Panco Petroleum Co.

PANCO PETROLEUM CO Panco Petroleum Co. and Local 445, International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America , AFL-CIO. Case 2-CA-22640 May 23, 1989 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On November 9,- 1988, Administrative Law Judge Raymond P. Green issued the attached deci- sion, The General Counsel and the Charging Party filed exceptions and supporting briefs, and the Re- spondent filed an answering brief to the General Counsel's and Charging Party's exceptions and sup- porting briefs. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, I and conclusions2 and to adopt the recommended Order. ORDER The recommended Order of the administrative law judge is adopted and the complaint is dis- missed. 1 The General Counsel and the Charging Party 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 Products, 91 NLRB 544 (1950), enfd 188 F2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for reversing the findings In the last paragraph of his decision, the judge found that the pretrial affidavit of Respondent dispatcher and former Gurran Oil secretary Tom Gurran, in which Gurran stated that the Respondent told Gurran that it sought to rid itself of the Union, could not be used as substantive evi- dence to establish the Respondent's union animus because the affidavit was merely hearsay The relevant portion of this affidavit is reproduced at fn 2 of the judge's decision It is unclear, however, whether the judge credited Gurran's denial of the accuracy of this statement in the affidavit Under these circumstances, and even assuming that the affidavit could be used as substantive evidence establishing the Respondent' s union animus, we agree with the judge that the Respondent would not have hired the former Gurran truckdrivers even in the absence of their union activities due to the prevailing economic circumstances at the time of the takeover Accordingly, the Respondent did not violate Sec 8(a)(3) by failing to hire these employees 2 In sec II,C, par 4, the judge concluded that even if the Respondent had agreed to assume the Union contract with Gurran Oil on October 6, 1986, the Respondent could not have been the employer of the Gurran employees on that date because the prospect of selling Gurran Oil to the Respondent was merely speculative at the time Because we affirm the judge's finding that the Respondent never agreed to assume the Union's contract with Gurran Oil, we find it unnecessary to pass on the judge's conclusion based on the above assumption 103 James Wasserman, Esq., for the General Counsel Roger Gilson, Esq. (Jackson, Lewis, Schnitzler & Krupman) and Pete G. Albert, Esq. (Levin Weissman), for the Re- spondent David Kramer, Esq., for the Charging Party DECISION STATEMENT OF THE CASE RAYMOND P GREEN, Administrative Law Judge This case was heard by me in New York City on May 31, June 1, 2, 3, and 24, 1988 The charge in this case was filed on January 28, 1988, and was amended on February 29, 1988. The complaint, which issued on March 11, 1988, alleged as follows: 1 That Local 445 has for many years, been the duly designated collective-bargaining representative of the drivers and mechanics of Gurran Oil Co Inc. employed at that company's Stony Point, New York place of busi- ness 2 That in or about July 1986, Gurran agreed to sell its business to the Respondent, whose correct name is Panco Equipment Corporation 3 That on or about October 6, 1986, Panco entered into an oral agreement with Local 445 to. (a) Hire all the drivers and mechanics employed by Gurran (b) Assume the existing collective-bargaining agree- ment between Gurran and the Union. (c) Dovetail the seniority of its own truckdrivers and mechanics with the seniority of Gurran's truckdrivers and mechanics 4 That on January 15, 1988, Gurran transferred its assets to the Respondent 5 That Respondent closed its facility located at Valley Cottage, New York, and moved it to the newly acquired facility of Gurran located at Stoney Point, New York. 6. That on January 15, 1988, the Respondent did not hire the former truckdrivers of Gurran because they were members of the Union 7 That on January 15, 1988, the Respondent, contrary to the prior oral agreement in October 1988, refused to recognize the Union and has refused to assume the con- tract the Union had with Gurran 8 That by the aforesaid acts, the Respondent has vio- lated Section 8(a)(1), (3), and (5) of the Act FINDINGS AND CONCLUSIONS A Jurisdiction The parties agree and I find that the Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act It also is agreed and I find that the Union is a labor organization within the meaning of Section 2(5) of the Act B. Operative Facts Gurran Oil Company Inc was a family owned compa- ny located in Stony Point, New York, and was engaged in the wholesale distribution of heating oil to homeown- ers and businesses As such, its business was highly sea- 294 NLRB No 9 104 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD sonal As of October 1986, Gurran employed five truck- drivers, one mechanic, and three office clerical employ- ees The drivers and the mechanic were represented by the Union and the most recent collective-bargaining agreement had a term from September 15, 1985, to Sep- tember 15, 1988 The covered