Gene's Toyota Sales & Service

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Gene's Toyota Sales and Service and Walter Reagan. Case 7-CA-16655 September 29, 1980 DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND PENEI.LO On June 19, 1980, Administrative Law Judge Marvin Roth issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its au- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Decision in light of the exceptions and brief and has decided to affirm the rulings, findings,' and conclusions of the Administrative Law Judge and to adopt his recommended Order. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Re- lations Board adopts as its Order the recommended Order of the Administrative Law Judge and hereby orders that the Respondent, Gene's Toyota Sales and Service, Inc., Muskegon, Michigan, its officers, agents, successors, and assigns, shall take the action set forth in the said recommended Order, except that the attached notice is substituted for that of the Administrative Law Judge. I Respondent has excepted to certain credibility findings made by the Administrative Law Judge It is the Board's established policy not to overrule an administrative law judge's resolutions with respect to credi- bility unless the clear preponderance of all of the relevant evidence con- vinces us that the resolutions are incorrect Slandard Dry Wall Producix. Inc.. 91 NLRB 544 (1950), enfd 18X F2d 362 (3d Cir. 1951). We have carefully examined the record and find no basis for reversing his findings APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government After a hearing at which all sides had an opportu- nity to present evidence and state their positions, the National Labor Relations Board found that we have violated the National Labor Relations Act, as amended, and has ordered us to post this notice. WE WIL.L NOT discourage membership in Local 527, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and 252 NLRB No. 71 Helpers of America, or any other labor organi- zation, by discriminatorily terminating employ- ees, or in any other manner discriminating against them with regard to their hire or tenure of employment or any term or condi- tion of employment. WE WILtI NOT threaten employees with un- favorable employment references in retaliation for their union activities. WE wit.l. NOT discriminatorily prohibit or restrict employees from using our telephones for personal calls, in reprisal for their union activities. WlI WILL NOT promise or grant wage in- creases to our employees in exchange for their withdrawal of support for Local 527, Interna- tional Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, or any other labor organization. WI: WIll. NOT in any like or related manner interfere with your right to engage in union or concerted activities, or to refrain therefrom. WI witLL offer Walter Reagan immediate and full reinstatement to his former job or, if such job no longer exists, to a substantially equivalent position, without prejudice to his seniority or other rights and privileges, and make him whole for losses he suffered by reason of the discrimination against him, with interest. All our employees are free to become or remain, or refuse to become or remain, members of Team- sters Local 527, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, or any other labor organization. GENE'S TOYOTA SAI.ES & SERVICE, INC. DECISION STA.MTIMENT 01r THE CASE MARVIN ROTH, Administrative Law Judge: This case was heard at Muskegon, Michigan, on February 14 and 15, 1980. The charge was filed on July 31, 1979, by Walter Reagan, an individual. The complaint, which issued on September 14, 1979, alleges that Gene's Toyota Sales & Service, Inc. (herein the Company or Respond- ent), violated Section 8(a)(1) and (3) of the National Labor Relations Act, as amended. The gravamen of the complaint is that the Company allegedly laid off Reagan because of his union activities, and further violated Sec- tion 8 (a)(1) by threatening employees with unfavorable employment references, prohibiting employees from using the Company's telephone for personal calls, and failing to clean the employees' work area for 2 days, all in reprisal for their union activities, and by promising 478 GENE'S TOYOTA SALES AND SERVICES, INC. and granting wage increases to employees in exchange for their withdrawal of support for Local 527, Interna- tional Brotherhood of Teamsters, Chauffeurs, Warehou- semen and Helpers of America (herein the Union). The Company's answer denies the commission of the alleged unfair labor practices. However, in its post-hearing brief, the Company admitted in sum that it promised and granted wage increases to employees in exchange for their withdrawal of support for the Union, that Service Manager James Westover dumped garbage on the floor of a work area in reprisal for the employees' union