cover the remaining 20 percent of the tankermen work that was still being performed by the Respondent 9 The Union repeated its request for the sales agree ment either orally or in writing, on April 10 and 29, and on May 28 The Respondent refused to provide the information During the period of the Union's requests for the sales agreement, negotiations continued, but the parties could not reach agreement on either a new master or supplemental contract At midnight Thanksgiving Day, the Respondent implemented its last and final offer 10 On June 10, in an attempt to reach a non Board settlement of this case, Union Representative Per- ryman visited the Respondent's Seattle office He was provided with the original sales agreement, which consisted of about eight pages, and was in formed that he could have an excised copy of the agreement Perryman asked for the excised copy so he could compare it with the original Reed Jr re jected his request Perryman then asked Reed to point out the parts that were being excised as he reviewed the original contract Reed, Jr again re faked to do so After Perryman reviewed the origi- nal for about 20 minutes, Reed, Jr took away the original from Perryman and gave him the excised copy Perryman asked for the original back so he could compare the two to see what was excised I1 Reed, Jr again refused Perryman's request Perry- man told Reed, Jr that this was not acceptable and 9 After the sale of the business Respondent employed one full time and two part time tankermen Before the sale it had employed five full time tankermen and one part time tankerman 10 The Respondent had proposed to eliminate the guaranteed work week for the tankermen which amounted to 30 days of work for each 2 calendar months under the then existing contract and had substituted a provision that tankermen would be paid for days actually worked ii The provisions concerning the moneys paid and clause concerning the method of payment and other related provisions were excised from the original This amounted to about 20 percent of the original document 238 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD that he would inform the NLRB of what had hap- pened Reed, Jr then took back the excised copy from Perryman Sometime later, the Respondent's attorney, after having been informed by the Regional Office of what had taken place, offered to allow Perryman to see the original and excised copy together and to keep an excised copy Perryman stated that the Union wanted its attorney to review the documents as the attorney had the legal knowledge to deter mine if a subcontract or a bona fide sale had oc curred The Respondent rejected this request B Contentions of the Parties The General Counsel contends that the informa tion sought by the Union is presumptively relevant because it concerns terms and conditions of em ployment of the bargaining unit employees, and that the Respondent is therefore required to produce it In this regard, the General Counsel argues that contents of the sales agreement concern terms and conditions of employment of the tanker men (the bargaining unit employees) because the sale and discontinuance of the work performed with the leased barge Pacific resulted in a drastic reduction of the number of tankermen employed by the Respondent The General Counsel further argues that the in- formation was, at a minimum, relevant and neces sary for the Union to carry out its statutory duties The then existing contract had a provision requir ing the Respondent to discuss and reach agreement with the Union on any plan for subcontracting unit work to an employer like WMSI It was necessary for the Union to see the sales agreement in order to determine if there was a bona fide sale or a subcon- tracting of work in violation of rule 9 of the Master Agreement The Union also had bona fide concerns as to whether the sale was made to an it legal alter ego, based on the Respondent's earlier conduct involving Sea Coast and the fact that Re- spondent's ex-manager, Lee Freeman, was now the principal manager of WMSI Finally, the General Counsel contends that the Respondent's June 10 disclosure of the sales agree- ment to Union Representative Perryman does not negate the violation Perryman's request that the Union's attorney be allowed to see the unexcised agreement is analogous to a request to have an auditor review an employer's financial records be cause of their complexity Furthermore, assuming arguendo that the June 10 disclosure satisfied the Union's request, such belated compliance did not cure the earlier violation The Respondent argues that it had no duty to bargain over the decision to discontinue and sell part of its business and thus it had no duty to pro vide information concerning the sale The Respondent further argues that the Union is not entitled to the sales agreement merely to allow it to more effectively represent its members Thus, the Respondent asserts that cases in which the Board has required the employer to provide a sales agreement are inapposite here Cases such as Wash ington Star Co, 273 NLRB 391 (1984), and St Mary's Foundry Co, 284 NLRB 221 (1987), in- volved collective-bargaining agreements containing "job guarantee" provisions, or "successor and as signs' clauses, which are not present here Nor, as- serts the Respondent, has it by its conduct made the terms of the sales agreement relevant as did the employer in RBH Dispersions, 286 NLRB 1185 (1987) The Respondent also argues that the Union is not entitled to the sales agreement in order to de termine whether there is a violation of the subcon- tracting provision in rule 9 of the collective bar- gaining agreement because that provision violates Section 8(e) of the Act and therefore cannot form a legitimate basis for a request for information Finally, the Respondent argues that the reasons given by the Union for requiring the information have been rendered moot because the charges filed by the Union regarding subcontracting and alter ego have been dismissed as having no basis in fact C Discussion For the reasons set forth below, we find that the Respondent violated Section 8(a)(5) and (1) of the Act by refusing to provide the Union with the sales agreement It is well settled that an employer has a statutory obligation to provide, on request, relevant informa tion the union needs for the proper performance of its duties as a collective-bargaining representative NLRB v Truitt Mfg Co, 351 U S 149, 152 (1956), NLRB v Acme Industrial Co, 385 US 432, 435- 436 (1967), Detroit Edison Co v NLRB, 440 U S 301 (1979) Where the union's request is for information per- taining to employees in the bargaining unit which goes to the core of the employer employee rela tionship, that information is presumptively relevant However, where a union has requested information with respect to matters occurring outside the bar- gaining unit, the burden is on the union to demon strate that the information is relevant Pfizer Inc, 268 NLRB 916 (1984), enfd 736 F 2d 887 (7th Cir 1985), Ohio Power Co, 216 NLRB 987 (1975), enfd mem 531 F 2d 1381 (6th Cir 1976) In either situa tion, the standard for relevancy is the same "a lib KNAPPTON MARITIME CORP eral discovery type standard " Acme Industrial, 385 US at 437 The Board has held that where, as here, the re- quested information concerns the existence of an alter ego operation, it is not presumptively relevant and the Union has the burden of establishing its rel evancy Proctor Mechanical Corp, 279 NLRB 201 (1986), Pence Construction Co, 281 NLRB 322 (1986) To satisfy this burden, the Union "must show that it had a reasonable belief that enough facts existed to give rise to a reasonable belief that the two companies were in legal contemplation a single employer " Walter N Yoder & Sons Inc v NLRB, 754 F 2d 531, 536 (4th Cir 1985), enfg 270 NLRB 652 (1984) For the reasons stated below we find that the Union has established a reasonable basis for requesting the sales agreement and that the information in the agreement is relevant to the Union's determination of whether to file a griev ance or take other action to assure the contractual rights of the employees It is well settled that two nominally separate business entities may be regarded as the same em ployer if one is the alter ego or "disguised continu- ance" of the other Southport Petroleum Co v NLRB, 315 U S 100, 106 (1942) The test for de- termining whether two companies should be treat- ed as one includes such factors as interrelation of business operations, common management, and common ownership Leslie Oldsmobile, 276 NLRB 1314, 1315-1317 (1985) If an alter ego relationship exists, a collective bargaining agreement signed by one entity will bind its nonsignatory alter ego Walter N Yoder & Sons, 270 NLRB 652 fn 2 (1984) Information concerning the existence of an alter ego may, therefore, be relevant and useful to the union in negotiating terms and conditions of employment with the employer or administering and enforcing the collective-bargaining agreement To establish the relevancy of such information, the union must, as stated above, show that it had a rea sonable belief that enough facts existed to give rise to a reasonable belief that one entity was the alter ego of another In this case, the Union asked to see the complete sales agreement between the Respondent and WMSI The information contained in the agree- ment could give some indication of common own- ership, financial control, common management, or interrelation of business operation between the two companies It, therefore, is a request for informa tion concerning a possible alter ego relationship The Union had objective facts to support its belief that WMSI may have been an alter ego and that WMSI's transportation of clean petroleum products was unit work which was covered by the collec- 239 tive-bargaining agreement between the Respondent and the Union Six months prior to the start of ne gotiations, an arbitrator had ruled that the Re- spondent had violated the same contract at issue here by leasing a tug to a newly formed corpora tion which operated the tug on a nonunion basis The arbitrator found that the newly formed corpo ration was controlled by the Respondent and that the Respondent therefore violated the collective- bargaining agreement by not applying the agree- ment to the employees operating the tug This recent incident formed a reasonable basis for the Union to scrutinize other efforts by the Respondent to divest itself of unit work such as the alleged sale to WMSI That the manager of WMSI was the former manager of the Respondent's barge division and had hired some of the Respondent's former barge employees provided additional objective grounds for the Union to reasonably believe that the Respondent's involvement with WMSI might be unlawful and in violation of the collective-bar gaining agreement In these