employees were James Pa- terson, Joe Picarello, John Marsh, Ronnie Babcock, Jude Taylor, and Larry Marguitta The union agent responsi- ble for dealing with Gurran was James Doohry Gurran, for some time, had been looking to sell its business and this was known to Doohry since October 1985 According to Doohry, he got a call from Thomas Gurran in September 1986 advising him that the Gurrans had a good prospect in the Panebianco brothers Panco Equipment Corporation is also a family run business which began in 1976 and was gron by acquiring a number of small companies Although like Gurran, it sells home heating oil, its business is somewhat more di- versified and less seasonal as it also sells gasoline and motor oil products As of October 1986 Panco's main office and place of business was at Valley Cottage, New York. It also had facilities in Sloatsberg, Pine Island, and Warwick, New York, and at the Panebianco's mother's home in Yonkers, New York (Nancy Panebianco is the company's president and is an active participant in the business.) As of October 10, 1986, Panco employed seven truckdrivers, one mechanic, one mechanic's helper, one service burner mechanic, one driver salesman, two dis- patchers, one gasoline station attendant, and three cleri- cal employees. At its Valley Cottage facility, Panco em- ployed four drivers, one mechanic, and one mechanic's helper. The reasons that Panco wanted to acquire Gurran were. (1) to increase its oil storage capacity; (2) to gain access to barge traffic on the Hudson River, (3) to obtain larger office and garage space, and (4) to obtain Gurran's existing customer list On October 6, 1986, Doohry met with John and Nich- olas Panebianco at a restaurant Doohry and the Pane- bianco brothers had never met before and their only pre- vious contact was when Doohry phoned to set up this meeting According to Doohry, he offered them copies of the exising contract with Gurran and they said that they had already obtained a copy They also said that the contract had been given to their attorney for review and that they didn't see any problem with it Doohry states that he asked the Panebiancos when they expected the transfer to take place and they said it was scheduled for December 15, 1986 According to Doohry, he asked what they thought of the union contract and they said that there were no problems with it on the wages and that they would agree to it but couldn't do anything at this time because they didn't own Gurran Oil According to Doohry, the Panebiancos said that they planned to close Panco's Valley Cottage facility and to consolidate their own operations with Gurran's facility at Stony Point. He states that when he raised the issue of integrat- ing the seniority status of the two sets of employees that would be merged at Stony Point, John Panebianco sug- gested that the seniority be dovetailed starting with Panco's most senior man. The Panebiancos agree that they met with Doohry on October 6 but emphatically deny entering into any agree- ments with him They testified that Doohry asked them to assume the existing collective-bargaining agreement and to hire Gurran's employees. They state that they told Doohry that it was too premature to discuss em- ployment for Gurran's employees but that it was their hope that there would be jobs for everyone They claim that Doohry said that they could rewrite the union con- tract if they wanted and Doohry concedes that he told the Panebiancos that the contract was open to negotia- tion, that if they had any problems, he would be willing to sit down with them and negotiate The Panebiancos denied that they agreed to hire Gurran's employees, that they agreed to dovetail seniority, or that they agreed to assume Gurran's contract with Local 445. Indeed, al- though I believe that the Panebiancos did anticipate hiring the hourly employees of Gurran at wage rages comparable to the union contract. I simply do not be- lieve that these two men would have entered into an oral agreement at a casual luncheon meeting with someone they did not know, to assume a collective-bargaining agreement and to guarantee employment to a group of employees with whom they were not familiar From my observation, the Panebiancos by education and tempera- ment are not the type of businessmen who would casual- ly enter into any agreements, much less an oral agree- ment with a man they met for the first time at lunch In fact, the Union's contention that the Panebianco's on Oc- tober 6 made an oral agreement to assume the existing collective-bargaining agreementis belied by the fact that Doohry, on December 12, 1986, sent a letter requesting a meeting to discuss the continuation of the terms and con- ditions of the current collective-bargaining agreement. (I note that this letter did not refer to the oral agreement allegedly made back on October 6.) Between October and the scheduled transfer date in December 1986, a number of problems began to surface. For one thing Gurran was not forthcoming concerning requests for financial information regarding the former's business Also, it was discovered that there was a great deal of oil seepage on Gurran's property which would require an extensive cleanup Sometime, probably in December 1986, the Pane- bianco brothers went to Gurran's facility at