Avila Group, Inc.

National Labor Relations Board - Board Decisions

Jun 18, 1975

218 N.L.R.B. 633 (N.L.R.B. 1975)

AVILA GROUP, INC.
Avila Group, Inc.' and District ' 65, Distributive
Workers of America . Case 2-CA-13136
June 18, 1975
DECISION AND ORDER
BY CHAIRMAN MURPHY AND MEMBERS
JENKINS AND PENELLO
On May 28, 1974, Administrative Law Judge
Josephine H. Klein issued the attached Decision in
this proceeding. Thereafter, the Respondent filed
exceptions and a supporting brief, and the General
Counsel and the Charging Party filed briefs in
opposition to the Respondent's exceptions.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the record and the
attached Decision in light of the exceptions and
briefs and has decided to affirm the rulings, findings,
and conclusions of the Administrative Law Judge
only to the extent consistent herewith.
Respondent is a fabric converter which purchases
greige goods at fabric mills, which are shipped to
dyers for processing and sold usually to clothing
manufacturers but occasionally to retailers of piece
goods. These fabrics are stored by the producing
mills, the dyers, or in independent warehouses at
various locations ^ throughout the country. Respon-
dent has also maintained one warehouse itself in
leased premises at 39 West 19th Street in New York
City, where it has stored both current and "obsolete"
fabrics, and employed approximately eight employ-
ees represented by the Union whose contract was
due to expire on April 30, 1973. The parties met on
several occasions, in April 1973 to negotiate a new
contract covering the warehouse employees. At a
meeting on April 27, a union representative an-
nounced that a strike would commence on May 1,
1973, under the ' Union's "no contract, no work"
policy. Respondent's counsel , Steinman, took the
position that the company had a current lease and a
convenient facility in its New York City warehouse
and that it was prepared to execute a reasonable
contract applicable to its employees there. The
Union representative declined to call off the strike
and have the employees remain on the job while
negotiations for a new contract continued-and the
strike accordingly began on May 1, 1973.
The Administrative Law Judge found that Respon-
dent violated Section 8(a)(5) of the Act when in April
1973 (and before its collective-bargaining agreement
with District 65 expired) it made a definite arrange-
ment to subcontract the unit work (sample cutting
218 NLRB No. 110
633
and shipping) being performed at its New York City
warehouse to Consolidated without consulting or
bargaining with the Union concerning that decision,
or its effects upon the unit employees. She further
found that Respondent, having made such an
"undisclosed" subcontracting arrangement, engaged
in bad-faith bargaining at later negotiating sessions
with the Union during April 1973, in violation of
Section 8(a)(5), being already aware, but not having
notified the Union that after expiration of that
contract on April 30 it would have its sample-cutting
and shipping work performed solely by Consolidat-
ed.
The record shows that Respondent's need to
maintain in operation the 19th Street warehouse no
longer 'existed although limited operating conven-
ience, as regards New York City customers, would
continue if the facility were retained. This situation
resulted from changing economic considerations.
First, in past years virtually all of Respondent's
customers were located in the New York metropoli-
tan area where they were served principally by the
19th Street warehouse, while in recent years the
geographic distribution of Respondent's customers
has gradually shifted so that about 80 percent of
them are now outside the New York metropolitan
area, where they are served by other warehouses.
Second, until recently fabrics were packaged in
cartons containing 2,000 to 3,000 yards or more of
fabric. During such times 200-yard samples ordered
by customers would be cut off the larger rolls,
packaged, and sent to customers (or in the case of
piece goods dealers specially folded or "double
rolled"). The remaining material on the large roll was
either repackaged or retained in open bins. In recent
years, however, the industry has changed and fabrics
are now packaged in cartons often containing only
250 to 300 yards. Customers desiring samples of 100
or 200 yards are now in many instances required to
buy an entire small package of 250 to 300 yards of
goods. The amount of sample cutting (and folding
performed for piece goods dealers) has thus been
greatly reduced by use of the shorter fabric rolls and
potential wastage minimized.
In April 1973, therefore, Respondent had new and
more efficient means available to provide samples to
customers which reduced its sample-cutting needs,
and a shifting customer market. Respondent had
under consideration possible discontinuance' of its
19th Street warehouse, and had so informed the
Union during April 1973 negotiations. Nevertheless,
Respondent as late as April 27 requested from the
Union more time to consider whether to take such
action. The Union, however, took an unequivocal
"no contract, no work" position and stated that a
strike would occur on May 1, 1973.
634 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Thus, as the Administrative Law Judge has found,
Respondent represented to the Union, at the last
bargaining session on April 27, 1973, "that, we had 'a
facility, that we had a lease, and that if we could get a
workable reasonable contract we were prepared to
do so." But while taking this seemingly legitimate
hard-line approach in order to reach agreement on
contract terms with the Union, Respondent was
concealing the subcontracting arrangements
(concerning the unit work of sample cutting and
shipping) which it had already consummated with
Consolidated, in early April 1973, in order to prevent
any bargaining about the effects of that subcontract-
ing decision and its concomitant decision to close the
warehouse. This conduct clearly constituted bad-
faith bargaining, as the Administrative Law Judge
found.
Nevertheless, we do not agree with the Administra-
tive Law, Judge's recommendation that Respondent
be ordered to reopen its warehouse and reinstate the
employees. As set forth above, there were sound
economic reasons for closing down the warehouse,
and the Union was apprised of these facts of life.
Therefore, while we find that Respondent engaged in
bad-faith bargaining by concealing from the Union
during negotiations its previously made decision to
subcontract the unit work, we also conclude that
Respondent closed its warehouse operation for
economic reasons. Respondent no longer has a lease
on that warehouse, and all the warehouse machinery
has been sold. Accordingly, in these circumstances,
we' conclude that Respondent should not be required
to reopen its warehouse facility. Walter Pape, Inc.,
205 NLRB 719 (1973).
THE REMEDY
Under such circumstances, we deem it necessary,
in order to effectuate the policies of the Act, to
require that the Respondent bargain with the Union
concerning the effects on its warehouse employees of
its warehouse closing and subcontracting arrange-
ments with Consolidated Textile Services, Inc., and
we shall accompany our Order with a limited
backpay provision designed both to make whole the
employees for losses suffered as a result of the 8(a)(5)
violation and to establish in some practicable
manner a situation in which the parties' bargaining
position is not devoid of economic consequences for
the Respondent. We shall do so in this case by
requiring the Respondent to pay backpay to its
employees in a manner analogous to that required in
Walter Pape, Inc, supra. Thus, the Respondent shall
pay employees backpay, at the rate of their normal
wages when last in Respondent's employ on April 30,
1973, from August 24i -of the same, year, the date of
the employee-strikers' unconditional offer to return
to work, until the occurrence of the earliest of the
following conditions: (1) the date Respondent
bargains to agreement with the Union on the effects
of the subcontracting and warehouse shutdown on its
warehouse employees; (2) a bona fide impasse in
bargaining; (3) the failure of the Union to request
bargaining within 5 days of this Decision and Order,
or to commence negotiations within 5 days of the
Respondent's notice of its desire to bargain with the
Union; or (4) the subsequent failure of the Union to
bargain in good faith; but in no event shall the sum
paid to any, of Respondent's employees exceed the
amount he would have earned as wages from the
date on which he would have been reinstated by the
Respondent if it had not closed' its New York City
warehouse, to the time he secured -equivalent
employment elsewhere, provided, however, that in no
event shall this sum be less than these employees
would have earned for a 2-week period at the rate of
their normal wages when last in the Respondent's
employ.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby orders that Respondent,
Avila Group, Inc,. New York, New York, its officers,
agents, successors, and assigns, shall:
1. Cease and desist from:
(a) Failing or refusing to bargain with District 65,
Distributive Workers of America, or any other labor
organization representing its warehouse employees;
with respect to the effects of Respondent's decision
to subcontract its sample cutting, shipping, and any
related warehouse work to Consolidated Textile
Service Corp., Patterson, New Jersey.
(b) Failing or refusing, upon request, to bargain in
good faith with the above-named Union, or with any
labor organization representing its warehouse em-
ployees, with respect to rates' of pay, wages, hours, or
other terms or conditions of employment.
(c) In any like or related manner interfering with,
restraining, or coercing its` warehouse employees in
the exercise of their right to self-organization, to
form, join, or assist labor, organizations, to bargain
collectively through representatives of their own
choosing, or to engage in other concerted activities
for the purpose of collective bargaining or other
mutual aid or protection as guaranteed in Section 7
of the National Labor Relations Act, as amended, or
to refrain from any or all such activities.
I Cf. A. P. W. Products Co., Inc. 137 NLRB 25 (1962).
AVILA GROUP, INC. 635
2. Take the following affirmative action which, it
is found, will effectuate the policies of the National
Labor Relations Act, as amended:
(a) Make all warehouse employees employed by
Respondent on April 30, 1973, whole in the manner
set forth in the section of this Decision and Order
entitled "The Remedy" for any loss of earnings they
may have suffered by reason of Respondent's
subcontracting its above-mentioned warehouse work
to Consolidated, and closing its warehouse.
(b) Preserve and, upon request, make available to
the Board or its agents, for examination and copying,
all payroll records, social security payment records,
timecards, personnel records and reports, and all
other records necessary to analyze the amount of
backpay due under the terms of this Order.
(c) Upon request, bargain in good faith with the
above-named Union, or any other labor organization
representing Respondent's warehouse employees,
with respect to the effects on such employees of its
decision to subcontract the aforementioned ware-
house work to Consolidated.
(d) Mail to all warehouse employees employed by
Respondent on April 30, 1973, copies of the attached
notice marked "Appendix.' 12 Copies of said notice,
on forms provided by the Regional Director for
Region 2, after being duly signed by its authorized
representative, shall be mailed immediately upon
receipt thereof to such employees at their last known
addresses.
(e) Deliver to the Regional Director for Region 2
signed copies of said notice in sufficient number for
posting by District 65, Distributive Workers of
America, it being willing, at all locations where
notices to its members are customarily posted.
(f) Notify the Regional Director for Region 2, in
writing, within 20 days from the date of this Order,
what steps the Respondent has taken to comply
herewith.
2 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 L ead "Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board."
APPENDIX
NOTICE
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
After a trial in which all sides had the opportunity to
present their evidence , the National Labor Relations
Board has found that we, Avila Group, Inc., violated
the law and has ordered us to mail this notice to all
warehouse employees who were employed by us at
our warehouse located at 39 West 19th Street, New
York City, New York, on April 30 1973, and we
intend to carry out the Order of the Board and abide
by the following:
WE WILL NOT subcontract our New York City
warehouse work (that is cutting, shipping, and
related warehouse work) to any other company in
the way we subcontracted such work to Consoli-
dated Textile Service Corp. without bargaining
with District 65, Distributive Workers of
America, over the effects of such subcontracting
decision.
WE WILL NOT refuse to bargain in good faith
with the above-named or any other labor organi-
zation which represents our employees in an
appropriate unit respecting rates of pay, wages,
working hours, and other matters relating to your
employment.
WE WILL NOT in any like or related way
interfere with any rights guaranteed to you by
law.
WE WILL pay you for any wages you lost
because we discharged you when we subcontract-
ed our warehouse work to Consolidated Textile
Service Corp. for a period required by a Decision
and Order of the National Labor Relations
Board.
WE WILL bargain in good faith with District 65,
Distributive Workers of America, concerning the
effects upon our warehouse employees of our
decision to subcontract the above-mentioned
warehouse work to Consolidated.
AVILA GROUP, INC.
DECISION
STATEMENT OF THE CASE
JOSEPHINE H. KLEIN, Administrative Law Judge: Upon a
charge filed against Avila Group, Inc. (Respondent), by
District 65, Distributive Workers of America (the Union),
on October 26, 1973 ,1 a complaint was issued on January
18, 1974, alleging that Respondent unlawfully refused to
bargain with the Union by negotiating in bad faith and by
subcontracting work without consultation and bargaining
with the Union , in violation of Section 8(a)(5) and (1) of
the Act,2 and unlawfully refused to reinstate strikers, in
contravention of Section 8(a)(3) and (1).
Pursuant to due notice, a hearing on the complaint was
held before me in New York, New York, on March 1 I and
12, 1974. All parties were represented by counsel and were
1 Except where otherwise specified, all dates herein are in 1973.
2 National Labor Relations Act, as amended (61 Stat. 136,73 Stat. 519,
29 USC § 151 , et seq.).
636 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
afforded full opportunity to be heard, to present oral and
written evidence, and to examine and cross-examine
witnesses. All `parties presented oral argument and filed
briefs after the trial.
Upon the entire record, observation of the witnesses, and
consideration of the arguments and briefs, I make the
following:
FINDINGS OF FACT
I. PRELIMINARY FINDINGS
Respondent, a New York corporation with an office and
place of business in New York, New York, is engaged in
converting, selling, and distributing textiles and related
products. During the past year, a representative period,
Respondent in the course and conduct of its business
operations manufactured, sold and distributed at its place
of business products valued in excess of $50,000, of which
products valued in excess of $50,000 were shipped from
said place of business in interstate commerce directly to
states other than the state in which it is located.
Respondent is, and has been at all times material herein,
an employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
The Union is, and has been at all times material herein, a
labor organization within the meaning of Section 2(5) of
the Act.
H. THE UNFAIR LABOR PRACTICES
A. The Issues
On May 1, the day after expiration of the collective-
bargaining agreement covering Respondent's warehouse
workers, the employees went on strike. The warehouse was
closed and Respondent permanently subcontracted the
work previously performed therein. Respondent sent
severance pay and thereafter refused to resume contract
negotiations and refused to reinstate the striking employees
when they unconditionally offered to return to work in
August.
The complaint- alleges that Respondent had previously
made arrangements for the permanent subcontracting of
its warehouse operation without consulting the Union and,
having made such arrangements, engaged in bad-faith
bargaining, with no intention of reaching agreement on a
renewal contract. Additionally, the complaint alleges that
Respondent's subsequent refusal to reinstate the strikers
was violative of Section 8(aX3). In defense, Respondent
maintains that the warehouse closing was caused solely by
the strike and that the employment relationship was ended
when the collective-bargaining agreement expired and
Respondent contracted out the warehouse work as a lawful
method of continuing its business operations in face of the
strike.
B. The • Facts
Respondent, a fabric converter, purchases greige goods
at fabric mills, has them shipped to dyers for processing,
3 Witness Arnold Natale testified that some cartons may contain as
much as 7,000 yards.
and then sells them, primarily to clothing manufacturers,
although some sales are made to retailers of piece goods.
Much of Respondent's merchandise is stored with the
producing nulls and the dyers and in independent
warehouses in various locations throughout the country.
However, until April 30, 1973, Respondent also maintained
its own warehouse in leased premises at 39 West 19th
Street in New York City. At its 19th Street warehouse
Respondent maintained substantial inventories of both
current and "obsolete" fabrics.
Until comparatively recently, fabrics were generally
packaged in cartons containing some 2,000 to 3,000 yards
or more.3 "Samples" of around 200 yards have been
supplied and shipped to customers from Respondent's
New York warehouse. To fill an order for such a sample,
Respondent's warehouse employees would open a carton
and cut off the sample, package it, and send it to the
customer. Apparently the material left was either repack-
aged or retained in "open bins." 'Sales to piece goods
dealers required somewhat different handling (folding or
"double rolling"), which also was performed at Respon-
dent's warehouse. Essentially the same equipment is ,used
for both sample cutting and double rolling. The other
storage facilities used by Respondent just keep the fabric in
"dead storage" and ship unopened cartons to Respon-
dent's customers upon instructions by Respondent. It also
appears that the number of storage facilities used by
Respondent fluctuates, generally ranging between 20 and
30. Goods are frequently transferred from one storage
establishment to another, as when the original depository
needs the space.
According to Respondent, in the past few years there has
been a shift to packaging goods in smaller amounts of
around 250 to 300 yards. Customers desiring "samples" of
100 to 200 yards are now often required to purchase an
entire package of 250 to 300 yards. Thus, according to
Respondent, the amount of sample cutting required is
declining.
Respondent's representatives also testified that for some
time the geographic distribution of its business has been
gradually shifting, so that now some 80 percent of its
customers are outside the New York metropolitan area,
whereas in past years virtually all its customers were in
New York. Further, even those customers still in New
York no longer expect the very fast delivery of samples
which is possible only from a'warehouse in the city. Thus,
according to Respondent, maintenance of a New York
City warehouse, while convenient, is no longer essential to
its business.
At its New York warehouse Respondent had around 9 or
10 employees,4 who were represented by the Union. In the
past Respondent had been a member of the Association of
Uptown Converters, Inc., and party to the Association
collective-bargaining agreements. However, it left the
Association and its most recent agreement was individual.
Its most recent agreement, like the Association contract,
was to expire on April 30, 1973.
In a letter dated February 23 the Union advised
Respondent of the Union's "desire to make certain changes
4 The collective-bargaining agreement prescribed a "basic crew" of 6
employees. See infra
AVILA GROUP, INC. 637
in our contract." Under date of February 27 Respondent
notified the Union that "Avila Group, Inc. proposes to
terminate the said contract as of April 30, 1973, and offers
to meet and confer with you for the purpose of negotiating
a new contract."
Apparently thereafter there was some telephone commu-
nication between Respondent's counsel and union repre-
sentatives, but no actual steps were taken toward com-
mencing negotiations until April 2. On that day Respon-
dent's counsel wrote to the Union requesting "a meeting as
soon as possible" because "time is getting short." It was on
the same date that the Union sent its contract demands to
Respondent. Negotiating meetings were held on April 16,
23, 24, and 27, without any agreement being reached.
The General Counsel presented no evidence concerning
the content of the negotiating sessions. Irving Leblang,
Respondent's vice president, testified briefly concerning
the April 27 meeting, the only one he had attended. He
testified that at that meeting the union representative
announced that a strike would commence on May 1 under
the Union's "no contract, no work" policy. According to
Leblang, Phillip Steinman, Esq., representing Respondent,
asked the Union not to strike but to continue negotiations.
Steinman said "that we had a facility, that we had a lease
and that if we could get a workable, reasonable contract we
were prepared to do so." The union representative,
however, refused to call off the scheduled strike and have
the employees stay on the job while contract negotiations
continued.
The strike began on May 1. On that day Steinman sent
the Union a list of the "severance pay" due under the
expired contract to each of 8 named employees. The letter
requested that the Union check the accuracy of the figures
and concluded by saying that checks would be sent to
employees in 5 days if Respondent did not hear from the
Union. The collective-bargaining agreement had provided
a formula for computing severance pay "(A) In the event
of the voluntary or involuntary liquidation of the business;
[and] (B) In the event of permanent layoff of an
employee." Although the agreement also called for
advance deposit of the amount of severance pay, such
advance had not been made. On May 4 Respondent sent
its "final payment" to the union health and welfare fund.
On May 4 the Union wrote Respondent that its conduct
was "unsatisfactory to the Union, since the basic concept
that the employer has the right to restructure the firm at
the expense of the Union members is not acceptable." The
Union said the issue was "jobs, not severance" and asked
that Respondent state its intentions concerning "future
jobs and all other companion issues" so that the parties
could then discuss "all the issues." Under date of May 7
Respondent's counsel replied to the Union letter as
follows:
I am in receipt of your letter of May 4th, 1973 and
do not understand your failure to realize what has
happened.
I am sure you recall that during our negotiating
session I mentioned a number of times that the
warehouse operation had become unnecessary and it
was not economically wise to continue. In that
connection I told you that the employer was hesitant
about eliminating that operation and would like more
time to consider. With that in mind I requested that we
continue working after April 30th, but, your answer
was "no contract no work." That, of course, made the
employer's decision.
On May 9 the Union advised Respondent that the
"severance pay" would be credited to the "Severance
escrow fund" provided in the contract, "without prejudice
to [the Union's] position that the firm has,not liquidated."
The letter also stated that the "employees are prepared to
continue their employment with [Respondent] at [its] new
location" and' suggested an "immediate meeting between
the Company & Union with a committee of workers." On
behalf of Respondent, Steinman rejected the request,
writing to the Union:
You were told during the negotiations that my client
was considering discontinuing the warehouse operation
and, as I wrote you in my last letter, your refusal to
permit your members to work after April 30th, because
as you said `no contract no work,' made up the
employer's mind about discontinuing the operation
since you gave him no choice.
There is no new location and there is no collective-
bargaining agreement because the agreement expired
by its terms April 30th. -
That letter apparently marked the end of communica-
tions between the parties until August 24, when, after
having withdrawn the picket line on August 21, the Union
formally offered the employees' return to work and
requested that Respondent "immediately resume bargain-
ing with the Union." Julius Reinfeld, the Union's repre-
sentative at that time, testified that he then spoke with
Steinman about the possibility of Respondent's opening a
new warehouse in New York, possibly smaller than the one
it had previously operated. Respondent rejected the
possibility on the ground that it was then "too late" and
Respondent did not want to have anything to do with the
Union. Primarily on the basis of his demeanor, I credit
Reinfeld's testimony, which was not directly contradicted
or denied.5
The General Counsel and the Union maintain that
before the contract expired Respondent had arranged to
subcontract all the unit work and violated Section 8(aX5)
of the Act by failing to consult and bargain with the Union
concerning that decision. They further contend that,
having made such undisclosed arrangements, Respondent
manifestly engaged in bad faith bargaining in the negotia-
tion sessions in April. Respondent, on the other hand,
denies that it had reached any subcontracting decision
before April 30 and asserts that the decision to subcontract
the work and abandon the 19th Street warehouse was made
only when the strike closed the warehouse. The following is
a summary of the evidence relevant to determination of
this factual dispute.
S In its brief Respondent does not refer to this part of Reinfeld's
testimony and does not attack his credibility.
638 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In December 1972 Respondent made its first contact
with Consolidated Textile Services, Inc., of Paterson, New
Jersey. Benjamin Michaelson, Respondent's president, and
Felice Palaciano,6 its head converter, conferred with
Arnold L. Natale,6 president of Consolidated, concerning
Consolidated's ability to store some of Respondent's
goods . At that time Respondent's representative spoke
mainly of goods then being held for Respondent by Leader
Dyeing and Finishing, of Paterson, New Jersey. After some
negotiation, Respondent and Consolidated agreed on a
price for storage of Respondent's goods. Thereafter, in the
latter half of December 1972, Irving Leblang, Respon-
dent's vice president, visited the Consolidated premises to
examine the facilities and setup for the storage of
Respondent's goods. During that visit Leblang questioned
Natale as to services other than storage that Consolidated
could perform. Of principal interest to Leblang was
Consolidated's ability to handle sample cutting. Natale
assured Leblang that Consolidated could perform that
service . However, at that time arrangements were made
only for storage of Avila goods by Consolidated.
Early in January 1973 some of Respondent's goods
started to arrive at Consolidated from Leader. Beginning in
February Consolidated began to receive Avila goods from
other dyers. At this time Respondent's 19th Street
warehouse was also overcrowded. Accordingly, apparently
in the latter part of January and in February, some goods
and some file cabinets were shipped from the 19th Street
warehouse to Consolidated for storage. Having prepared
the material for shipment, Respondent's employees pre-
sumably knew of the transfer. But no notice was given to
the, Union as such. In any event, this transfer of material
did not reduce or affect the amount or kind of work
available to Respondent's warehouse employees. By March
several hundred cartons of Respondent's goods were stored
at Consolidated. With possibly very few exceptions, in
which it folded some material, Consolidated did not open
any of these cartons but simply stored them and shipped
them to customers on instructions from Respondent.
Natale testified that in March Palaciano first spoke
seriously of the possibility of Respondent's having its
sample cutting performed by Consolidated. At that time a
price for that service was negotiated but Respondent made
no definite commitment. It was late in March or early in
April that, according to Natale, Respondent made a
definite commitment that Consolidated would do sample
cutting for Respondent beginning "[a ]fter May sometime."
Natale testified that in one of the two conversations lust
mentioned he asked if Respondent had a union. Upon
being informed that District 65 represented Respondent's
employees, Natale expressed concern, since Consolidated's
employees were represented by a Teamsters' local. Natale
indicated that he would not take on Respondent's work if
it would cause him union trouble. According to Natale,
Palaciano or Michaelson assured him that there would be
no problem because Respondent's contract with District 65
was expiring at the end of April and Respondent did not
intend to renew it.T Natale further testified that the
commitment for Consolidated's sample cutting services
was "open-ended," with no suggestion that the arrange-
ment was to be temporary or of limited duration. Upon
inspecting the area which Natale proposed to use for the
work, Palaciano requested that the area be arranged.
Thereupon, in April, in accordance with Palaciano's
instructions, Natale had lights installed and bins rear-
ranged so they would be ready for Palaciano's placing
Avila's goods when they arrived in the future.
Leblang and Palaciano testified that around March or
April, as a result of newspaper reports and general talk,
they became concerned that there would be a general
industry strike upon expiration of the contracts.s Palaciano
testified that he consulted Leblang and it was agreed that
Palaciano would look into the possibility of using Consoli-
dated's services in the event of a strike. Leblang did not
testify to any such specific conversation with Palaciano.
Palaciano testified that thereupon, around April 10, he
visited Consolidated and "asked [Natale] if it were
possible, should there be a strike by Local 65 . . . would it
be possible for him to help us if we needed sample cut work
and he said yes, that he would be able to help us."
Palaciano later testified that price was not discussed during
that conversation but was arranged during the first week in
May, after the strike began. Palaciano corroborated
Natale's testimony that in the April conversation nothing
was said about the duration of the arrangement. Palaciano
affirmatively testified that he always assumed that the
subcontracting arrangement was to be permanent .9
In the first half of May Palaciano spent considerable
time at Consolidated arranging Respondent's goods as
they arrived. During that time Palaciano had installed a
direct telephone line between Consolidated and Respon-
dent's office. On specific instructions from Palaciano,
Consolidated shipped cartons to customers and opened
others to place the contents in open bins. Around the
middle of May Consolidated did its first sample cutting for
Respondent.
The sample cutting relationship between Respondent
and Consolidated was ended in the latter part of June on
pressure from the Union. At that time ^ Al Dicker, vice
president of the Union, accompanied by a' representative of
6 "Palaciano" and "Natale" appear to be correct spelling despite
different spelling appearing at points in the transcript.
7 The relevant portion of Natale 's testimony is:
A. . . . So, I don't recall if it was at that time or the previous
meeting when I asked them if they were affiliated with any union, and
they said yes, they were. I asked them who it was and they said Local
65. 1 believe they asked me also if I had a union, and I said yes, I do. So
I said, well, if it is going to mean any trouble it's not for me, because
I'm not looking for any trouble So they said, well, they have no
obligation because, in other words, their contract is expiring at the end
of April, the 1st of May, the first of May I flunk it was....
w « s s
Q. Did anybody say what was going to happen after the contract
expired?
A That I would be doing their work because they weren't going to
renew the contract, it wasn't feasible for them, they didn't have enough
room.
8 No newspaper reports were produced. The evidence establishes,
however, that there actually was a strike, lasting about a week, against the
Association employers.
9 In this context , as in employment situations, "permanent" is synono-
mous with "at will."
AVILA GROUP, INC. 639
Local 514 of the Teamsters, with which Consolidated had a
collective-bargaining agreement, visited Consolidated.
Dicker issued an ultimatum to the effect that the Union
(District 65) would set up a picket line at the premises
unless Consolidated got rid of Avila.'s goods forthwith.'0
At this point Avila arranged to have its sample cutting
work done by Riverbend Warehouse Services, a new
establishment in Danielson, Connecticut. Within a day or
two after Dicker's ultimatum, Consolidated started to ship
out Avila goods according to Respondent's directions.
Respondent sold its cutting equipment, worth about $4000,
to Riverbend.
Avila goods entrusted to Consolidated for storage, as
distinguished from that which had been sent for sample
cutting and similar services, remained with Consolidated
until October, when Respondent had them moved else-
where because Consolidated announced a rate increase for
storage. It was also in October that Respondent subleased
the 19th Street warehouse until January 31, 1974, when its
prime lease expired."
C. Discussion and Conclusions
1. Section 10(b)
The complaint, as amended at the hearing, alleged, inter
alia, that Respondent violated Section 8(a)(5) of the Act by
making a subcontracting arrangement with Consolidated
"in or around March" and commencing to implement that
arrangement in "early April," both without notifying the
Union or giving it a chance to bargain with respect
thereto.12 Since the complaint also alleged that the charge
had been filed and served on October 26, at the hearing I
raised the question whether the foregoing allegations were
not dismissible on their face as time. barred under Section
10(b). After some discussion of the question, it was left
open for disposition in the decision of the case.
Respondent had not pleaded Section 10(b) as a defense
in its answer to the complaint, did not move to amend its
answer, expressed no opinion on the question at the
hearing , and has not addressed itself to the issue in its
posttrial brief. Thus, it is perhaps sufficient to observe that
any defense based on the statute of limitations has been
waived. See, e.g ., H. A. Belo Corporation [WFAA-TV] v.
N.L.RB., 411 F.2d 959, 966 (C.A. 5, 1969), cert. denied 396
U.S. 1007 (1970), and cases there cited.
In some instances, however, the Board has applied
Section 10(b) where , so far as the decisions show, it had not
been pleaded or raised before the Trial Examiner. Howard
Manufacturing Company, Inc., 180 NLRB 220 (1969),13
enfd. 436 F.2d 581 (C.A. 8, 1971), cert. denied 402 U.S.
930; Shovel Supply Company, Inc., 162 NLRB 460, fn. 1.14
Thus, a brief discussion of the matter may be in order
As the General Counsel and the Union contend, the
10(b) limitations period, like all Federal statutes of
limitations, will be tolled during any period of "fraudulent
concealment" of the violative conduct. Atlantic City
Electric Co. v. General Electric Co., 312 F.2d 236, 239 (C.A.
2), cert. denied 373 U.S. 909. In the present case it was
stipulated that "at no time did the company tell the Union
of its arrangement with Consolidated." It does appear that
around February Respondent started to ship some materi-
als to Consolidated for storage. But, as Respondent
established at the hearing, the 19th Street warehouse at
that time was very crowded. Respondent has always had
goods stored in many different locations. Thus, observing
goods being transferred from the crowded 19th Street
warehouse to Consolidated for storage would not alert the
employees to the possibility that the 19th Street warehouse
was to be abandoned or that services other than storage
would eventually be transferred.15 Respondent' s silence,
even if it were not active deceit, was sufficient to toll the
limitations period. Saylor v. Ltndsley, 391 F.2d 965, 970
(C.A. 2). Accordingly, I find that, even if the final decision
to close the warehouse and the arrangements for effectuat-
ing that decision were made before April 26, the 10(b)
period did not begin to run until May 1, the earliest date
on which the Union could have become aware of it and the
earliest date on which the decision had any impact on the
employees and the Union. Cf N.LR.B. v. Duncan Foundry
and Machine Works, 435 F.2d 612, 619 (C.A. 7, 1970), enfg.
176 NLRB 263; Russell-Newman Manufacturing Company,
Inc., 167 NLRB 1112, 1115 (1967), enfd. 406 F.2d 1280
(C.A. 5, 1969).
In any event, the complaint also alleges that Respondent
violated Section 8(a)(5) by ceasing its warehouse opera-
tions on May 1 and by bargaining in bad faith "[a]t all
times material herein." Both the cessation of the warehouse
operations and at least the final negotiating session took
place within the permissible 6-month period. Evidence of
Respondent's prior decision to subcontract and arrange-
ments with Consolidated is clearly admissible and relevant
to cast light on and reveal the true nature of the conduct
within the limitations period which is alleged as violative of
the Act. Whether or not the, decision to subcontract and
the arranging therefor with Consolidated may themselves
to Natale testified that Dicker said the picket signs would say "Avila
goods on strike" and added : "When a truck goes by and he sees the [sign]
. we're going to flag you by:' Cf. Schwarzbart v. District 65, National
Council of Distributive Workers [Newburgh Dyeing Co.], 85 LRRM 2993
(S.D.N.Y .), granting an injunction under Sec. 10 (1) of the Act against
picketing by the Union, under Dicker's direction.
11 In its brief, Respondent says : "While the warehouse was still in
existence and in the possession of the Respondent it might have been
ossible to resume o erations but when the strike continued for severalp p ,
hh h d b fl d O be 29 1965 h B d de c saiarge a een i e on ,cto r , t e oaz :tmonths, the Respondent disposed of his equipment and sublet the space ink
July of 1973." However , Michaelson, Respondent's president , testified that, "Accordingly, and contrary to the Trial Examiner's finding that Respon-
the lease "expired on January 31 ," 1974, and Respondent "subleased the dent failed to bargain in good faith from on or about April 16, 1965, we find
prenuses in October of 1973 for the last four months of the lease." that such failure occurred on and after May 7, 1965, the date of the parties'
12 As originally filed , the complaint allege that the arrangement was second bargaining meeting."
made in "late December , 1972 or early January, 1973" and its implementa- 15 No opinion is here expressed as to whether knowledge by the
tion began in early January. employees would be imputable to the Union.
13 In Howard Mfg. Co., Sec. 10(b) had been raised and sustained as a
defense to some of the allegations. However, it does not appear to have been
raised as' to the alleged unlawful institution of a new leave policy. Reversing
the Trial Examiner's finding of a violation as to that , the Board said: `"The
Trial Examiner ... failed to note that the charge ... was filed ... more
than 6 months after the notice was posted:'
14 In Shovel Supply the complaint "alleg[ed] that, since on or about April
16, 1965" the respondent had refused to bargain in good faith. Noting that
640 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
be found violative of the Act, they established the
backdrop against which the actual subcontracting and
negotiations were conducted after April 26.
Accordingly, for the foregoing reasons I hold that
Section 10(b),-even if properly pleaded, would not be a
defense to the present complaint.16
2. Section 8(a)(5)
If I correctly understand its position, Respondent claims
that in April it made arrangements for continuing
operations in the event of a strike and that when the
contract expired and the strike actually began, Respondent
was legally free to effectuate such arrangements, with no
obligation toward the Union. This position, however,
proceeds from several errors of law. The expiration of a
collective-bargaining agreement does not end an employ-
er's obligation to bargain. As said by the Board in Shell Oil
Company, 149 NLRB 283, 287 (1964):
... it is well settled that notwithstanding the
termination of a labor contract, the parties, pending its
renewal or renegotiation, have the right and obligation
to maintain existing conditions of employment Unilat-
eral changes therein violated the statutory duty to
bargain in good faith... .
See also N. L R.B. v. Sky Wolf Sales, etc., 470 F.2d 827, 830
(C.A. 9, 1972). It is equally well settled that a "strike does
not in and of itself suspend the bargaining obligation."
General Electric Company, Battery Products, Capacitor
Department v. N.L.R.B., 400 F.2d 713, 729 (C.A. 5, 1968),
cert. denied 394 U.S. 904 (1969), and cases there cited;
N.L.R.B. v. United States Cold Storage Corp., 203 F.2d 924,
928 (C.A. 5). The evidence in the present case leaves no
doubt that Respondent conditioned further bargaining on
the employees' remaining at work and terminated the
employment, thus totally changing existing conditions,
upon the expiration of the contract.
Respondent also maintains that its payment of severance
pay under the expired contract absolved it of any further
obligation . As noted above, the Union stated that it would
credit the severance pay to the escrow account called for
by the contract. No opinion is here expressed as to the
contractual rights and obligations between the parties as to
the severance pay. Respondent does not, and could not
reasonably, contend that the contractual provision for
severance pay in itself conferred on Respondent the
absolute right unilaterally to discontinue the warehouse
operation. The expiration of that contract "would permit
the Company to negotiate for a new and different .. .
arrangement , but would not allow it to institute a unilateral
change on this mandatory bargaining issue without
negotiating." N.L R.B. v. Frontier Homes Corporation, 371
F.2d 974, 980 (C.A. 8, 1967).
Respondent seeks to rely on its legal right to subcontract
in order to continue operations in the face of the strike.
The right of an employer to take necessary steps to
continue operations during a strike may be conceded.
Empire Terminal Warehouse Company, 151 NLRB 1359,
1365 (1965), affd. sub nom. Dallas General Drivers,
Warehousemen and Helpers, Local Union No. 745 v.
N.L.R.B., 355 F.2d 842 (C.A.D.C., 1966); Shell Oil Co.,
supra, 149 NLRB at 285. Cf. Sign andPictorial Union Local
1175 Brotherhood of Painters, Decorators and Paperhangers
of America, AFL-CIO v. N. L. R. B., 419 F.2d 726, 736
(C.A.D.C.), affg. W. L. McKnight, d/b/a Webster Outdoor
Advertising Company; 170 NLRB 1395 (1968). But the
employer's right to take action, without notice to the union,
to continue operation during a strike does not embrace the
broader power to use a strike as the occasion' to alter
working conditions permanently without bargaining. That
is made clear, for example, in Empire Terminal Warehouse
Co., supra, where the Board said that "an employer was not
under a duty to bargain over temporary subcontracting
necessitated by a strike where such subcontracting did not
transcend the reasonable measures necessary in order to
maintain operations in such circumstances." In'' holding
that the subcontracting in Empire Terminal was not
unlawful, the Board emphasized the facts that it had been
undertaken at the request of the employer's customers and
"solely as a stopgap or temporary measure in order to
continue its business relationship with these customers"
and did not "eliminate, permanently or otherwise, any unit
jobs or otherwise alter or impair the bargaining unit, and
... did not exceed what was necessary to protect
Respondent's customers whose deliveries were in jeop-
ardy." See also Shell Oil Co., supra, 149 NLRB at 288, fn. 5.
In N.L R.B. v. Robert S. Abbott Publishing Company, 331
F.2d 209 (CA. 7, 1964), cited by Respondent, the employer
originally subcontracted only to assure continued opera-
tions during a strike and it was only later that it discovered
that subcontracting was economical and therefore decided
to subcontract permanently. Here the evidence
(particularly Palciano's testimony) makes it clear that from
the beginning Respondent intended the subcontracting to
be permanent. In Hawaii Meat Co., Ltd v. N.L.R.B., 321
F.2d 397 (C.A. 9, 1963), also cited by Respondent, it does
not appear whether the employer originally intended the
subcontracting to be permanent and the court apparently
considered that fact immaterial. Although it reversed the
Board's fording that the subcontracting was violation of
Section 8(a)(5) of the Act, the court said (p. 399):
We also assume that if the employer decides to
subcontract as a means of keeping its plant operating
during an economic strike, and if thereafter a request is
made to bargain upon such decision, the employer's
duty to bargain, which is not terminated by the
existence of a strike, embraces a duty to bargain about
the question of whether, when the strike is over, he will
continue the subcontract arrangement....
Thus, the courts' decisions in Abbott Publishing and Hawaii
Meat do not support Respondent's contention that it did
not violate Section 8(a)(5) of the Act by permanently
subcontracting its warehouse operation without offering to
negotiate with the Union.
16 No opinion is expressed on the General Counsel's and Union's
argument that Sec. 10(b) is inapplicable because the refusal to bargain was a
"continuing" violation.
AVILA GROUP, INC. 641
In any event, it does not appear that the Board has ever
expressly accepted those court decisions to the extent that
they differ from the Board 's views. Southern California
Stationers, Wallace Printing Co., 162 NLRB 1517, 1542
(1967). Cf. Rice Lake Creamery Co., 151 NLRB 1113, 1116,
fn. 12 (1965), modified 365 F.2d 888 (C.A.1).C., 1966), cert.
denied 371 U.S. 827 (1967). Under the Board 's decisions
(Hawaii Meat Co., 139 NLRB 966 (1962), and Robert S.
Abbott Publishing Co., 139 NLRB 1329 (1962)), Respon-
dent's subcontracting of the sample cutting work without
bargaining with the Union would be found violative of
Section 8(a)(5) even if it had been instituted solely to
continue operation in face of a strike.17
The complaint further alleges that "Respondent bar-
gained in bad faith and with no intention of entering into a
collective bargaining agreement." The General Counsel
presented no direct evidence concerning the bargaining
other than a stipulation as to the date of four negotiating
meetings held in April . Respondent maintains that the
absence of any such evidence requires dismissal of the
allegation . But if, as the complaint alleges, Respondent had
decided to subcontract and made arrangements therefor in
March , it could hardly have been bargaining in good faith,
with an intention of reaching agreement , in April.
If credited , Natale's testimony establishes that Respon-
dent had decided not to renew the collective-bargaming
agreement and to subcontract the warehouse operations
before it purported to engage in collective bargaining.
Thus, it is necessary to determine Natale 's credibility.
Natale's demeanor impressed me very favorably. Fur-
ther, he was essentially disinterested . Indeed, if anything,
he had more reason to be hostile toward the Union than
toward Respondent, since it was the Union which caused
Consolidated to lose Respondent 's sample cutting business
in June, after it had gone to considerable effort and
expense to rearrange its facilities to accommodate the
business .' To be sure, Natale apparently somewhat resented
what he considered the low price levels which Respondent
had agreed to. But he had accepted and operated under
those prices . For about 4 months after losing the sample
cutting work he continued to provide storage services for
Respondent , apparently under the original prices.
Additionally,' Natale's testimony was more specific and
forthright than that of Respondent 's representatives.
Palaciano testified that he had originally asked Natale
about the feasibility of Consolidated's doing the sample
cutting in the event of a strike. But then Palaciano could
not recall precisely what he had said to Natale . Natale, on
the other hand, specifically recalled asking about the union
situation and receivin' Palaciano's assurance that there
would be no problem because Respondent was not going
to renew its contract with ' the Union. Natale's testimony in
this respect comports with the probabilities . Since Consoli-
dated had a collective-bargaining relationship with a
Teamsters local, it is probable that Natale would have
some misgivings about courting a possible jurisdictional
i7 For example, in Hawaii Meat the Board held (139 NLRB at 969) that
an employer fails to bargain and violates Section 8 (a)(5) if, after a strike
begins, he does not give the union an opportunity to bargain about his
proposal to change, the existing terms and conditions of employment among
which, and not the least important, is the permanency of the job
classifications which were held by employees when the strike began "
wrangle. While subsequent events proved that Natale was
perhaps overly naif in accepting Respondent's assurance, it
is reasonable to believe that he sought it.
On the other hand, it seems improbable that, as
Palaciano testified, Respondent wouldmake arrangements
in April for Consolidated to take over the sample cutting in
the event of a strike without at the same time coming to
some agreement as to the price for such service. This is
particularly true in view of Palaciaiio's assumption that
any subcontracting of the work would be permanent.
Natale's testimony is further corroborated by the speed
and finality with which Respondent effectuated termina-
tion of the employment relationship. On May 1, the very
day after the contract expired, Respondent offered sever-
ance pay and thereafter flatly refused to discuss any aspect
of the matter with the Union. Although the evidence shows
that Consolidated did no sample cutting until some 3
weeks later, Respondent did not even repeat its request of
April 27 that the employees remain at work while the
Union and Employer continued negotiations. Leblang
testified that at least as late as April 27 Respondent had
"absolutely" no intention of closing the warehouse.
Steinman's letter of May 7 to the Union says that he had
"mentioned a number of times that the warehouse
operation had become unnecessary and it was not
economically wise to continue" and Respondent was
requesting "more time to consider" its elimination. But
Respondent took no time to consider. On May 1, the day
after the contract expired, Respondent unilaterally decreed
the final "liquidation" of the warehouse operation and the
termination of the employment relationship.
On all the evidence, I find, in accordance with Natale's
testimony, that in April Respondent made arrangements
for subcontracting all the unit work after expiration of the
collective-bargaining agreement on April 30.
As evidence of its claimed good faith, Respondent points
to the fact that on April 27 it made a wage offer, which the
Union rejected. Such offer, however, could not of itself
establish Respondent's good faith. In this respect the
present case is markedly similar to McGregor Printing
Corporation, 163 NLRB 938 (1967), where, in finding that
the employer had violated Section 8(a)(5) by permanently
closing a plant during a strike,18 the Board said (pp. 938-
940):
[The union] was given no advance notice that the
plant would be closed. Although Respondent had, in
every bargaining session, stated that it might become
necessary to close the plant if an acceptable agreement
were not reached, we agree with the Trial Examiner
that this did not amount to notice, and was rightly
construed by the [Union] as merely a "bargaining
tactic.".
is In McGregor the Board reversed the Trial Examiner's finding that the
closure was designed to discourage unionization and therefore violated Sec.
8(a)(3) of the Act No similar issue is presented in the instant case, since the
complaint does not allege that the closing of the warehouse and/or the
termination of the warehouse employees violated Sec. 8(a)(3).
642 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
11
. [we ] agree with the Trial Examiner, and find,
that Respondent was bound to notify the [union] of its
decision to close the ... plant, and to bargain about
both the decision and the effect such closing would
have on the . . . employees....
*
Reaching agreement on terms was all that was
necessary to keep the plant in operation. The [union]
might or might not have accepted Respondent's "last
offer" had it known Respondent was actually going to
close . The hazard of a guess is irrelevant . The [union]
was entitled to proper notice, and a chance to bargain
about such a decision , and its effects on the employees.
See, also, Royal Typewriter Company, a Division of Litton
Business Systems, Inc., etc., 209 NLRB 1006 (1974).
In the present case "the employer frustrated all bargain-
ing by unilaterally subcontracting [its warehouse] opera-
tion under conditions that deprived the union of an
opportunity to attempt to negotiate a mutually acceptable
alternative." Shell Oil Co., supra, 149 NLRB at 289,
discussing Town & Country Manufacturing Company, Inc.,
and Town & Country Sales Company, Inc., 136 NLRB 1022
(1962), enfd. 316 F.2d 846 (C.A. 5, 1963). Such conduct in
itself negatives any possibility of good faith behind the
facade of bargaining by Respondent.
3. Section 8(a)(3)
Although the complaint does not allege that the
employees were discharged in contravention of Section
8(a)(3), it does allege that Respondent's refusal to reinstate
them upon their unconditional request on August 24 was
"in furtherance of its plan to avoid entering into an
agreement with District 65 and in order to undermine the
majority status of District 65 amongst its warehouse
employees." There is no doubt that Respondent's refusal to
reinstate the employees was "in furtherance of its plan to
avoid entering into an agreement with District 65," i.e.,
that it was part of its Section 8(a)(5) violation. However, in
no realistic sense (indeed, in no purely verbal sense) could
it be said that in August and thereafter Respondent was
"discriminating" to discourage union activities or was
attempting to undermine the Union's majority "amongst
its warehouse employees." The simple fact is that Respon-
dent thought it had got rid of all its warehouse employees
and thus probably did not care one whit about their union
sympathies. The refusal to reinstate the striking employees
appears not to be a separate violation of Section 8(a)(3).
In any event, a ruling on this matter has no practical
effect, since, as discussed below, the remedy for the 8(a)(5)
violation is at the same as would be recommended if
violation of Section 8(a)(3) had been found. Cf. Town &
Country Mfg. Co., supra, 136 NLRB at 1031.19
For the same reason, it is unnecessary to pass on the
allegation in the complaint that the strike that commenced
19 "In sum, even were we to fmd that Respondent terminated its
truckdnvmg operations for nondiscriminatory reasons, we would, in the
circumstances of this case , order Respondent to abrogate its subcontract
on May 1 was an unfair labor practice strike. Whether the
strike was an economic or an unfair labor practice strike,
the strikers were entitled to reinstatement upon their
unconditional offer to return, provided, in the case of an
economic strike, that they had not been permanently
replaced. The present record makes it clear that Respon-
dent has not hired any replacements. Additionally,
whatever the nature of the strike, backpay could not be
ordered for any period before August 29, 5 days after the
employees, having ended the strike, sought reinstatement.
Royal Typewriter Co., supra; Roosevelt Roofing and Sheet
Metal Works, Inc., 204 NLRB 671 (1973); Valley Oil Co.,
Inc., 210 NLRB 370 (1974).
CONCLUSIONS OF LAW
1. -Respondent is engaged in commerce within the
meaning of Section 2(6) and (7) of the Act.
2. District 65, Distributive Workers of America, is a
labor organization within the meaning of the Act.
3. At all relevant times the Union has been, and now is,
the' exclusive collective-bargaining representative of all
Respondent's warehouse employees.
4. By unilaterally discontinuing its warehouse opera-
tions without first bargaining collectively with the Union,
Respondent has committed unfair labor practices within
the meaning of Section 8(a)(5) and (1) of the Act.
5. By refusing to bargain in good faith with the Union
concerning wages, hours, and other terms and conditions
of employment for its warehouse employees, Respondent
has violated and is violating Section 8(a)(5) and (1) of the
Act.
THE REMEDY
In addition to customary cease-and-desist and notice
posting requirements, effectuation of the policies of the Act
in cases like the present normally requires restoration of
the status quo ante by abrogation of the subcontracting
arrangements and resumption by the respondent of its
discontinued operations. See, e.g., Town & Country Mfg.
Co., supra; Bruce E. Kronenberger and Herbert Schoenbrod
d/b/a American Needle & Novelty Company, et al., 206
NLRB 534 (1973). In some cases, however, such affirma-
tive action has not been required. For example, in Royal
Typewriter Co., supra, the Board did not require the
employer to reopen a plant which had been long closed. In
that case, however, there were available alternative means
for restoring the union to a position of economic strength
sufficient for meaningful bargaining. The employer had
other plants and the Board ordered, inter alia, that the
employees of the discontinued plant be placed on a
preferential hiring list for those other plants. In Royal
Plating and Polishing Co., Inc., 160 NLRB 990 (1966), by
the time the remedial order was finally issued, the
respondent employer had gone out of business entirely.
The decision to close the plant in issue had been made on
economic grounds and the substantive issues to be
negotiated did not include the decision to close the plant
and bargain with the Union over any future decision to subcontract those
operations . In addition, we would direct reinstatement of its drivers with an
appropriate backpay remedy "
AVILA GROUP, INC. 643
but only, the effects of such action on the employees, i.e.,
such matters as severance pay. The Board has also
indicated that it may refrain from ordering resumption of
discontinued operations where such a requirement would
cause undue hardship to the employer.
None of the considerations listed is applicable in the
present case. Here Respondent has not gone out business.
It has continued its business as before, having merely
subcontracted the work previously performed by the unit
employees. Respondent has no operations into which any
of its warehouse employees could be absorbed. Nor is there
any readily apparent alternative method by which the
Union could be restored to a position of any bargaining
strength without resumption of operations in which the
employees could be employed.
It is clear that Respondent's motivation in closing the
19th Street warehouse was not purely economic. On the
contrary, Respondent protests that at least as late as April
27 it had "absolutely" no intention of closing the
warehouse, even though it was no longer indispensable or
economically wise. Respondent says it found the ware-
house convenient and would have continued its operation
if a "reasonable" contract could have been reached. But
Respondent prevented reaching any such agreement by
concealing its plans to subcontract and by refusing to
bargain while the employees were on strike.
Respondent now claims that it would be improper to
require reinstatement of its warehouse operation since the
work there performed by 9 or 10 employees is now being
performed by Riverbend with the use of only 2 to 4
employees.20 It may be observed that the relative number
of employees is not necessarily decisive as to the relative
economy of the two types of operations to Respondent.
Respondent has presented no evidence as to relative
overall costs. Presumably it is paying Riverbend enough to
compensate for the physical facilities involved, in addition
to labor and other costs, plus a profit. In any event, as just
noted, Respondent had planned on keeping the warehouse
even with the knowledge that it may not have been entirely
economical to do so. And Respondent never gave the
Union an opportunity to consider means for solving any
economic problems. In this connection it is interesting to
note that in August, when it ended the strike, the Union
suggested that the parties negotiate the possibility of
reopening on a somewhat reduced scale. Respondent's
lease of the 19th Street premises then had over 5 months to
run and Respondent did not even sublease the premises
until about 2 months after the Union's request for
reinstatement and the resumption of bargaining.
Finally, as the General Counsel and the Union argue,
there is very little, if any, hardship on Respondent involved
in reopening a warehouse. Since the 19th Street warehouse
was leased, its closure involved no withdrawal of capital
and reopening in leased premises would involve no
investment of capital. The equipment used at the ware-
house was valued at only some $4,000, an insignificant
figure in view of Respondent's $11.5 million annual volume
of business. Since the, equipment was sold-to Riverbend,
the present subcontractor, for the purpose of performing
the services for Respondent, presumably it could be readily
repurchased should the work be recalled to New York.21
Accordingly, on the facts here presented, it is concluded
that effectuation of policies of the Act requires that
Respondent reopen its New York warehouse (at a different
location, if necessary) and resume bargaining with the
Union upon request. Fibreboard Paper Products Corp. v.
N.L R.B., 379 U.S. 203 (1964).
Manifestly, effectuation of the policies of the Act also
requires that Respondent offer immediate and full re-
instatement to the employees working at the warehouse as
of April 30, 1973.
The Union's letter of August 24 "offer[ed] the return of
all of the workers who went out on strike on May 1, 1973."
Respondent's letter of May 1, concerning severance pay,
listed 9 employees. There was some testimony concerning a
10th, Emanuel Reyes, whom Respondent maintained was
not entitled to severance pay under the expired collective-
bargaining agreement because he was not a permanent,
regular employee. However, the complaint lists only five
employees as having unconditionally offered to return to
work in August. Apparently the list is limited to those
employees who were serving as the "basic crew," within the
terms of the collective-bargaining agreement 22 There is no
apparent reason for not extending the remedial action to
all employees as of April 30, 1973, with identification of the
specific employees covered left to the collective-bargaining
process or, if necessary, a supplemental compliance
proceeding.
The employees are also entitled to backpay from August
29, 1973, 5 days after they unconditionally offered to
return to work. Even though neither their former jobs nor
substantially equivalent jobs appear to be available
immediately, their reinstatement and backpay rights
should be fully vindicated since the absence of jobs is the
direct result of Respondent's unfair labor practices. While
it is possible that good-faith bargaining might have resulted
in a reduction in the number of jobs available, or even
elimination of all the jobs, it was Respondent's misconduct
which prevented a solution by bargaining. American Needle
& Novelty Co., supra. Accordingly, it will be recommended
that Respondent be required to make the employees whole
for any loss of earnings suffered by reason of the
discontinuance of the 19th Street warehouse, by payment
of a sum of money equal to that which normally would
have been earned from August 29, 1973, to the date of
Respondent's offer of reinstatement, less net earnings
during such period, with backpay computed on a quarterly
basis in the manner established by the Board in F. W.
Woolworth Company, 90 NLRB 289 (1950), with interest at
the rate of 6 percent per annum in accordance with Isis
Plumbing & Heating Co., 138 NLRB 716 (1962). Since the
warehouse was discontinued during the period in which a
new collective-bargaining agreement was to be negotiated
(and, according to Respondent, after some increase had
20 Consolidated used about the same number. However, Consolidated Consolidated and given to Riverbend strongly contraindicates any such
never got full-scale performance of the work situation.
21 There is no evidence of any formal or ;longterm contract between 22 The contract calls for a "basic crew" of six employees. At the hearing,
Respondent and Riverbend the termination of which might be costly to Respondent apparently maintained that only three of its employees on April
Respondent. Indeed, the speed with which the work was taken from 30, 1973 , were basic crew members.
644 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
been offered), the wage rates upon which the backpay
liability is to be computed shall be determined in the
bargaining herein directed . Respondent apparently consid-
ers the severance pay it sent in May as meeting any
potential financial obligation to the employees. The Union,
however, informed Respondent that the severance pay
would be credited to the "escrow" account provided in the
collective-bargaining agreement. And the severance pay
was not tendered during a penod in which any backpay
was due . Thus, the severance pay cannot be set off against
the backpay liability. The ultimate disposition of the
severance pay can best be resolved in the collective
bargaining.
[Recommended Order omitted from publication.]