Borman'S, Inc.

BORMAN'S INC. Borman's, Inc. and Guild for Professional Pharma- cists. Case 7-CA-27403 August 23, 1989 DECISION AND ORDER BY MEMBERS CRACRAFT, HIGGINS, AND DEVANEY On January 26 1989, Administrative Law Judge Irwin H. Socoloff issued the attached decision. The Respondent filed exceptions and a supporting brief. The General Counsel filed an answering 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 conclusions and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, Borman's, Inc., Detroit, Michigan, its officers, agents, succes- sors, and assigns, shall take the action set forth in the Order. ' The Respondent has excepted to some of the judge's credibility find- ings. The Board's established policy is not to overrule an administrative law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect . Standard Dry Wall Products, 91 NLRB 544 ( 1950), enfd 188 F 2d 362 (3d Cir. 1951). We have carefully examined the record and find no basis for reversing the findings. Amy Bachelder, Esq., for the General Counsel. Robert Lewis, Esq., of New York, New York, for the Re- spondent. DECISION STATEMENT OF THE CASE IRWIN H. SOCOLOFF, Administrative Law Judge. On a charge filed on October 19, 1987, by the Guild for Pro- fessional Pharmacists (the Union), against Borman's, Inc. (the Respondent), the General Counsel of the National Labor Relations Board, by the Regional Director for Region 7, issued a complaint dated December 3, 1987, al- leging violations by Respondent of Section 8(a)(3) and (1) and Section 2(6) and (7) of the National Labor Rela- tions Act (the Act). Respondent, by its answer, denied the commission of any unfair labor practices. Pursuant to notice, trial was held before me in Detroit, Michigan, on March 22 and April 5, 1988, at which the General Counsel and the Respondent were represented by counsel and were afforded full opportunity to be heard, to examine and cross-examine witnesses, and to in- troduce evidence. Thereafter, the parties filed briefs which have been duly considered. 245 On the entire record in this case,' and from my obser- vations of the witnesses, I make the following FINDINGS OF FACT I. JURISDICTION Respondent, a Delaware corporation, maintains its principal office and place of business in Detroit, Michi- gan, and operates numerous supermarkets in southeastern Michigan, where it is engaged in the retail sale of food and other consumer goods. Annually, Respondent, in the course and conduct of its business operations, derives gross revenues in excess of $500,000 and purchases and receives at its Michigan facilities goods and materials valued in excess of $50,000, which are sent directly from points located outside the State of Michigan . I find that Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. II. LABOR ORGANIZATION The Union is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES A. Background Respondent operates some 85 supermarkets within the State of Michigan, under the name Farmer Jack. At 35 of those Farmer Jack stores, it runs a pharmacy . In addi- tion, Respondent operates a single drugstore, G & W Drugs, located in Livonia, Michigan. In all, it employs 66 full-time salaried pharmacists, 7 part-time hourly paid pharmacists, and 5 pharmacy interns. In January 1987, certain of the pharmacists com- menced organizational activities on behalf of the Union. On May 27, the Union filed a representation petition with the Board, seeking a unit of Respondent's pharma- cists and pharmacy interns employed in the State of Michigan . The Board conducted an election in that unit on August 5 and 6, 1987, which was won by the Union. Thereafter, Respondent filed objections to conduct af- fecting the results of the election.2 Shortly after the Union filed its representation petition, Respondent informed the pharmacists that it was sus- pending its salary review program. In the instant case, the General Counsel contends that Respondent took that action because of the employees' activities on behalf of the Union and in response to the filing of the petition, in violation of Section 8(a)(3) of the Act. Respondent argues that it lawfully suspended salary reviews to avoid an appearance of election interference and in good-faith reliance on the advice of counsel. ' General Counsel's unopposed motion to correct certain errors in the transcript is granted General Counsel's motion to strike portions of Re- spondent's brief is denied. 2 Hearings on those objections were held in September and October 1987 296 NLRB No. 43 246 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD B. Facts3 Respondent's salary year runs from April 1 to March 31. From salary year 1977, April 1, 1977, to March 31, 1978, through salary year 1981, April 1, 1981, to March 31, 1982, Respondent reviewed the wage rates of all pharmacists and other salaried employees , each year, in late March or early April. At least in the case of the pharmacists, almost every review resulted in a wage in- crease, effective in April of the new salary year . In 1979, 1980, and 1981 , additional reviews were conducted in October or November, but those reviews did not neces- sarily result in additional increases. Due to financial difficulties encountered in 1981, Re- spondent imposed a corporatewide wage freeze which lasted for 3 years. As a result, the pharmacists were not reviewed, and they received no salary increases, during salary years 1982, 1983, and 1984. The freeze was lifted at the beginning of salary year 1985. At that time, Respondent resumed conducting annual salary reviews, but decided that each pharmacist would be reviewed on the anniversary of his or her date of hire. So that those pharmacists whose anniversary dates fell late in the salary year would not have to wait an additional lengthy period before receiving an increase, Respondent, for salary year 1985, only, gave partial in- creases in April 1985 to pharmacists whose anniversary dates fell between October and March. Thus, in salary year 1985, pharmacists with anniversary dates between April and September received their full reviews on their anniversary dates. Pharmacists with anniversary dates be- tween October and March received a partial review in April 1985, and the remainder of the review on their an- niversary dates. Respondent continued the practice of annually review- ing the salaries of the pharmacists on their anniversary dates during salary year 1986, April 1, 1986, to March 31, 1987. Likewise, salary reviews were conducted during salary year 1987 on the employees' anniversary dates until the end of May, when, as noted , the petition was filed and the review process was suspended. In salary years 1985, 1986, and 1987, until the suspen- sion of the review process, every pharmacist and phar- macist intern was reviewed and every review resulted in a wage increase. During salary year 1985, increases for the pharmacists ranged from $20 to $35 per week. In salary year 1986, the increases ranged from $25 to $50. For salary year 1987, the increases were from $50 to $80. In those years, as in prior years, the range of increases and the amount of individual increases were in relation to the amount of money available for that purpose and to performance evaluation type factors. Seniority and rela- tive wage standing were also considered. Following the May 27, 1987 filing of the representa- tion petition, Respondent sought and received legal advice with respect to the salary review program. By letter dated June 4, 1987, its counsel advised: "The factfindings contained here are based on a composite of the doc- umentary and testimonial evidence introduced at trial Where necessary, in order to resolve significant testimonial conflict, credibility resolutions have been set forth, infra. ... We have reviewed your Salary Administration Program, past and present, and advise that, if the Guild were to file an unfair labor practice charge, or an objection to the election based upon the in- creases given after May 27, there is a good possibili- ty the NLRB would hold the increases unlawful or set aside the election. The safest course would be to suspend the increases until after the election. The Board has approved this approach, providing the employer makes clear that the purpose in doing so is to avoid the appear- ance of election interference. Thereafter, Respondent announced to the pharmacists the suspension of the salary review program , by letter dated June 11, 1987, stating: In view of the National Labor Relations Board election proceedings, our legal counsel has advised ... that continuation of our Salary Administration Program at this time could be considered to be an unfair labor practice by the N.L.R.B . Regrettably, we are therefore suspending further salary reviews. If the Union were to prevail, salaries, as well as all benefits and working conditions, would be nego- tiable and subject to the collective-bargaining proc- ess. If the Union is not successful in its efforts to or- ganize our Pharmacists, the reviews would be re- sumed. On June 23, 1987, the Union, by its president, Ralph Vogel, sent a letter to the pharmacists which stated, in part, as follows: Is the employer prohibited from giving salary in- creases during the election process? No. An employer may continue normal salary in- creases during the election process. In order for the N.L.R.B. to consider a salary increase as an unfair labor practice, a charge against the company would have to be filed by the Guild and the salary in- crease would have to be abnormally high and un- timely. The Guild has never, and will never, file a charge objecting to any salary increase for any pharmacist . To make it official, the Guild hereby waives all rights to file unfair labor practice charges against Borman's with respect to the company con- tinuing its Salary Administration Program during the election and negotiating process . (reference to the Company's letter to pharmacists dated June 11, 1987). In reply, Respondent sent a letter dated July 10, 1987, to the pharmacists, stating: The union stated: "An employer may continue normal salary in- creases during the election process." If this is so, how do you explain Mr. Vogel's state- ment quoted in the November 3, 1986 edition of "Drug Topics"? BORMAN'S, INC. "As Vogel explained, the usual union system is to collect the required minimum number of authori- zation cards (30%) and immediately file with the National Labor Relations Board to hold an elec- tion. The act of filing prevents the employer from granting a wage increase, which might undermine the union 's position in the coming election. " I sincerely regret that the salary reviews for many of our pharmacists scheduled to be reviewed during the last few months had to be suspended, however, with the filing of the petition by the union, the company had no other choice. Irrespective of any assurances given by Mr. Vogel in respect to salary reviews, the facts are: If any objection to the elec- tion is raised for any reason by the union, then the N.L.R.B. could of its own volition, invalidate the election by virtue of the granting of salary increases after the petition had been filed. Following the suspension of the salary review pro- gram, Respondent held a series of breakfast meetings with small groups of the pharmacists. Pharmacist Sandra Cline testified that at such a meeting held on July 2, 1987, the attending pharmacists were addressed by Ronald Selden, Respondent's director of pharmacy.4 Ac- cording to Cline, when Selden was asked by the pharma- cists to explain