activ- ity, and that the layoff of Walter Reagan was motivated in part (albeit not dominant part) by Reagan's union ac- tivity. All parties were afforded full opportunity to par- ticipate, to present relevant evidence, to examine and cross-examine witnesses, to argue orally, and to file briefs. The General Counsel and Respondent each filed a brief. Upon the entire record in this case and from my obser- vation of the demeanor of the witnesses, and having con- sidered the arguments of counsel and the briefs submitted by the General Counsel and Respondent, I make the fol- lowing: FINDINGS OF FACT I. THE BUSINESS OF RESPONDENT The complaint alleges and the answer admits that the Company is and has been at all times material a Michi- gan corporation with its only office and place of business at 2221 S. Henry in Muskegon, Michigan, and is and has been at all times material engaged in the sale and service of Toyota automobiles to the general public. The com- plaint further alleges, and the answer admits, that during the calendar year 1978, "which period is representative of its operations during all times material herein," the Company had gross revenues in excess of $500,000, and received at its Muskegon place of business, automobiles, repair parts, and other goods and materials valued in excess of $50,000 which were shipped directly from points outside of Michigan. These admitted facts are suf- ficient to warrant assertion of the Board's jurisdiction in this case. However, some elaboration is warranted in connection with the alleged unfair labor practices. Therefore the Company's operations will be further dis- cussed in connection with the merits of the case. At this point I find, as the Company admits, that it is an employ- er engaged in commerce within the meaning of Section 2(6) and (7) of the Act. It. THE LABOR ORGANIZATION INVOLVED The Union is a labor organization within the meaning of Section 2(5) of the Act. 111. THE ALLEGED UNFAIR LABOR PRACTICES A. Background. The Nature of the Company's Operations, and the Union Organizational Campaign Since May 25, 1978, the brothers Daniel and David Marchido have been and still are the sole owners of the Company, having purchased the business from their father, Eugene Marchido. Daniel is president and David is vice president of the Company. Until January 21, 1980, the Company was a franchised Toyota dealer, and in that capacity was engaged in the sale and servicing of Toyota automobiles to the general public. The Company was and still is also engaged in the sale of used cars to the public, and this has always been the Company's most profitable operation. On August 2, 1979, the Company entered into a written agreement to sell to E & B Auto Sales, Inc., all of its stock of Toyota vehicles and equip- ment, subject to E & B being designated as the area Toyota dealer. The franchise transfer was approved on January 21, 1980. In the meantime, the Company contin- ued to sell and service Toyota vehicles until the first week of December 1979, when (notwithstanding that the franchise transfer had not yet been formally approved), E & B took over the Toyota operation at its own prem- ises. Thereafter, the only mechanical work performed by the Company consisted of such work as was necessary to put the used cars in saleable condition; i.e., the Company no longer engaged in service work to the general public. In January and February 19791 the Company's top echelon consisted of Daniel and David Marchido and their general manager, Paul Garonson. James Westover managed the service department. The service department personnel complement consisted of mechanics Walter Reagan, Frank Smith, and Earl Andre, Parts Manager Richard Sly, cashier-clerk Carol De Rochey, and two part-time cleanup boys. In January, Reagan talked to his fellow mechanics about a union. 2 They agreed to join the Teamsters Union. They each signed union authoriza- tion cards which Reagan had obtained from the Union, and Reagan returned the signed cards to the union hall. On February 2, the Union sent a letter to the Company in which it requested recognition as the collective-bar- gaining representative of the mechanics. No answer having been received, the Union on February 8 filed a petition for a Board-conducted election (Case 7-RC- 15254). On February 13 the Company received notifica- tion of the election petition. B. The Company's Response to the Union Activity The Alleged Violations of Section 8(a)() of the Act On February 3, Service Department Manager James Westover received the Union's request for recognition. Westover promptly telephoned the Marchido brothers, who were then in Florida. All three were "angry" and "upset." Westover "hated" the Teamsters, and Dan Mar- chido was convinced that he could not afford to operate with a union. They were particularly upset and angry at Reagan, who Westover assumed