circumstances, we find that the Union has established the relevancy of the sales agreement between the Respondent and WMSI and that the Respondent violated Section 8(a)(5) and (1) of the Act by refusing to provide the agreement 12 The dismissal of unfair labor practice charges al- leging WMSI as an alter ego of the Respondent does not require a different result The Regional Director's action went to the merits of the charges, i e, whether there was sufficient evidence to estab- lish that the Respondent violated the Act by trans- ferring unit work to a nonunion entity which was an alter ego In cases involving information re quests, however, the Board does not consider the merits of a union's claims Instead, the Board acts only on "the probability that the desired informa- tion was relevant, and that it would be of use to the union in carrying out its statutory duties and responsibilities' Acme Industrial Co, 385 U S at 437 Finally, we find that the Respondent, in allowing the Union to keep an excised copy of the requested agreement but prohibiting its attorney from seeing the original, has not sufficiently met its obligation to provide information When a union has met the standards of relevancy in requesting the production of financial records, its right to review such records has long been recognized NLRB v Truitt i 2 Inasmuch as the Union has established the relevancy of the request ed information to a determination of whether WMSI was an alter ego of Knappton we find it unnecessary to decide whether the Union would have been entitled to the information had its request been based solely on a belief that the Respondent violated rule 9 of the collective bargaining agreement which limits subcontracting 240 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Mfg Co , 351 U S 149 ( 1956), Metlox Mfg Co , 153 NLRB 1388 , 1394-1396 ( 1965), enfd 378 F 2d 728 (9th Cir 1967), cert denied 389 U S 1037 ( 1968) 13 Here, we find the Union had a similar right to have its attorney review the original sales agree- ment Some 20 percent of the agreement was ex cised from the copy offered by the Respondent The excised provisions included moneys paid and method of payment-both matters of significance in determining whether an arm's length transaction occurred In this context, we find that by refusing to allow the Union's attorney to review the origi nal and excised copy together the Respondent has failed to meet its obligation to provide the request ed information Therefore, based on the above, we will order Respondent, on request, to furnish the Union with the information it seeks CONCLUSIONS OF LAW 1 The Respondent, Knappton Maritime Corp, is an employer engaged in commerce with the mean- ing of Section 2(6) and (7) of the Act 2 The Union is a labor organization within the meaning of Section 2(5) of the Act 3 By refusing to provide the requested informa- tion to the Union on and after March 23, 1987, the Respondent has violated Section 8(a)(5) and (1) of the Act REMEDY Having found that the Respondent has violated Section 8(a)(5) and (1) of the Act We shall order that it cease and desist therefrom and take certain affirmative actions designed to effectuate the pur- pose of the Act This affirmative action will in- clude the furnishing of the requested information on request and the posting of the usual notice ORDER The National Labor Relations Board orders that the Respondent, Knappton Maritime Corp, Seattle, Washington, its officers, agents, successors, and as signs, shall I Cease and desist from (a) Refusing to bargain collectively with Inland boatmen's Union of the Pacific, Marine Division, International Longshoremen's and Warehousemen's Union by refusing to furnish it with the informa- tion it requested on and after March 23, 1987, con cerning the sales agreement between WMSI and the Respondent is There is no contention that the request here sought confidential business information (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of rights guaranteed by Section 7 of the Act 2 Take the following affirmative action neces- sary to effectuate the policies of the Act (a) On request, bargain collectively with the Union by furnishing to it the information it request- ed on and after March 23, 1987 (b) Post at its Seattle, Washington facility copies of the attached notice marked `Appendix "14 Copies of the notice, on forms provided by the Re gional Director for Region 19, after being signed by the Respondent's authorized representative, 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 material (c) Notify the Regional Director in writing within 20 days from the date of this Order what steps Respondent has taken to comply 14 If this Order is enforced by a judgment of a United States court of appeals the words in the notice reading Posted by Order of the Nation al Labor Relations Board shall read Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice WE WILL NOT refuse to bargain collectively with Inlandboatmen's Union of the Pacific, Marine Divi Sion, International Longshoremen's and Warehou semen's Union, by refusing to furnish the Union with information it requested on and after March 23, 1987, concerning the sales agreement between Washington Marine Services, Inc and us WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7 of the Act WE WILL, on request, furnish the Union the in formation it requested on and after March 23, 1987 KNAPPTON MARITIME CORPORATION