Avnet, Inc.

National Labor Relations Board - Board Decisions

Jun 30, 1975

218 N.L.R.B. 1127 (N.L.R.B. 1975)

BRITISH INDUSTRIES COMPANY
British Industries Company, Lyra Systems, Divisions
of Avnet, Inc. and' District 65, Distributive
Workers of America and Amalgamated Local 475,
International Union of Electrical , Radio and
Machine Workers of America, AFL-CIO, Party to
the Contract. Case 29-CA-3917
June 30, 1975
DECISION AND ORDER
BY MEMBERS JENKINS , KENNEDY, AND
PENELLO
On March 25, 1975, Administrative Law Judge
Bernard Ries issued the attached Decision in this
proceeding. Thereafter, the General Counsel, Rd-
spondents British Industries Company, Lyra Sys-
tems, Divisions of Avnet, Inc., and Avnet, Inc., and
Party to the Contract Amalgamated Local 475,
International Union of Electrical, Radio and Ma-
chine Workers of America, AFL-CIO, filed excep-
tions and supporting briefs.
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 2 of the Administrative Law Judge to
the extent consistent herewith, and to adopt his
recommended Order, as modified herein.3
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommend-
ed Order of the Administrative Law Judge, as
modified below, and hereby orders that Respondent,
Lyra Systems, a Division of Avnet, Inc., Westbury,
Long Island, its officers, agents, successors, and
assigns, shall take the action set forth in the said
recommended Order, as so modified:
11. Delete all references to Avnet, Inc., in the
recommended Order.
2. Substitute the attached notice for that of the
Administrative Law Judge.
MEMBER KENNEDY, concurring:
When there are 8(a)(2) allegations of premature
recognition of a union , I will continue to examine all
of the surrounding facts and circumstances of each
case.
Accordingly, while I concur in the result reached
here, I do not adopt the test proposed by the
Administrative Law Judge which holds that the
218 NLRB No. 172
1127
number of employees actually hired is immaterial in
determining whether an 8(a)(2) violation has oc-
curred. Cf. Milton Kline and Jacob Kline a co-
partnership, d/b/a Klein's Golden Manor, 214 NLRB
No. 121 (1974).
1 The Administrative Law Judge, sua sponte amended the caption by
including Avnet, Inc., as a separate Respondent ; in view of our dismissal of
all allegations of the complaint pertaining to Avnet, Inc, infra, we hereby
restore the caption as it appears in the complaint and notice of hearing.
2 The Administrative Law Judge , although finding that Avnet and
British Industries Company together constituted "the employer" of the
employees in the certified bargaining unit , did not find that Avnet and
British Industries also continued , for purposes of the statutory rights of the
employees, to be "the employer" of the Lyra employees when Lyra Systems
began operations . Rather, he found that a new operation has been initiated,
and the "employer" of the employees in that operation is not Avnet/Bntish
Industries , but Avnet/Lyra Systems. Accordingly, he dismissed the 8(a)(5),
(3), (2), and (1) allegations concerning the laying off and/or refusing to
recall certain employees of British Industries to perform the work being
done by Lyra in the former British Industries Company building and
refusing to bargain with and withdrawing recognition from District 65,
Distributive Workers of America with respect to the employees engaged in
production work in the building occupied by Lyra. We agree with the
Administrative Law Judge that a new industry has been initiated which
created a new bargaining unit with a new community of interests . In view of
this conclusion, we find it unnecessary to determine whether Avnet, Inc., is
a single employer with British Industries Company or Lyra Systems.
Accordingly, we shall dismiss all allegations of the complaint pertaining to
Avnet, Inc.
3 The Administrative Law Judge inadvertently failed to include a finding
of an additional 8(a)(2) violation against Respondent Lyra based on the
existence, maintenance , and enforcement of the union-security provision in
the contract which it executed on May 8, 1974, with Amalgamated Local
475, International Union of Electrical, Radio and Machine Workers of
America, AFL-CIO. Accordingly, we find that Respondent Lyra by the
aforesaid conduct further violated Sec . 8(aX2) of the Act. In addition,
although the Administrative Law Judge formally concluded that Respon-
dent Lyra violated Sec . 8(a)(3) and (1) by executing a contract on May 8,
1974, with Local 475 which required membership in good standing in Local
475 as a condition of employment and provided the appropriate remedy for
this violation , he inadvertently failed to mention this separate violation in
the body of his Decision. We hereby correct this omission.
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that
we have violated the National Labor Relations Act
and has ordered us to post this notice and to keep
our word about what we say in this notice:
The Act gives employees these rights:
To engage in self-organization
To form, join, or help unions
To bargain collectively through a repre-
sentative of their own choosing
To act together for collective bargaining
or other mutual aid or protection
To refrain from any and all these things.
WE WILL NOT contribute assistance or support
to Amalgamated Local 475, International Union
1128 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of Electrical, Radio and Machine Workers of
America, AFL-CIO, or any other labor organiza-
tion.
WE WILL withdraw and withhold recognition
from Amalgamated Local 475, International
Union of Electrical, Radio and Machine Workers
of America, AFL-CIO, and cease giving effect to
the collective-bargaining agreement executed
between that labor organization and Lyra Sys-
tems, Inc., a Division of Avnet, Inc., unless and
until the time that labor organization is certified
by the National Labor Relations Board.
WE WILL reimburse present and former em-
ployees working in the Lyra Systems building for
any initiation fees, dues, or other moneys they
had to pay pursuant to the foregoing collective-
bargaining agreement for the benefit of Amalga-
mated Local 475, International Union of Electri-
cal, Radio and Machine Workers of America,
AFL-CIO.
WE WILL NOT in any similar manner interfere
with, restrain, or coerce employees in the exercise
of their rights to self-organization, to form, join,
or assist a union, to bargain collectively through
representatives of their own choosing, or to
engage in other mutual aid or protection, or to
refrain from such activities.
LYRA SYSTEMS, A
DIVISION OF AVNET, INC.
DECISION
STATEMENT OF THE CASE
BERNARD RIES, Administrative Law Judge: The charge
in this proceeding was filed on July 5, 1974, and amended
on August 12. Complaint was issued on August 30, 1974. A
hearing was held before me on December 9-13, 1974,
inclusive, in Brooklyn, New York.
The essence of the complaint is that Avnet, Inc., British
Industries Company, and Lyra Systems' constitute a
"single employer" within the meaning of Board doctrine;
that Respondents, as a single employer, were required to
continue to extend recognition to District 65, the Charging
Party, as the 'certified bargaining representative of the
employees in the two buildings formerly occupied by
British Industries Company when, in 1974, Lyra Systems, a
newly created division of Avnet, Inc., began production
work in one of the two buildings; that Respondents
violated Section 8(a)(3) of the Act by laying off and/or
refusing to recall certain employees of British Industries to
perform the work being done by Lyra Systems in the
I As it appears in the complaint, the caption of this case does not name
Avnet, Inc., as a separate Respondent The body of the complaint (par.
2(a)), however , does name Avnet, Inc., as a Respondent, and the case was
tried by the General Counsel and defended by Respondents on the
underlying theory that the question of whether Avnet, Inc., together with
British Industries Company and Lyra Systems, constitute a single employer,
is crucial to the case . I have therefore, sua sponte, amended the caption
which appears in the complaint.
former British Industries Company building; that Respon-
dents violated Section 8(a)(2) of the Act when on May 8,
1974, they extended recognition to Local 475 as bargaining
agent for the employees in the Lyra Systems building-and
Section 8(a)(3) by entering into, and thereafter enforcing, a
union security agreement with Local 475 on that date; and
that Respondent violated Section 8(a)(5) by various
specific acts of refusing to bargain, as well as by
withdrawing recognition from the Charging Party with
respect to the employees engaged in production work in
the building occupied by Respondent Lyra Systems.
Upon the entire record, including my observation of the
demeanor of the witnesses, and after due consideration of
the briefs filed by the General Counsel, the Respondents,
and the Party to the Contract, I make the following:
FINDINGS OF FACT
1. JURISDICTION
The answer admits the specific allegations of the
complaint that Respondents British Industries Company
and Lyra Systems are employers engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
While the complaint contains no similar express allegation
as to Respondent Avnet, it is clear from the record that
Avnet, being the parent corporation of 33 unincorporated
divisions including Respondents British Industries Compa-
ny and Lyra Systems, and a conglomerate which, in fiscal
1974, had sales of over $500 million, is also engaged in
commerce within the meaning of the Act.
II. THE LABOR ORGANIZATIONS INVOLVED
District 65 and, Amalgamated Local 475 are labor
organizations within the meaning of Section 2(5) of the
Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Operative Facts
1. A chronology of the events
District 65, Distributive Workers of America, succeed-
ing; by amendment of certification (see British Industries
Company, Division of Avnet, Inc., Case 29-CA-1610,
adopted pro forma by the Board on October 14, 1970), to
the representation rights of an independent employee
association, became the recognized bargaining agent of the
production employees of Respondent British Industries in
1970. Their first bargaining contract, executed in April
1970, named the employer as "British Industries Company,
a Division of Avnet, Inc." and described the bargaining
unit as "employees in the Service, Shipping, Wharfedale
and Quality Control Departments." 2 A second bargaining
2 The case cited in the preceding sentence , however, indicates that the
unit as certified is "all employees of British Industries Company, Division of
Avnet, Inc., employed at its Westbury plant, including shipping, service,
Wharfedale and quality control department employees," with the usual
exclusions.
BRITISH INDUSTRIES COMPANY 1129
agreement, bearing an expiration date of December 31,
1975, was signed in April, 1973.
For a number of years, Respondent British Industries
was engaged in two principal lines of work at two
buildings, located 100-200 feet apart, in Westbury, Long
Island. In "building no. 1" (or the "Garrard building"),
emplloyees performed inspection and shipping work on
Garrard record changers, of which British Industries was a
marketer and distributor. In "building no. 2" (or the
"Wharfedale building"), employees performed assembly
work on Wharfedale speakers, also thereafter sold and
distributed by British Industries.
In March and April, 1973, 23 employees were laid off by
British Industries due to loss of the Wharfedale distributor-
ship. District 65 and British Industries were in contract
negotiations at the time, and Mr. James Brigagliano, vice
president of District 65, expressed his concern about the
layoff to Mr. Henry Lipton, operating head of British
Industries.3 Lipton said that the Company might lose the
Wharfedale contract as well as the Garrard work, and that
it was looking for new items, mentioning, in particular, two
other brands of speakers .4
In April 1973, Mr. Robert Furst, an electronics engineer
and formerly a vice president of Harmon-Kardon, Inc.,
approached President Simon Sheib of Respondent Avnet
with a proposal for developing and marketing a "sophisti-
cated consumer cassette tape deck." In doing so, he was also
acting on behalf of two associates. After a series of
discussions, Sheib was evidently impressed, and, in
September 1973, Furst entered into an employment
contract with Avnet providing, inter alia, that he would
develop, produce, and market the tape deck, through the
medium of a "Tape Recorder Division" which would be
created by Avnet.
In considering where Furst should locate his operation,
Sheib recalled that one of the British Industries buildings
(the Wharfedale building) was standing idle, and he told
Furst that he could establish his operation there if he
thought the facility suitable. Furst inspected the building
and found it acceptable.5
Thereafter, on October 1, Furst moved into the building
and, a few weeks later, was joined by a secretary and his
two associates. Furst began making budgets and prepro-
duction schedules for the cassette. Research and develop-
ment work on the cassette also began. According to Furst,
he selected "Lyra 'Systems" as the division name and,
around October 15, erected two signs bearing the name
near the building.