was responsible for the union activity. (Reagan had already informed Westover that the three mechanics had joined the Union and the place was unionized now.) On Monday, February 5, Westover made clear to the employees, in no uncertain I All dates herein are in 1979 unless otherwise indicated 2 Reagan's reasons for engaging in this activity are immaterial to the question of whether or not he was lawfully terminated. Ohio [alley Graphic Arls. Inc., 234 NLRB 493 (1978) Al the hearing company coun- sel offered to prove that Reagan joined the Union in order to have job security" In any event, that would be a legitimate reason for engaging in such actiit, Ohio Valley. supra at fn 4 479 DECISIONS OF NATIONAL LABOR RELATIONS BOARD terms, the Company's hostility toward unionization. Wes- tover told Reagan that Dave Marchido would like to poke him. Service Manager Westover, who was presented as an adverse witness for the General Counsel, testified that he gave vent to his feelings by dumping trash on the floor of the employees' work area, but that he picked up the trash about 5 or 10 minutes later. The Company normal- ly had a policy of keeping its garage floor in "immacu- late" condition, and the cleanup boys normally cleaned the floor every night. Reagan and Earl Andre, who was also presented as a witness for the General Counsel, testi- fied in sum that the floors were not cleaned for 3 con- secutive days during the week of February 5. Reagan testified that an oil spill remained for 3 days, creating a hazardous condition, and that he complained to General Manager Garonson. Andre testified that the floor was washed on one day, but that the cleanup boy left soap on the floor, leaving the floor in a slippery condition. Carol De Rochey, who was also presented as a witness for the General Counsel, testified that in February she over- heard Garonson tell one of the cleanup boys that the boys were not to clean the floor. Garonson was not pre- sented as a witness in this proceeding. However Chet Kroll, who was one of the cleanup boys, was presented as a Company witness. Kroll testified that he cleaned the garage floor every day during the week that Dan and Dave Marchido were away, and that no one told him not to clean the floors. Kroll further testified that he saw some clean oil on the floor, and he asked Frank Smith how it got there. According to Kroll, Smith indicated that he did it intentionally, and by way of demonstration, poured more oil on the floor. Kroll testified that he cleaned up the oil. Smith, who was presented as a com- pany witness, did not testify about the matter. I am not persuaded that either De Rochey or Kroll were demon- strably lacking in credibility as witnesses. There may well be truth in the testimony of all of the witnesses con- cerning this matter. In light of the ncident described by Kroll, it is possible that Smith was venting his personal anger by spilling oil on the floor, and that Garonson, in counter anger, told the other cleanup boy not to clean the floors. Given this incident, and the fact that the floors were probably wet and dirty for much of the time, due to the snow conditions which normally prevail in Muskegon at that time of year, I find that the General Counsel has failed to prove by a preponderance of the credible evidence that the company intentionally failed to clean its garage floor in retaliation for the employees' union activity. I further find that Westover's childish action in throwing trash on the floor, although evidenc- ing the Company's hostility toward unionization, was too isolated and brief to have affected the employees' work- ing conditions, e.g., by creating unhealthy or hazardous working conditions. Therefore I am recommending that this allegation of the complaint be dismissed. Walter Reagan testified that prior to February, compa- ny policy was that the Company preferred that its phones not be used by employees for personal calls, but that the phones could be so used when necessary, prefer- ably during breaks or at lunchtime. According to Reagan, Dan Marchido and Westover told the employ- ees to avoid using the phones continuously during the day. Earl Andre testified that the Company permitted the employees to use its telephones at any time of day. The Company did not present any testimony or other evidence concerning its policy. It is evident from the tes- timony of Reagan and Andre that the Company was le- nient in permitting its employees to use company tele- phones for personal calls, short of abuse of that privilege. Andre testified that after the Company learned of the union, Jim Westover announced that "no union people could see the telephone" during working hours. Walter Reagan testified that on one occasion in late February he tried to telephone his wife between 5:30 and 6 p.m.; i.e., after business hours. Someone pushed the buttons on