Thomas Gurran's request Based on the credible testimony of the Panebiancos, it appears that they told Gurran's employ- ees that negotiations for the sale were still on, but that it did not look like they would meet the December closing date They state that there was a discussion regarding se- niority but that they did not tell Gurran's employees that they had guaranteed jobs, that the Union was going to be recognized or that the Union's contract was going to be assumed. Because of the oil seepage problem and because Panco was not furnished with all the requested data from Gurran, the transfer was put off A year later, in December 1987, Panco was given the financial information it had earlier requested After re- viewing,the data, the Panebiancos decided to go ahead with the purchase despite serious problems in Gurran's PANCO PETROLEUM CO 105 business They decided to do so because the purchase of the Stony Point facility would give them a tremendous expansion of their oil storage capacity and because it would give them access to the Hudson River barge traf- fic which would reduce the cost of receiving oil. Ac- cording to the Panebiancos, they discoverd after review- ing Gurran's records, that a significant portion of Gur- ran's business was based on contracts which resulted in oil being sold to commercial customers at or near cost Further, they discovered that one major account (Corn- wall Paper) had not paid its bills for quite some time Consequently, the Panebiancos decided to terminate a substantial number of Gurran's commercial accounts and to service the remaining accounts with Panco's existing drivers by integrating deliveries into their existing routes. The end result was that the Panebiancos decided that there was no need at that time to employ any additional drivers and they therefore decided not to hire Gurrna's drivers (As of January 1988, Gurran's unionized work force had been reduced from six for four as one of its drivers and its mechanics had resigned in 1987 and nei- ther had been replaced.') On January 15, the assets of Gurran were transferred to Panco. On that date the Panebianco brothers were at Gurran's facility where, among other things, they asked Gurran's drivers to fill out job applications but told them that there was not enough work to hire them at that time Gurran's drivers were also told that if business picked up they would be the first ones called for em- ployment 2 Following the transfer of assets, Panco moved its Valley Cottage operations to Stony Point and began op- erations there on February 1, 1988 As of January 21, 1988, Panco employed 11 truckdrivers, 1 mechanic who was assigned to Stony Point, and it hired a mechanic's helper for that location in February 1988. After January 15, 1988, Panco did not hire any new truckdrivers or mechanics and was able to service all accounts with its existing work force C Discussion In Fall River Dyeing Corp v. NLRB, 482 US 27 (1987), the Supreme Court held that a purchasing em- ployer is required to recognize and bargain with a union representing the seller's employees when there is a "sub- stantial continuity" of operations after the sale and if a majority of the purchaser's work force, in an appropriate unit, consists of the precedessor's employees when the i In late December 1987, Panco hired one new driver for its Valley Cottage facility, albeit that person did not begin to work until January 16, 1988 The new driver, Chris Molitero, was hired to replace Joe Do- herty who left Panco at the end of December 1987 2 Thomas Gurran, who was hired by Panco as a dispatcher, gave an affidavit to the Board's Regional Office on February 26, 1988 This read in part This is the first time I learned that the Panebtancos would not rehire our men if the Union was there I did speak to John Panebianco on 1/5/88 1 said if they wanted to get rid of the Union there were better ways to do it, that they could let the contract run out and not renew it John Panebianco said it was best for the business to rid of the local or words to that effect They said the men could come in and fill out applications The Panebiancos did not say that there was not enough work for the men or anything to that effect successor has reached a "substantial and representative complement." 11 In my opinion, under circumstances most favorable to the General Counsel, and assuming for argument's sake that Panco had hired all four of Gurran's drivers when it took over the latter's facility, the work force after the takeover would have consisted of 4 Gurran's employees in a minimum unit of 10 Panco employees Therefore, even assuming that the smallest appropriate bargaining unit would have been the drivers and mechanics at the Stony Point facility, the majority of that work force, when it reached a "substantial and representative com- plement" would not have consisted of the predecessor's employees 3 Notwithstanding the above, the General Counsel pos- tulates an interesting if not persuasive theory as to why Panco should be considered a successor having an obli- gation to bargain with the Union He contends that on October 6, 1986 (14 months before the actual takeover), Panco entered into an agreement with the Union (albiet an oral one) whereby it contracted to hire all of Gurran's drivers and mechanics, agreed