why salary reviews had been suspended, he stated that the Company "had been advised that they had to stop reviews because the Guild had filed a peti- tion for an election." Cline and Selden then discussed a purported waiver by the Union of the right to file objec- tions if salary reviews were resumed. Selden testified that at the breakfast meeting when questioned about the suspension of salary reviews, he stated that "on advice of counsel, it might be unlawful for us to continue the reviews." His testimony in that regard was corroborated by Edward Mimikos, pharmacy supervisor, who also attended the meeting. Pharmacist Janet McCoy testified that during a June 15, 1987 telephone conversation with Selden she referred to Respondent's June 11, 1987 letter, and said, "I hear we're not going to be getting our raises." According to McCoy, Selden stated: "I'd like to apologize to you about that. I know how close your review date was... . But with this union business and all we had no choice." On cross-examination, McCoy further testified that at the end of the conversation Selden might have stated that Respondent had been advised by its attorneys to stop the raises. Selden, in his testimony, denied having told McCoy that reviews had been suspended because of the "union business." Rather, he testified he told McCoy that Respondent's attorneys had advised it to suspend re- views. Pharmacist Denise Yankovich also testified about a June telephone conversation with Selden. According to Yankovich, she asked Selden if and when she would be getting a wage review. Selden stated that "wage reviews had been stopped because a petition had been filed" and a The complaint alleges, and the answer admits, that Selden is a statu- tory supervisor 247 "it could be considered an unfair labor practice to con- tinue with wage reviews." Selden testified that during the conversation he told Yankovich, in response to her inquiry about wage reviews, that "it might be considered an unfair labor practice for us to continue the reviews, and we were suspending them." Pharmacist Benny Salem testified that in late July or early August 1987 he had a conversation with Selden in the pharmacy of the store where he works. According to Salem, Selden stated that, "You know that we have to discontinue reviews because of this union matter pend- ing." Salem said that he understood, as he had read Re- spondent's letters. The pharmacist then complained to Selden about the fairness of the review process. Accord- ing to Selden's testimony, the conversation with Salem did not occur in late July or early August, but on June 16. Selden denied that he told Salem that reviews had been discontinued because of the "union matter." Rather, Selden testified he stated to Salem that "our attorneys advised us that we should suspend the reviews because it might be considered an unfair labor practice." Cline, McCoy, Yankovich, and Salem impressed me as truthful witnesses, in possession of clear and certain recollections of the conversations about which they testi- fied. Based on their credited testimony, I find that on July 2, 1987, Selden informed employees that the re- views had been stopped because the Guild had filed a petition; on June 15, 1987, Selden told McCoy that the salary review program had been suspended because of the "union business"; in June 1987, Selden told Yanko- vich that wage reviews had been stopped because a peti- tion had been filed ; in late July or early August 1987, Selden told Salem that reviews had been discontinued because of "this union matter." I find, too, based upon Selden's testimony, that in each of these conversations Selden also stated that Respondent's attorneys had ad- vised it to suspend the reviews "because it might be con- sidered an unfair labor practice" to continue to conduct them. However, as I found Selden's testimony concern- ing these conversations generally less believable than that of the pharmacists, I have not credited those portions of his testimony in which he denied having made the com- ments which they attributed to him. C. Conclusions It is well settled that during the course of a union campaign "the employer's legal duty is to proceed as he would have done had the union not been on the scene."s If wage increases or other benefits are granted or with- held because of the presence of the union, there is a vio- lation of the Act.6 Where an employer has an established wage increase policy, suspension of that policy during the course of a union campaign is normally a violation of Section 8(a)(3) of the Act "unless the employer post- pones the increases only for the duration of the cam- paign and informs the employees at the time of the post- ponement that the sole reason for its action is to avoid the appearance that it seeks to intervene in the election, Gates Rubber Co, 182 NLRB 95 (1970). 6 G C Murphy Co., 223 NLRB 604 (1976) 248 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD and the Board finds that this in fact was its reason."7 However, such a wage increase postponement or defer- ral will be found unlawful if the employer attempts to place the onus for the postponement or deferral on the union, or takes that action to influence the votes of em- ployees in an impending election. In this case, Respondent had an established policy of annual salary reviews and wage increases for pharmacy employees geared to the employees' anniversary dates. That the specific amounts of the increases were not fixed, is not significant.8 It is beyond legitimate dispute, on the state of this record, that, but for the union cam- paign, Respondent would have continued its practice of conducting reviews and granting increases. Respondent indefinitely suspended its salary review program in response to the filing of the representation petition and, long after the holding of the election, it had not resumed the conduct of that program. Indeed, its June 11, 1987 letter, announcing the suspension, assured the employees, only, that the program would be reinstat- ed if, ultimately, the Union was defeated. In that letter, the employees were advised that the salary review pro- gram was being suspended "in view of the National Labor Relations Board election proceedings ." By its July 10, 1987 letter, Respondent informed the employees that "with the filing of the petition by the union, the compa- ny had no other choice." Orally, Respondent variously told employees that the review program had been stopped "because a petition had been filed," because of the "union business," and because of "this union matter." While Respondent repeatedly told the pharmacy employ- ees that its attorneys had advised it to suspend the re- views "because it might be considered an unfair labor practice" to continue to conduct them, Respondent at no time told those employees that it was acting to avoid the appearance of election interference. This is not a case in which an employer deferred ex- pected wage increases until after an election and advised its employees that its sole reason for doing so was to avoid the appearance of interference with the election.9 In this case, the salary review program was indefinitely suspended and Respondent, by its letters and oral state- ments to employees, sought to put the onus for that action on the Union. In these circumstances, I find and conclude that Respondent suspended its salary review program, in response to the union activities of its em- ployees and the filing of the representation petition, in order to undermine the Union, in violation of Section 8(a)(3) of the Act. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES ON COMMERCE The activities of Respondent set forth in section III, above, occurring in connection with its operations de- scribed in section I, above, have a close , intimate, and substantial relationship to trade, traffic, and commerce among the several States and tend to lead to labor dis- 7 Smith & Smith Aircraft Co., 264 NLRB 516 (1982) 8 Eastern Maine Medical Center. 253 NLRB 224 (1980) 9 See Sugardale Foods, 221 NLRB 1228 (1975) putes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that Respondent has engaged in certain unfair labor practice conduct in violation of Section 8(a)(3) and (1) of the Act, I shall recommend that it be ordered to cease and desist therefrom and to take certain affirmative action designed to effectuate the policies of the Act. CONCLUSIONS OF LAW 1. Borman's, Inc. is an employer engaged in com- merce, and in operations affecting commerce, within the meaning of Section 2(2), (6), and (7) of the Act. 2. Guild for Professional Pharmacists is a labor organi- zation within the meaning of Section 2(5) of the Act. 3. By suspending its policy of giving salary reviews and raises to its pharmacy employees because those em- ployees had engaged in activities on behalf of the Union, Respondent has engaged in unfair labor practice conduct within the meaning of Section 8(a)(3) of the Act. 4. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. On the foregoing findings of fact and conclusions of law, I issue the following recommended' ° ORDER The Respondent, Borman's, Inc., Detroit, Michigan, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Suspending its policy of giving salary reviews and raises to its pharmacy employees because of the union activities of those employees. (b) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed them in Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Restore, retroactive to May 27, 1987, the policy of giving salary reviews and raises to pharmacy employees on the anniversary dates of their employment. (b) Make whole the pharmacy employees who have not received salary reviews, as a result of the suspension of the salary review policy, for any loss of earnings and other benefits . Backpay shall be computed as prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), with in- terest as computed in New Horizons for the Retarded, 283 NLRB 1173 (1987)." (c) 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, 10 If no exceptions are filed as provided by Sec. 102.46 of the 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 purposes. i i Under New Horizons, interest is computed at the "short-term Federal rate" for the underpayment of taxes as set out in the 1986 amendment to 26 U.S C § 6621 . Interest accrued before January 1 , 1987 (the effective date of the amendment), shall be computed as in Florida Steel Corp, 231 NLRB 651 (1977). BORMAN'S, INC. personnel records and reports, and all other records nec- essary to analyze the amount of backpay due under the terms of this Order. (d) Post at its Michigan facilities copies of the attached notice marked "Appendix." t a Copies of the notice, on forms provided by the Regional Director for Region 7, after being signed by the Respondent's 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 materi- al. 12 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 249 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 suspend our policy of giving salary re- views and raises because of our employees' union activi- ties. WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the exercise of their rights under the Act. WE WILL restore, retroactive to May 27, 1987, our policy of giving salary reviews to pharmacy employees on the anniversary dates of their employment. WE WILL make whole the employees who have not re- ceived salary reviews as a result of the suspension of the salary review policy for any loss of earnings and other benefits, plus interest. BORMAN'S INC.