the office telephone to prevent them from talking. Carol De Rochey testified that Garonson did this. Reagan testified that when he complained to Garonson and Westover, they told him that he was not to use the telephone again, and that no one was permitted to call him at the Compa- ny's place of business. The Company did not present any testimony or other evidence concerning these matters. In light of Westover's reference to the "union people," Gar- onson's obvious harrassment of Reagan, the timing and arbitrary and selective nature of these actions, and the absence of evidence that the Company had any legiti- mate reason for curtailing use of its telephone by the union members, 1 find that the Company curtailed the use of its telephones by the mechanics, and particularly by Reagan, in reprisal for their union activity. The Com- pany thereby violated Section 8(a)(l) of the Act. Stoughton Trailers, Inc., 234 NLRB 1203, 1206 (1978). During the second week of February, after the Mar- chidos returned from Florida, they summoned Reagan, Smith, and Andre into their office. Dan Marchido said that they sold the dealership to the Duthler Car Agency, and that there would be no union in the shop. (In fact, on February 17 the Company entered into an agreement to sell its Toyota operation to Duthler, but the sale was never consummated because Toyota refused to approve this transfer of its franchise.) According to Reagan, Dan Marchido said that they "had talked to different dealers in the Muskegon area and they would blackball us and we would never get a job in Muskegon." Reagan's testi- mony concerning this conversation was uncontradicted. Earl Andre testified, also without contradiction, that in a subsequent conversation Dave Marchido told him that he (Andre) had blown his chances of getting a job any- where else, and that "no one wants to hire an instigator or troublemaker." I credit the testimony of Reagan and Andre, and I find that the Company, through Dan and Dave Marchido, threatened its employees with unfavor- able employment references in retaliation for their activi- ties on behalf of the Union. Cf., Young Hinkle Corpora- tion, 244 NLRB 264 (1979). If, as here, an employer indi- cates that it has or is willing to prevent its employees from being hired elsewhere because of their union activi- ty, then an inference is warranted that the employer would also be inclined to remove the employees from its own employ because of that union activity. Therefore, the threats by Dan and Dave Marchido may properly be 480 GENE'S TOYOTA SALES AND SERVICES, INC. considered as evidence of the Company's motivation in subsequently terminating Walter Reagan. As indicated, on February 13 the Company received notice of the Union's election petition. Later that week the Marchidos once again summoned the three mechan- ics to their office to discuss the matter of unionization. Reagan, Andre, and Frank Smith (who was presented as a company witness) testified concerning the interview. The Marchidos stated their position bluntly and to the point. They asked what it would take for the employees to withdraw from the Union. They asked if the employ- ees wanted raises. The employees said they did. The Marchidos asked how much they wanted. Reagan and Smith said they each wanted raises of $1.50 per hour (from $7.50 to $9 per hour for Reagan and from $5 to $6.50 per hour for Smith). Andre wanted an increase of at least $1.25 per hour from his current rate of $3.25 per hour. The Marchidos did not argue about the amounts. Dan Marchido told the employees that they would get the raises if they withdrew from the Union, after they ef- fectuated that withdrawal. After the interview, the three mechanics talked among themselves and agreed to with- draw from the Union. That weekend they went to the union hall and requested that the Union withdraw the election petition. On February 22, the Company received notification that the petition was withdrawn. Reagan and Smith each received raises of $1.50 per hour, effective as of the payroll week ending Friday, March 9. Andre never received his increase, because the Company laid him off during the last week of February. Reagan's suc- cess was short-lived, because he was terminated on March 6. Dan Marchido testified that he told the em- ployees that "if you fellows want a wage increase, we're going to have to go through arbitration with the union and it could take some time or if you want it right away, you can drop the union and we'll do it." Marchido's own version of the interview constitutes not only an admis- sion that he unlawfully promised immediate wage in- creases in order to induce the employees to withdraw from the Union, but also that he further violated the Act by threatening to deal in bad faith with the Union, by delaying or refusing to grant wage increases which he would have promptly granted if they were not represent- ed by the Union. "An employer's legal duty in deciding whether to grant benefits while a representation petition is pending is to determine that question precisely as if a union were not in the picture." Newport Division of Wintex Knitting Mills, Inc., 216 NLRB 1058 (1975). 1 credit the testimony of the employees, and I find that the Company violated Section 8(a)(1) of the Act by promis- ing and subsequently granting wage increases to its em- ployees in exchange for their withdrawal of support for the Union. N.L.R.B. v. Exchange Parts Co., 375 U.S. 405 (1964). I further find that the Company's action tends to indicate that while it wished to keep down labor costs, the Company's primary concern was to maintain a non- union shop. Thus the Company hesitatingly agreed to substantial pay increases, which it supposedly could ill afford, in order to get rid of the Union. Dan Marchido was, as he indicated in his testimony, convinced from talking with other employers that he could not afford to operate with a union. Whether he was concerned with continuing the dealership himself or with maintaining a marketable franchise, it is evident that the Marchidos re- garded nonunion conditions as indispensible. 3 By promis- ing and subsequently granting wage increases in ex- change for withdrawal of union support, the Company succeeded in removing the immediate prospect of union- ization. The next step, as will be discussed, was to secure that result by getting rid of the principal, and indeed only remaining, advocate of unionization. C. The Termination of Walter Reagan On Monday, March 5, Service Manager Westover in- dicated to Walter Reagan that Reagan would be laid off. The next morning Reagan was summoned to the Marchi- dos' office. They gave him a termination slip which indi- cated, without explanation, that he was laid off, and also indicated without explanation that he was not reem- ployable. Reagan testified without contradiction that Dave Marchido threatened: "We're going to fix you, we're going to sue you. The old man is going to sue you too." Dan Marchido then told his brother to calm down, and told Reagan that he was let go "because of just lack of work." The Company did not give Reagan any other reason for his termination. The testimony presented by Dan and Dave Marchido and by Jim Westover concern- ing the reason or reasons for Reagan's termination was shifting and contradictory. Westover testified that Reagan was laid off "strictly for lack of work." Accord- ing to Westover, Dan Marchido asked him for his rec- ommendation about a layoff. Westover testified that he recommended a layoff because work was slow, that he recommended that Andre be selected for layoff, because of problems with his work, and that Reagan be laid off because he was paid more than Frank Smith, the remain- ing mechanic. Dan Marchido initially testified that Reagan was laid off for "strictly an economic reason." Dan Marchido explained that he wanted to make the service department profitable in order to make the fran- chise saleable, and that Reagan was let go because he cost more money than Frank Smith. Dave Marchido tes- tified that they decided to lay off Reagan because he was earning $9 per hour, although Smith could do as good a job at $6.50 per hour, and because Reagan was "bad- mouthing" the business to customers. As an adverse re- buttal witness for the General Counsel, Dan Marchido attempted to bring his version in line with that of his brother. Dan Marchido testified that the "bad mouthing" was a "very important" factor which "triggered" the de- cision to "discharge" Reagan (although Reagan was told that he was laid off for lack of work). However, in his investigatory affidavit to the Board, Dan Marchido stated that the badmouthing had nothing to do with the decision to lay off Reagan. The most illuminating testi- mony in this morass of shifting and conflicting assertions was given by Dan Marchido in response to a question as 3 For the purpose of deciding the issues in this case, it is immaterial whether the Company's decision to sell the Toyota Franchise was made before or after it learned of the union activity. The General Counsel does not contend that the sale was unlavful. As indicated. the Company was determined to keep the Union out, regardless of whether or when it sold the franchise. 481 DECISIONS OF NATIONAL LABO()R RELATIONS BOARD to why the Company failed to recall Marchido when work became available. Dan Marchido answered as fol- lows: A. We already heard that Walt had got a job down in Grand Haven and after he had started this union thing, to be quite honest with everybody, I didn't really care fbr Walt Reagan anymore to even have him round the place. He was creating problems like that and the day we laid him off, there was what hap- pened that morning was it was reported to us that he was saying derogatory [sic] remarks about our business to a customer in the service garage. Q. Was there any- A. I thought after giving him that raise and for him to do that to us, was just too much. [Emphasis supplied.] The above quotation indicates that because of "this union thing" Marchido had already decided before March 6 that he no longer wanted Reagan around the place. Assuming, arguendo, that I were to credit the Marchi- dos' assertion that Reagan was laid off because he was being paid too much money, I would nevertheless be compelled to find that his termination was unlawful. If Reagan was being paid too much money, then that con- dition was brought about by the Company's own unlaw- ful conduct in granting him a substantial wage increase in exchange for his withdrawal of support for the Union. Therefore Reagan's termination would be a direct result of the Company's own unfair labor practices, and would in itself be unlawful. However, it is evident that Reagan's wage rate was not the reason for his termination. As Dan Marchido acknowledged, the Company's service de- partment, like that of franchise auto dealers generally, was not a profitmaking operation. The Company's profit was derived primarily from the sale of used cars, and secondarily from the sale of new Toyota vehicles. The service department was a necessary adjunct of its Toyota franchise. The manufacturer compensated the dealer for service performed under warranty at a labor rate which was below that normally charged to the public. It is evi- dent that under these conditions the Company's best in- terests would be served by fast and competent service, with a minimum of "comebacks," which would have the dual effect of keeping the service departments' financial loss to a minimum, and of attracting prospective purchas- ers of new cars. Until March 1979, Dan and Dave Mar- chido were successful in reducing the service department loss to a tolerable level. Dan Marchido testified that in prior years, when their father operated the business, the service department sustained losses of $20,000 to $30,000 annually. However, in 1978 the service department sus- tained a net loss of only $1,209. In January and February 1979, when business was slow, the service department actually operated at a profit ($1,683 in January and $389 in February). All this was accomplished by a department staff which always included three mechanics. In late February the Company laid off Earl Andre, Parts Man- ager Richard Sly, and cashier-clerk Carol De Rochey. However De Rochey was recalled within 2 to 3 weeks and continued to work for the Company until late July. (In June she received a pay increase of 50 cents per hour.) The General Counsel does not allege that these layoffs were unlawful. It may well be that these layoffs would have occurred without the union campaign. How- ever, it is evident that until Reagan's union activity, the Company had no intention of losing its best and most ex- perienced mechanic. Reagan had worked for the Compa- ny as a mechanic since 1969, had 32 years experience as a mechanic, and was the Company's only "A" mechanic, i.e., qualified to perform the most difficult jobs. Reagan and Andre testified without contradiction that in early January, when work was slow, Jim Westover assured Reagan that if there was a layoff, Reagan would be the last mechanic to be let go. Westover said that the order of layoff would be Andre, Smith, and Reagan, and that in fact Reagan would not be laid off because the Compa- ny would close down the business before letting him go. At this time, as in March 1979, Reagan was earning $2.50 per hour more than Smith. Therefore it is evident the Company preferred to retain Reagan rather than Smith, notwithstanding that Reagan was paid at a much higher rate. In February, Reagan and Smith, together with Andre, agreed to withdraw their demand for union representation in exchange for pay raises. In Smith's case, the employees' decision reflected not only a quid pro quo, but also a change of heart. Smith testified that he felt he made a mistake in joining the Union, that he had "bad feeling" toward the union, and that he told the Marchidos and Westover about his changed attitude. In contrast, Reagan, who initiated the union campaign, was unrepentant. In February, shortly after Dan Marchido threatened to blackball the employees, he asked Reagan what brought about the union campaign. Reagan went into detail about his grievances, which only partially in- volved his rate of pay. Reagan's termination had the pre- dictable effect of impairing the efficiency of the service operation. Notwithstanding the layoffs, the service de- partment sustained a loss of $1,943 in March, the largest monthly loss since Dan and Dave Marchido took over the business. Frank Smith worked substantial overtime hours in March and early April, and Carol De Rochey (after her return) helped in the parts department. James McGowan, a former company employee, was brought in on some evenings to do mechanical work. The Company hired one mechanic who did not work out, and left after a week. In May, the Company hired Calvin Smith (Frank Smith's brother) as a full-time employee "to do mechanic's work" (Dan Marchido's affidavit). Calvin Smith did cleanup work (essentially a part-time func- tion), but he also performed grease jobs, oil changes, minor tuneups, brake jobs, and other minor mechanical work. Calvin Smith was still working for the Company as a mechanic at the time of this hearing. In the mean- time Frank Smith replaced Reagan as the Company's "A" mechanic, and he remained at least until late De- cember 1978. (As of the time of this hearing, Frank Smith and Jim Westover were working for Mona Shores Toyota.) In sum, the Company was well aware that so long as it held the Toyota franchise it could not operate with Frank Smith as its only mechanic. It is evident that the Company terminated Reagan in order to get rid of 4#2 GENE'S TOY()TA SALES AND SERVICES, INC. the last union adherent, and not for reasons of economy or efficiency. The alleged "bad mouthing" by Reagan was demon- strably a pretext. As indicated, Dan Marchido admitted in his affidavit that this matter had nothing to do with the Company's decision to terminate Reagan, and he told Reagan that he was being laid off for lack of work. Ac- cording to Dave Marchido, Frank Smith reported to Jim Westover that Reagan had been bad mouthing the busi- ness to customers, and specifically to one Harold Clem- ens. Dave Marchido testified that the Marchidos asked both Clemens and Reagan about the matter, that Clem- ens said that Reagan was "bad mouthing the manage- ment, and that Reagan admitted bad mouthing the place to Clemens. However no evidence was presented as to the content of the alleged badmouthing. Clemens was not presented as a witness, and Reagan was not ques- tioned about the matter. Testimony about the matter was hearsay, except for the alleged admission by Reagan to the Marchidos. It is possible that Reagan was expressing the grievances which led him to join the Union, or talk- ing about the Company's unfair labor practices. In these circumstances, including the fact that the entire matter was used as an additional pretext to terminate Reagan, I find that Reagan was not subsequently recalled to work for the same reason that he was terminated, namely his union activity, and that Reagan did not engage in any misconduct which would warrant denial of the conven- tional remedies of backpay and reinstatement. American Medical Insurance Company, 224 NLRB 1321, 1329-30 (1976), 235 NLRB 1417, 1418 (1978). 1 find that the Company terminated Reagan because of his union activi- ty, and thereby violated Section 8(a)(1) and (3) of the Act. CONCt USIONS OF Law 1. The Company is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 3. By interfering with, restraining, and coercing its em- ployees in the exercise of the rights guaranteed them in Section 7 of the Act, the Company has engaged, and is engaging, in unfair labor practices within the meaning of Section 8(a)(1) of the Act. 4. By discriminating in regard to the tenure of employ- ment of Walter Reagan, thereby discouraging member- ship in the Union, the Company has engaged, and is en- gaging, in unfair labor practices within the meaning of Section 8(a)(3) of the Act. 5. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Sec- tion 2(6) and (7) of the Act. THE REMEDY Having found that the Company has committed viola- tions of Section 8(a)(1) and (3) of the Act, I shall recom- mend that it be required to cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. 1laving found that the Company discriminatorily ter- minated Walter Reagan, it will be recommended that the Company be ordered to offer him immediate and full re- instatement to his former job or, if it no longer exists, to a substantially equivalent position, without prejudice to his seniority or other rights and privileges, and make him whole for any loss of earnings that he may have suffered from the time of his discharge to the date of the Compa- ny's offer of reinstatement. The backpay for said employ- ee shall be computed in accordance with the formula ap- proved in F. W. Woolworth Company, 90 NLRB 289 (1950), with interest computed in the manner and amount prescribed in Florida Steel Corporation, 231 NLRB 651 (1977). 4 It will also be recommended that the Company be required to preserve and make available to the Board, or its agents, on request, payroll and other records to fa- cilitate the computation of backpay due. Certain aspects of the backpay and reinstatement remedy warrant elaboration, as they are closely related to the merits of the case and involve changes which were the subject of testimony or litigation in this hear- ing. It is settled Board policy that employees should not be deprived of the benefit of pay raises which were granted by the employer in order to discourage union ac- tivity. To do otherwise would be to penalize the employ- ees for the employer's unfair labor practices. Moreover, Dan Marchido testified that he intended to carry out his promises regarding the pay raises, and Frank Smith con- tinued to receive the higher rate of pay for the duration of his employment with the Company. Therefore the finding is warranted that but for his discriminatory termi- nation, Walter Reagan would have continued to receive the rate of 9 per hour. and his gross backpay should be computed accordingly for the duration of Frank Smith's employment. As Smith functioned as Reagan's replace- ment, gross backpay should be computed on the basis of the number f hours worked by Frank Smith. The record indicates that after the Company sold its Toyota dealership, the Company continued to perform mechani- cal work, and continued to use at least one employee (Calvin Smith) for this purpose. Therefore continuing computation of backpay and a conventional reinstate- ment order are warranted. However, in view of the changed nature of the Company's operations since De- cember 1979, the determination of a formula for compu- tation of backpay after Frank Smith left the Company should be left to the compliance stage of this proceeding. The remedy is without prejudice to the right of the Gen- eral Counsel to assert that any person, firm, or corpora- tion is the Company's successor or assign and liable ac- cordingly. Upon the foregoing findings of fact and conclusions of law, and upon the entire record, arid pursuant to Section 10(c) of the Act, I hereby issue the following recom- mended: I See, generally. lwiv Plumbing & theating Co. 138 NLRB 71h, 717 721 (1962) 483 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ORDER5 The Respondent, Gene's Toyota Sales and Service, Inc., Muskegon, Michigan, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Discouraging membership in Local 527, Interna- tional Brotherhood of Teamsters, Chauffeurs, Warehou- semen and Helpers of America, or any other labor orga- nization, by discriminatorily terminating employees, or in any other manner discriminating against them with regard to their hire or tenure of employment or any term or condition of employment. (b) Threatening employees with unfavorable employ- ment references in retaliation for their union activities. (c) Discriminatorily prohibiting or restricting employ- ees from using its telephones for personal calls, in repris- al for their union activities. (d) Promising or granting wage increases to its em- ployees in exchange for their withdrawal of support for said union or any other labor organization. (e) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of their rights to organize, to form, join, or assist labor organiza- tions, including the above-named labor organization, to bargain collectively through representatives of their own choosing, to engage in concerted activities for the pur- ' In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the find- ings, conclusions, and recommended Order herein shall, as provided in Sec. 102 48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes. pose of collective bargaining or other mutual aid or pro- tection, or to refrain from any and all such activities. 2. Take the following affirmative action which is found necessary to effectuate the policies of the Act: (a) Offer Walter Reagan immediate and full reinstate- ment to his former job or, if such job no longer exists, to a substantially equivalent position, without prejudice to his seniority or other rights, and make him whole for losses he suffered by reason of the discrimination against him as set forth in the section of this Decision entitled "The Remedy." (b) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, time- cards, personnel records and reports, and all other re- cords necessary to analyze the amount of backpay due. (c) Post at its Muskegon, Michigan, place of business, copies of the attached notice marked "Appendix." 6 Copies of said notice on forms provided by the Regional Director for Region 7, after being duly signed by Re- spondent's authorized representative, shall be posted by Respondent immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by Respondent to insure that said notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director for Region 7, in writ- ing, within 20 days from the date this Order, what steps Respondent has taken to comply herewith. 6 In the event that 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 National Labor Relations Board" shall read "Posted Pursu- ant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board." 484