3 Lipton testified that his official title is "Vice-President of Finance and
Administration at British Industries , a division of Avnet, Incorporated."
When asked if British Industries had a president , Lipton said, "Simon Sheib
is presumed to be the president of British Industries ." Simon Sheib is the
president of Respondent Avnet, Inc., a conglomerate of which British
Industries is an unincorporated division . The relationship between Sheib,
Avnet, and Avnet's divisions will be fully described, infra
4 Lipton did not deny making this statement . The fact is that, according
to Lipton's testimony, the Wharfedale business had already been given up at
the end of 1972.
s The foregoing is based on Fursts testimony; Sheib was not a witness at
the hearing. The building was being held under lease by Avnet. For the first
6 months of Furst 's stay, British Industries directly paid the rental for the
building, and Furst, who was then using only the office space, reimbursed
British Industries for one-third of the rent. The remainder of the building
According to District 65 representative, Brigagliano, he
visited the Wharfedale building in December 1973 on
personal business. He introduced himself to Furst and
asked whether the Company was in the process of getting
any new items. Furst said that they were not ready to start
producing.6
The development work on the tape deck had scarcely
begun,, however, when Lyra's fortunes took an unexpected
turn. In December 1973, according to Furst, Simon Sheib
asked him, as an electronics expert, to have a look at an
assembly with which IPM, another Avnet division, was
having problems. IPM was then under the temporary
stewardship of Irwin Lubain, also identified by Furst in
another context as an "assistant" to Sheib. After studying
the subassembly, Furst concluded that Lyra itself could
produce the item, and that it "would be a beneficial thing
in terms of developing a labor force and just be in the
business of manufacturing." He testified that he thereupon
offered his services to Mr. Lubain, and, in January or
February 1974, received the first of a series of purchase
orders from IPM for the parts. Furst denied that Sheib had
ordered or suggested to him that he undertake the
assembly work; Furst's employment agreement with
Avnet, as we shall see, required him to perform such
"development and engineering management and/or execu-
tive duties" for Avnet as might be assigned to him.
According to Furst, he began hiring employees for
production of the IPM subassembly by placing a "help
wanted" sign in front of the Lyra premises for the "better
part of the week" beginning Monday, May 6, 1974. The
sign was 15 by 10 inches, and was taped to the glass
entrance. A computer printout of Lyra's payroll records
shows that it hired five production employees on May 7,
1974, and 21 more on various dates thereafter. Curiously,
however, the management notations on the application
forms of four of the five employees purportedly hired on
May 7 state that they were hired on May 5, a Sunday, and
"will report" on May 6, and this despite the fact that the
forms are dated May 6 by the applicants. ' These four
employees were formerly employed by a business called
Stillman Manufacturing Company. Furst's execution of a
contract on May 8 with Local 475, IUE, will be discussed
hereafter.
Production work on the IPM item began at Lyra
sometime in May 1974.7 The product is a printed circuit
board assembly which electronically varies the speed of the
motor in a record changer. Thus far, Furst has received
two purchase orders from IPM, for a total of 12 months'
production work, on the subassembly.
was apparently being used by British Industries for warehousing. The lease
is now in the name of Lyra Systems, Division of Avnet, the division name
adopted by Furst.
6 Brigaghano 's testimony was substantially corroborated by District 65
organizer Clinton Folsom, who accompanied Brigaghano on this visit; he
stated that Furst said that "an item will be coming in pretty soon . He didn't
know what kind of item it would be." Furst denied having ever met
Brigagliano prior to the instant hearing and stated that he had "absolutely
no recollection" of this encounter . I find Brigaghano and Folsom to be
credible, based on their demeanor and the detail in their testimony which
gave it the ring of truth.
7 Just prior to this time , in April 1974, there were five employees in the
plant performing research and development work on the cassette. A
supervisor had also been hired in March in order to prepare for production
of the IPM subassembly.
1130 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Shortly before Lyra started producing the IPM assembly
in building no. 2, District 65's Brigagliano was the recipient
of bad news for the remaining employees in building no. 1.
In early April 1974, Vice President Lipton called to notify
him that British Industries would no longer be doing the
Garrard work and that a substantial layoff was necessary.
Brigagliano asked Lipton if progress was being made on
obtaining new lines ; Lipton replied, "Well, we're not ready
yet. We're still looking around." Lipton did not mention
Lyra Systems.s On April 16 and May 23, Lipton sent letters
to Brigagliano notifying him of the layoff of 16 more
employees.
On April 15, organizer Folsom had received a call from
Ralph Cooper, District 65 shop steward at British
Industries, that a rumor was current that hiring was to be
done for the Wharfedale building. Folsom went out to the
site, and, with Cooper, visited Furst in the building.
According to Folsom:
I told Mr. Furst that under my understanding that they
were supposed to get a new item in there and they were
supposed to call some of the members back from
District 65. Mr. Furst told me right away that they
didn't have a new item there, they didn't have the item
in there yet. So me and Ralph Cooper left.
Furst was not questioned about this encounter, nor was
Cooper. I credit Folsom's testimony. Unlike Furst's
testimony about Brigagliano, Furst never denied meeting
Folsom who, as described, testified to two meetings with
Furst.
According to the uncontradicted testimony of Furst, a 2-
hour work stoppage, by an unstated number of the workers
then employed, occurred at the Lyra building on May 8, in
the context of a demand for recognition made by Local
475, IUE. Furst testified that he placed a call to Simon
Sheib:
I indicated to him that there was a work stoppage, that
there was an organizer from IUE outside the building
who started the work stoppage, that unless I-that I
have a problem on my hands. I sought his advice.
His response to that was, "Look, it's your company. It's
your baby. You do the best you can. That's what you're
here for."
Furst thereupon entered into negotiations with repre-
sentatives of Local 475 and, in 5 hours, concluded a
bargaining agreement . He had never before negotiated a
bargaining contract. The contract included, inter alia, a
union-security clause which has subsequently been en-
forced.
The following day, Furst called Sheib again, apparently
not quite convinced that Lyra was really his "baby." He
reported to Sheib that he had signed an agreement. Sheib
asked him about the substance of the contract, and Furst
told him the particulars .9
In mid-May, Brigaghano received a report from his
organizers that they had been at the Lyra building, had
talked to Furst, and had been shown a copy of his contract
with Local 475. On receipt of this news, Brigagliano first
contacted some IUE officials, to no avail. He then went to
see Lipton, and expressed his anger at the fact that
employees were being laid off while Furst was obviously
preparing to go into production. Lipton said that he had
nothing to do with the Lyra building. He told Brigagliano,
"You know who to talk to." When Brigagliano replied,
"Who am I going to talk to? Mr. Sheib?," Lipton said,
"Yes. I have nothing to do with it at all." 10
Brigagliano accepted the suggestion. When he finally got
through to Sheib by telephone and registered his com-
plaint, Sheib said, "That company has nothing to do with
you." The conversation ended soon thereafter, Sheib
having refused Brigagliano's request for a personal meet-
ing. A few days after the call to Sheib, Brigagliano and a
committee of workers met with Lipton to urge recall of the
employees who had been laid off. Lipton again refused to
discuss any matters relating to the hiring at Lyra.
As of the hearing, there were a total of 11 unit employees
represented by District 65 remaining in the Garrard
building. Half of them constitute a service department,
reparing Wharfedale speakers and Garrard turntables.
There is also a shipping and receiving department. The
latter department apparently is shipping out the last of the
Garrard and Wharfedale equipment. It also distributes
packaged multicore solder and flux, sending these products
all over the country, including across the way to Lyra
Systems. In addition, there is a small parts department,
which replaces defective Garrard record changer parts for
individual owners and dealers and fills small part orders
for dealers. Two employees staff this department.
2. The nature of the work formerly performed at
British Industries
Ramon Escolastico , who has been employed at British
Industries for 10 years , most of that time on the
Wharfedale work, described the nature of the operation
formerly conducted in building no. 2.
Fully assembled Wharfedale speaker units, shipped from
England , would be tested by a testing employee. A
frequency oscillator would be used to determine whether
the frequencies of the various components of the speaker
unit were within permissible tolerances.11
The tested speaker unit would then be bolted into a
finished, but empty, cabinet. Depending on the model, the
number of speaker units placed into a cabinet could range
from two to six.
8 Lipton was not asked about , and therefore did not deny, this testimony.
8 Although it was uncontradicted , I cannot accept Furst's testimony that
the first conversation was so brief Before his elevation to the presidency,
Sheib was outside counsel to Avnet. He participated in the 1970
negotiations between District 65 and British Industries, see British Industries
Company, Case 29-CA-1610, supra. In view of his background in labor law
and his prior personal involvement with British Industries , his demonstrated
interest in the detailed workings of Avnet's enterprises , as later discussed,
and the inference arising from the fact that Furst called him again the next
day, I sincerely doubt that Sheib would have shunted off Furst, a man
totally inexperienced in labor relations, with nothing more than "It's your
baby. You do the best you can."
10 Lipton was not questioned about, and therefore did not deny, this
testimony. I credit Brigagliano.
11 Escolastico learned to operate an oscillator in about a week.
BRITISH INDUSTRIES COMPANY 1131
British Industry employees also assembled control panels
and attached them to the inside of the cabinets. These
panels, which monitor the power going through a speaker,
were assembled as follows. Small pieces of masonite board
with precut holes would be distributed to assembly
employees, who worked at a bench. These employees
would screw, bolt, or wire, and then hand-solder, various
components (e.g., an ohm resistor, capacitors) to the
board; on the demonstration control panel used at the
hearing, there were 16 solder points on a small board. They
would then attach wires to the mounted terminals 12
After the speakers and control panel had been installed
in a cabinet, they were connected; in the latest model, this
was done by locks clipped onto the speakers, in the older
models, by hand-soldering.
The final step in the process, after the speaker was
assembled, was to test it again, using a sound oscillator. If
the item failed to pass inspection, it was returned to the
assembly line.
Escolastico gave the following description of the work
process in the Garrard building, to which he was assigned
in 1973 and where he is now employed. Assembled
turntables, complete with tone arms, were received.
"Quality control" employees would take the units out of
their cartons, put them on an electric conveyor belt, and
test them. The tests included a sound test, a record-
dropping test, a test for speed accuracy, and a number of
others. Each employee usually performed only one or two
tests , and only a single instrument--an amplifier-was
used in the testing sequence. If a unit passed the tests, it
would be repacked and stocked in the warehouse. If the
record changer was imperfect, but the imperfection was
easily correctable, repair would be made on the line. If the
problem was more serious, the unit would be removed
from the belt and the necessary repair work done by
employees other than those on the quality control line.
One of the two repair employees was Angela Escolastico,
who began working for British Industries in 1968 and was
laid off in May 1974. For 1 or 2 years, she performed repair
work on every part of the Garrard record changer.
Generally speaking, the "repair" work consisted of
replacement or adjustment of a defective platform, cam,
motor, etc. Occasionally, she did more traditional, but
essentially simple, repair work, such as replacing a broken
wire in a tone arm or putting new ball bearings in a motor.
In all, it took about 1 month to learn the skills required for
the; job.
12 Employer Cooper credibly testified that the control panel on an earlier
model of the Wharfedale speaker worked on by British Industries
employees had been considerably more complex and difficult to assemble
than the demonstration model.
13 The minimum rate for a Class B inspector is $2.10 per hour, and his
maximum rate $2 .25, under the Local 475 contract.
14 Of the 16 persons who have been hired for this particular position at
various times between May and November 1974, only one had any sort of
relevant experience , and they were all employed at a wage ranging from
$2.10-2.35 per hour , in accordance with the Local 475 contract. In
newspaper advertisements for these openings, some offered jobs for
"trainees," other said "some experience helpful ," and one stated "no
3. The IPM -subassembly work
The work processes on the IPM subassembly presently
being produced at Lyra-the mounting of components on
a plastic board-closely resemble those formerly employed
on the Garrard and Wharfedale products. The electronic
components are received and tested by inspectors 13 for 25-
30 characteristics, such as resistance, tolerance, solderabili-
ty, etc., using electronic and mechanical instruments. The
components are then put in bins and thereafter placed into
the plastic boards by Class B assemblers.14
After an inspection of the integrity of the insertions, a
wave soldering machine is used to solder the parts to the
board.15 The whole assembly is then degreased to remove
foreign matter. A visual inspection of the solder surface is
then made, with a magnifying glass, followed by a
functional test using specially built testing equipment.
Assemblies which pass the test are then placed in an aging
rack for 24 hours; defective parts are repaired and then put
in the aging rack. After 24 hours, they are tested again and
finally examined. Another, "sandwich," board is then
snapped into place by four plastic fasteners, and there is a
final inspection, primarily visual but occasionally mechani-
cal.
Between May-November 1974, Lyra hired a total of 26
employees covered by the Local 475 contract. Employment
reached a level of 13 by July 16, was 12 on July 30, 13 on
August 6, 14 by August 9, varied between 13 and 14 until
November 5, and reached 15 on November 5. At the time
of the hearing, 11 employees were in the contract unit.
Lyra continues, as well, to proceed with the development
work on the cassette ; Furst "hoped" the item would be in
production by March 1975. There was no testimony with
respect to the production methods by which the cassette
would be fabricated.
4. The relationship between Avnet and its
divisions
Respondent Avnet, Inc., is a publicly held New York
stock corporation whose shares are traded on the New
York Stock Exchange and other principal exchanges.
Avnet is a conglomerate. It directly engages in no
particular business under that name. It is, instead, a
corporate umbrella for 33 divisions which employ a total of
9,000 employees both in the United States and abroad.
None of the divisions is separately incorporated;
accordingly, as the parties stipulated at the hearing, the
shareholders, directors, and officers of Avnet are also the
shareholders, directors, and officers of the divisions.
Avnet's divisions engage in such activities as manufactur-
ing and distributing electronic components, high-fidelity
experience necessary ." Nine of the 16 hired were 21 years or younger. I
should note that at no time has Lyra had 16 such assemblers on the payroll
at one time ; however, as of June 12, according to the application forms
(G.C. Exhs. 20-35) and its payroll record (G.C. Exh. 16), Lyra had hued
eight assemblers , seven of whom were still on the payroll at that tune. All
but two of these eight were hired at $2.10 per hour . It should be noted that
G.C. Exh. 16 does not accurately reflect the hiring rates ; to derive these, one
must look to the application forms and the testimony regarding them.
15 The operator of the Hollis wave solder machine is Dorothy Jenkins.
When hired, she had had no experience in operating the machine , and was
employed at a rate of $2.15 per hour.
1132 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
products, automotive parts, wire and cable products,
musical instruments, toiletries, catalogues, and trophy
parts. A total of about 2,800 of its employees throughout
the divisions are covered by collective-bargaining agree-
ments with 21 labor organizations.
The headquarters of Avnet are located in New York
City. Of its 28 officers, 7 are resident at corporate
headquarters and the remainder at various locations
throughout the country. Together with the 7 officers, there
are 13 other staff people at the corporate offices. The
president of Avnet is Simon Sheib, who is also chairman of
its 16-man board of directors. The other officers are a vice
chairman, an executive vice president, 5 senior vice
presidents, 16 vice presidents, a treasurer, and 3 assistant
secretaries . Thirteen of the vice presidents are in charge of
specific divisions-e.g., Senior Vice President Melvin G.
Alperin is the operating head of Carol Cable Company in
Pawtucket, Rhode Island-and apparently play no active
part in managing Avnet or any other of its divisions.
Charles J. Spiegel, general counsel and assistant to the
president of Avnet, described the functions of the
corporate office as follows: "the tax functions for the
corporation as a whole, some insurance for the corporation
as a whole and the treasury function for cash management
and those are the only services rendered [by] the corporate
headquarters of Avnet " With respect to hospitalization
insurance coverage for employees not represented by labor
organizations , corporate headquarters is responsible for the
"centralized function" of providing and administering such
coverage; the terms of coverage may vary, however, if a
division head makes a request to headquarters for a
specified level of benefits to meet prevailing standards in
his geographical area, and the request is approved. The
corporation funds and maintains, by outside trustees, a
uniform pension program for all employees not represent-
ed by unions (such uniformity is apparently required by
law; the existence of the program, and its level of benefits,
is not). Avnet also provides group life insurance for such
employees; selection of the carriers for the different
divisions is made by a manager of insurance at corporate
headquarters. In addition, Avnet provides a stock incentive
plan for all employees, whether represented by a union or
not.
Annually, all division heads submit detailed proposed
budgets to corporate headquarters. The budget may be
approved in toto or, as has happened in the past to Lipton,
modified as deemed advisable by the New York office.16 If
necessary thereafter, a division may request and receive
additional funding from headquarters; conversely, Avnet
16 Spiegel testified that the major function of such budgets is to serve as
evidence to banking institutions, with which Avnet has a loan agreement,
that there will be sufficient income and cash flow to pay off the loan I do
not believe that to be the primary purpose for submission of the budgets
17 In August 1974, Furst, of Lyra Systems, submitted a budget forecast
to Sheib, on the corporate forms furnished by Avnet and used by the
divisions for this purpose. The forms indicate that they were "prepared by"
Lipton, of British Industries, and "approved by" Furst. Furst explained that
he had personally collected the raw data, but had asked Lipton to insert it
into the unfamiliar format of the company forms. The forms have a number
of spaces for spelling out "ultra-company" (as opposed to "inter-company")
transactions . In the form showing projected cash flow for fiscal 1975,
section II contains a block for a "summary analysis of account with
corporate." One item thereunder projects cash advances from Avnet of
$72,000 in each of the first and second quarters, $110,000 in the thud, and a
may at any time thereafter reduce the budget of a
division.17 During the year, monthly and quarterly reports
of income are filed with Avnet by the divisions but,
according to Spiegel, these are for purposes of compliance
with SEC requirements and the reports do not contain a
detailed statement of operations and expenses.
Spiegel testified that purchases and sales occur between
the divisions, but there is no requirement that the divisions
must deal with one another. When such transactions occur,
they may be recorded simply as bookkeeping entries at
headquarters. For example, the Hamilton/Avnet division
has a computer system which provides bookkeeping and
other services for some 30 locations of other divisions,
"and there is an appropriate cost distribution for that." A
large division called Channel Master, headquartered in
Ellenville, New York, has a computer system which it uses to
perform all "billing, receivables and cash management" for
British Industries, one of the Respondents here, which does
not have the facilities for such a system. According to
Spiegel, a book allocation is made to show the proportion-
ate cost of British Industries' use of the system. 18 It also
appears, however, that " in some instances" money in fact
changes hands between divisions.
According to Spiegel, Avnet headquarters has no labor
relations department, its headquarters personnel do not
participate in negotiations of collective-bargaining agree-
ments in behalf of the organized divisions, and they do not
assist in processing of grievances within the divisions.
When questioned whether corporate personnel are, ever
called by division heads for advice on labor relations
problems, Spiegel testified that headquarters employees are
"available for discussion but we don't advise them as to
negotiations or in the handling of a contract"; when asked,
however, Sheib has recommended labor counsel to division
heads. Spiegel specifically testified that determinations as
to the number of holidays to be given employees at each
division, the amount of vacations, and the amount of sick
leave benefits, are made by the division head.
Avnet owns all patents which are utilized by and in the
custody of the various divisions.19 However, according to
Spiegel, one division which wishes to use another's patent
would directly contact the latter, bypassing corporate
headquarters. While Spiegel at first testified to this policy
with assurance, he subsequently conceded that he did not
know in fact of an occasion on which one division made
such a request of another division.20 Spiegel testified to a
"multitude of subjects" which are covered by routine
correspondence between President Sheib and the division
repayment to Avnet in the fourth quarter of $121,000.
19 This testimony was seemingly contradicted by Henry Lipton of British
Industries , who testified that Channel Master bills British Industries for the
service, and the latter "pay[s ] those bills to Channel Master."
19 As stated by Respondents' counsel at the hearing, "as a matter of law,
it has to be Avnet. Even if the patent is issued to the division British
Industries Company, Avnet, Incorporated, as a matter of law it is Avnet,
Inc. [which holds the rights to the patents l."
20 Spiegel's testimony was occasionally punctuated by such instances of
initial overstatement . The problem seemed to stem from two sources:
Spiegel's unconscious translation of a belief that Avnet would act in a given
manner into a stated conviction that it does act that way, and his being
asked to testify definitively as to matters about which he was incapable of
giving definitive testimony (such as his reply to the question whether
corporate headquarters participates in the day-to-day personnel relations
BRITISH INDUSTRIES COMPANY 1133
heads. He knew of letters relating to such varied matters as
justifications by division heads for price increase applica-
tions which Sheib, as president of the corporation, had to
sign under the Economic Stabilization Program; letters to
the division heads "not instructing them but telling them to
adhere" to the requirements of the Equal Employment
Opportunity Act; requests made by division heads for
appropriations of several million dollars for capital
expansion or a new site ("then they would have commen-
tary back and forth as to the justification of that site"); and
"fringe benefits are generally discussed," such as stock
incentive plans for the employees.21
Examples of such correspondence particularly relevant
to the instant case indicate that President Sheib kept a
watchful eye on even the smallest segment of the Avnet
enterprise . For instance, on July 18, 1974, Sheib sent an
"inter-office memo" to Robert Furst of Lyra Systems
noting that Sheib had "been urging you to complete the
tape deck model" and checking to make sure that Furst
was also "doing the `production engineering' (at least in a
preliminary way) to assure the producability [sic] of the
model." The following day, on July 19, 1974, Sheib sent
another memo to Furst reminding him of his personal
responsibility for, the preparation of budget forecasts then
in process .22 On August 9, 1974, Furst wrote to Sheib
forwarding "copies of the two letters you had asked me
for" (perhaps by telephone). The enclosed letters are
described in Furst's letter as relating to patent problems
involving the cassette deck. In his cover letter, Furst stated
that a patent attorney (who had been recommended by
Sheib to Furst) had advised him to proceed with a patent
application, and noted that execution of the patent would
cost a total of about $3,000. Furst concluded, "Unless I
hear from you to the contrary, I shall feel free to proceed
with the patent."
Also relevant to the internal relationship is evidence
regarding the 3-year employment agreement made in
September 1973 between Avnet and Furst (and signed by
Sheib on behalf of Avnet). The agreement requires, inter
alia, that Furst perform "such development and engineer-
ing management and/or executive duties for the Employer
or any subsidiary or division thereof as may be assigned to
him from time to time." It further provides, as Furst's
compensation, a substantial basic salary plus a percentage
of "the annual net earnings of the Tape Recorder Division,
which the Employer expects to create with the help of the
Employee, and in which the Employer presently intends to
employ Employee." "Annual net earnings" is defined as
each period from July 1 to June 30 "during which the
Division exists." 23
Avnet's board of directors' minutes for October 17, 1973,
indicate that the decisions to hire Furst and to create a new
division were made by Sheib on his own responsibility. The
minutes state that Sheib reported to the board that Avnet
had acquired rights to patent applications for a tape
transport system, and that the acquisition of these rights
"... formed the basis for [Sheib's ] establishing a new
division for the development and production of tape
recorders. Tentatively called the Tape Recorder Division,
Mr. Sheib had engaged Mr. Furst to be its general manager
reporting directly to him. The Corporation had entered into
a 3-year contract with Mr. Furst [the minutes go on to
detail the terms of the employment contract]" (Emphasis
supplied).
Certain evidence of record shows a striking lack of
demarcation of function and identity among some of the
divisions, suggesting Avnet's recognition of their internal
fungibility. At the hearing, the testimony was clear that
"British Industries Company" did not actually produce
anything more than the specific work being performed at
building no. 1 in Westbury. Avnet's 1974 annual report,
however, states that "British Industries Company" has
introduced "two major products into the market-the
'B.I.C. VENTURI' loudspeaker and the 'B.I.C. Pro-
grammed ' Turntables.' " Subsequently, with reference to
the "Programmed Turntables," the report states, "This
product is owned by Avnet and manufactured in the
United States." A sales brochure for the turntable enclosed
with the annual report states that "British Industries Co. [is
the] creator and builder of the new B.I.C. turntables" and
that "[t ]hey are built in B.I.C.'s own plant where all aspects
of manufacturing are in B.I.C.'s hands" (the brochure
identifies "B.I.C." as "a trademark of British Industries
Co., Westbury, New York 11590. A division of Avnet
Inc."). At the hearing, Lipton testified that B.I.C. turn-
tables are in fact manufactured by British Industries' sister
division, IPM (and also that the subassembly work being
performed for IPM by Lyra was destined for inclusion in
"B.I.C." record changers). Lipton further testified that,
despite the indications in the sales brochure, British
Industries merely buys the turntables from IPM, and sells
them for British Industries' account. Shipment is apparent-
ly handled by IPM. Contrary to the brochure, then, it is
obvious that "British Industries Company," as such, is not
the "creator and builder" of the "new B .I.C. turntables."
There is other evidence of the obviously close and on-
going relationship between the parent Avnet and its
divisions, and, with special relevance to this case, between
Respondents British Industries and Lyra Systems. The
signature card for Lyra's checking account makes provi-
sion for President Sheib to withdraw from and deposit
moneys to that account on his own signature , Any other
deposits or withdrawals require the signatures of two of
three named persons . Two of these persons are Furst and
between a division and its employees . I am, accordingly , disinclined to give
much weight to sweeping answers given by Spiegel to generalized questions.
2 i Spiegel stated that "the Avnet stock incentive plan . . . is broad and
applies to any employee of Avnet, Incorporated, union or non-union"
(Emphasis supplied.)
22 Furst testified that he believed this was a result of a discussion with
Sbeib in which he told Sheib that he was not an accountant and would need
assistance in order to transfer the basic budgetary materials into the Avnet
budget format. From the tenor of Sheib's letter, I think Furst's account of
the origin of this letter is faulty. Sheib's letter clearly appears to be a form
letter to all division heads.
23 Spiegel testified , without contradiction, that most of Avnet 's division
heads are employed under a profit-sharing arrangement in order to provide
an incentive to them.
1134 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
his associate, Mr. Richter; the third person is Stephen
Zach, the office manager for British Industries 24 Zach
also, according to Furst, "had been assigned by Mr.
Lipton, I believe, on Mr. Sheib's request to take care of our
accounting bookkeeping . . ." (Emphasis supplied). Furst
said that the arrangement is that "an accounting" will be
made for Zach's services at the end of the first year:
A. . . . it will be a book transfer.
Q. It will be a book transfer?
A. Either or, or we are easing into this thing, it was
decided at the end of this fiscal year we would in some
formal manner pay back the cost incurred by B.I.C.
Since Respondent Lyra -was established in .late 1973,
Simon Sheib had, as of the hearing, personally visited the
building on three occasions to discuss the progress of
Lyra's operation, and one of Sheib's assistants visited the
premises for similar purposes on two or three other
occasions.
Henry Lipton, of British Industries, similarly testified
that Avnet representatives visit his plant, and they
correspond with and telephone one another about the
operation. Like Lyra's, British Industries' bank account
arrangement permits Sheib to deposit and withdraw money
on his own signature. The record shows that the May 1973
decision of Plessey Incorporated, parent of Garrard, to
terminate the distribution franchise of the Garrard record
changers was not communicated to Lipton or British
Industries, but to Simon Sheib, in a letter from Plessey to
Sheib stating that it had determined not to "renew or
extend the agreement between Avnet and Plessey with
respect to the distribution of Garrard record changers"
(Emphasis supplied).25
Avnet's annual report for fiscal 1974 projects an image of
a unified enterprise , which will be discussed at greater
length infra
Analysis and Conclusions
1. The single employer relationship
The complaint is principally bottomed on a theory that
the essential nature of the collective-bargaining relation-
ship in existence at Westbury prior to the creation of Lyra
Systems was not changed by that occurrence. To establish
his case that a legal nexus existed between Respondents
Avnet and British Industries which made them as one for
purposes of the representative status enjoyed by District 65
and for other purposes, counsel for the General Counsel
introduced a considerable body of evidence relevant to the
"single employer" doctrine evolved by the Board over the
years. That evidence has been summarized above.
.In asserting that a single employer relationship should be
found on the evidence adduced here, General Counsel
relies heavily on Royal Typewriter Company, a Division of
Litton Business Systems, Inc., a Subsidiary of Litton
Industries, Inc., and Litton Industries, Inc., 209 NLRB 1006
(1974), one of the Board's more recent expansive treat-
ments of the single employer question. In its broadest
outlines, that case dealt with a factual situation similar to
that before us in this case-the relationship between Litton
Industries, a large conglomerate, and Royal Typewriter
Company, an unincorporated division of a Litton corpo-
rate subsidiary. The Board found them to constitute a
single employer.
My study of the evidence in this case and the facts found
in Royal lead me to conclude that the salient factors
bearing on the issue of single employer relationship in the
two cases are essentially indistinguishable. Without under-
taking the laborious task of comparing all the evidence
previously found above with that relied on by the Board in
Royal, I shall briefly comment on what seem to me to be
some compelling similarities.
The Board begins its analysis, "At the outset, it may be
noted that Royal is not a legal entity; it cannot sue or be
sued in its own name, and thus cannot, in a legal sense, be
regarded as the sole `employer' of its employees." The
Board does not, however, pursue this line of reasoning,
going on instead to discuss the question of common
management.
It seems to me that the legal argument just quoted carries
a certain force of its own. As in Royal, the unincorporated
divisions here, British Industries Company and Lyra
Systems, exist in name only. They have no autonomous
legal life; they cannot sue or be sued; they cannot hold
patents in their own name; they are ephemeral creatures of
the corporation; they may be created or abolished without
even a stroke of a pen. On this view of their legal status, it
might well be said that such unincorporated operating
divisions are at best agents of the corporation which
brought them into being, and that, perforce, the real and
only party extending recognition to the Union and
contracting with it is the principal, Avnet, Inc. It may be,
however, that the Board felt under a certain constraint
arising from its decisions in such cases as Los Angeles
Newspaper Guild, Local 69 (Hearst Corp.), 185 NLRB 303
(1970), enfd. 443 F.2d 1173 (C.A. 9, 1971), and American
Federation of Television and Radio Artists Washington-
Baltimore Local, AFL-CIO (Hearst Corp.), 185 NLRB 593
(1970), enfd. 462 F.2d 887 (C.A.D.C., 1972), in which it
held that unincorporated divisions of a corporation are
separate "persons" for purposes of Section 8(b)(4) of the
Act. Cogent policy arguments might be presented for
drawing a different conclusion on this matter under
Section 8(a), as opposed to Section 8(b), of the Act. I will,
24 The reason given by Furst for Zach being one of the three authorized
signatories was that Furst or Richter might be absent and therefore unable s * s
to sign a necessary check.
25 Lipton's testimony on this point is worth reproducing: Q. To your knowledge, did anyone from British Industries
Q. ... Now, when the Company lost the Garrard record changer,
Company have communications with Plessey Incorporated about
Plessey's desire to terminate your contract regarding Garrard?
were you personally informed by people in Plessey Incorporated ... ? A. Not to my knowledge.
A. No, I wasn't personally informed of it. Q. Do you know who the contacts were with?
A. I have no idea.
BRITISH INDUSTRIES COMPANY 1135
however, concern myself only with more conventional
analysis in evaluating the single employer relationship, as
the Board did in Royal.
Common ownership is clear here; it was stipulated at the
hearing that the shareholders, officers, and directors of
Avnet and its divisions are one and the same. Similarly
present here is common management, which the Board in
Royal discussed in the following words:
[Litton Industries] officials have created, abolished,
and rearranged divisions, including Royal, at will.
These same officials, the group executives, appoint the
heads of the divisions and retain control over their
activities. They hold frequent discussions with the
division managers, and their approval is required for
each division's overall budget and detailed plans ... .
Thus, although the various divisions may have nomi-
nally separate management, it is clear that real
authority over all divisions is in the hands of high
officials of Litton Industries-the executive committee
and the group executives-who functioned, in the words
of the president of Litton Industries, as a"management
of managers."
The evidence in this case makes it very plain that the
foregoing description applies in all material respects to the
operation of Avnet and its divisions. Simon Sheib, whom
British Industries Vice President Lipton "presumed" to be
the president of British Industries, obviously had, and
exercised, authority to create, abolish, or rearrange
divisions at will, as witness his independent decision to
establish a tape recorder division under the management of
Furst. In the employment agreement between Avnet and
Furst, provision was made for the possible utilization of
Furst in any engineering or management capacity that
Avnet saw fit to require. I have no doubt that Sheib was
empowered to juggle divisions and division heads almost
without restraint, and the record makes it eminently clear
that he was a "manager of management."
Discussing the factors of "integration of operations, and
actual control of the divisions' operations by Litton
Industries," the Board had the following to say:
,As has been noted, the very existence of each division,
as well as the scope of operations under it, is controlled
by the group executive, in practice as well as in theory.
Similarly, the group executive must approve each
division's annual budget, thereby setting a limitation on
expenditures which the division manager cannot
exceed without the group executive's approval. This
requirement'of approval clearly reflects actual control,
not merely the possibility of exercising control. The
same is true of the requirement that each division
submit a detailed plan of its expected operations; the
testimony of the president of Litton Industries before
the FTC indicates that monthly evaluation of data is
made to compare results with expectations, and
corrective action is taken if necessary. Furthermore, the
group executives exercise control by frequent visits to
the divisions and discussions with the division manag-
ers. Finally, we note that in its, reports to stockhold-
ers-the annual report and notice of annual meeting-
Litton Industries characterized itself, not as a holding
company for divisions engaged in separate operations,
but as an active, integrated enterprise which operates in
a wide variety of industries. The financial statement
gives figures for Litton Industries as a whole; the total
amount of property owned or used by Litton Industries
as a whole is given; the major plants and offices are
listed by location, with no separate list for those of each
subsidiary or division; and it states that Litton
Industries (Royal is not even mentioned) manufactures
numerous products, including electric and manual
office and portable typewriters and accessories. It is
thus apparent that the management of Litton Industries
recognized what this record shows; that there was but
one integrated enterprise.
The foregoing considerations are essentially applicable
here. The division heads not only were required to submit
detailed annual budgets to Sheib, but also made monthly
and quarterly reports. Sheib could refuse, and has refused,
to approve budgets submitted in the past by British
Industries; as noted, the Board in Royal concluded that the
mere "requirement of approval" in that case "clearly
reflects actual control, not merely the possibility of
exercising control." As previously indicated, Sheib and his
assistants have not only made personal visits to Furst's
operations, but Sheib has also obviously kept a close eye
on his progress. This watchfulness is exemplified, for
instance, by the letter of July 18, 1974, in which Sheib
referred to the fact that he had "been urging [Furst] to
complete the tape deck model," and cautioned him to be
sure that he was doing the necessary-production engineer-
ing.
The annual report for fiscal 1974 of Avnet, Inc., clearly
intends, as in Royal, to portray the corporation as a
vigorous, cohesive single entity. The report states, in bold
letters, on its first page: "Avnet, Inc., is a diversified
manufacturer and distributor of electric components, home
entertainment and high fidelity products, automotive parts,
wire and cable products, and electrical, electronic and
other products for consumer and industrial use" (Emphasis
supplied). The report gives gross sales and net income
figures for what are referred to as five "groups"-electronic
marketing group, consumer products group, wire and cable
group, automotive group, and electrical and engineering
group.26 The whole tenor of the report (e.g., "In fiscal 1974
Avnet once again had record sales and earnings") suggests
that, as in Royal, Avnet views itself "not as a holding
company for divisions engaged in separate operations, but
as an active, integrated enterprise which operates in a wide
variety of industries." The other abundant evidence of
both actual control and actual integration need not be
recited again here.2?
28 These "groups" were never referred to at the hearing; there is no
reference in the annual report or elsewhere in the evidence to any "group"
executives ; and it would appear to me that the "groups " exist only for
purposes of convenience in writing the annual report.
27 As the record evidence discussed above shows , there are many close
working relationships between the divisions . For example, there is British
(Continued)
1136 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In discussing the facts pertinent to the subject of control
of labor relations, the Board conceded in Royal, "it is clear
that Royal has autonomy in controlling day-to-day
relations and certain separate benefits."
In Royal, Litton Industries maintained a uniform
pension plan for its nonunionized employees; that is also
true of Avnet. In the present case, however, with respect to
hospitalization insurance coverage for nonorgamzed em-
ployees, Avnet corporate headquarters provides and
administers such coverage and, as well, also centrally
provides group life insurance and a stock incentive plan for
all employees. In Royal, there was in fact less centralized
control exercised by Litton Industries in these areas. The
decision in Royal indicates that Litton Industries did not
make available to the employees of its subsidiaries and
divisions a nationwide hospitalization program, and it
further states, "Litton Industries has a stock purchase plan
for rank-and-file employees which some, but not all;
divisions have adopted . . . ." It is thus apparent that
Avnet, unlike Litton, has chosen to maintain corporate
control over these critically important fringe benefits,
rather than to relinquish control to its divisions.
Unlike Litton Industries, Avnet does not maintain a
separate labor relations department. However, as in Royal,
there is evidence on this record that "officials of divisions
have indicated to employees or their bargaining representa-
tives that Litton Industries determines their labor relations
policies." Thus, when District 65 complained in May 1974
to Lipton about the failure to recall employees to work at
the. Lyra Systems building, Brigagliano was told by Lipton
that -he had nothing to do with the matter and that he
should register his complaint with Sheib. Lipton, a
seasoned employee of the Company, clearly recognized
that the person to consult in the situation was not Furst,
but rather the president of Avnet. I am convinced that the
same sort of abiding and active interest in the labor
relations of its divisions which existed at Litton Industries
also is a fact of life at Avnet headquarters. Thus, as
discussed above, according to Furst's testimony, when
Local 475 appeared at his doorstep, he considered it
appropriate to call Sheib directly for guidance. The
following day he called Sheib again, to report on the results
of his negotiations:
In Royal, the Board relied in large measure on the role
played in bargaining negotiations in 1969 by the director of
labor relations of Litton Industries, and on the participa-
tion by officials of Litton Industries in deciding to close the
Royal plant in Springfield, Missouri . I have no compunc-
tions whatever against inferring from this record that in a
like situation, involving negotiations which portended the
closing of a plant employing 1,000 persons, Simon Sheib or
a personal appointee would have taken a most active part,
not only in the negotiations but in the decision to close the
plant. It is obvious to ni that just as Sheib had the
authority to create a division by entering into the
Industries' use of Channel Masters' computer facilities ; Hamilton/Avnet's
furnishing of computer services tQ some 30 other division facilities; Lyra
Systems' employment of British Industries ' office manager for certain
accounting functions (at Shob's request), and the office manager's listing on
Lyra Systems' bank account card ds one of the three individuals (other than
Sheib) authorized to make deposits or withdrawals . Similarly, control is
employment agreement with Furst, thus committing Avnet
to an expenditure of many thousands of dollars, only he or
the board of directors, rather than the head of a division,
were empowered to close one of the divisions. Cf. Royal,
supra.
In sum, I find that the evidence presented in this case
closely parallels that relied on by the Board in Royal
Typewriter Company, supra (and I find American Federation
of Television and Radio Artists (Hearst Corp.), supra,
strongly urged by Respondents as controlling, to be
inapposite on the facts). Common ownership and manage-
ment plainly exist here. The entire Avnet enterprise is fully
integrated in the sense that the Board used that term in
Royal, both in the image projected to the public and as a
practical matter on the interdivisional level. The unincor-
porated divisions are simply appendages of the president of
Avnet, Inc. From a programmatic point of view, it seems
clear that division heads were, in a very real sense,
powerless to control the destinies of their domains. One of
the major lines-the Garrard distributorship-upon which
British Industries had relied for a number of years was the
product of a 'contract between the parent of Garrard and
Avnet, not British Industries, and the negotiations con-
cerning the termination of that relationship took place
between President Sheib and Garrard's parent. Lipton was
not asked to participate. The creation of Lyra Systems
came about because Sheib thought that the idea was
sound, and he brought the division into existence.
Thereafter, Furst thought it advisable to clear with Sheib a
matter of such seemingly little consequence as expending
$3,000 for a patent application. After careful consideration
of all the relevant evidence, including that earlier set out
but not touched on in this discussion, I am convinced that
the General Counsel is correct in asserting that a single
employer relationship exists here.
I further conclude that the nature of that relationship is
such that Avnet, Inc., may and should be held to occupy
the position of the principal employer of the employees of
the two operating divisions involved here, and that, as to
those employees, Avnet, Inc., is subject to all legal
obligations customarily owed by an employer to his
employees under the Act. See Royal Typewriter Company,
supra, footnote 21 (where the Board held that Litton
Industries violated Section 8(a)(5) and (1) by refusing, in
discussing the effects of the closure of the Royal plant, to
bargain about the possibility of offering employment to
Royal employees at two other Litton plants in the vicinity),
and (where the Board provided that in the event Litton
Industries or any subsidiary or division thereof resumed
production of typewriters in the area, it would be required
to recognize and bargain with the union which formerly
represented the Royal employees); Cowles Communica-
tions, Inc., 170 NLRB 1596, 1599-1600, 1612, 1613 (1968).
indicated by such items as Furst's clearance with Sheib of the expenditure of
$3,000 for a patent ; Sheib's own appearance on both British Industnes' and
Lyra Systems' banking cards as authorized to deposit and withdraw on his
own signature; the "multitude of subjects" about which Sheib and his
division heads correspond ; and other matters previously discussed.
BRITISH INDUSTRIES COMPANY 1137
2. The violations of Section 8(a)(2), (3), and (5)
From the conclusion that Respondents constitute a
single employer, General Counsel would move on to apply
here the principles propounded by the Board in Rushton &
Mercier Woodworking Co., Inc., and Rand & Co., Inc., 203
NLRB 123 (1973), enfd. by the U.S. Court of Appeals for
the First Circuit, March 21, 1974 (unpublished opinion).
In that case, Rand & Co., Inc., which engaged in various
business enterprises , had, for valid economic reasons,
closed down its woodworking plant in Boston and laid off
its employees, some of whom were represented by
Carpenters Local 51. Several months later, having acquired
the name and good will of a small New Hampshire
company called Rushton & Mercier Woodworking Co.,
Inc., Rand created a corporation by that same name in
Massachusetts, as a wholly owned subsidiary of Rand, and
reopened the plant under that name, extending recognition
at the same time to another union which had represented
the employees of Rushton & Mercier in New Hampshire.
Rushton & Mercier did not recall any of the employees
who had been laid off by Rand when the latter company
had earlier closed the Boston plant.
The Board agreed with the conclusion of the Administra-
tive Law Judge that the principles reaffirmed by the United
States Supreme Court in N.LRB. v. . Great Dane Trailers,
Inc., 388 U.S. 26 (1967), were applicable. In Great Dane,
the Supreme Court, synthesizing earlier cases, held that:
[s ]ome conduct ... is so "inherently destructive of
employee interests" that it may be deemed proscribed
without need for proof of an underlying improper
motive . . . . If the conduct in question falls within this
"inherently destructive" category, the employer has the
burden of explaining away, justifying or characterizing
"his actions as something different than they appear on
their face," and if he fails, "an unfair labor practice
charge is made out." ... And even if the employer
does come forward with counter explanations for his
conduct in this situation, the Board may nevertheless
draw an inference of improper motive from the conduct
itself and exercise its duty to strike a proper balance
between the asserted business justifications and the
invasion of employee rights in light of the Act and its
policy. [388 U.S. at 33.]
In Rushton & Mercier, framing the issue in the light of
Great Dane, the Board stated:
The key question is whether an employer, when
resuming operations after an economic layoff, may hire
a whole new work force represented by one union to
the exclusion of his laid-off employees who are
represented by a different union. In other words, can
he, by hiring, an new work force instead of recalling
]laid-off employees, rid himself of the union that
represents these employees with a resulting effect of
substituting a new union for the one which previously
,represented his employees.
The Board answered the question thus posed by it as
follows:
It is obvious that Respondents' actions here were
"inherently destructive of employee interests" in that
the natural effect of Respondents' failure to recall any
of the employees represented by Local 51 when they
resumed operation was to discourage membership in a
union. Thus, such conduct is violative of Section 8(a)(3)
unless Respondents can establish that they had
adequate business justification for their actions.
The Board then concluded that the Respondents in fact
had no adequate business justification for their conduct.
General Counsel contends that Rushton is dispositive
here. His argument is that the Respondents, being "an
employer" within the meaning of the "key question" put by
the Board in the foregoing quotation, has hired a "whole
new work force represented by one union to the exclusion
of his laid-off employees who are represented by a different
union." Respondents would distinguish Rushton as follows:
In [Rushton], it was self-evident that a parent and
subsidiary were an integrated single employer, where
the parent company had created the wholly owned
subsidiary, there were interlocking officers and direc-
tors and common ownership. The subsidiary"has using
the same plant and equipment previously used by the
parent, the same individuals exercised control over
both entities, orders produced 'by the subsidiary were
obtained by salesmen under the parent's name and
there were no significant differences in their operations.
Furthermore, the Board found that the creation of the
subsidiary had been a scheme and a device for the
parent to rid itself of the u_ nions4that had represented its
employees and obtain a more 'favorable collective
bargaining agreement with another union.28
These are not the facts in the case at bar. Lyra was
never, a part of BIC. The prime business objective of
Lyra was to develop and manufacture a tape cassette
recorder. This was a completely new venture and was
not related to the existing or prior business activities of
BIC. The manufacturer of the component for a record
changer could not be related to the marketing and
distribution operations of BIC. In short, there was no
run-away shop in order to avoid any of the obligations
of BIC under its collective bargaining agreement with
District 65. On the contrary, in accordance with
representations made by BIC to District 65, efforts
were being made to obtain new lines of electronics
equipment for sale and distribution. (G.C. Exh. No. 15
p. 4) At no time was there any representation that BIC
would become a manufacturing organization rather
than a wholesaler and distributor of high fidelity
equipment.
An impressive theoretical argument can be marshaled in
General Counsel's favor. After careful consideration,
however, and not without doubt, I have concluded that
Rushton is not controlling here.
za It should be noted that the Board's finding of actual motive in Rushton
was an alternative holding.
1138 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The Board has held that the fording of a single employer
relationship does not necessarily commit each of the
entities involved in that relationship to the other's
bargaining and statutory obligations. B & B Industries, Inc.,
162 NLRB 832, 834-835 (1967). It seems to me that Avnet
and British Industries Company together constituted "the
employer" of the employees in the certified bargaining
unit, but I cannot fmd that Avnet and British Industries
also continued , for purposes of the statutory rights of the
employees, to be "the employer" of the Lyra employees
when Lyra Systems began operations.
Lyra Systems was not intended to be a continuation of
British Industries, and the record unequivocally shows that
it is not a disguised continuance. The uncontradicted
evidence is that Lyra Systems was established to develop,
produce, and market a new product, in a separate "Tape
Recorder Division," under the stewardship of a man whose
services were uniquely important to the project. While
Lyra has received some assistance from the neighboring
British Industries, it is clearly not functionally integrated
with British Industries. Furst runs his operation, and
Lipton runs his, without any appreciable interdependence
between the two. When Lyra was established in October
1973, with Furst at the helm, and research work on the
cassette was begun, it was plainly the intent of Avnet and
Furst to create a new industry. That new industry, I would
fmd, with Furst, not Lipton, in charge, corollarily created a
new bargaining unit with 'a new community of interests,
separate and apart from the tenuous community of
interests which had previously allied the two buildings
under Lipton.
General Counsel's contention, at bottom, rests on what
appears to' be a fortuity-the decision to locate Lyra
Systems in a building formerly used by British Industries.
That building was not owned,by Avnet, but was held under
lease, a lease which was to expire on April 1, 1974. If Lyra
Systems had chosen to begin operations in some other
building many miles away, I can scarcely conceive that the
8(a)(3)' and (5) complaint allegations now before me would
have been made , since Lyra would then have appeared to
be a new and separate division of Avnet, totally unrelated
to British Industries Company or its bargaining obliga-
tions. And if, by April 1, Avnet had been unable to secure
a new line for British Industries, it may well have been that
the lease would not have been renewed, thus resulting in
the same diminution of operations for British Industries
which presently exists.
The General, Counsel's contentions , as I have said, are
,seductive . As an abstract matter, a close relationship, can
indeed be argued, to exist between the fact pattern
described by the Board as the "key question" in Rushton
29 It seems clear to me that British Industries itself could not have
undertaken the cassette project with its existing managerial personnel.
30 Although I have found that the work presently being performed on the
IPM subassembly is quite similar to that formerly done by British Industries
in the Wharfedale building, there is no evidence to contradict Respondents'
testimony that the IPM work was unforeseen and unanticipated when Lyra
was created, and it clearly appears to be an incidental increment to the
principal business objective for which Lyra Systems was founded.
Furthermore, although I doubt that the cassette production, when begun,
will constitute "manufacturing" in the sense that Respondents use that term
in their brief, the preproduction plans made up by Furst (Resp. Exhs. I and
2) indicate that the operation will entail a more complex work process,
and the one we confront here. "[A]n employer" (i.e.,
Avnet), it might be said, has hired "a whole new work force
represented by one union to the exclusion of his laid-off
employees who are represented by a different union." But
in view of the clear and legitimately conceived distinction
between British Industries and Lyra Systems, the latter
having plainly been created as an enterprise with a wholly
new and special business objective, to be managed
independently, of British Industries by an experienced
electronics expert, authorized to exercise discretionary
authority over day-to-day matters relating to operations
and personnel, for the purpose of developing, fabricating
and selling an entirely different product than that custom-
arily handled by British Industries,29 I cannot conclude
that, as in Rushton, the "employer" has simply "resum[ed]
operations -after an economic layoff' (Rushton). A new
operation, rather, has been initiated, and the "employer" of
the employees in that operation is not Avnet/British
Industries, but Avnet/Lyra Systems.30
I recognize that, in Rushton, the Board found that the
"Respondents' actions here were `inherently destructive of
employee interests' in that the natural effect of Respon-
dents' failure to recall any of the employees represented by
Local 51 when they resumed operation was to discourage
membership in a union." I am not altogether certain that I
understand this conclusion; the employees of an enterprise
called "Rand & Co." had months before vacated the plant,
and I am not sure how they were to know, when the plant
reopened under the name "Rushton & Mercier" and the
supervision of an individual named Rushton,, that the latter
firm was a continuance of their former employer.31
Nonetheless, it might well be argued that the "natural
effect" of the failure to recall here was even more
pronounced than in Rushton, since in this case there
remained in building no. I a group of employees capable of
witnessing the fact that a new union was representing
employees in a building which had formerly been part of
their bargaining unit. But they also witnessed what I have
found to be, for all practical purposes, a new "employer"-
Avnet/Lyra Systems. It would appear that the potential for
discouragement of union membership here was no less
than if the empty building had been leased to some tenant
totally unrelated to Avnet or" British Industries, ' which
called itself "Lyra Systems" and began performing work
similar in character to that previously done in that building
by British Industries; any such discouragement, of course,
would have been of no legal significance under Section
8(a)(3). It seems most doubtful that the employees of
British Industries regarded building no. 2 as one of the
immutable parameters of their bargaining unit; it is more
likely that they conceived their unit jurisdiction to
requiring new equipment and more highly skilled employees, than that
previously performed in the Wharfedale building. I also note that even in
the production of the IPM subassembly , General Counsel concedes in his
brief that 2 of the 15 employees (Labella and Morgan) at work on that item
in November 1974 possessed skills which could not be duplicated or readily
learned by the laid-off employees.
31 Compare Great Dane Trailers, Inc., supra, 388 U.S. at 32: "The act of
paying accrued benefits to one group of employees while announcing the
extinction of the same benefits for another group of employees... surely
may have a discouraging effect on either present or future concerted
activity." (Emphasis supplied.)
BRITISH INDUSTRIES COMPANY 1139
comprehend that work done by the entity known as
"British Industries Company."
In the present circumstances, where Avnet, without
fraudulent intent, clearly intended to establish a new
operation, under new and relatively independent manage-
ment , with considerable new capital investment, in an
enterprise which British Industries, as presently constitut-
ed, could not have itself undertake 4 I do not believe that
the mere happenstance of the location of the new entity,
and the common parentage of the two divisions, are a
sufficient basis for concluding that the employing industry
survived and that the failure to recall employees laid off by
British Industries to work for Lyra Systems was "so
inherently destructive of employee interests that it may be
deemed proscribed without need for proof of an underlying
improper motive," Great Dane Trailers, 388 U.S. at 33
(1967). I fully appreciate the logic of General Counsel's
theory, and I do not regard it as insubstantial, but I believe
that the realities of the situation require the conclusion that
the establishment of a genuinely new division, and the
failure to recall laid-off employees of another division
thereto, does not amount, in these particular circum-
stances, to the kind of "invasion of employee rights"
contemplated by Great Dane Trailers, Inc., supra.
To so find would, I think, stretch Rushton and Great
Dane to the breaking point. In order for there to be a
"destruction of employee rights," those rights must,
obviously, exist in the first instance. Whatever statutory or
contractual obligations were owed to the laid-off employ-
ees by the employer Avnet/British Industries were extir-
pated by the establishment of the new, lawful, and
independent employer Avnet/Lyra Systems. While the
language of Great Dane suggests that the Board is
empowered to "strike [a] balance ... in light of the Act
and its policy" and find a violation on the basis of the
appearance of employer conduct (388 U.S. at 32, 33-34),
that doctrine must have its limitations. In the present case,
where a separate employer, whose employees have their
own special community of interests, has been created by
Aviiet, and fortuitously placed in a building previously
occupied by the District 65 bargaining unit, the sort of
"employee rights" envisioned by Great Dane are not
implicated.
Although suspicious circumstances abound, I am not
convinced here, as the Administrative Law Judge and the
Board were in Rushton, that the General Counsel has
satisfactorily made a showing of actual motive to discrimi-
nate against the employees represented by District 65. The
original layoff of employees leading to the discontinuance
of operations in the Wharfedale building was concededly
impeccable. As indicated above, however, in April 1974
Lipton unquestionably knew that Furst, his neighboring
division head, was about to embark on production of the
IPM[ subassembly. Nonetheless, when District 65 repre-
sentative Brigagliano asked him in that month whether
progress had been made in obtaining new lines, Lipton
replied, "Well, we're not ready yet. We're still looking
around," without any reference to Lyra Systems. On April
15, District 65 organizer Folsom and shop steward Cooper
went to see Furst to investigate a rumor that some hiring
was to begin in the Wharfedale building. Folsom asserted
the right of the laid-off employees represented by District
65 to be recalled. Furst, who was to begin work on the IPM
subassembly within a month, carefully responded that
"they didn't have a new item there, they didn't have the
item in there yet."
This pattern of concealment might be construed as a
calculated prelude to the lightning-like recognition of
Local 475 on May 8. As I have indicated in stating the
facts, the setting for that extension of recognition raises
troublesome questions.
Furst was ready to hire for production, he says, on
Monday, May 6, and placed a "help wanted" sign in front
of the plant that day. Four employees formerly employed
by Stillman Manufacturing Company (Berrios, Danzi,
Meraglia, and Mallardi) appeared at the Lyra building in
Westbury, apparently simultaneously.32 They dated their
application forms "May 6," a Monday. The company,
however, indicated on the same form that they were hired
on May 5, a Sunday, and "will report" on May 6. All four
were hired at a rate of $3.75. As to one of them, Furst
testified, "my judgment at that time was that he would be
of some use to us and I might tell you at that time I really
didn't have anything, I did not have this specific job [in
which he is presently employed] in mind." On May 7, a
fifth employee, Mary Rullo, was hired; her application
form shows that she is related to Mallardi and that she
gave Meraglia as a reference 33 On May 8, a representative
of Local 475 turned up, the employees began what Furst
termed a 2-hour work stoppage, and a bargaining agree-
ment was executed 4 or 5 hours later.
This sequence of events is, I think, comparable to "the
highly suspect coincidence of a District 50 representative
showing up to organize the Rushton & Mercier of New
Hampshire employees the Monday after the Friday that
the sale of the name and good will was completed"
(Rushton). Application to Lyra of the bargaining agreement
between Respondents and District 65 would have been
considerably more costly to Respondents than the agree-
ment executed by Furst with Local 475. The 1970 District
65 contract presented in evidence contains no specific wage
schedule,34 but its April 24, 1973, amendment provides,
inter ilia, that "For the first two years of this Agreement
new employees will be hired at $2.80 an hour and will
automatically progress to $3 an hour during the first twelve
months of employment." Some of the wage scales in the
Local 475 contract are noted, supra, and should be
compared.35
32 Their application forms show that one resided in the Bronx, one in
Centi al Islip , one in Shirley , New York, and one in Manhattan. There is no
evidence in the record that Stillman Manufacturing employees are or were
represented by Local 475.
33 Respondents' payroll record , G.C. Exh . 16, shows that Rullo
terminated the very next day.
34 Art. 10 ("Wages") of the contract refers to a "Schedule A attached
hereto" which purportedly contains employee wage rates and classifications.
I asked the parties about the omission and was told the attachment was
unnecessary to the case
35 There is no question that on May 8, 1974 , Avnet President Sheib was
fully aware of the existence of a bargaining relationship between British
Industries and District 65 The earlier case cited above, British Industries
Company, Division of Avnet, Inc, 29-CA-1610, adopted by the Board pro
(Continued)
1140 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Although these factors provide fertile breeding ground
for suspicion, I think their totality falls somewhat short of
the necessary preponderance of the evidence. I do not
know anything, for example, about the circumstances
under which the four employees who had previously
worked at Stillman Manufacturing Company came to the
plant or, indeed, whether Stillman was itself a Local 475-
organized plant. The Lyra entity was apparently not
created as a subterfuge, as Rushton & Mercier clearly was
in the Rushton case. I note that counsel for the General
Counsel has reduced to one sentence in a footnote in his
brief his argument for the presence of a showing of actual
motive, and he primarily relies there upon "the prior Board
case involving Respondent British and District 65 wherein
it was found to have committed extensive unfair labor
practices" (G.C. brief).36
These circumstances lead me to conclude that the
General Counsel has not sufficiently proved, by substantial
evidence, the existence of unlawful intent upon the part of
Respondents. Since I have also found that Respondents
may not be held to have committed a violation of Section
8(aX3) under the Rushton & Mercier analysis, I must also
conclude that Respondents have not violated Section
8(a)(2) and 8(a)(5) as a corollary of any 8(a)(3) violation
(cf. Rushton & Mercier).
General Counsel, however, advances a separate basis for
concluding that a violation of Section 8(a)(2) has been
committed. He alleges that, even if Lyra were to be
considered a separate and independent employer and
Respondents were not guilty of the unfair labor practices
otherwise alleged, the recognition accorded Local 475 was
violative of Section 8(a)(2) because, on May 8, 1974, Lyra
did not yet employ a representative complement of
employees in the "new" bargaining unit.
The record shows that on May 8, when recognition was
extended and the contract executed, Furst had hired five
unit employees. As discussed above, the record also shows
that one of the five, Mary Rullo, who had been hired on
May 7, terminated on May 8; whether she ever appeared
for work is a matter about which the record is silent. On
May 8, no certain number of formal job classifications
were in existence. However, the record shows that Furst
and Local 475 entered into a supplemental memorandum
of agreement a few days after May 8, listing 13 different
job classifications. Furst testified, as later discussed, that
the employees initially hired were not hired to perform any
particular work and, as well, that they have since engaged
in work which cut across classification lines.
In August and October 1973, in making projections
about the number of "direct labor" employees required to
produce the cassette recorder, Furst estimated that figure
at 23 (Resp. Exhs. 1 and 2). In August 1974, having signed
the contract with Local 475, with 14 employees covered by
that contract, Furst estimated that the number of "union
employees" required to produce both the cassette deck and
the IPM subassembly would be 30. Since May 8, 1974, the
forma on October 14, 1970, shows that Sheib, then outside counsel to Avnet,
served as a representative of British Industries in the negotiations leading to
the 1970 contract.
36 In that case , British Industries Company, Division of Avnet, Inc., Case
29-CA-1610, referred to elsewhere, British Industries was found to have
committed a number of violations of Sec. 8(a)(1) and (5) in 1969. No
unit complement has been as high as 15 employees; at the
time of the hearing, Furst employed 11 persons covered by
the contract, and he testified that it would be necessary to
hire only one other employee with a special skill when he
began to produce the cassette. Thus, he concluded that the
work force had stabilized for the foreseeable future at a
figure of 12.
Since the job classification addendum was agreed to in
May 1974 (with, as Furst testified, "the understanding that
if there are other classifications that have to be added, that
we would be able to do that"), according to Furst, he has
never employed employees in the following classifications:
QC Class "A" Inspector; Maintenance Man; Driver;
Wirer; Machine Operator; Class A Assembler; Material
Handler; and Porter. This would mean that 8 of 13
contract classifications have never been filled. Other
testimony by Furst, as well as entries made by a Lyra
supervisor on General Counsel Exhibit 16, a cumulative
payroll printout for Lyra, clearly indicate, however, that at
least one employee (Veneruso) falls within the classifica-
tion of QC "Class A" Inspector and that other employees
(Jenkins, Danzi) have performed full-time work as Ma-
chine Operators.37 Accordingly, I find that employees have
occupied at least 7 of the 13 contract classifications.
The theory that an employer illegally assists a union, and
thereby violates Section 8(a)(2), by extending exclusive
recognition to the union before the employer has a
representative complement in his employ is well-estab-
lished unfair labor practice doctrine. E.g., The Englander
Company, Inc., 1 14 NLRB 1034 (1955), enforcement denied
on other grounds 237 F.2d 599 (C.A. 3,1956). A similar
theory has long been applied in representation cases,
holding that a bargaining contract executed poor to
attainment of a representative complement would not be a
bar to an election. In General Extrusion Company, Inc., 121
NLRB 1165 (1958), the Board laid down a rule as to the
measuring standards to be applied in representation cases,
and explained its reasons for making the rule, (at 1167):
[a] contract will bar an election only if at least 30
percent of the complement employed at the time of the
hearing had been employed at the time the contract
was executed, and 50 percent of the job classifications
in existence at the time of the hearing were in existence
at the time the contract was made. This rule is
essentially a codification and restatement of the
principles set forth in a number of cases . . . . It will,
however, simplify the heretofore existing rules by
eliminating contract-bar issues based 'upon whether
operations had begun or had assumed normal propor-
tions [footnote omitted] and substituting therefore the
above rule related to the status of personnel when the
agreement was made.
At first, it appears, the Board envisaged no necessary
relationship between the rule to be applied in unfair labor
violations of Sec. 8(a)(3) were alleged or found by the Trial Examiner. I
would not assign controlling weight to a case of this vintage and character.
37 I do not believe the record supports General Counsel's assertion on
brief that Furst has also employed individuals who would fall in the
classifications of Class A Assembler and Driver.
BRITISH INDUSTRIES COMPANY
practice cases and the arithmetic standard set out in
General Extrusion. Thus, in A.O. Smith Corporation, 122
NLRB 321 (1958), decided 2 months after General
Extruusion, the Trial Examiner found an 8(a)(2) violation
when the employer accorded recognition "before the plant
was in production and when only a small percentage of the
planned complement of employees was at work ... at a
time when the complement of personnel was admittedly in
the process of a planned rapid expansion" (122 NLRB at
329). The Board adopted the Trial Examiner's decision
without referring to the General Extrusion standards. Since
then, in unfair labor practice cases, the Board generally,
although not invariably, has predicated a fording of
violation on the facts that, at the time of recognition, the
employing industry "was not in normal production and the
then employees were not representative of the anticipated
complement," Lianco Container Corp., 173 NLRB 1444,
1448 (1969); see also Fruehauf Trailer, 162 NLRB 195
(1966); Lapeer Metal Products Co., 134 NLRB 1518 (1961).
In Crown Cork & Seal Company, 182 NLRB 657(1970), as
in the preceding cases, the Board adopted without
comment a Trial Examiner's decision which did not
analyze the facts in General Extrusion terms; which held
that recognition had been invalidly granted at a time when
"neither a representative complement of employees was
employed nor were the employees engaged in normal
operations;" and which concluded that "the Board has
established no mathematical formula nor any per se rule
for resolving the issue" in unfair labor practice cases. 182
NLRB at 662.
In Hayes Coal Co., Inc., 197 NLRB 1162, 1163 (1972),
the Board itself spoke out on the matter:
A determination of premature recognition, however,
cannot be predicated on whether existent jobs are
temporarily unfilled by reason of quit or discharge, or
on a possibility that future conditions may warrant an
increase in personnel, or on the basis of an increase in
personnel subsequent to the granting of recognition.
The correct test is whether, at the time of recognition, the
jobs or job classifications designated for the operation
involved are filled or substantially filled and the operation
is in normal or substantially normalproduction. [Empha-
sis supplied; footnotes omitted.]
In Hayes, the Board held that the Respondent met the
foregoing test because "[i]t purchased a single-shift
operating mine which it continued to operate without
interruption on the same basis; it intended to, and to a
substantial degree did, maintain its predecessor's work-
force, and [at the time of recognition] the mine was
engaged in a normal operation with all or substantially all
of the job classifications necessary for a mine operation"
38 I note that the Administrative Law Judge in Klein's Golden Manor did
not strictly apply the General Extrusion rules in his analysis, which a
majority of the panel adopted. Thus, while General Extrusion focusses on
only two critical dates-the time of contract execution and the date of the
hearing-the Administrative Law Judge (I) had before him payroll figures
only for the year of 1973 (recognition had been granted on July 5, 1973),
although the hearing was held in March 1974; and (2) the Administrative
Law Judge did not look to a single critical second date, but rather analyzed
the employment factor in terms of average complement for the period July
5-December 31, 1973
1141
(197 NLRB at 1163). The Board rejected as irrelevant
(although this appears to be dicta) the fact that Respondent
had anticipated increasing its work force to two shifts
about 6 months after purchase of the mine, an expectation
which was realized in only 2 months, on the ground that
"the addition of a second shift was caused and justified by
economic factors which occurred subsequent to its recogni-
tion of the Union," ibid
The holding in Hayes seems to stand for the proposition
that the General Extrusion standards and the standards
applicable to unfair labor practice cases are not the same
(although they are inevitably related). In Klein's Golden
Manor, 214 NLRB No. 121 (1974), a three-member panel
split on the question of the role played by the General
Extrusion percentages in unfair labor practices cases,
Member Kennedy holding to the view that those stand-
ards, when met, are not "to be given determinative weight
in a complaint case," and Members Fanning and Penello
concluding that the General Extrusion standards "may" be
given such weight 38 No mention of Hayes Coal Co., Inc.,
was made by either the majority or the concurring member
in Klein's Golden Manor.
In the present case , recognition was granted and the
contract signed on May 8, 1974, when Lyra had (perhaps,
if Rullo is included) five employees covered by the
agreement . Three months after granting recognition, in
August 1974, when he had 14 covered employees on the
payroll, Furst estimated in a memorandum that 30
employees would be required to produce both the IPM
subassembly and the cassette, a figure consistent with the
estimate of 23 employees he had twice projected in 1973 as
necessary to production of the cassette alone.39
These figures compel the conclusion that the number of
employees involved was not representative on May 8. For
purposes of determining, in unfair labor practice cases,
whether premature recognition was granted, the appropri-
ate legal test would seem to be the number of employees
the employer anticipated employing in his normal work
force at the time he granted recognition, rather than the
number fortuitously hired thereafter. Such a rule not only
provides guidance to the employer in determining whether
or not to extend recognition, but also deters possible
manipulation of his complement in the event that an
8(a)(2) charge is filed. Of course, evidence of the anticipat-
ed complement may not always be available, and the
Board in such cases might have to draw inferences from
postrecognition employment experience. In the present
case, however, such evidence is available: twice in 1973,
Furst had estimated a force of 23 employees just for the
cassette project, and in August 1974, 3 months after
granting recognition to Local 475, he forecast a comple-
ment of 30 employees for both the IPM subassembly and
the cassette. Clearly, the 5 (or 4) employees employed on
39 This projection is unlike the one in Hayes, where the Board deemed
irrelevant the employer' s anticipated addition of a second shift. That
business decision was an optional one, clearly resting on the vicissitudes of
the market for coal; here, Furst clearly determined that the minimum
complement necessary to perform the work in prospect was 30 employees.
Furst's testimony that he presently expects to produce both items with a
work complement of 11 or 12 employees must be rejected as not only self-
serving but as based upon the kind of economically fortuitous circumstance
rejected by the Board in Hayes.
1142 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
May 8, 1974, representing at best 17 percent of the
expected complement' of 30, was an inadequate predicate
for recognition.
Similarly, due to Furst's professed uncertainty about the
uses to which he intended to put the first employees hired,
it is impossible to say that on May 8, 1974, they
represented a sufficient percentage of the seven job
classifications which have subsequently been activated.
The five employees hired on either May 5, 6, or 7,
depending on which piece of evidence one wishes to rely,
were Meraglia, Mallardi, Berrios , Danzi, and Rullo.
Meraglia, so Furst testified, was hired before the contract
classifications were agreed to, and on the following basis:
. . we were at the time interviewing each particular group
of people to see whether they would fit in, and it was our
feeling they would fit in and we would move them around
in such a way that we find a home for them .... My
judgment at this time [of hire] was that he [Meraglia]
would be of some use to us and I might tell you at that time
I really didn't have anything, I did not have this specific
job in mind."40 As to Mallardi, the foregoing testimony
also appears to apply.41 Berrios , Furst testified, was
employed because "it was my judgment at that time that
we would be able to hire him and essentially find him
useful in the operation. At that time we didn't even know
how we were going to lay it out even." 42 Danzi was hired,
says Furst, because "we expected some machine operation
and we thought we would be able to use him there." Furst
subsequently clarified this statement by saying that what
he had in mind for Danzi was servicing machines, i.e.,
taking them apart and cleaning them.43 Finally, Rullo was
apparently hired as a Class "B" Assembler.
With perhaps the exception of Danzi and Rullo, it is
difficult to conclude that the five employees were hired
into any specific job classifications. It was hoped that
Meraglia would be "useful," but Furst had no specific job
in mind for him. Mallardi was one of the group expected to
be "move[d] ... around in such a, way that we find a
home for them." The testimony about Berrios is most
revealing ; Furst thought that Berrios would be "useful,"
but "[a It that time we didn't even know how we were going
to lay it out even." It therefore appears that, on May 8, two
job classifications, at best, were " in existence"; since that
time, seven classifications have been occupied. The General
Extrusion standards thus have plainly not been met.
Applying the Hayes Coal test, it equally appears that on
May 8, Lyra was not "engaged in a normal operation with
all or substantially all of the job classifications necessary
for [its] operation.", Furst had only begun hiring on May 6
(or 5) and I cannot believe that the five (or four) employees
on the payroll on May 8 enabled him to be engaged in a
"normal operation" even with respect to the IPM sub-
assembly (the fact, of course, that the production of the
subassembly was undertaken by Furst, as he testified, for
the purpose of "developing a labor force" for the
subsequent production of the cassette militates even more
against the "normality" of the operation). Furthermore, the
question posed in Hayes as to whether, at the time of
recognition, "the jobs or job classifications designated for
the operation involved are filled or substantially filled"
may be answered, as discussed above, only in the negative.
Assuredly, the hiring of three out of the original five
employees with no specific job in mind for them, and the
subsequent grant of recognition to Local 475 a day or two
later when, as Furst conceded, "we didn't even know how
we were going to lay it out even," plainly indicates that
Lyra was not, on May 8, "engaged in a normal operation
with all or substantially all of the job classifications
necessary" to its operation.
I am, accordingly, convinced that the rationale giving
rise to the requirement of a representative complement-
the need to prevent a minority of employees, not
characteristic of the diverse elements of plant personnel,
from committing the unhired majority to a collective-
bargaining' representative-has been offended by the
recognition granted on May 8. Thus, I conclude that the
recognition afforded Local 475 on that date was violative
of Section 8(a)(2).
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES
UPON COMMERCE
The activities of Respondents set forth above have a
close, intimate, and substantial relationship to trade,
traffic, and commerce among the several States and tend to
lead to labor disputes burdening and obstructing com-
merce and the free flow of commerce.
Upon the foregoing fmdings of fact, and upon the entire
record in this case, I make the following:
CONCLUSIONS OF LAW
1. Avnet, Inc., British Industries Company, a Division
of Avnet, Inc., and Lyra Systems, a Division of Avnet, Inc.,
are employers engaged in commerce within the meaning of
Section 2(6) and (7) of the Act, and Avnet, Inc., together
with each of its aforesaid divisions constitute single
employers for purposes of the Act.
2. District 65, Distributive Workers of America, and
Amalgamated Local 475, International Union of Electri-
cal, Radio and Machine Workers of America, AFL-CIO,
are labor organizations within the meaning of Section 2(5)
of the Act.
3. By extending recognition to Amalgamated Local
475, International Union of Electrical, Radio and Machine
Workers of America, AFL-CIO, on May 8, 1974, as the
collective-bargaining representative of 'employees working
in the Lyra Systems building, Respondents Avnet, Inc.,
and Lyra Systems, a Division of Avnet, Inc., have violated
Section 8(a)(1) and (2) of the Act.
4. By executing a collective-bargaining agreement on
May 8, 1974, with Amalgamated Local 475 which required
membership in good standing in Local 475 as a condition
of employment, and by maintaining and enforcing said
provision, Respondents Avnet, Inc., and Lyra Systems, a
40 Meraglia was subsequently trained to operate a component cutting 42 At present, Furst would classify Bemos as both a trouble shooter and
machine. a Class A inspector-"he is doing a variety of functions in our place,"
41 Mallards is now performing work as to which Furst testified, "He including shipping and receiving.
would fit in as a Class A inspector probably best." 43 Danzi did not work out and was released after 30 days.
BRITISH INDUSTRIES COMPANY 1143
Division of Avnet, Inc., have violated Section 8(a)(1) and
(3) of the Act.
5. The aforesaid, unfair labor practices are unfair labor
practices affecting commerce within the meaning of
Section 2(6) and (7) of the Act.
6. Respondents have not engaged in any other conduct
violative of the Act as alleged in the complaint.
Tim REMEDY
In order to effectuate the policies of the Act, it is
necessary that Respondents Avnet , Inc., and Lyra Systems,
a Division of Avnet , Inc., be ordered to cease and desist
from the unfair labor practices found and to appropriately
remedy them.
Respondents' violations of Section 8(a)(2) and (3) of the
Act require an order that they withdraw and withhold
recognition from Amalgamated Local 475 as the represent-
ative of their employees in the Lyra Systems building and
cease giving effect to the collective -bargaining agreement
executed by Lyra Systems and Amalgamated Local 475 on
May 8 , 1974, unless and until such time as Amalgamated
Local 475 is certified by the National Labor Relations
Board, and that they reimburse employees for any
initiation fees, dues, or other moneys paid by the
employees or withheld from their wages for the benefit of
Amalgamated Local 475, pursuant to said collective-
bargaining agreement, with interest at 6 percent per
annum , computed in the manner set forth in Seafarers
International Union of North America, Great Lakes District,
AFL-CIO, 138 NLRB 1142 (1962).
Upon the foregoing findings of fact, conclusions of law,
and the entire record , and pursuant to Section 10(c) of the
Act, I hereby issue the following recommended:
ORDER44
Avnet, Inc., and Lyra Systems, a Division of Avnet, Inc.,
Brooklyn, New York, their officers, agents, successors, and
assigns, shall:
1. Cease and desist from:
(a) Contributing assistance or support to Amalgamated
Local 475, International Union of Electrical, Radio and
Machine Workers of America, AFL-CIO, by recognizing
or contracting with such labor organization as the exclusive
representative of any of their employees at a time when the
employees in the appropriate bargaining unit do not
constitute a representative complement.
(b) Giving effect to, performing, or in any way enforcing
the collective-bargaining agreement executed with Amalga-
4 i In the event no exceptions art filed as provided by Sec. 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
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.
mated Local 475, International Union of Electrical, Radio
and Machine Workers of America, AFL-CIO, on May 8,
1974, unless and until said labor organization has been
certified by the National Labor Relations Board as the
exclusive bargaining representative of their employees;
provided, however, that nothing herein shall require
Respondents to vary or abandon any wage, hour, seniority,
or other substantive feature of its relations with the
employees covered by said agreement or to prejudice the
assertion by such employees of any rights they may have
thereunder.
(c) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of their
rights guaranteed in Section'7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act:
(a) Withdraw and withhold recognition from Amalga-
mated Local 475, International Union of Electrical, Radio
and Machine Workers of America, AFL-CIO, and cease
giving effect to the collective-bargaining agreement execut-
ed between that labor organization and Respondents
Avnet, Inc., and Lyra Systems, a Division of Avnet, Inc.,
unless and until such time as Local 475 is certified by the
National Labor Relations Board.
(b) Reimburse present and former employees in the Lyra
Systems building for any initiation fees, dues, or other
moneys paid by them or withheld from their wages
pursuant to the union-security clause in the May 8, 1974,
collective-bargaining agreement between Amalgamated
Local 475 and Respondents Avnet, Inc., and Lyra Systems,
a Division of Avnet, Inc., with interest at 6 percent per
annum.
(c) Post at the Lyra Systems building at Long Island
Expressway, South Service Road, in the town of Westbury,
County of Nassau, State of New York, copies of the
attached notice marked "Appendix." 45 Copies of said
notice, on forms provided by the Regional Director for
Region 29, after being duly signed by Respondents'
authorized representative, shall be posted by them immedi-
ately upon receipt thereof, and be maintained by them for
60 consecutive days thereafter, in conspicuous places,
including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by
Respondents to insure that said notices are not altered,
defaced, or covered by any other material.
(d) Notify the Regional Director for Region 29 in
writing, within 20 days from the date of this Order, what
steps Respondents have taken to comply herewith.
45 In the event that the Board's 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 Pursuant
to a Judgment of the United States Court of Appeals Enforcing an Order of
the National Labor Relations Board."