to assume the existing contract between Gurran and the Union, and agreed to dovetail the seniority of both sets of employees when it merged its own operations with Gurran's operations at the Sandy Point facility The General Counsel then makes the contention that as of October 5, 1986, Panco became the employer of Gurran's unionized work force (then consisting of six employees) and from that date, bound itself to the existing collective-bargaining agree- ment between Gurran and the Union From this postu- late, the General Counsel then argues that when Panco finally took title of Gurran's facility in January 1988 and moved its (Panco's) operations from Valley Cottage to Stony Point, the employees who had formerly worked at Valley Cottage simply became an "accretion" to the ex- isting bargaining unit at Stony Point which had recog- nized back in October 1986. Even assuming that I were to credit Doohry's testimo- ny in toto, I still cannot see how Panco became the em- ployer of Gurran's employees in October 1986. Those people continued to work solely for Gurran, were paid by Gurran, and the prospect of the sale was still only speculative At most, it might be argued that Panco, on October 6, 1986, agreed that it would hire Gurran's em- ployees when and if Panco took over Gurran's oper- ations As such, had such an agreement been made and carried out, this still would have meant that Panco's work force at Stony Point after the takeover, would have consisted of 4 Gurran drivers out of a minimum unit of 10 employees. Thus, under the rational of Fall River Dyeing Corp., supra, Panco would not be construed as a successor with an obligation to recognize and bar- gain with the Union. Moreover, I have already concluded that no such oral agreement was made on October 6, 1986, or at any other time. As noted above, I do not believe that the Panebian- 3 A reasoned argument can be made that the smallest appropriate bar- gaining unit for Panco would be all of its drivers and mechanics em- ployed at all of its facilities in light of the integration of its operations However, I do not have to decide that question in this case 106 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD cos at a luncheon meeting with a man they had never met before, entered into a contract to employ the em- ployees of another company if and when that company's assets were purchased at a future time Nor do I con- clude that they made an agreement to assume the collec- tive-bargaining agreement that the Union had with Gurran nor that they agreed to dovetail seniority in the event that the two sets of employees were merged At most, I conclude that the Panebiancos said that they hoped that they could employ Gurran's workers if a sale was made and indicated that Panco's existing wages and benefits were comparable to those in the union contract Accordingly, as I do not credit Doohry's version of the October 6, 1986 transaction, the linchpin of the General Counsel's theory is missing I also conclude that Panco did not discriminatorily refuse to hire the truckdrivers employed by Gurran when it took over the latter's operations In my opinion, the evidence shows that when the Panebiancos finally, in December 1987, obtained Gurran's financial records, they realized that Gurran was having substantial business problems Despite these problems (and the problem of cleaing up the oil seepage) the Panebiancos decided to go ahead with the purchase, mainly in order to expand its storage facilities and to gain access to the barge traffic on the Hudson River. At the same time I credit their as- sertion that they decided to pare down Gurran's business by eliminating some of that company's commercial cus- tomers who, in some cases were getting oil at substantial discounts and in other cases had not paid their bills. It is my opinion that at the time of the takeover, Panco, having decided for legitimate economic reasons to eliminate some of Gurran's larger customers, had no need to hire Gurran's drivers and could and did service the business by using its existing work force 4 To the extent that the pretrial affidavit of Gurran asserts that John Panebianco said something to the effect that the was not hiring Gurran's drivers in order to get rid of the Union, I have concluded that this affidavit, which in this respect was not adopted by Gurran, constitutes hearsay and may not be relied on to prove the alleged statement by John Panebianco who denied CONCLUSIONS OF LAW 1 Respondent, Panco Equipment Corporation, is an employer engaged in interstate commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. Local 445 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America is a labor organization within the meaning of Section 2(5) of the Act 3 The Respondent has not violated the Act as alleged in the complaint On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed5 ORDER The complaint is dismissed. 4 The fact that Panco's drivers after the takeover worked considerable amounts of overtime is not deemed to be material The evidence shows that during the heating oil season (winter) the truckdrivers of both Panco and Gurran have historically worked a great deal of overtime and this seems to be standard industry practice 5 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses